B-199152, November 28, 1980, 60 Comp.Gen. 90
Fair Labor Standards Act - Applicability - "Foreign Exemption" - Not For
Application - Overseas Temporary Duty - Return Travel on Nonworkday
Within Same Workweek
Three Navy employees who are nonexempt under Fair Labor Standards Act
(FLSA) are entitled to overtime under FLSA for return travel from
Scotland. "Foreign exemption" under FLSA is construed narrowly, and
hours of work in covered area during same workweek will defeat "foreign
exemption." Compensation - Traveltime - Hours of Work Under FLSA - What
Constitutes "Workweek" - Overseas Temporary Duty - Return Travel on
Nonworkday Within Same Workweek
Three Navy employees completed temporary duty in Scotland on Friday,
the last day of their "regularly scheduled administrative workweek," and
returned to United States on Saturday, a nonworkday. Travel on
nonworkday which is within 7-day workweek is compensable under Fair
Labor Standards Act. "Regularly scheduled administrative workweek" is a
concept under title 5, United States Code, and has no application to the
FLSA. Compensation - Wage Board Employees - Overtime - Traveltime
Three Navy employees who performed temporary duty in Scotland
returned to United States on Saturday, a nonworkday. Traveltime is not
compensable as overtime under title 5, United States Code, under these
circumstances.
Matter of: Paul G. Abendroth, et. al. - Overtime claim for travel,
November 28, 1980:
The issue in this decision is whether employees who are nonexempt
under the Fair Labor Standards Act (FLSA), 29 U.S.C. 201, are entitled
to overtime compensation for travel where they are returning from
temporary duty at an overseas location. We hold that although they are
not eligible for overtime under title 5, United States Code, they are
entitled to overtime under the FLSA since the return travel within the
same workweek defeats the "foreign exemption" under the FLSA.
This decision is in response to a request from A. W. Countryman,
Chief Steward, Federal Employees Metal Trades Council, Portsmouth Naval
Shipyard, Portsmouth, New Hampshire. The request has been handled as a
labor-management relations matter under our procedures contained in 4
C.F.R.Part 21(1980). We have received comments on this matter from the
Commander, Portsmouth Naval Shipyard, and we have requested and received
a report from the Office of Personnel Management (OPM) on the issue of
overtime entitlement under the FLSA.
In October 1979, 29 Pipefitters at the Portsmouth Naval Shipyard were
assigned to temporary duty at the Shipyard's worksite in Holy Loch,
Scotland. Work was due to be completed on Friday, October 12, but due
to unforeseen circumstances, three Pipefitters, Paul G. Abendroth, Fred
R. Bragdon, and Paul W. Dubois, were selected and assigned to work on
Friday and return home on Saturday, October 13.
These three employees were paid for 8 hours of overtime while in travel
status on Saturday although there return travel involved 12 hours of
traveltime. However, the Shipyard subsequently collected back the
overtime payments from the employees on the basis that overtime could
not be paid for this travel under either title 5, United States Code, or
the FLSA.
The union argues that although work in a foreign area is exempt from
coverage under the FLSA, the three employees in this case returned to
the United States on Saturday, October 13, and thereby performed "hours
of work" within their administrative workweek in an area covered by the
FLSA. The Shipyard argues, however, that these three employees did not
perform work in the United States within their "regularly scheduled
administrative workweek" and, therefore, the time spent in travel status
is not compensable under the FLSA.
Under the provisions of 5 U.S.C. 5544(a)(1976), a prevailing rate
employee may not be compensated for time spent in travel status 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.
Neither the union nor the Shipyard claims that these three employees
are entitled to overtime compensation under this section. That is
consistent with our decisions holding that such travel is not considered
hours of works for the purposes of title 5, United States Code. See,
for example, 49 Comp.Gen. 209(1969).
The remaining question is whether these nonexempt employees are
entitled to overtime under the FLSA. In view of the authority of the
Office of Personnel Management under 29 U.S.C. 204(f)(1976), to
administer the FLSA with respect to Federal employees, we requested
OPM's views of this matter.
The report from OPM states that the "foreign exemption" contained in
29 U.S.C. 213(f), and 5 C.F.R. 551.204, exempts from the overtime
provisions of the FLSA any employee whose services during the workweek
are performed in a workplace within a foreign country or certain
territories. However, it is OPM's view that exemption criteria,
including the foreign exemption, are to be narrowly construed.
After reviewing the legislative history of section 213(f), OPM believes
that the purpose of the exemption is to exclude the application of the
FLSA only to an employee who is an integral part of the foreign economy.
Thus, since the FLSA is a workweek law, OPM concludes the exemption is
applicable on a workweek basis to an employee on temporary duty if the
employee spends the entire workweek in the foreign area. Where the
employee performs any compensable work in a "covered" area (the United
States or certain territories or possessions) in any workweek, OPM
believes it would not be appropriate to apply the foreign exemption.
Thus, since travel is considered "hours of work" under the FLSA, OPM
concludes that an employee who is permanently stationed in a covered
area and who performs compensable travel to or from an exempt area will
not be subject to the foreign exemption for that workweek. See also
Federal Personnel Manual (FPM) Letter 551-7, para. 2.a.
The Shipyard argues that since these three employees performed all
their work within the "regularly scheduled administrative workweek"
(presumably Monday through Friday) in Scotland, a foreign area, their
travel on Saturday to a covered area does not fall within this workweek
and is therefore not compensable.
Although there does not appear in the OPM regulations any definition
of the term "workweek," we believe for the purposes of the FLSA that an
employee's workweek cannot be limited to his "regularly scheduled
administrative workweek," which is a term used for purposes of
compensation under title 5, United States Code. See 5 U.S.C. 6101 and
5544. We note, for example, that under the Department of Labor's
regulations governing FLSA in the private sector, a workweek is defined
as a fixed and regularly recurring period of 168 hours, seven
consecutive 24-hour periods. See 29 C.F.R. 778.105(1979). In addition,
in determining what constitutes "hours worked," the regulations issued
by OPM cite the following example in FPM Letter 551-1, Attachment 4:
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" on regular
workdays, during normal work hours but also during the corresponding
hours on nonwork days. Thus, if an employee regularly works from 8:30
a.m. to 5:00 p.m. from Monday through Friday, the time spent traveling
during these hours is worktime on Saturday and Sunday as well as on the
other days.
Therefore, we conclude that time spent traveling need not be limited
to the employee's "regularly scheduled administrative workweek" in order
to be compensable under the FLSA.
Applying these principles to the facts of this case, we assume that
these three employees' regular workdays were Monday through Friday and
that their workweek for the purposes of the FLSA was Sunday through
Saturday.
The travel they performed on Saturday was "hours worked" under the FLSA
during the workweek. Therefore, the foreign exemption would not be
applicable due to the performance of compensable work (travel) in the
covered area during that workweek.
Accordingly, these employees are entitled to overtime compensation
under the FLSA for the hours of travel on Saturday that corresponded to
their normal working hours.
B-200886, November 26, 1980, 60 Comp.Gen. 86
Synthetic Fuels - Procurement - National Defense Needs - Defense
Production Act - Presidential Authority - Appropriations Sufficiency
Under section 305 of Defense Production Act of 1950, as amended,
President or delegate may enter into contracts for purchase or
commitment to purchase synthetic fuels as long as there are sufficient
appropriations in advance to pay the amount by which the contract price
exceeds the estimated market price for the fuel at the time for
performance.
Matter of: Synthetic Fuel Purchase Contracts Under Defense
Production Act, November 26, 1980:
The Deputy Assistant Secretary of Defense has requested our opinion
on the authority of the President, or his delegate, to enter into long
term contracts for the purchase of synthetic fuels in advance of
appropriations under section 305 of the Defense Production Act of 1950,
as added by section 104(3) of the Defense Production Act Amendments of
1980, Pub. L. No. 96-294, 94 Stat. 611, 619 (to be codified at 50 U.S.C.
App. 2095).
Section 305 authorizes the President to enter into contracts to
purchase synthetic fuels for purposes of national defense. The Act
requires that any contract entered under this authority contain a
provision allowing the President to refuse delivery of the fuel and
instead to pay the contractor the amount by which the price specified in
the contract exceeds the prevalent market price for that fuel at the
time delivery under the contract is required. The Deputy Assistant
Secretary specifically asks whether it is necessary to have
appropriations in advance to cover the full price of the contracts, or
whether it is sufficient only to have advance appropriations to cover
the difference between the contract price and the estimated market price
at the time of scheduled delivery should the President refuse to accept
delivery of the fuel.
For the reasons indicated below, we conclude that the President or
his delegate may lawfully enter into contracts to purchase synthetic
fuels so long as there are sufficient appropriations in advance to cover
the estimated payments which will be due in the event the President
chooses to refuse delivery of the fuel.
Public Law 96-294 amended the Defense Production Act by adding a new
section 305. Section 305 directs the President to take immediate action
to achieve production of synthetic fuel to meet national defense needs.
He may issue loan guarantees, make direct loans, or
contract for purchase of, or commitments to purchase, synthetic fuels
for Government use for defense needs. * * * (Section 305(b)(1)(A)(i)).
Funds to carry our Section 305 were appropriated by the Supplemental
Appropriations and Rescission Act, 1980, Pub. L. No. 96-304, 94 Stat.
857, 880. The act appropriated $3 billion for this purpose, to remain
available until expended.
Subject to price ceiling limitations, purchases or commitments to
purchase authorized by section 305 may be made
(A) without regard to the limitations of existing law (other than the
limitations contained in this Act) regarding the procurement of goods or
services by the Government; and
(B) subject to section 717(a), for such quantities, on such terms and
conditions (including advance payments subject to paragraph (3)) and for
such periods as the President deems necessary. (Section 305(c)(1)).
The section 717(a) referred to authorizes all activities under the
Defense Production Act through September 30, 1981, and contains a
proviso
* * * That all authority hereby or hereafter extended under title III
of this Act shall be effective for any fiscal year only to such extent
or in such amounts as are provided in advance in appropriation Acts. *
* *
(50 U.S.C.App. 2166(a)).
The incorporation of the language of section 717(a) into section 305
makes it clear that the President cannot enter into purchase contracts
until an appropriation for the purpose has been enacted. We previously
interpreted the language of section 717(a) in a letter to the Chairman,
Senate Committee on Banking, Housing, and Urban Affairs. B-96983,
August 1, 1979. We said::
In our opinion, this proviso requires that, with respect to the
authorities granted in sections 302 and 303 of the Act, the exercise of
which will result in the actual expenditure of funds, Congress must
appropriate these funds before the authorities can be used.
The fuel purchase authority in section 305 will also result in the
expenditure of funds and thus the reasoning in our letter applies in
section 305.
Section 305(d)(3) of the Act provides:
(3) Any contract for such purchases or commitments to purchase shall
provide that the President has the right to refuse delivery of the
synthetic fuel involved and to pay the person involved an amount equal
to the amount by which the price for such synthetic fuel, as specified
in the contract involved, exceeds the market price, as determined by the
Secretary of Energy, for such synthetic fuel on the delivery date
specified in such contract.
The Deputy Assistant Secretary has not provided us with a sample of a
contract for purchase or commitment to purchase to be used under section
305. However, based on the inclusion of the provision required by
section 305(d)(3), the contract would allow the Government two options,
either of which would constitute full performance. At the time of
performance, the Government could either accept the fuel and pay the
contractor the price set by the contract, or refuse the fuel and pay the
contractor the difference between that contract price and a lower market
price.
Unless the market price for fuel at the time for performance is zero,
the likelihood of which we view as very nearly impossible, the amount
the Government must pay the contractor if it chooses not to accept the
fuel will be less than the full contract price. It is thus within the
sole power of the Government to limit its potential liability under the
contract to the difference between contract price and market price while
still fully performing.
In our opinion when a contract gives the Government the option of two
performances at different prices, then the Government has incurred an
obligation only for the lesser amount because the Government cannot be
held to any greater liability. The Government can lawfully enter into
such a contract, without violating the prohibition against contracting
in advance of appropriations, if at the time it enters the contract it
has sufficient appropriations available to pay the lesser amount.
Cf. Newport News Shipbuilding and Drydock Co., 55 Comp.Gen. 812,
826(1976).
Therefore, it is our opinion that the President may enter into
synthetic fuel purchase contracts without violating section 717(a) of
the Act so long as he has sufficient appropriations in advance to pay
any anticipated difference between the contract price and the estimated
market price at the time of performance.
Our view is supported by section 305(d)(5) of the Act, which
provides:
(5) In any case in which the President, under the provisions of this
section, accepts delivery of any synthetic fuel, such synthetic fuel may
be used by an appropriate Federal agency. Such Federal agency shall pay
for such synthetic fuel the prevailing market price for the product
which such synthetic fuel is replacing, as determined by the Secretary
of Energy, from sums appropriated to such Federal agency for the
purchase of fuel, and the President shall pay, from sums appropriated
for such purpose pursuant to the authorizations contained in sections
711(a)(2) and 711(a)(3), an amount equal to the amount by which the
contract price for such synthetic fuel as specified in the contract
involved exceeds such prevailing market price.
This provision makes it clear that Congress intended the funds
appropriated to carry out section 305 to be used only to pay the amount
by which the contract price exceeds the market price for the fuel.
(Also see H.R. Rept. No. 96-165, 96th Cong., 1st Sess. 24 (1979).) If
the Government decides to purchase the fuel, the part of the price equal
to the market price is to be paid from the appropriations for fuel
purchases of the agency which will actually use the fuel. Since it
cannot be known until the time for performance whether the Government
will accept the fuel, or which agency will actually use it if accepted,
the Congress did not intend that the market price portion of the cost
would be paid from an appropriation current at the time the contract is
entered. Rather it intended that this portion of the purchase price
would be paid from the using agency's appropriation current at the time
of performance.
Further support is found in section 305(g). The first paragraph of
this provision requires each contract entered under section 305 to
specify in dollars the maximum liability of the Government under the
contract. The second paragraph states that in determining this maximum
liability:
purchase agreements shall be valued as of the date of each such
contract based upon the President's estimate of the maximum liability
under such contract * * *
Since the full contract price would be known at the time the contract
was entered, the only liability that the President could estimate would
be the difference between that price and the market price at the date
for performance. Thus the maximum liability, which the Government would
have to have sufficient appropriations in advance to cover, is only the
difference between the contract and market prices.
B-195418, November 25, 1980, 60 Comp.Gen. 83
Panama Canal Commission - Employees - Civil Service Reform Act of 1978 -
Senior Executive Service - Inapplicability
Panama Canal Act of 1979 expressly excepts the appointment and
compensation of all Panama Canal Commission positions from the
provisions of the civil service laws and regulations. Additionally,
provisions of the Panama Canal Treaty of 1977 would be in conflict with
the implementation of the Senior Executive Service. The Treaty must be
given priority over a subsequently enacted statute applicable to Federal
agencies generally. Hence, the provisions of the Civil Service Reform
Act of 1978 establishing a Senior Executive Service do not apply to the
employees of the Panama Canal Commission.
Matter of: Panama Canal Commission - Applicability of Senior
Executive Service, November 25, 1980:
By letter dated July 23, 1980, the Administrator of the Panama Canal
Commission has requested our decision whether the employee of the
Commission are subject to the provisions of Title IV of the Civil
Service Reform Act of 1978, /1/ establishing a Government-wide Senior
Executive Service (SES), designed to insure the high quality of
Government executives.
The Panama Canal Commission was established effective October 1,
1979, by the Panama Canal Act of 1979, /2/ as successor to the Panama
Canal Company. The establishment of the Commission was required by the
Panama Canal Treaty of 1977 and the purpose of the 1979 Act is to
provide legislation implementing the Treaty between the United States
and the Republic of Panama.
The Panama Canal Company as a Government Corporation was excluded
from the Senior Executive Service. The Panama Canal Commission, however,
is an agency for the purpose of the SES under the definition in 5 U.S.C.
3132(a)(1). Nevertheless, the Commission believes that its positions
are not subject to the provisions of Title IV of the Civil Service
Reform Act (CSRA) governing the Senior Executive Service. The
Commission relies on sections 1202 and 1212 of the Panama Canal Act of
1979 (22 U.S.C. 3642 and 3652). Under section 1202(a) of that law,
positions in the Commission have been statutorily excepted from the
competitive service and have been placed outside of the appointment,
classification, and pay provisions of title 5, United States Code.
Moreover, section 1212 of the Act provides that the Commission shall
operate under a separate Panama Canal Employment System, established by
the President. That system is required to conform to the Panama Canal
Treaty and to conform, to the extent practicable and consistent with the
Panama Canal Act, to the policies, principles, and standards applicable
to the competitive service.
The Commission points out that several provisions of the Panama Canal
Act and the Panama Canal Treaty would be inconsistent with statutory
requirements of the SES, if the SES were to be interpreted as applying
to the Commission and that sections 1202 and 1212 of the Act appear to
be intended to permit the establishment of an employment system that
conforms to the treaty but to which provisions of law relating to
appointments in Federal agencies in the United States do not apply of
their own force.
An opinion on this question was also sought by the Commission from
the Office of Personnel Management (OPM), the agency responsible for
administering the SES program. In an opinion dated July 25, 1980, the
General Counsel of OPM concluded that the SES is not applicable to the
Panama Canal Commission. OPM reasoned that, while the Commission was
created as an Executive agency (Sec. 1101 of the Act), it is clear from
sections 1202 and 1212 of the Panama Canal Act that its employees would
be excluded from the civil service generally and subject to its own
personnel system.
Further, OPM found it significant that the Act does not make provision
for placing Commission positions in the SES. If Congress had intended
to include Commission employees under SES it would have expressly
provided for it particularly since Congress had intended to include
Commission employees under SES it would have expressly provided for it
particularly since Congress was very mindful of the CSRA which became
effective 9 months prior to the Panama Canal Act. OPM developed this
point further as follows:
In fact, a careful reading of P.L. 96-70 discloses that when Congress
wanted certain civil service laws to apply to Commission employees, it
knew how to make specific provisions for it. For example, section 1209
extends coverage to certain Commission employees for work injuries (5
U.S.C.Chapter 81), retirement, (5 U.S.C.Chapter 83), life insurance, (5
U.S.C.Chapter 87) and health insurance (5 U.S.C. Chapter 89), and denies
it to others, e.g., non-citizens, those appointed after October 1, 1979
etc. In addition, section 1241 makes the early retirement provisions of
5 U.S.C. 8336 applicable in certain instances. Also, section 1271
confers the Labor Management Relations coverage of 5 U.S.C.Chapter 71 on
Commission employees. It is especially noteworthy too, under section
1224, that Commission employees were made subject to veterans'
preference, to the title 5 removal or suspension provisions applying to
the competitive service and to certain wage grade provisions in 5 U.S.C.
5544(a).
On the other hand, it is also apparent in section 1112(a), (Code of
Conduct for Commission Personnel), for example, that Congress was not
subjecting the Commission to the Code of Conduct requirements in 5
C.F.R.Part 735, the civil service regulations applicable to Executive
agencies generally, but instead was directing the Commission to
establish a system that was substantially equivalent to Part 735.
Moreover, with the language in section 1212(a), that the Panama Canal
Employment System shall "(3) conform to the extent practicable and
consistent with the provisions of this Act, to the policies, principles,
and standards applicable to the competitive service," there can be no
doubt that Congress was presupposing that title 5 provisions would not
apply to Commission employees unless it was so provided in the Act or,
in the Commission's discretion, it was practicable to do so. Thus, in
view of the specific authorities Congress accorded the Commission, we
find the absence of express language in the law on SES applicability
particularly persuasive that Congress did not intend SES to apply.
In reconciling the CSRA with the Panama Canal Act, OPM noted that the
SES was never intended to embrace positions created by a later law for
the purpose of operating a new agency under its own statutory authority.
Under general rules of statutory construction, the Panama Canal Act,
the later law, would take precedence over the earlier law, CSRA. OPM
also pointed out that since the Act is the more specific statute,
applying only to Panama Canal Commission employees whereas the CSRA
applies to employees in the Executive branch generally, the two statutes
can easily coexist by considering the conflicting provisions of the Act
as specific exceptions to the SES reach of CSRA.
Finally, OPM noted the various provisions of the Panama Canal Treaty,
particularly those provisions designed to foster participation of
Panamanian nationals at high management levels and growing participation
at all other levels, along with employement procedures which would give
Panamanian nationals employment preference, which conflict with the
CSRA.
The OPM opinion recognized that a treaty cannot be deemed to have been
abridged or modified by a later statute, such as CSRA, unless such
purpose on the part of Congress has been clearly expressed. Cook v.
United States, 288 U.S. 102, 120(1932). Thus, OPM concluded that,
without express language to the contrary, the CSRA cannot be found to
impliedly repeal the Panama Canal Treaty. Since the Treaty and SES are
basically incompatible, the Treaty and its implementing statute cannot
be disturbed by a CSRA provision with which it happens to conflict.
We are in agreement with the conclusions reached by both the Panama
Canal Commission and the Office of Personnel Management. We believe
that the statutory independence of the Panama Canal Commission mandates
the conclusion that the Congress did not intend the Senior Executive
Service provisions to apply to the Commission. We have previously
reached the same conclusion with respect to the Federal Reserve Board,
58 Comp.Gen. 687, B-195418, July 30, 1979. The Federal Reserve Act
exempted the Board's employees from the appointment and pay provisions
of the civil service laws and regulations. In the absence of a definite
indication that Congress intended otherwise, we held that the specific
provisions of the Federal Reserve Act prevailed over the more general
SES provisions of the Civil Service Reform Act. The same reasoning is
equally applicable to the Panama Canal Commission.
As to the Panama Canal Commission, therefore, we hold that its
employees are not covered by the Senior Executive Service.
/1/ Pub. L. 95-454, October 13, 1978, 92 Stat. 1111, 1154 (codified
at 5 U.S.C. 3131 et. seq.).
/2/ Pub. L. 96-70, Sec. 1101, 93 Stat. 452, 456, September 27, 1979,
22 U.S. Code 3611.
B-199289, November 24, 1980, 60 Comp.Gen. 81
Transportation - Bills - Payment - Proper Carrier To Receive - "Last"
Carrier Identification - Evidence in GBL
In determining whether billing carrier is lase (delivering) carrier
in privity with contract of carriage, and entitled to payment of
transportation charges under 41 CFR 101-41.302-3(a)(1) and
101-41.310-4(a)(1), General Services Administration (GSA) regulations
authorize Government agency to look to properly accomplished, covering
Government bill of lading (GBL). Transportation - Bills of Lading -
Accomplishment - What Constitutes - Transportation Payment Act, 1972 -
Billing Carrier v. Consingee's Certification
Under Transportation Payment Act of 1972, 49 U.S.C. 66(c)(1976), and
Government payment regulations, "Properly accomplished" GBL is one on
which billing carrier certifies that it made delivery, there being no
need for consignee's certificate. Transportation - Payment - To Other
Than Destination Carrier
Where billing carrier was issued G0L, it actually performed major
part of transportation services, and presented properly accomplished GBL
showing it as delivering carrier, Government agency correctly paid
origin (billing) carrier, even though claimant actually performed
delivery.
Matter of: Freeport Fast Freight, Inc., November 24, 1980:
Under 4 CFR Part 53(1980), Freeport Fast Freight (Freeport) requests
review of settlement action taken by the General Services Administration
(GSA) on Freeport's claim for transportation charges relating to a
shipment of Government property that was transported from Richmond,
Virginia, to Rock Island, Illinois, on Government bill of lading (GBL)
N-0056810, dated July 18, 1978.
The claim for $714.86, which was initially filed with the United
States Army Finance and Accounting Center, in April 1979, was denied by
that agency for the reason that the transportation charges had been paid
to B&P Motor Express, Inc. (B&P), in September 1978.
In support of its claim before the GSA and in this Office, Freeport
contends that the Government erroneously paid B&P. The claimant asserts
that the error arises because Freeport was the delivering carrier, and
as the last carrier in privity with the contract of carriage it was
entitled to payment.
The GSA disallowed the claim, contending that even if Freeport
actually was the delivering carrier the Government correctly paid B&P
because evidence on the original GBL, which was presented by B&P,
established that B&P delivered the shipment, and that by the terms of
the GBL, as expressly governed by Title 41, Subpart 101-41.3 of the Code
of Federal Regulations, identification of the "last" carrier is properly
made by reference to evidence on the covering GBL.
We agree with GSA that 41 CFR 101.302-3(a)(1) and 41 CFR
101-41.310-4(a)(1) permit the paying agency, generally, to rely on a
properly certified, original GBL to determine whether the billing
carrier is the last carrier in privity with the contract, and to pay
that carrier, even though another carrier actually delivered the
shipment.
Prior to 1974, Government regulations dealing with the presentation
and payment of transportation bills were set forth on the reverse of the
GBL, and in Title 4 of the Code of Federal Regulations, whereas now they
are published in 41 CFR Subpart 101-41.3. See 58 Comp.Gen. 799,
801(1979). Also the GBL was revised, and among other changes permitted
certification by the authorized billing carrier rather than the
consignee as to delivery of the consignment. In our pre-1974 decisions
we held that payment of transportation charges is correctly made when
the billing carrier presents a properly accomplished or certified GBL
indicating that the property was received in apparent good order and
condition from the claimant, and payment is made in good faith. See
B-172981, May 27, 1971, and B-171825, May 10, 1971. These decisions,
which involved Condition 1 of the GBL and previous regulations of this
Office, contemplated that a "properly accomplished" GBL was one on which
the consignee's certificate of delivery had been signed by the
consignee.
See A-24222, July 9, 1971.
Thus since enactment of the Transportation Payment Act of 1972, Pub.
L. No. 92-550, 86 Stat. 1163, 49 USC. 66(c), and the revised Government
payment regulations, the meaning of "properly accomplished or certified"
GBL has changed in that the carrier no longer is required to obtain an
accomplished consignee's certificate of delivery on the original GBL to
receive payment. B-182952, February 27, 1975. Now, the billing carrier
certifies that it has made delivery. In relation to the paying agency's
good faith, we see no difference in the legal effect of the consignee's
certificate under prior procedure, and the carrier's certificate of
delivery under current procedure.
Here, B&P certified on the original GBL that it was the delivering
carrier; and the claimant concedes that B&P actually transported the
shipment from its origin in Virginia, to Chicago, Illinois (where it was
transferred to Freeport for delivery to Rock Island). The GBL was
issued to B&P, the only carrier shown thereon and B&P presented the GBL
to the paying agency for payment. Therefore, since the GBL was regular
on its face and otherwise in good order for payment to the last carrier
which is shown as B&P on the certificate of delivery, the Army Finance
Office was correct in making payment to B&P. The Government has no
legal obligation to distribute monies apparently properly paid to the
billing carrier. B-171825, supra.
Freeport's payment to B&P of its interline revenue share, $478.96, in
anticipation of being paid by the Government, and the bankruptcy of B&P
are not legally relevant facts.
Accordingly, GSA's settlement is sustained.
B-199242, NOVEMBER 24, 1980, 60 COMP.GEN. 79
Bids - Late - Mail Delay Evidence - Certified Mail - Mail Receipt, But
Not Envelope, Postmarked
While protester had certified mail receipt postmarked by Postal
Service, envelope containing protester's late bid did not have required
U.S. Postal Service postmark indicating that it had been mailed at least
5 days before bid opening date. Therefore, bid did not comply with
invitation for bids requirements and agency was entitled to reject bid
as late.
Matter of: N.Y. Enterprise Capital Corp., November 24, 1980:
N.Y. Enterprise Capital Corp. (Enterprise) as protested the refusal
by the Federal Supply Service (FSS) of the General Services
Administration to accept its late bid for invitation for bids (IFB) No.
5FCB-13-80-035. Enterprise would have been the low bidder for certain
items.
Bid opening was 3:30 p.m., April 30, 1980. Enterprise claims it
mailed its bid on April 23, 1980, using certified mail and that its
employee asked the postal clerk to postmark both its receipt and the
envelope containing the bid. There was a postage meter impression made
by Enterprise's postage machine already upon the envelope. The clerk
postmarked and returned the receipt but did not postmark the envelope.
Enterprise's bid arrived at FSS offices on May 5, 1980, and FSS
informed Enterprise its bid was late. However, upon Enterprise's
submission of the receipt, postmarked April 23, 1980, FSS concluded that
Enterprise's bid was acceptable. Another bidder protested FSS's ruling
and, upon reconsideration, FSS concluded that Enterprise had not met the
"late bid" requirement of article 7 of standard form 33-A which had been
included in the IFB. Once again, Enterprise's bid was ruled late.
The IFB provided that late bids sent by registered or certified mail
were acceptable if sent at least 5 days before bid opening. Further,
the IFB stated:
The only acceptable evidence to establish:
The date of mailing of a late bid, modification, or withdrawal sent
either by registered or certified mail is the U.S. Postal Service
postmark on both the envelope or wrapper and on the original receipt
from the U.S. Postal Service. If neither postmark shows a legible date,
the bid, modification, or withdrawal shall be deemed to have been mailed
late. (The term "postmark" means a printed, stamped, or otherwise
placed impression (exclusive of a postage meter machine impression) that
is readily identifiable without further action as having been supplied
and affixed on the date of mailing by employees of the U.S. Postal
Service. Therefore, offerors should request the postal clerk to place a
hand cancellation bull's-eye "postmark" on both the receipt and envelope
or wrapper.)
Enterprise maintains that under the "Certified Mail" procedures of
the United States Postal Service, its bid envelope was placed in the
mail on April 23, 1980, the date postmarked on its certified mail
receipt. Section 912.7 of the Postal Service's Domestic Mail Manual
(Issue 2, 5-15-80) instructs the postal clerk to verify names,
addresses, delivery instructions, and postal charges before giving the
mailer a postmarked receipt and concludes--
Deposit article in mail. Do not return to the mailer.
The requirement for a postmark on both the receipt and the envelope
was added to the late bid clause by amendment 193 to the Federal
Procurement Regulations dated July 6, 1978 and that amendment contained
the following rationale for the requirement:
While certified mail service provides a receipt to the sender and a
record of delivery at the office of address, no record is kept at the
office at which it was mailed. Consequently, when metered postage is
used, the only evidence establishing the date of mailing is the postmark
on the certified mail receipt. Because the U.S. Postal Service cannot
substantiate that the certified bid envelope was actually deposited in
the mail on the date shown on the postmarked receipt, it is questionable
that the postmarked certified mail receipt under these circumstances is
a reliable indication of the actual date of mailing.
While Enterprise argues that this new requirement for a postmark on
both the receipt and envelope is unnecessary, in view of the Postal
Service requirement that the item being mailed should not be returned to
the mailer, we find this position to be without merit. The solicitation
instructions are clear and reflect the requirement in the FPR's. We see
no basis for waiving the IFB requirement even though the Postal Service
manual provides that the postal clerk shall not return the mail to the
sender since, in the absence of the postmark on the envelope, there is
no evidence that the mail was deposited on the date stamped on the
receipt held by the sender.
The protest is denied.
B-198726, B-198792, November 19, 1980, 60 Comp.Gen. 77
General Accounting Office - Jurisdiction - Labor Stipulations - Service
Contract Act of 1965 - Inequality of Competition in Procurement
Although responsibility for administration and enforcement of Service
Contract Act rests with Department of Labor, not General Accounting
Office, protest is sustained where protester is denied opportunity to
prepare offer and have it evaluated on common basis because solicitation
contained wage determination and required inclusion of budget breakdown
by category of labor and rate of compensation, but agency in evaluating
offer ignored inclusion by awardee of compensation rates which indicated
failure to comply with wage determination.
Matter of: Education Service District of Washington County, November
19, 1980:
Education Service District of Washington County (ESDWC) protests the
award by the U.S. Department of Agriculture, Forest Service (Forest
Service), of two negotiated contracts to EDGE, Inc. (EDGE), under
solicitation Nos. R6-80-41 and R6-80-147. Both awards are for contracts
under 16 U.S.C. 1703(c)(1976) to operate Youth Conservation Corps (YCC)
camps, and both contracts have been performed.
ESDWC asserts that: (1) EDGE is not eligible for award since it is
not a private nonprofit organization which has been in existence for 5
years as required by the act and the solicitation; (2) EDGE represented
in its proposal that it had operating arrangements with Southern
Colorado University when no such arrangements existed; (3) EDGE did not
submit an offer adequate to meet the minimum requirements of the
contract; (4) EDGE fails to provide certain employee benefits which are
required by law; and (5) EDGE's proposal indicated on its face that its
staff salaries did not comply with the Service Contract Act (SCA) wage
determination which was included in the solicitation, but the agency
ignored this in evaluating and awarding the contract despite the
specific solicitation requirement of inclusion of wage rates by labor
category.
We agree with ESDWC's final contention. Therefore, we need not
consider the other contentions. Lawrence Johnson & Associates, Inc.,
B-196442, March 11, 1980, 80-1 CPD 188.
The solicitations in question included SCA wage determinations and
required that:
The price proposal * * * shall include an itemized breakdown of the
project price, including types or categories of labor, together with
person-hours for each category indicating rate of compensation for each
unit.
EDGE's proposal indicated that for at least one job category
("assistant cook") it would not pay a compliant salary. EDGE expressed
its rate by a range rather than a fixed rate, but for the "assistant
cook" category it would be noncompliant even if it were to pay at the
highest rate in the range. For certain other labor categories it would
be noncompliant at the lower end of its stated salary range, but
possibly complaint at upper end. While EDGE has asserted that, in fact,
it did pay compliant salaries over the course of the contract, the
salaries which it contends were paid do not comport with those stated in
its proposal.
We have consistently held that administration and enforcement of the
SCA rest with the Department of Labor and not with our Office. Massa
Flooring Co., Inc., B-187974, January 19, 1977, 77-1 CPD 40; SIMCO
Electronics, B-187152, August 31, 1976 76-2 CPD 209. However, in this
case, the effect of the Forest Service's procurement practices in this
respect has been to effectively prevent the protester from competing on
an equal basis with the awardee. Thus, the question with which we are
concerned is not that of enforcement, but one of the propriety of the
agency's use and evaluation of the express solicitation requirements.
The Forest Service concedes that there is some question regarding
EDGE's compliance with the wage determination levels based on the rates
allotted in EDGE's proposal. However, the Forest Service contends that
the applicability of the SCA to this type of contract is an unresolved
question currently being considered by the Department of Labor. The
agency further asserts that the evaluation criteria do not provide for
evaluation of the budget proposal in determining the aware. The latter
position is contrary to the solicitation terms. While it does provide
for technical evaluation separate from price evaluation, it also
requires submission of a price proposal, including the above-quoted rate
of compensation requirement, and it provides 160 points maximum for the
technical proposal and 350 points maximum for the price proposal. The
solicitation states that: "Award will be made to the responsible
offeror whose proposal deemed technically acceptable and within the
competitive range will be the most advantageous to the Government price
and other factors considered."
Thus, the budget proposal was critical in determining the award.
In effect, despite the Forest Service's apparent reservations about
the applicability of the SCA, the solicitation contained the SCA wage
determination and provided a mechanism for evaluating to assure that
proposals were compliant. Consequently, the agency effectively elected
to waive the requirement by ignoring the noncompliant wages provided in
EDGE's proposal. The result was to penalize offerors whose proposals
reflected higher salary costs in order to be compliant with the
solicitation requirements.
It is a fundamental principle of Federal procurement law that a
solicitation must be drafted in such a manner that offers can be
prepared and evaluated on a common basis. Computek Inc., Ontel
Corporation, 54 Comp.Gen. 1080(1975), 75-1 CPD 384; Lawrence Johnson &
Associates, Inc., supra. To that end, Federal Procurement Regulations
(FPR) Sec. 1-3.805-1(d) (1964 ed. amend. 153) provides:
When, during negotiations, * * * a decision is reached to relax,
increase or otherwise modify the scope of the work or statement of
requirements, such change or modification shall be made in writing as an
amendment to the request for proposals, and a copy shall be furnished to
each prospective contractor. * * *
In this case, the Forest Service waived the SCA wage determination
levels for EDGE without advising any offerors of this waiver. We
believe that this impropriety deprived the other offerors of an
opportunity to compete on a common basis.
Since the contracts for the YCC programs have been performed, no
meaningful relief is possible. However, the contracts provide for
renewal at the option of the Government for two additional YCC programs.
We recommend that these renewal options not be exercised. In addition,
prior to issuing any new solicitations, the Forest Service should
ascertain definitively the applicability of inapplicability of the SCA
to the YCC program operation contracts and structure the solicitation
and evaluate the new proposals accordingly. By separate letter of today
we are advising the Secretary of Agriculture of the defects in this
procurement and of our recommendation.
The protest is sustained.
B-196946, November 19, 1980, 60 Comp.Gen. 74
Quarters Allowance - Basic Allowance for Quarters (BAQ) - Confinement in
Guard House, etc., - Conviction Not Overturned
Basic allowance for quarters (BAQ) is not authorized when a member,
without dependents, is convicted by court-martial, which does not direct
forfeiture of allowances, and the member is sentenced to confinement in
a guardhouse, brig, correctional barracks or Federal penal institution,
regardless of whether the member was receiving BAQ prior to confinement
or his assigned quarters were terminated, provided the sentence is not
overturned or set aside. 40 Comp.Gen. 169(1960) and 40 id. 715(1961)
distinguished.
Matter of: Basic allowance for quarters while member is in
confinement, November 19, 1980:
The Assistant Secretary of Defense Comptroller, requests a decision
on whether members without dependents, confined to a guardhouse, brig,
correctional barracks, or Federal penal institution, pursuant to a
court-martial which does not direct forfeiture of allowances, is
entitled to basic allowance for quarters (BAQ during confinement. The
circumstances are discussed and set forth in Committee Action No. 547 of
the Military Pay and Allowance Committee, Department of Defense.
The questions presented are as follows:
a. A member, without dependents, is convicted by court-martial and
sentenced to 2 years confinement. The United States Disciplinary
Barracks (USDB) Fort Leavenworth, Kansas, is designated as the place of
confinement. The member will not be returned to duty status upon
completion of the period of confinement. If this member was assigned to
adequate Government quarters at the old duty station and that assignment
was terminated upon transfer to the USDB, would he be entitled to BAQ
for the period of confinement? Would the answer be the same if the
member was in receipt of BAQ at the old duty station?
b. A member, without dependents, is convicted by court-martial and
sentenced to 2 years confinement. The guardhouse or brig at the
member's permanent duty station is designated as the place of
confinement. The member will not be returned to a duty status upon
completion of the period of confinement. If this member was assigned to
adequate Government quarters before being confined, and the assignment
to quarters was terminated because the member was not to be returned to
duty, would he be entitled to BAQ during the period of confinement?
Would the answer be the same if the member was in receipt of BAQ before
the period of confinement?
Title 37, United States Code, section 403(b), provides that " * * * a
member of a uniformed service who is assigned to quarters of the United
States or a housing facility under the jurisdiction of a uniformed
service, appropriate to his grade, rank or rating and adequate for
himself * * * is not entitled to a basic allowance for quarters * * * ."
Basic allowance for quarters is not part of the pay of a member but is
rather an allowance which is payable when adequate Government quarters
are not furnished, and BAQ is not an amount of members' naturally due
compensation which he forfeits when quarters are furnished but is rather
an allowance which is authorized when quarters are not so furnished.
This rationale was expressed by the Court of Claims in Byrne v. United
States, 87 Ct.Cl. 241, 248(1938):
* * * Commutation is for the purpose of compensating an officer for
expenses incurred in providing private quarters for himself and his
dependents when the Government fails to provide public quarters. On
this theory only can recovery be bad and, as it appears in this case
that the officer has not been put to any expense, no right to
reimbursement has been established.
The theory behind BAQ is reimbursement for something paid out.
Byrne, supra. Once confined the member has no out-of-pocket expenses
for quarters and thus has no basis for receiving BAQ. By analogy, under
circumstances where a member of the armed services has been hospitalized
in a Government hospital without being put to any expense to provide
quarters for himself our decisions have held that he was furnished the
equivalent of quarters in kind. This has been grounded on the theory
that during such hospitalization he is furnished all the quarters he can
use and that we would not be warranted in construing the law so as to
authorize the payment of BAQ. See B-130107, February 7, 1957, and cases
cited therein. The same is true for confinement. The member is not
being put to any expense to provide quarters for himself, and in
accordance with his conduct he has been furnished the equivalent of
quarters in kind; he is furnished all the quarters he can use for the
duration of his confinement. Thus, there is no basis for paying BAQ
regardless of whether the member was in receipt of BAQ prior to
confinement or was assigned to adequate quarters which were terminated.
The fact that we have held that there is entitlement to BAW for
periods when a member is confined if the charges are later withdrawn,
the court-martial results in an acquittal, or if there is a conviction
and the sentence is later set aside or disapproved is not considered
controlling in the circumstances here in question. If confinement is
disapproved after it was enforced we held that BAQ should be paid
because the quarters ordinarily provided for confinement in a
guardhouse, brig, disciplinary barracks, etc., may not properly be
regarded as adequate quarters assigned to a member appropriate to his
rank, etc. 40 Comp.Gen. 169, 171(1960). See also 40 Comp.Gen.
715(1961). Freedom of use and of ingress and egress were basic
considerations in this matter. 40 Comp.Gen. at 172.
That rule is predicated upon the retroactive disapproval of
confinement. It results in part from the requirement that the
individual be restored all rights and privileges to individuals whose
confinement is not approved after it has taken place. However, a member
whose conduct results in conviction by court-martial with a sentence to
confinement and the conviction is not later overturned or set aside, is
in a different situation.
That is, he is placed in such quarters as the proper result of his
conduct, and under these circumstances those quarters are appropriate
and adequate. The curtailment of the freedom to come and go at will is
also a consequence of the member's own conduct and in such circumstances
has no bearing on BAQ. Accordingly, the fact that BAQ is allowed when a
period of confinement is retroactively disapproved provides no basis for
holding that BAQ should be paid to those who are confined and whose
sentences to confinement are not later altered.
B-199251, November 18, 1980, 60 Comp.Gen. 71
Officers and Employees - New Appointments - Relocation Expense
Reimbursement and Allowances - Non-Entitlement - Position Outside
Conterminous United States
Employee, who was hired as a new appointee to position in the area
formerly known as the Canal Zone, was erroneously authorized
reimbursement for temporary quarters subsistence expenses although such
reimbursement is not permitted under 5 U.S.C. 5723 and para.
2-1.5g(2)(c) of the Federal Travel Regulations (FPMR 101-7) (May 1973).
Employee is not entitled to payment for temporary quarters as Government
cannot be bound beyond actual authority conferred upon its agents by
statute or regulators. Employee must repay amounts erroneously paid as
Government is not estopped from repudiating erroneous authorization of
its agent. There is no authority for waiver under 5 U.S.C. 5584.
Matter of: Dr. Frank A. Peak - Erroneous Payment of Temporary
Quarters Subsistence Expenses, November 18, 1980:
By letter dated April 30, 1980, Dr. Frank A. Peak, an employee of the
Department of the Army, has appealed the settlement by the Claims
Division which disallowed his claim for reimbursement of temporary
quarters subsistence expenses. In its settlement action the Claims
Division disallowed his claim in the amount of $530 for temporary
quarters subsistence expenses and determined that his reimbursement by
the Army in the amount of $1,295.06 for such expenses was an erroneous
payment and not subject to waiver.
The record shows that in October 1979 Dr. Peak was appointed to a
position as a Veterinary Medical Officer with the Department of the Army
in the Republic of Panama.
On October 22, 1979, travel orders were issued for the travel of Dr.
Peak and his dependents from the United States to his permanent duty
station in the "Canal Zone." The travel orders, in part, authorized
temporary quarters subsistence expenses for himself and his wife.
Dr. Peak states that, at above the time he applied for employment
with the Department of Defense for a position in Panama, he understood
that he would receive a temporary living allowance until he could obtain
permanent quarters for a maximum of 90 days. He further states that
upon his arrival in Panama he and his dependents occupied temporary
quarters for approximately 42 days. He received reimbursement from the
Army for $1,295.06 for the cost of temporary quarters subsistence and he
now claims that he is entitled to an additional $530 incident to the
occupancy of temporary quarters.
On February 12, 1980, the Department of the Army advised Dr. Peak
that the authorization of reimbursement for temporary quarters
subsistence was erroneous and that temporary quarters subsistence
expenses are not payable to new appointees assigned to a first duty
station. He was further advised that as he was reappointed after a
break in service he was a new employee. Accordingly, we was informed
that he would be required to refund the payment he had received for
temporary quarters subsistence expenses in the amount of $1,295.06.
The Claims Division, by Certificate of Settlement dated April 15,
1980, disallowed Dr. Peak's claim for temporary quarters subsistence
expenses on the basis that as a new appointee he was not intitled to
reimbursement for such expenses. He was also advised that his
indebtedness for the erroneous payment could not be waived under 5
U.S.C. 5584 as that statute does not allow waiver of erroneous payments
of travel and transportation expenses.
Upon appeal Dr. Peak contends that he is entitled to payment of
temporary quarters subsistence expenses on the basis that his travel
orders authorized reimbursement for such expenses. He suggests that the
Government is contractually bound by that authorization because he
accepted the position in Panama in reliance on this indication that he
would be paid temporary quarters subsistence expenses.
Section 5923 of title 5, United States Code, provides, in part, that
an employee and his family may receive a quarters allowance for the
reasonable cost of temporary quarters for a period not in excess of 3
months after first arriving at a new post in a foreign area.
For purposes of entitlement to overseas differentials and allowances
under subchapter III of chapter 59 of title 5, United States Code,
including temporary lodging allowance under section 5923 of title 5,
United States Code, 5 U.S.C. 5921(6)(1976) defines "foreign area" as
follows:
(A) The Trust Territory of the Pacific Islands; and (B) any other
area outside the United States, the Commonwealth of Puerto Rico, the
Canal Zone, and territories and possessions of the United States. * * *
Under the Panama Canal Treaty effective October 1, 1979, the Republic
of Panama regained full sovereignty over the Canal Zone. Section 3(b)
of the implementing legislation, the Panama Canal Act of 1979, Public
Law 96-70, September 27, 1979, 93 Stat. 455 (22 U.S.C. 3602), provides
in part that:
* * * for purposes of applying the Canal Zone Code or other laws of
the United States and regulations issued pursuant to such code or other
laws to transactions, occurrences, or status on or after the effective
date of this Act:
(1) "Canal Zone" shall be deemed to refer to the areas and
installations in the Republic of Panama made available to the United
States pursuant to the Panama Canal Treaty of 1977 and related
agreements.
The effect of Section 3(b) is to redefine the term "Canal Zone"
insofar as laws of the United States which refer to the Canal Zone apply
to events occurring after the effective date of the Panama Canal Treaty.
See H. Rept. No. 96-98, Part 1, p. 41. Accordingly, that area formerly
known as the Canal Zone which has now been redefined as the areas and
installations in the Republic of Panama made available to the United
States pursuant to the Panama Canal Treaty of 1977 and related
agreements, continues to be outside the definition of "foreign area" for
purposes of overseas differentials and allowances.
As Dr. Peak was stationed in that part of the Republic of Panama,
which by definition is not a "foreign area" for purposes of overseas
differentials and allowances he is not entitled to a temporary lodging
allowance under 5 U.S.C. 5923.
The entitlement to travel and relocation expenses of employees
transferring to a post of duty in the area formerly known as the Panama
Canal Zone is governed by the Federal Travel Regulations (FTR) (FPMR
101-7) (May 1973).
New appointees to positions outside the conterminous United States
are entitled only to the travel and transportation expenses listed at
paragraph 2-1.5g(2)(b) of the FTR. As specifically noted at FTR para.
2-1.5g(2)(c), new appointees to positions overseas are not entitled to
certain allowances payable to transferred employees under 5 U.S.C. 4724
and 5724a, including temporary quarters subsistence expenses. In
providing that these and other allowances are not payable to new
appointees, the cited regulations merely reflect the extent of authority
granted by 5 U.S.C. 5722 to pay travel and transportation expenses for
new appointees to positions overseas. The expenses that may be paid to
new appointees to shortage-category positions within the United States
are similarly limited.
See 5 U.S.C. 5723 and FTR para. 2-1.5f(4).
Since Dr. Peak was a new appointee at the time he traveled to his
duty station in the former Canal Zone area, there is no authority by
which he may be authorized reimbursement of temporary quarters
subsistence expenses.
We recognize that Dr. Peak was furnished travel orders which
purported to authorize reimbursement for temporary quarters subsistence
expenses and we do not dispute that he may have relied on this erroneous
authorization in determining to accept the position in the former Canal
Zone area. Unfortunately, this combination of circumstances does not
provide a basis to pay Dr. Peak the temporary quarters subsistence
expenses claimed or to relieve him of responsibility to refund the
amount erroneously paid to him.
It is a well-settled rule of law that the Government cannot be bound
beyond the actual authority conferred upon its agents by statute or by
regulation. See Matter of Reza Fassihi, 54 Comp.Gen. 747(1975), and
cases cited therein. The Government is not estopped from repudiating
unauthorized acts taken by one of its officials. Matter of Joseph
Pradarits, 56 Comp.Gen. 131(1976). Any payments made on the basis of
such erroneous authorizations are recoverable. Matter of T. N. Beard,
B-187173, October 4, 1976.
We note that Federal employment does not give rise to a contractual
relationship in the conventional sense. Bers v. United States, 207
Ct.Cl. 941(1975). Thus, there is no basis to consider his claim for
allowance upon contract law.
Concerning Dr. Peak's request for waiver of the indebtedness
resulting from the erroneous payment for temporary quarters subsistence
expenses, the authority to waive erroneous overpayments under 5 U.S.C.
5584 is specifically limited to payments of pay or allowances "other
than travel and transportation expenses and allowances and relocation
expenses." Since the temporary quarters subsistence expenses are
relocation expenses, there is no authority to consider for waiver the
erroneous payments made to Dr. Peak.
Accordingly, we sustain the action of the Claims Division in
disallowing Dr. Peak's claim and denying waiver.
B-198448, November 18, 1980, 60 Comp.Gen. 64
Contracts - Stenographic Reporting - Bidder Responsibility
Solicitation for recording and transcript services which preclude use
of electronic tape recording devices on basis of agency personnel past
experience with other systems and difficulties which concern bidder
responsibility, thereby excluding monitored multimicrophone tape record
system with successful record of performance in similar proceedings in
other agencies which procuring activity has neither tested nor used,
unduly restricts competition. Contracts - Stenographic Reporting -
Specifications Propriety
Solicitation for requirements-type contract which fails to include
estimates upon which bids will be evaluated and to define "other
service" delivery basis upon which bids are sought precludes preparation
and evaluation of bids on equal basis. Solicitation should be amended
before agency proceeds with procurement to either include estimates and
definition or to stipulate ceiling price for services in question.
Matter of: North American Reporting, Inc.; Ace-Federal Reporters,
Inc., November 18, 1980:
North American Reporting, Inc. (NAR), and Ace-Federal Reporters,
Inc., (Ace), have protested against alleged deficiencies in the Federal
Energy Regulatory Commission's (FERC) invitation for bids (IFB) No.
FERC-80-B-0001 for stenographic reporting services. NAR contends that
the IFB is unduly restrictive of competition because it prohibits the
monitored electronic recording method of reporting. Ace, on the other
hand, asserts that the IFB is ambiguous because it does not provide
estimates for the evaluation of all bid items, define "other services"
for which a bid is required, or include sufficient information from
which to bid on accelerated delivery services. The protesters conclude
that the solicitation is so defective as to preclude adequate
competition for the agency's requirements and that it should be
rewritten to correct these deficiencies before proceeding with the
procurement. The FERC has postponed bid opening pending resolution of
the protests.
The IFB contemplates the award of a requirements-type contract under
which the successful bidder acts as the official FERC stenographic
reporter, produces transcripts, and furnishes copies of the transcripts
to the FERC and the public. The IFB divides the FERC's reporting needs
into three categories-- Schedules "A," "B," and "C"; the latter two
schedules pertain to nonpublic proceedings and sale of these transcripts
is restricted.
Paragraph "D," page 29, of the IFB states that "(e)lectronic tape
recording devices are not acceptable in administrative proceedings
before Administrative Law Judges." NAR claims that this provision is
unduly restrictive of competition because it excludes a method of
reporting already proven before other Federal agencies, citing our
decisions in Bowers Reporting Company, B-185712, August 10, 1976, 76-2
CPD 144; National Stenomask Verbatim Reporters Association, B-183837,
August 5, 1975, 75-2 CPD 84; GSA Reporting Corporation, 54 Comp.Gen.
645(1975), 75-1 CPD 70. NAR also refers to many favorable experiences
and comparison tests with its equipment by other Government agencies and
courts in support of its assertions that the firm's monitored
multimicrophone system of direct recording can meet the FERC's actual
needs. The protester characterizes those needs as accurate reporting of
proceedings and complete transcripts and concludes that the FERC should
be concerned with the quality and timely receipt of transcripts rather
than with the reporting process itself.
The FERC states that the restriction to which NAR objects does not
apply to proceedings which are not before administrative law judges.
It is based upon the following three categories of problems identified
by the judges through past use of monitored and unmonitored tape
recordings services which they found can: (1) be inefficient due to
numerous disruptions and delays, (2) give poor quality transcripts
caused by the service or equipment, and (3) create administrative
problems in the hearing room. The procuring agency also enumerated the
reasons the judges found that tape recording services can have each of
these types of problems. The FERC asserts that contrary to NAR's
suggestion, a demonstration to compare the protester's direct recording
system and stenographic services is neither necessary nor appropriate
because an after-the-fact demonstration is irrelevant to the question of
the propriety of the agency's use of its administrative discretion in
drafting the IFB specifications, citing our decision in Digital
Equipment Corporation, B-181336, September 13, 1974, 74-2 CPD 167.
Furthermore, the FERC emphasizes that the restriction applies equally to
all recording services or companies and does not single out NAR for
exclusion from the competition.
We have held that the determination of what will satisfy the
Government's needs is primarily within the discretion of the procuring
officials. We will not interpose our judgment for that of the
contracting agency unless the protester shows that the agency's judgment
is in error and that a contract awarded on the basis of such
specifications would be a violation of law by unduly restricting
competition. Essex Electro Engineers, Inc., B-191116, October 2, 1978,
78-2 CPD 247; Joe R. Stafford, B-184822, November 18, 1975, 75-2 CPD
324.
Similarly, we will not disturb a reasonable determination by the
using agency of how its needs for services of a highly technical or
specialized nature should be met. Therefore, in a CSA Reporting
Corporation and National Stenomask cases, cited above, specific and
logical deficiencies in a system as related to the agency's needs
justify the exclusion of or requirement for particular methods. Such
restrictions may properly be based upon actual experience by the agency
or others, engineering analysis, logic, or similar rational bases.
Bowers Reporting Company, supra. In our opinion, the reasons set forth
by the FERC, however, do not meet this standard.
We believe that our decision in Bowers Reporting Company, supra, is
controlling here. In the Bowers case, the agency sought to exclude
recording by tape recorder alone on the basis of its experience with
tape recording systems which included inaudibility, problems with
speakers' words and accents, and the necessity of rescheduling meetings
due to poor quality recordings, but did not state that it had ever
tested or used the protester's sophisticated, monitored system. We held
that difficulties with speaker identification, repetition of testimony,
equipment malfunction, and inaudibility caused by predominating
background noise (also alleged here by the FERC), which are not shown to
be peculiar to the system, are problems of bidder responsibility.
As such, they are adequately protected against because an affirmative
determination of a bidder's responsibility is prerequisite to award of a
contract.
However, among the reasons enumerated for the three categories of
problems listed above, the FERC further explains that the judges found
that recording services can be inefficient due to disruptions and delays
because there can be a need to stop the hearing every 30 to 45 minutes
to change the tape. Similarly, it found that the services can create
problems in the hearing room because, among other things, it is often
impractical to place enough microphones in the room to accommodate the
number of speakers and the wires running throughout the room create a
potential safety hazard. NAR states, however, that its system does not
require stopping hearings for any reason at any time, that it has
reported many hearings (for specified Government agencies and the
Congress) identical to and larger than FERC proceedings, that there are
no exposed wires or safety hazards and that no one has ever been injured
with NAR's system. The FERC, however, takes the position that whether
NAR has specifically experienced these problems is irrelevant because
the FERC considered the entire field of electronic recording services as
a whole and did not consider or compare the merits or demerits of other
types of services or contractors in preparing the IFB. While the
reasons suggested relate to the method of service and the equipment to
be used and therefore do not pertain to bidder responsibility, we
believe that the Bowers case is nonetheless dispositive.
In our opinion, the FERC's objections merely relate to possible
problems which could occur in using some tape recording devices rather
than features inherent in all recording devices which necessarily result
in the problem phenomena. We note, too, that they may also be problems
to which other types of stenographic equipment and services are subject.
Moreover, objectionable features, such as frequent tape changes and
exposed wires, could be prescribed by the IFB specifications. Finally,
NAR has uncategorically stated that these problems are not applicable to
its system. We find that the FERC's reasons are no more than a
collection of impressions, gained from experience or other equipment and
predictions, which we have held insufficient to justify excluding a
system, particularly one which has been found acceptable by other
agencies in similar circumstances. Therefore, we cannot concur in the
FERC's generic exclusion of a reporting method on the basis of features
which are not characteristic of the entire class of devices or services
using that equipment.
Consequently, we conclude that the IFB provision prohibiting the use of
electronic tape recording devices, quoted above, is unduly restrictive
of competition and NAP's protest on this ground is sustained.
Ace's protest pertains primarily to that portion of the IFB
concerning duplicating services for the public and its objection to the
FERC's failure to provide transcript duplication estimates is twofold.
Initially, the protester asserts that the absence of estimated
quantities for accelerated duplication service to the public precludes
bidders from bidding on a rational basis. Ace contends that the IFB
therefore also fails to state the quantities upon which bids for
accelerated duplication services for the public will be evaluated so
bidders do not know the basis upon which their bids are to be evaluated
and the successful bidder could well be determined by the evaluation
quantity chosen rather than by the lowest bid price.
Section "D" of the IFB provides that bids will be evaluated for each
period or option period on the following four cost factors: 1) cost of
original and specified copies to the Government, 2) cost to the public
and to the FERC of reproduced copies, 3) minimum charges, and 4)
surcharges. Ace takes the position that part "B" of the section, "Cost
to Public," as amended, requests per page bid prices for tables "A" and
"B" for five types of accelerated delivery services (same day,
overnight, 3-day, 5-day, and other service) without providing any
estimates of the number of transcript pages which may be required
contrary to Federal Procurement Regulations (FPR) Sec. 1-3.409(b)(1)
(1964 ec. circ. 1) and prevents bidders from knowing the basis on which
their bids will be evaluated. Because the IFB prescribes a $0.25 per
page rate for regular delivery service (furnished within 10 days of
receipt by the FERC) to the public, and bidders are required to bid on
same day, overnight, 3-day, and 5-day delivery service, Ace contends
that the term "other service" upon which a bid is also required is
ambiguous.
The FERC states that the term "other service" is not ambiguous
because it has only one reasonable meaning and obviously means every
service offered by the contractor not otherwise enumerated. The "other
service" category, in the agency's opinion, permits the contractor the
flexibility to state a price for service not otherwise specified in the
solicitation while at the same time meeting the FERC's requirement that
fees be fixed in advance, 18 C.F.R. 1.21(a)(1980). In answer to Ace's
hypothetical question as to whether the term might include delivery
performed in 3 hours and 42 minutes, the FERC explains that if Ace has
such a service for sale it should quote its prices, but that unless Ace
advises the FERC of this particular service, it would not be permitted
to offer this "other service" to the public.
We agree with the protester that the term "other service" as used in
the amended IFB is ambiguous. If, as the FERC suggests, the term is a
catchall category for accelerated delivery services other than those
listed, it would appear to include 4-day, as well as 6- through 9-day,
delivery at the same price per page-- a rate presumably lower than that
bid for 5-day service. More importantly, according to the FERC's
response to Ace's hypothetical question, the term "other service" may be
any other delivery service each bidder cares to offer as long as the
FERC is so advised. Thus, the bidders are, in effect, defining the term
and, as they do so differently, their bids are not comparable because
they are not bidding on the same delivery bases. See 39 Comp.Gen. 570,
572(1960). Therefore, we believe that this portion of the IFB
accelerated delivery specification is not sufficiently definite to
permit the preparation and evaluation of bids on a common basis. M. J.
Rudolph Corporation, B-196159, January 31, 1980, 80-1 CPD 84; 36
Comp.Gen. 380, 385(1956).
Similarly, we believe that the FERC's failure to provide estimates
for duplication services to the public in violation of FPR Sec.
1-3.409(b)(1) also precludes the preparation and evaluation of the bids
on a common basis known to the bidders. Although estimates for its own
transcript and duplication requirements for the base and option years
were incorporated in the IFB by amendment, the FERC states that no
estimates for services to the public have been provided because the
incumbent contractor is not required to keep sales data or provide them
to the FERC and it is not administratively feasible for the FERC to
independently estimate public sales. The FERC contends that it is not
soliciting bids for the needs of the public and is not required to
estimate those needs, but believes that "Cost to the Public" must be
evaluated because it is a required feature of the contract. Bids for
transcript duplication services to the public, the agency explains, will
be evaluated, therefore, by selecting arbitrary evaluation estimates
which will be split equally among the schedules and delivery bases and
concludes that application of the same arbitrarily selected estimates to
all bids will result in their evaluation on an equal basis.
With regard to requirements contracts, our Office has held that,
where the quantities of the items to be procured are not known, the IFB
must provide some basis for bidding, such as estimated quantities for
the various items; and that where it is not administratively feasible
to estimate future requirements, the IFB may instead list past orders.
52 Comp.Gen. 732, 737(1973). Estimates are essential in helping bidders
prepare reasonable, intelligent bids and ensure award of the contract to
the lowest bidder. Edward E. Davis Contracting, Inc., B-192707, April
20, 1979, 79-1 CPD 280; Michael O'Connor, Inc., 56 Comp.Gen. 108,
109(1976), 76-2 CPD 456. Therefore, without estimates, bidders are not
provided all the information that might be important to formulate an
intelligent bid on a common basis and have to guess the anticipated
reproduction requirements of the public.
Elrich Construction Company, B-187726, February 14, 1977, 77-1 CPD 105;
Instant Replay Equipment Company, et al., B-193826, June 15, 1979, 79-1
CPD 423.
Finally, due to the omission of estimates for duplication services to
the public, the IFB not only fails to inform bidders of the basis upon
which their bids for these services will be evaluated, but also leaves
the overall evaluation method to the bidders' speculations and invites
unbalanced bidding. Bidders cannot compete on an equal basis as
required by law unless they know in advance the basis on which their
bids will be evaluated. At a minimum, the basis of evaluation must be
stated in the IFB with enough clarity to tell bidders before bid opening
the objectively determinable factors (factors which can be stated or
ascertained by bidders at the time they are preparing bids) from which a
bidder can reasonably estimate the effect of applying these factors to
his bid in relation to other possible bids. 36 Comp.Gen. 380,
385(1956). We have held that, if the bid evaluation provisions of an
IFB do not adequately express the procuring agency's intent or reflect
the reported actual needs of the agency, the solicitation is defective.
Crown Laundry and Cleaners, B-196118, January 30, 1980, 80-1 CPD 82,
aff'd, April 2, 1980, 80-1 CPD 245. We therefore have found evaluation
factors based primarily on a subjective determination announced at or
after bid opening violative of this requirement because they cannot be
determined by the bidders during bid preparation. 36 Comp.Gen. 380,
385(1956). Consequently, we find the evaluation of bids for duplication
services to the public on the basis of unannounced, arbitrary evaluation
estimates similarly objectionable because they are not ascertainable in
advance by the bidders and preclude bidding on an equal basis.
For the reasons discussed above, we recommend that the instant IFB be
amended to correct the aforementioned deficiencies before the FERC
proceeds with the procurement. First, the IFB should be amended to omit
the restriction excluding the use of the monitored multimicrophone
recording system for stenographic reporting services. Second, the term
"other service" for accelerated duplication service to the public should
be defined if a bid for delivery on that basis will be required.
Finally, estimates for anticipated accelerated duplication services to
the public must be provided to bidders if the FERC intends to include
bids for those services as factors in its bid evaluation. These
estimates would also serve to inform bidders of the basis upon which
their accelerated service bids and overall bids are to be evaluated.
If, on the other hand, the FERC is unable to estimate the anticipated
duplication requirements of the public, it may stipulate a ceiling
charge for duplication services rendered on various accelerated bases,
as it has done with regard to regular delivery service to the public,
and evaluate bids only on the basis of the price for duplication
services to the FERC. See B-179038, October 4, 1973, aff'd, CSA
Reporting Company, B-179038, February 13, 1974, 74-1 CPD 66. In that
case, however, the FERC must determine that the ceilings for duplication
services for the public are reasonable pursuant to the requirements of
the Federal Advisory Committee Act, Sec. 11, 5 U.S.C.app. (1976), and
the Freedom of Information Act, 5 U.S.C. 552(1976), which limit the cost
of duplication to be charged to the public to the actual cost of
duplication, including a reasonable factor for overhead and profit.
Securities Exchange Commission, B-184420, July 2, 1975, 75-2 CPD 9; see
Hoover Reporting Company, Inc. B-185261, July 30, 1976, 76-2 CPD 102.
Accordingly, the protests are sustained.
B-199445.4, B-199445.5, November 17, 1980, 60 Comp.Gen. 61
Bids - Acceptance Time Limitation - Dissimilar Provisions -
Cross-Referencing - No Entry by Bidder - Bid Responsiveness
Bidders' failure to insert number in space provided for indication of
offered bid acceptance period does not render bids nonresponsive where
invitation for bids (IFB) contained standard provision that bid would be
considered open for acceptance for 60 days unless bidder indicated
otherwise in space provided, with asterisk centered in space with
footnote to another IFB provision requiring bids to be open for at least
90 days, since asterisk and cross-referencing had effect of
incorporating 90-day acceptance period into standard provision, to which
bidder committed itself by signing bid.
Matter of: Robert E. Derecktor of Rhode Island, Inc.; Marine Power &
Equipment Co., Inc., November 17, 1980:
This decision is in response to the suspension of proceedings by the
United States District Court for the District of Rhode Island in a suit
filed by Robert E. Derecktor of Rhode Island, Inc. (Derecktor), Civil
Action No. 80-0445, pending receipt of our opinion in related protests
filed in our office by Derecktor and Marine Power & Equipment Co., Inc.
(MP&E), which intervened in the suit. Derecktor's low bid and MP&E's
second low bid under Coast Guard solicitation CG-011738-A to construct
nine cutters were rejected as nonresponsive because of the firms'
alleged failure to offer to keep the bids open for the bid acceptance
period stipulated in the invitation. The contract was awarded to Tacoma
Boatbuilding Co. (Tacoma), the third low bidder.
Although more than one issue has been raised by the protests, the
court has asked us for a decision limited to the narrow issue presented
by the rejection of the bids as nonresponsive.
We believe that the two low bids were improperly rejected for failure
to offer the required minimum acceptance period.
Page 1 of Standard Form (SF) 33, "Solicitation Offer and Award,"
which was the first page of the invitation, provided:
In compliance with the above, the undersigned agrees if this offer is
accepted within * . . . calendar days (60 calendar days unless a
different period is inserted by the offeror) * * * to furnish any or all
items upon which prices are offered at the price set opposite each item,
delivered at the designated point(s), within the time specified in the
schedule. *CAUTION-- See subsection C-21.
All but the asterisk in the space provided and the caution were
preprinted. Subsection C-21 stated:
Bids offering less than 90 days for acceptance by the Government from
the date set for opening will be considered nonresponsive and will be
rejected.
Bids were opened in June 1980, with the following results: (TABLE
OMITTED)
Derecktor and MP&E, as well as Avondale Shipyards, Inc., failed to
insert an acceptance period in their bids, which therefore were rejected
as nonresponsive because in the Coast Guard's view the SF 33 language
quoted above meant that the two bids properly could be viewed as
offering an acceptance period of only 60 days.
The failure of a bidder to offer at least the bid acceptance period
required by a solicitation normally renders the bid nonresponsive. The
reasons are two-fold. First, a bid offering less than the required
period is not an offer that meets the Government's minimum needs.
Second, a bidder which offers a shorter period than that specified gives
itself an advantage over other bidders in that its risk is less and it
has the option after bid opening to decline award after expiration of
its bid or extend its acceptance period if it desires award. See Hemet
Valley Flying Service Co., Inc., B-191390, May 8, 1978, 78-1 CPD 344,
and cases cited therein. Thus, we have held in a number of decisions
that where bidders were advised by standard language that the bid
acceptance period would be a certain number of days unless the bidder
inserted a different period in the space provided, and the solicitation
stated elsewhere that bids offering less than a number of days greater
than that "base" number would be rejected as nonresponsive, a bid which
specifically offered less than the required period or had no entry in
the space provided properly was rejected as nonresponsive. See, e.g.,
49 Comp.Gen. 649(1970); 47 id. 769(1968); 46 id. 418(1966). We
nonetheless did recommend that in such circumstances a cross-reference
to the required minimum acceptance period provision be made in the
standard provision. See 46 Comp.Gen. supra.
Our position was amplified in our decision in 52 Comp.Gen. 842(1973),
which contained bid acceptance provisions almost identical to those in
the instant case, except that they were not cross-referenced in any way.
There, 10 of the 13 bidders responding to three solicitations left
blank the space on the SF 33 for indicating a bid acceptance period of
other than 60 days, and their bids were deemed nonresponsive for failure
to comply with the 90-day bid acceptance period.
We stated:
* * * where an invitation contains language specifying a bid
acceptance period and another separate provision located elsewhere in
the invitation sets forth a minimum bid acceptance period, the two
provisions should be cross-referenced in such manner as to specifically
direct bidders' attention to the fact that insertion of a shorter period
will cause the bid to be rejected. * * *
* * * the Government has the initial responsibility of stating what
is required in reasonably clear fashion. Communication of the minimum
bid acceptance period under the instant solicitations * * * was clearly
inadequate, as exemplified by the overwhelming number of bidders who
obviously either failed to appreciate the 90-day requirement or failed
to take proper steps to establish responsiveness to that requirement.
We have observed that a sense of fairness and impartiality should
imbue the Federal procurement effort. These solicitations reasonably
must be viewed as having contained a trap to ensnare the average bidder
into a state of nonresponsiveness as to the bid acceptance period
imposed. We must assume that only a grossly misleading invitation would
have caused almost all bidders-- who expended considerable time and
money to compete for the Government's business-- to fail to hold their
bids open as required.
We recommended that the two solicitations under which award had not
been made be canceled and the procurements resolicited with clear bid
acceptance period requirements stated.
Since rendering that decision, we have considered situations
involving a "standard" acceptance period and a greater one noted
elsewhere in the invitation in which (1) the provisions were
cross-referenced but the bidder inserted a bid acceptance period less
than that required, e.g., Hemet Valley Flying Service Co., Inc., supra,
and (2) the provisions were not cross-referenced and the bidder made no
entry at all. E.g., Hild Floor Machine Co., Inc., B-196419, February
19, 1980, 80-1 CPD 140.
In the first situation, we found that the bid properly was rejected
as nonresponsive because bidders were clearly advised by the
cross-reference as to the minimum required bid acceptance period and the
bidder offered a shorter acceptance period. In the second situation, we
essentially followed the holding in 52 Comp. Gen., supra recommending
that the invitation be canceled and readvertised with properly
cross-referenced provisions (except that award was recommended for
certain line items since the low bidder for those items complied with
the required acceptance period and no other bidder thus would be
prejudiced by the award).
We recognize that where no alteration is made by the procuring
activity in the "standard" bid acceptance period language of the SF 33,
the 60-day period is by the provision's terms automatic, and thus the
language contemplates the insertion by the bidder of a different bid
acceptance period if the bidder intends other than 60 days.
Intercontinental Manufacturing Company, Incorporated, B-180784, June 4,
1974, 74-1 CPD 300.
However, once the agency alters the provision by inserting a
reference to a period other than 60 days, we believe that the 60-day
language no longer is operative but is modified by whatever requirement
is otherwise imposed. For example, we have recognized that the agency
may strike out the "60" in the SF 33 and insert a different period if
necessary to meet its needs. See 47 Comp.Gen. 769, 772(1968). Just as
a bidder need not also itself insert that other period in such a
situation in order to be bound to that period, we do not believe a
separate insertion by a bidder is necessary where, as here, the agency
in effect makes an insertion by means of an asterisk cross-referencing
to another provision which modifies the SF 33 acceptance period. Thus,
we believe the asterisk in the SF 33 provision and the cross-reference
to the 90-day provision effectively negated the 60-day language of the
SF 33 provision and in its place imposed a 90-day bid acceptance period
to which bidders committed themselves by signing their bids, without any
need for them to specifically insert "90" on the SF 33.
Consequently, we view the bids of Derecktor and MP&E as offering
acceptance periods of 90 days. Therefore, we find the Coast Guard's
rejection of those bids as nonresponsive to the 90-day requirement to be
improper.
The protests are sustained. In light of the limited nature of the
court order and the ongoing judicial proceedings, we are not making a
recommendation for corrective action, as that ultimately is for
determination by the court.
B-180010.07, November 7, 1980, 60 Comp.Gen. 58
Compensation - Prevailing Rate Employees - Negotiated Agreements -
Overtime - Double - Supervisory Employees' Entitlement
Long-standing practice of paying double overtime to foremen whose pay
is not negotiated but is fixed at 112.5 percent of negotiated journeyman
base pay was discontinued because 57 Comp.Gen. 259 held that overtime is
limited by 5 U.S.C. 5544 to time and a half, notwithstanding section
9(b) of Public Law 92-392 preserving previously negotiated benefits.
Foremen claim restoration of double overtime because section 704(b) of
Public Law 95-454 overturned holding and permitted double overtime for
nonsupervisory employees who negotiate wages. While not directly
covered by sections 9(b) or 704(b), foremen may continue to receive
double overtime since broad purpose of these statutory provisions was to
preserve prevailing rate practices existing before their enactment.
Modifies (extends) 59 Comp.Gen. 583(1980).
Matter of: W. L. Ableidinger and E. G. Walters - Foreman - Double
Time for Overtime Work, November 7, 1980:
Ms. Nedra A. Blackwell, an authorized certifying officer with the
Bureau of Reclamation, Pacific Northwest Region, Department of the
Interior, has requested a decision as to whether Mr. W. L. Ableidinger
and Mr. Eldon G. Walters, employees of the Yakima Project, Bureau of
Reclamation, may receive overtime compensation at double time rates.
Messrs. Ableidinger and Walters are hourly Foremen II who directly
supervise power plant workers whose hourly pay rates are determined
through collective bargaining under an agreement between the Department
of the Interior and the International Brotherhood of Electrical Workers,
Local Union No. 77.
This collective bargaining agreement, which is covered by section 9(b)
of Public Law 92-392, August 19, 1972, 86 Stat. 54 (5 U.S.Code 5341
note), provides that nonsupervisory workers shall receive double time
compensation for overtime work. The two foremen, however, being
supervisory personnel, are excluded from the bargaining unit of the
workers they supervise and their pay is administratively established at
112.5 percent of the negotiated journeymen base rate.
Prior to March 14, 1979, it has been the practice of 20 years to pay
the foremen double time for overtime work, based on the fact that
foremen's wages were expressed as a percentage of compensation of the
workers they supervised. The Bureau, however, has now denied Messrs.
Ableidinger and Walters' request for double time. The Bureau's decision
to deny double time to the foremen was apparently taken because a
decision of the Comptroller General, 57 Comp.Gen. 259(1978), limited
overtime compensation under 5 U.S.C. 5544 to time and a half, section
9(b) of Public Law 92-392 notwithstanding. The question presented
therefore is whether the foremen may be paid at double time rates for
overtime work because their rates of pay are based on nonsupervisory
rates which incorporate a double time provision.
Public Law 92-392 amended subchapter IV of chapter 53 of title 5,
United States Code, to establish a statutory system for fixing and
adjusting the rates of pay for prevailing rate employees. Section 9(b)
of that law provides in substance that the amendments shall not be
construed to affect the provisions of contracts in effect on the date of
enactment pertaining to wages and other employment benefits for
prevailing rate employees and resulting from negotiations between
agencies and employee organizations. Section 9(b) also preserves the
right to negotiate for the renewal, extension or modification of such
contract provisions.
On October 13, 1978, statutory authority to negotiate double overtime
for section 9(b) employees was enacted in section 704(b) of the Civil
Service Reform Act of 1978, Public Law 95-454, 92 Stat. 1218, which
provided that overtime could continue to be negotiated for such
employees without regard to 5 U.S.C. 5544. In enacting section 704, the
Congress made it clear that it was overruling decision 57 Comp.Gen.
259(1978) and that it was providing "specific statutory authorization
for the negotiation of wages, terms and conditions of employment and
other employment benefits traditionally negotiated by these employees in
accordance with prevailing practices in the private sector of the
economy."
Conference Report (to accompany S. 2640), House Report No. 95-1717,
October 5, 1978, p. 159.
In light of the enactment of section 704, we reconsidered 57
Comp.Gen. 259(1978) regarding overtime pay. We held in 58 Comp.Gen.
198(1979) that, since section 704(b)(B) specifically provides that the
pay and pay practices of employees covered by section 9(b) of Public Law
92-392 shall be negotiated without regard to subchapter V of chapter 55,
title 5, United States Code (which contains section 5544 pertaining to
overtime pay for prevailing rate employees), our decision 57 Comp.Gen.
259 was overruled insofar as it had invalidated overtime contract
provisions of Interior's prevailing rate employees whose wages were
negotiated.
More recently in our decision 59 Comp.Gen. 583(1980), which was a
case similar to that here, we held that certain Corps of Engineer
employees who did not negotiate their wages but who had been for 22
years paid double time for overtime under the special Pacific Northwest
Regional Power Rate Schedule which was itself based on prevailing wage
practices, could continue to be paid double time. We concluded that
even though these employees were not specifically covered under section
9(b) of Public Law 92-392 as implemented by section 704(b) of Public Law
95-4554, the broad purpose of these provisions was to preserve
prevailing rate practices existing before their enactment.
Here, as in the case of the Corps of Engineers employees, the foremen
are not specifically covered by section 9(b) nor by section 704(b),
since they do not negotiate their wages. The foremen's wages, however,
have for a long time been based on rates established by employees who do
negotiate their wages and who are therefore covered by the savings
provisions in the above cited laws. Moreover, it has been the practice
for 20 years to pay these foremen double overtime. The two foreman who
have filed claims for double overtime in the instant case were also
involved in E. G. Walters, et al., B-180010.07, June 15, 1977. We found
that, since the foremen's salary is assimilated without limitation to
the rate of pay negotiated for journeymen, the foremen were entitled to
a retroactive pay increase based on a retroactive pay increase which the
journeymen had received.
Since the broad purpose of section 9(b) and section 704(b) was to
preserve pre-existing prevailing rate practices, and since there is no
sound basis for distinguishing the foremen's situation from that
presented in 59 Comp.Gen. 583, supra, we hold that the payment of double
time for overtime to the foremen of the Yakima Project is proper.
Therefore, Messrs, Ableidinger and Walters are entitled to double time
compensation for overtime work, including corrective payments for the
period when double time was discontinued.
B-198349, November 3, 1980, 60 Comp.Gen. 57
Subsistence - Per Diem - Military Personnel - Temporary Duty -
"Lodgings-Plus" System - Staying With Friends, Relatives, etc.
A claim by a member of the military for reimbursement of expenses
incurred during temporary duty for lodging provided by a friend must be
denied, even though the member paid his friend rent for the lodging,
since Joint Travel Regulations para. M4205-1 provides that under such
circumstances there may be no reimbursement for the cost of lodgings.
Matter of: Lieutenant (junior grade) James O. McGranahan - Staying
at Friends' Apartment on TDY, November 3, 1980:
By letter of April 2, 1980, an advance decision is requested
concerning the reimbursement of expenses for lodging incurred by a
member of the military during temporary duty while staying at the
apartment of a friend. Since reimbursement is not permitted for
expenses incurred by a member for lodging provided by a friend, the
claim is denied.
The request for an advance decision was made by Lieutenant (junior
grade) S. R. Miller, disbursing officer at Moffett Field, California,
and was assigned Control No. 80-13 by the Per Diem, Travel and
Transportation Allowance Committee.
For the period of August 20 through September 14, 1979, Lieutenant
(junior grade- James O. McGranahan was on temporary duty in San Diego,
California, for Legal Officer School. Since Government quarters were
not available, Lieutenant McGranahan stayed in the apartment of a
friend, to whom he paid $300 in rent. He received no receipt for the
payment from the apartment owner or his friend, no did he furnish any
information indicating increased costs incurred by his host due to his
stay at the apartment.
This situation is covered by Joint Travel Regulations, para. M4205-1,
which provides, in pertinent part:
If the member uses no lodging during the temporary duty period or
utilizes lodging as a guest of friends or relatives, then the average
cost of lodging is zero * * *
This provision is established under the authority granted to the
Secretaries having jurisdiction over the uniformed services by 37 U.S.C.
404(1976). The purpose of the prohibition against reimbursing friends
and relatives is to eliminate potential abuses from occurring in
connection with claims involving lodging with friends or relatives.
The lodging here was obtained by Lieutenant McGranahan from a friend.
Although the friend expected payment for permitting Lieutenant
McGranahan to stay in his apartment, the friend did not operate a
commerical establishment and this is the type of reimbursement against
which the regulation is aimed. Paragraph M4205-1 was revised January 1,
1978, to its current form, but prior to that paragraph M4205 (effective
October 3, 1976) provided, in pertinent part:
If the member uses no lodging during the temporary duty period or
utilizes lodging without cost, including as a guest of friends or
relatives, then the average cost of lodging is zero * * * .
The current regulation as revised omitted the language "without
cost," indicating that a member may be a guest even if there is some
cost involved. Moreover, the Per Diem, Travel and Transportation
Allowance Committee advises that the use of the term guest is
unfortunate and that the intent of the regulation is to allow zero
dollars for lodging whenever a traveler stays with a friend or relative.
This regulation was promulgated pursuant to statutory authority and it
must be followed. Therefore, Lieutenant McGranahan is not entitled to
reimbursement for the lodging expenses he has claimed.
In accordance with the foregoing, the claim for reimbursement must be
denied.
B-198460, October 28, 1980, 60 Comp.Gen. 53
Subsistence - Per Diem - Death of Employee on Temporary Duty - Rule for
Payment
Employee of General Services Administration died while on temporary
duty for which he was authorized per diem allowance. Payment of per
diem in these circumstances is subject to same rule which governs
payment of compensation to deceased employee; namely, payment may be
made to one legally entitled to payment of per diem allowance due
deceased employee of United States up to and including entire date of
death, regardless of time during day that death occurs, but such payment
may not be made for any date later than that. 59 Comp.Gen. 609,
modified (extended). Subsistence - Per Diem - Death of Employee on
Temporary Duty - Prepaid Expenses - Reimbursement Basis
Where application of rule stated in this decision in regard to
termination of deceased employee's per diem entitlement precludes
reimbursement for authorized expenses actually incurred by employee and
definitely intended for coverage by the per diem entitlement, agency may
find that employee's death comes within the scope of our decision
Snodgrass and VanRonk, 59 Comp.Gen. 609. Accordingly, prepaid expenses
incurred by a deceased employee may be reimbursed by his agency to the
same extent as if the temporary duty has been cancelled or curtailed.
Matter of: James H. Bailey - Termination of Per Diem Entitlement
when Employee Dies on Temporary Duty, October 28, 1980:
The General Services Administration (GSA) has asked this Office to
determine when the per diem entitlement terminates in circumstances
where an employee on temporary duty dies. For the reasons which follow
we conclude that an employee's entitlement to per diem continues through
the entire day of the employee's death but may not be further extended
to a later date to approximate the planned culmination of the temporary
duty and return travel.
Mr. Fred T. Latkowski, Acting Assistant Regional Administrator,
Transportation and Public Utilities Service, General Services
Administration - Region 5, reports that on December 17, 1979, Mr. James
H. Bailey, a motor pool employee with the General Services
Administration, Transportation and Public Utilities Service, Motor
Equipment Division, was sent on temporary duty travel, Mr. Bailey, whose
official station was Red Lake, Minnesota, was detailed to perform
temporary duty at the Duluth, Minnesota, GSA Interagency Motor Pool from
December 17, 1979, through December 21, 1979. On December 19, 1979, Mr.
Bailey suffered an apparent heart attack and was pronounced dead at St.
Lukes Hospital, Duluth, Minnesota, at 11:55 a.m.
Mr. Bailey left his home at approximately 8 a.m. on December 17,
1979. Commercial lodgings were obtained in Duluth, Minnesota, at a
daily rate of $19.66 with the motel charging for 3 days lodgings,
December 17 through 19, 1979. In connection with this temporary duty
Mr. Bailey was authorized per diem computed on the "lodgings plus"
method not to exceed $35 per day. Following his death Mr. Bailey's
remains arrived back at the official station at about 10:30 p.m. on
December 20, 1979.
Authorizing officials at the Red Lake, Minnesota, facility requested
assistance from the GSA Finance Division, Kansas City, Missouri, on
preparation of the travel voucher. The responsive instruction were to
claim the actual expenses for preparation of the remains for
transportation to the official station, limited to $250, as well as
those transportation expenses not to exceed cost by common carrier, and
per diem expenses until the time the remains arrived at the official
station. Mr. Latkowski questions the continuation of per diem beyond
the day of Mr. Bailey's death since compensation may not be paid beyond
the day of death of an employee.
Section 5702 of title 5 United States Code (1976), provides that
under regulations prescribed by the Administrator of General Services,
employees as defined by 5 U.S.C 5701 while traveling on official
business inside the continental United States are entitled to a per diem
allowance at a rate not to exceed $35. Implementing regulations appear
in the Federal Travel Regulations (FTR) (FPMR 101-7, May 1973). The
pertinent paragraph 1-7.3c(1) of the FTR, as amended effective May 1,
1977, provides that when lodgings are required, per diem shall be
established on the basis of the average amount the traveler pays for
lodging, plus an allowance of $16 for meals and miscellaneous expenses,
not to exceed the maximum amount. This is known as the "lodgings-plus"
system of computing allowable per diem. Hutchinson, B-191559, November
8, 1978.
Paragraph 1-7.3c(1)(a) of the FTR provides that to determine the
average cost of lodging, the total amount paid for lodgings during the
period covered by the voucher is divided by the number of nights for
which lodgings were or would have been required while away from the
official station. Moreover, FTR paragraph 1-7.3c(2) requires that the
traveler actually incur expenses for lodging before lodging costs may be
used in computing per diem. Thus it seems clear that the only lodging
expenses which may be reimbursed to a traveler are those that he
actually paid in connection with his official travel. There appears to
be no basis under the law or regulations to credit or pay an employee
for lodging costs on a hypothetical basis. See Hutchinson, supra,
citing Bornhoft v. United States, 137 Ct.Cl. 134(1956).
We are unaware of any legal authority which would permit the
continued payment of a per diem allowance beyond the date of death of an
employee on temporary duty. Therefore, we conclude that the payment of
per diem in these circumstances is subject to the same rule which
governs the payment of compensation to a deceased employee; namely,
payment may be made to the one legally entitled thereto of the unpaid
compensation due a deceased employee of the United States up to and
including the date of death, but such payment may not be made to include
any date later than that. See generally 9 Comp.Gen. 111(1929); 16 id.
384(1936); 43 id. 128(1963); and 43 id. 503(1964). In addition, the
unpaid compensation is payable for the entire day of death-- regardless
of the time during-- the day that death occurs-- where the employee was
in pay status immediately prior to his death.
See generally 25 Comp.Gen. 366(1945); and 52 Comp.Gen. 493(1973).
Accordingly, the per diem allowance authorized for Mr. Bailey is
payable to the person entitled thereto under 5 U.S.C. 5582(1976) for the
period of his temporary duty from December 17 thru the date of his
death, December 19, 1979. The voucher submitted should be adjusted to
delete the per diem for December 20, 1979, before it is certified for
payment.
Mr. Latkowski has also asked whether, "(I)f the per diem entitlement
is much less than the actual and necessary subsistence expenses of the
traveler, may the agency place the employee on actual expense
reimbursement due to unusual circumstances and establish a reasonable
allowance for meals?"
We recognize that strict application of the rule in regard to the
termination of a deceased employee's entitlement to per diem may work an
unintended hardship in certain cases. For example, where specific
expenses associated with the temporary duty have been firmly established
and incurred in advance, the death of an employee may preclude further
reimbursement notwithstanding that such costs were definitely intended
to be covered by the per diem allowance. In such circumstances, we
believe there is for application the rule we recently adopted for cases
where temporary duty is cancelled or curtailed by an agency. In our
recent decision Snodgrass and VanRonk, 59 Comp.Gen. 609(1980), we held
that when an employee has acted reasonably in incurring allowable
lodging expenses pursuant to temporary duty travel orders before they
have been cancelled for the benefit of the Government and 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 cancelled.
We believe that the special circumstances which attend the death of
an employee while on authorized temporary duty are within the scope of
Snodgrass and VanRonk, supra. Accordingly, prepaid expenses incurred by
a deceased employee may be reimbursed by his agency to the same extent
as if the temporary duty has been cancelled or curtailed.
In the present case, however, the use of the Snodgrass and VanRonk
principle would not appear to be necessary. As stated above, per diem
is payable for the period through the entire day of Mr. Bailey's death,
i.e. for the 3 full days of temporary duty on December 17, 18, and 19.
Since he paid in advance for 3 nights lodging, the per diem allowance
would appear to cover the expenses incurred.
The voucher prepared in connection with Mr. Bailey's temporary duty
may be certified for payment in accordance with this decision.
B-196397, October 28, 1980, 60 Comp.Gen. 51
Pay - Withholding - Member's Consent Requirement - Anticipated
Indebtedness - Early Discharge - Advance Leave, Unearned Bonuses, etc.
A service may withhold from pay due a member, with the member's
consent, amounts expected to become due to the United States because of
paid bonuses and advance leave which are expected to become unearned
bonuses and excess leave due to the member receiving an early separation
from the service. However, such amounts may not be withheld from
current pay without the member's consent since no actual debt exists
until the member is discharged. Leaves of Absence - Military Personnel
- Advance Leave - Separation Prior to Leave Accrual - Recoupment - Pay
Rate Applicable
Collection for advance leave which becomes excess leave on discharge
must be computed based on pay received by the member at the time the
leave was taken and not on pay rates in effect at time of the member's
discharge.
Matter of: Debts of Service Members Discharged Early, October 28,
1980:
The following questions are presented for an advance decision by the
Principal Deputy Assistant Secretary of the Air Force (Financial
Management):
a. May a Service, with the member's consent, withhold from pay due
the member prior to an early separation, a reasonable portion of the
amount expected to become due to the United States because of paid but
unearned bonuses and advance leave?
b. Is it legally permissible to compute advance leave that becomes
excess leave because of an early separation, at the rates in effect at
separation rather than at the rates in effect at the time of the advance
leave?
The matter was submitted through the Department of Defense Military
Pay and Allowance Committee and assigned submission number SS-AF-1331.
For the following reasons, question a is answered yes and question b is
answered no.
Concerning question a, the submission indicates that military members
who are given early separations often have used advance leave which was
granted based on the leave they were expected to earn during their
normal term of service. Also, they often have been paid
reenlistment-type bonuses, continuation pay, and variable incentive pay
based on their normal expected period of service. When they are
discharged early the advance leave becomes excess leave, payment for
which must be recouped. Similarly, the unearned portions of the bonuses
must be recouped.
The Air Force indicates that it is difficult to collect these amounts
from members after separation and involuntary collection of these
projected debts prior to separation appears impermissible. However, the
Air Force indicates that since the member is requesting a voluntary
early release, if such a release is going to create a debt to the United
States, it appears reasonable for the member to agree to the withholding
from subsequent monthly entitlements of a reasonable amount of the
anticipated debt, not to exceed two-thirds of his pay.
As the Air Force is aware, members who have received the bonuses in
question become liable to refund a pro rata amount of the bonuses if
they do not complete the term of service for which they were paid. See
37 U.S.C. 308(d), 308(b), 311(b), 313(b) and (c). Also, collection is
required of pay and allowances received for advance leave which becomes
excess leave on discharge. 37 U.S.C. 502(b) and Department of Defense
Military Pay and aLlowances Entitlements Manual (DODPM), paragraph
10305a. Thus, although it is possible to estimate in advance based on a
projected early discharge date the amounts which a member will owe upon
discharge, the member is not actually in debt for unearned bonuses or
advance leave until the date of discharge. Therefore, there is no
authority we are aware of to begin collection of those amounts from the
members' current pay without their consent prior to discharge.
As to withholding current pay with the member's consent to cover an
anticipated debt, while there is no specific statutory authority for
such a procedure, there is authority for members to make voluntary
allotments or assignments of their pay.
37 U.S.C. 701(d), 702, 703, 705. Also, we have recognized that,
although a member may not waive his statutory entitlement to retired pay
(which is similar to the entitlement to active duty pay) he may decline
to receive such pay. 28 Comp.Gen. 675(1949); B-159343, August 24,
1966; and B-196839, April 24, 1980. Therefore, we would not object to
the procedure proposed in question a.
In response to question b, a member of the Armed Forces is entitled,
under 10 U.S.C. 701(a), to accrue leave at the rate of 2 1/2 calendar
days for each month of active service. Section 704 provides that such
leave may be taken on a calendar-day basis as vacation or as an absence
from duty with pay annually as accruing or otherwise, in accordance with
regulations issued by the Secretary concerned. Under the provisions of
37 U.S.C. 502(b) a member who is authorized by the Secretary concerned
to be absent for a period that is longer than the leave authorized by
section 701, is not entitled to pay or allowances during that part of
his absence that is more than the number of days leave authorized. See
43 Comp.Gen. 539(1964) and B-175160, April 27, 1972. The DODPM
implements the mandate of 37 U.S.C. 502(b) at paragraph 10305b in
requiring that collection will be computed based on the pay and
allowances actually received by the member during the period of leave
involved. Therefore, it is not permissible to compute the amount of
excess leave at the pay rates in effect at separation. The statute
makes it clear that the applicable rate to compute excess leave is that
which the member received at the time the advance leave was taken.
B-195183, October 24, 1980, 60 Comp.Gen. 44
Contracts - In-House Performance v. Contracting Out - Cost Comparison -
Failure to Follow Agency Policy and Regulations
Protest against agency's determination to retain function in-house
based on cost comparison with offers received in response to
solicitation is sustained to extent that agency failed to follow
prescribed guidelines in conducting comparison. Contracts - In-House
Performance v. Contracting Out - Cost Comparison - Faulty - Cost
Escalation Factor
Where decision to retain function in-house based on comparison of
estimated in-house costs with offers received in competitive
procurement, integrity of process dictates that comparison be supported
by complete and comprehensive data, and that elements of comparison are
clearly identifiable and verifiable.
Matter of: Serv-Air, Inc.; AVCO, October 24, 1980:
Serv-Air, Inc. (Serv-Air) and AVCO Corporation (AVCO) protest the
determination by the Department of the Air Force that the Military
Aircraft Storage and Disposal Center (MASDC) at Davis-Monthan Air Force
Base in Arizona would be operated at a lower cost to the Government
through continued use of Government personnel rather than by awarding a
contract based on proposals submitted by either of the two firms. The
protesters contend that when comparing in-house costs and the costs of
contracting, the Air Force failed to properly implement its own
regulations, policies and procedures. AVCO also raises certain
additional matters with respect to the solicitation of offers itself.
The protests are sustained to the extent that we find that the Air
Force's determination is not supported by the agency's cost comparison
as presented to our Office.
Initially we point out that a dispute over an agency decision to
perform work in-house rather than to contract for the services involves
a matter of Executive branch policy which we do not generally review as
part of our bid protest function. General Telephone Company of
California, B-189430, July 6, 1978, 78-2 CPD 9. Nevertheless, when an
agency utilizes the procurement system to aid in its decision-making by
spelling out in a solicitation the circumstances under which a contract
will or will not be awarded, we believe it would be detrimental to the
system if, after the agency induces the submission of proposals, there
is a faulty or misleading cost comparison which materially affects the
decision in that respect. Therefore, we do consider protests which
allege such a faulty or misleading cost comparison. Jets, Inc., 59
Comp.Gen. 263(1980), 80-1 CPD 152; Crown Laundry and Dry Cleaners,
Inc., B-194505, July 18, 1979, 79-2 CPD 38. However, we also point out
that the burden is on the protester to show the inaccuracy of the cost
comparison.
Amex Systems, Inc., B-195684, November 29, 1979, 79-2 CPD 379.
Request for Proposals (RFP) No. F04606-79-R-0150 to operate MASDC
contemplated a fixed-price incentive fee contract with a ceiling price
of 125 percent of the contractor's target cost. The contract term was
one year, with options by offerors priced for two more years. Offerors
were advised that once the offer most favorable to the Government was
determined, the "phase-in price, plus total ceiling price, plus over and
above contract line item prices" would be compared with the Government's
three-year cost estimate of retaining the operation in-house. A
contract would be awarded only if the in-house cost estimate were
higher.
A pre-proposal conference for 15 firms was conducted, after which
three firms submitted proposals. All were found technically acceptable.
Discussions were held, and best and final offers were submitted.
Serv-Air's proposal was the most favorable of the three.
The Government's in-house cost estimate of approximately $39,600,000
for three years was then disclosed to the offerors, and AVCO and
Serv-Air submitted numerous questions with respect to certain of its
elements. The protests were filed in our Office based on the Air
Force's responses to a number of the questions. The comparison of the
in-house estimate with Serv-Air's cost proposal (as evaluated at
approximately $39,900,000 for three years) showed that it would be more
economical for the Air Force to keep the MASDC function in-house.
Serv-Air requests that we focus on four areas of the Air Force's cost
comparison:
(1) whether the Air Force should have escalated its estimate for
civilian personnel costs for the second and third years if the MASDC
function were retained in-house;
(2) the Air Force's computation of the personnel termination costs if
the function were contracted out;
(3) the Air Force's estimated cost for a Project Management Office
to, in part, oversee the contractor's performance; and
(4) whether the correct Federal tax rate was used in estimating the
amount of taxes the Government would collect on the contract price if it
awarded a contract to Serv-Air.
Line item 10 of the Cost Analysis Worksheet used by the Air Force in
its cost comparison is for the "Civilian Personnel Costs" payable if the
in-house operation is retained. The Air Force's estimated first,
second, and third year costs were $11,304,767, $12,064,213 and
$12,569,405, respectively, the second and third year cost estimates were
not escalated for possible civilian personnel cost increases, e.g., wage
and General Schedule salary rate increases. Serv-Air protests that cost
escalation was mandated by Air Force regulations.
Section 814(b) of the Department of Defense (DOD) Appropriation
Authorization Act, 1979, Pub. L. No. 95-485, 92 Stat. 1611, 1625(1978),
prohibited DOD from contracting out commercial or industrial functions
unless performance by a private contractor began before the date of its
enactment (October 20, 1978), or would have been allowed by the policy
and regulations in effect before June 30, 1976. That prohibition was in
effect until October 1, 1979, and is applicable to the instant
procurement. See Tri-States Service Company, B-195642, January 8, 1980,
80-1 CPD 22. Therefore, the dispute on this issue concerns whether Air
Force policy and regulations which were in existence prior to June 30,
1976, required salary escalation in the Government in-house cost
estimate. The Air Force asserts that they did not.
First, the Air Force states that Air Force Regulation 26-12, "Use of
Commercial or Industrial Activities" (published on January 29, 1974),
made no provision for escalation of either personnel or material costs.
On March 5, 1976, Air Force Regulation 26-12 was replaced by an advance
draft copy of Chapter 1 of Air Force Manual (AFM) 26-1, "Manpower
Utilization," which was to be implemented upon receipt. AFM 26-1
prescribed in paragraph 1-16(e):
* * * All recurring costs such as contract cost (line 8) and civilian
personnel cost (line 10) will be straight lined for the three year
period unless there are known changes for the second and third year
(i.e., line 12; maintenance of facility). * * * No adjustments will be
made in the in-house cost estimate for the second and third year
recurring cost items for such things as inflation, price escalation
and/or projected wage increases, except where the contractor has
estimated such costs in the second and third year of a multi-year
contract or in priced options for the second and third year.
The Air Force points out that possible civilian personnel wage
increases for the second and third years were not "known" at the time
the analysis was done, i.e., prior to the receipt of offers, nor was it
known at that time whether or to what extent an offeror for a
fixed-price incentive fee contract would consider possible increases in
computing a price proposal.
Second, the Air Force asserts that "Monthly Messages" of March and
April 1976 issued to supplement AFM 26-1 provided examples of second and
third year personnel cost estimate computations which do not appear to
escalate those costs from the first year.
Third, the Air Force asserts that it never has escalated second and
third year civil servant costs in a cost estimate, where, as here, the
contractor would be eligible for annual contract adjustments under a
"fair Labor Standards Act and Service Contract Act" contract clause.
The clause provides for a contract price adjustment when the contractor
implements a change issued by the Department of Labor in either the
minimum prevailing wage determination or the Federal minimum wage from
that initially applicable to the contract. The Air Force evidently
assumes that since minimum wage increases would be payable as contract
price adjustments in any event, offerors do not escalate proposed
personnel costs for option years.
Fourth, the Air Force cites post-1976 communications from the Air
Force Directorate of Manpower and Organization, which has primary
responsibility in the Air Force for cost comparison policy and
regulation, clarifying the pre-June 1976 policies and which the Air
Force contends do not authorize cost escalation.
Serv-Air argues that the Air Force practice of straight-lining the
second and third year estimated costs in a cost comparison, where an
offeror in fact escalated its costs, simply perpetuates a
misinterpretation of the agency's pre-June 1976 policies. Serv-Air
focuses on the language in paragraph 1-16(e) of AFM 26-1 requiring
adjustment in the in-house estimate "where the contractor has estimated
such costs in the second and third years." In this connection, Serv-Air
asserts that as a matter of economics an offeror certainly escalates his
estimated costs in this area for those years.
Serv-Air also points to paragraph 1-18(a), which requires the Air
Force to project in its estimate additional pay increases for Government
employees for the second and third years of a multi-year contract or a
contract with pre-priced options where there are no economic adjustment
clauses in the contract. Serv-Air asserts that there are no economic
adjustment clauses in the proposed contract as contemplated by that
provision for personnel, material, maintenance, overhead and similar
costs.
Serv-Air also asserts that the "Monthly Messages" referenced by the
Air Force at best are not clear on the issue, and that any post-1976
clarifications of the pre-June 1976 policies in any event are "nothing
more than one Air Force organization's interpretation."
We consider that the Air Force's practice here was contrary to the
requirement in paragraph 1-18(a), and also failed to properly give
effect to all of the language in paragraph 1-16(e).
We point out here that in our view the RFP, by clearly advising
offerors that the cost comparison and the contract award would be made
"in accordance with AFM 26-1," effectively established the pre-June 1976
manual as the groundrule mandated by section 814(b) of the 1979 DOD
Appropriation Authorization Act, supra. Since in preparing their
proposals offerors therefore were entitled to rely on the explicit
provisions of AFM 26-1, we would view a cost comparison based on a
selective reading of the document, i.e., one incorporating only certain
of its instructions and substituting post-June 1976 practice for others,
as precisely the type of misleading comparison contemplated in our
decisions in Jets, Inc., supra, and Crown Laundry and Dry Cleaners,
Inc., supra.
Also, we do not find support for the Air Force's view in either the
1976 "Monthly Messages" or the post-1976 Air Force policy
"clarifications," since neither addresses the situation where an offeror
escalated second year civilian personnel costs, and then further
escalated such third year costs.
We find that paragraph 1-18(a) of AFM 26-1 is dispositive of the
matter. The paragraph specifically provides for second and third year
Government employee pay escalation in the Government estimate when
making decisions of the type here in issue if prices are requested for
more than one year and there are no economic adjustment clauses. The
economic price adjustment clause regarding labor rates for inclusion in
contracts is at Defense Acquisition Regulation (DAR) Sec. 7-107 (1976
ed.). It allows for contract price adjustments whenever the
contractor's labor costs increase during performance, if otherwise
appropriate. This clause did not appear in the RFP.
The results of the Air Force's approach, which essentially ignores
paragraph 1-18(a), are that (1) the Air Force estimate simply does not
reflect the actual cost of performing the function in-house, since that
cost certainly increases in the second and third years, and (2) the Air
Force is comparing two figures that were prepared on two different
bases, i.e., the offeror's escalation of second and third year personnel
costs, and the agency's straight-lining of them for in-house estimating
purposes.
To the extent that the Air Force views the contract's "Fair Labor
Standards Act and Service Contract Act" clause as the type of economic
adjustment clause contemplated by paragraph 1-18(a), that clause only
provides for contract price adjustments if the contractor is compelled
to increase employees' wages to comply with a change mandated by the
Department of Labor.
Thus, if a contractor is already paying its employees more than the
minimum wage when an increase in the minimum wage becomes operative,
there will be no contract price adjustment unless the new wage exceeds
the one being paid. Further, offerors certainly may plan to increase
proposed personnel costs in years two and three based on business
judgment independent of the minimum wage. We do not view the existence
of that clause here as invoking the exception to the cost escalation
mandate in paragraph 1-18(a).
Regarding paragraph 1-16(e), we recognize that, as a practical
matter, at the time an estimate is prepared there are no "known" changes
in Federal civilian personnel costs for the years after the initial
performance year, since historically Federal employee pay increases are
not definitized until shortly before the beginning of the fiscal year in
which they are to take effect.
However, we believe that the only reasonable reading of paragraph
1-16(e) in light of the direction in paragraph 1-18(a) as to how to
compare costs in these specific circumstances, is that where offers for
three years are solicited on a fixed price basis without an economic
adjustment clause, the Government must adjust the in-house estimate by
escalating second and third year costs.
Accordingly, we believe that the Air Force's in-house civilian
personnel cost estimate should have been adjusted on a reasonable basis
for the second and third years.
As indicated above, the Air Force's three year estimate to continue
the MASDC function in-house was $39,600,000, which included $35,938,385
in civilian personnel costs. Serv-Air's offer was evaluated at
approximately $39,900,000 for three years. Since even a minimal
escalation in the second and third year civilian personnel costs would
have resulted in a three-year in-house estimate exceeding Serv-Air's
offer, under the published award criteria a contract should have been
awarded to Serv-Air.
Therefore, it is unnecessary to consider the other issues raised by
Serv-Air.
The protest is sustained.
In addition to joining Serv-Air in protesting the matters noted
above, AVCO has raised a number of additional issues. Certain of them
involve the accuracy of the Air Force's in-house estimate, and thus are
academic in view of our conclusion above.
However, AVCO also raises matters relevant to the preparation of its
own proposal: that it was improper to invite proposals on a fixed-price
plus incentive-fee basis rather than a fixed-price one; that the RFP
improperly required the offeror to include in its proposal costs to
secure and provide facilities and equipment that already were on the
installation and thus were not included in the Government in-house
estimate; and that the labor rates prescribed by the Secretary of Labor
for use in the RFP were excessive.
Section 20.2(b)(1) of our Bid Protest Procedures, 4 C.F.R.part
20(1980), requires that protests based upon alleged improprieties
apparent from an RFP as issued by filed prior to the closing date for
the receipt of initial proposals. The protest on these issues involves
alleged improprieties within the meaning of that provision, but was
filed in our Office over two months after initial proposals were due.
Accordingly, the issues will not be considered on the merits.
In any event, we point out with respect to the prescribed labor rates
that the courts have held that the correctness of a prevailing wage
determination made by the Secretary of Labor is not subject to judicial
review. See United States v. Binghamton Construction Co., 347 U.S.
171(1954); Nello L. Teer Co. v. United States, 348 F.2d 533 (Ct. Cl.
1965). We have construed the former decision as precluding this Office
from reviewing the correctness of a wage determination in situations
such as we have in the present case. See International Union of
Operating Engineers, B-182408, February 12, 1975, 75-1 CPD 90. The
appropriate manner in which to challenge wage determinations is through
the administrative process within the Department of Labor as established
by 29 C.F.R.part 7(1979). Associated General Contractors of America,
Inc., Arkansas Chapter, B-190775, January 17, 1978, 78-1 CPD 40.
Finally, AVCO disagrees with certain of the procedures prescribed in
AFM 26-1 for use in calculating various costs. This matter also is
untimely under section 20.2(b)(1) of our Bid Protest Procedures, since
as stated above the RFP clearly advised offerors that AFM 26-1 would be
the groundrule for the cost comparison. Nonetheless, consistent with
our limited review role in this area as stated as the outset, we will
question only whether mandated procedures were followed, not the
efficacy of the procedure themselves.
The protests are sustained to the extent discussed above.
The Air Force originally determined to compete the MASDC operation
and to contract it if the low evaluated offer were less than the
Government estimate.
We presume that another competition thus would not be inappropriate.
Accordingly, by separate letter we are recommending to the Secretary
of the Air Force that since the first performance year has ended he
consider having a new solicitation issued as soon as possible with a new
Government cost comparison made on the basis of any offers that are
received in response. That comparison in turn should form the basis for
a new Executive branch decision with respect to the performance of the
MASDC operation.
We point out that the comparison would follow the guidelines set out
in Office of Management and Budget Circular A-76, "Policies for
Acquiring Commercial or Industrial Products and Services Needed by the
Government," which applies to DOD solicitations issued after October 1,
1979 (when the prohibition in section 814(b) of the DOD Appropriation
Authorization Act, 1979, expired).
We are also recommending that as a general matter the Secretary
insure that cost comparisons with respect to contracting-out decisions
are supported by complete and comprehensive data, and that the elements
of the comparisons are clearly identifiable and verifiable.
B-198022, October 22, 1980, 60 Comp.Gen. 41
Contracts - Protests - Authority to Consider - North Atlantic Treaty
Organization (NATO) - Procurements
Protest over award of contract by Army for North Atlantic Treaty
Organization is subject to General Accounting Office (GAO) bid protest
jurisdiction since use of appropriated funds are initially involved and
procurement is therefore "by" an agency of the Federal Government whose
accounts are subject to settlement by GAO. Contracts - Negotiation -
Requests for Proposals - Failure to Solicit
Protest alleging deliberate exclusion of potential bidder is denied
where protester fails to affirmatively prove that agency made deliberate
or conscious attempt to preclude potential bidder from competing.
Matter of: Security Assistance Forces & Equipment International
Inc., October 22, 1980:
Security Assistance Forces & Equipment International Inc. (SAFE)
protests the award of a contract to Gebr. Weimer Gmbh by the U.S. Army
Contracting Agency, Europe (USACAE) under Request for Proposals (RFP)
DAJA37-80-R-0113. SAFE alleges that USACAE committed a civil rights
violation by failing to send SAFE a copy of the solicitation until after
the submittal date had passed. SAFE also contends that its offer would
have been lower than the awardee's had it been provided an opportunity
to to submit a timely offer.
The contract is for the purchase of steel bar window grills and doors
for the Central Army Group (CENTAG) of the North Atlantic Treaty
Organization (NATO). USACAE has advised us that the purchase is being
funded initially from a Department of the Army appropriation which will
be reimbursed by CENTAG.
As a preliminary issue, the Army raises the question of whether we
have jurisdiction to consider protests concerning NATO procurements.
Our Bid Protest Procedures provide for our consideration of protests by
interested parties of the proposed or actual award of a contract, or the
award of a contract "by or for an agency of the Federal Government whose
accounts are subject to settlement by the General Accounting Office."
4 C.F.R. 20.1(a)(1980). Recently we took jurisdiction over protests
concerning procurements conducted pursuant to the Arms Export Control
Act (formerly the Foreign Military Sales Act), 22 U.S.C. 2751 et seq.
(1976), where the Department of Defense (DOD), acting for a foreign
government, directly enters into an agreement with a contractor and
initially uses its own funds to accomplish the transaction.
Procurements Involving Foreign Military Sales, 58 Comp.Gen. 81(1978),
78-2 CPD 349. The involvement of the USACAE in this procurement is
essentially identical to the involvement of DOD in Foreign Military
Sales Act transactions to the extent that appropriated funds are used at
least initially. Consequently, we believe the involvement of USACAE in
this procurement is sufficient to constitute a procurement "by * * * an
agency of the Federal Government * * * ." 4 C.F.R. 20.1(a).
Pursuant to a request from NATO for the procuring of steel bar window
grills and doors, the Army mailed RFP DAJA37-80-R-0113 on December 12,
1979 to six firms on its bidders list. SAFE was not one of the six
firms to receive the solicitation. Closing date for receipt of
proposals was set for January 9, 1980.
In a postscript to a letter directly addressed to the Commander,
USACAE, dated December 14, 1979, SAFE requested a copy of the
solicitation. SAFE did not request the solicitation from the
contracting officer, nor did its representative attempt to obtain a copy
from the procurement office, although he resided nearby and could have
done so. The Commander, replying to SAFE in a letter dated January 8,
1980, stated that SAFE was not listed on its records as a firm providing
the types of items required by this solicitation. Nevertheless, SAFE
received a copy of the requested solicitation on January 14, five days
after the closing date for receipt of proposals.
On January 15, SAFE protested to the Army concerning the failure of
the Army to send SAFE a copy of the solicitation until after the closing
date for receipt of proposals. SAFE alleged that this act was just one
of several similar deliberate actions on the part of the Army to exclude
SAFE from participating in this and other procurements. To remedy this
particular wrong, SAFE requested that the submittal time for the
contract be extended, thus affording it the opportunity to submit an
offer.
The Commander, USACAE, in a reply to SAFE dated February 22,
acknowledged that SAFE should have been sent a copy of the solicitation
immediately following his receipt of SAFE's request dated December 14.
He stated further that:
* * * I have found no evidence that any of the SAFE companies have
requested to be placed on the Bidder's List for construction items or is
a current producer of steel bar grills for doors or windows. * * *
* * * (M)y reply to SAFE International, Inc.'s letter of 14 December
1979 was not a conscious or deliberate attempt to preclude (SAFE) from
making an offer to subject RFP. Instead of having the Contracting
Officer provide the RFP directly to you in response to your Post Script,
I requested that it be forwarded to me for incorporation into my
response * * * . Regrettably my reply to you was delayed due to
staffing coordination and Christmas and New Year Holidays during which
the Agency was closed and/or personnel were on * * * leave.
* * * However, in order to reduce the number of occasions in which
you assert that your firms are not placed on original source lists for
those supplies and services for which they are interested in making
offers, I reiterate my request that your companies maintain their
Bidder's Mailing List applications in a current status. * * *
I further recommend that should an occasion arise wherein one of your
firms is not solicited * * * you make your request for the particular
RFP to the responsible Contracting Officer (who) is best situated to
promptly dispatch * * * the requested RFP * * * if a copy is available.
* * * It is USACAE's routine practice * * * to send * * * an RFP, if
available, to any firm * * * upon request. * * *
Not satisfied with this response from the Army, SAFE protested to our
Office.
Inadvertent actions of an activity which preclude a potential bidder
from competing on a procurement do not constitute a compelling reason to
question an award if there is no evidence of a deliberate or conscious
attempt to preclude the potential bidder from competing and competition
resulted in an award at a reasonable price. Intermountain Sanitation
Service, B-193239, January 19, 1979, 79-1 CPD 33; Valley Construction
Company, B-185684, April 19, 1976, 76-1 CPD 266. In the instant case,
SAFE does not contend that competition was inadequate or that the
contract was awarded for other than a reasonable price. SAFE only
asserts, after the fact, that if it was able to participate in the
procurement, it would have made a lower offer than that of the awardee.
Moreover, since SAFE's assertion that the Army deliberately attempted to
exclude it from participating in the procurement was only substantiated
by references to alleged similar actions by the Army, which were never
proven, and since the Army not only emphatically denied these
contentions but offered a plausible explanation for its actions, SAFE
has not met its burden of affirmatively proving its assertion.
Crestwood Furniture Company-- Reconsideration, B-195109.3, January 21,
1980, 80-1 CPD 59; Introl Corporation, B-194570, January 15, 1980, 80-1
CPD 41. We believe that the record here amply demonstrates that most of
SAFE's difficulties in this procurement resulted from its own actions--
the manner in which the request was made, its incomplete bidders list
application, its failure to attempt to personally obtain a copy of the
RFP-- RATHER than as a result of anything that the procuring activity
did.
Finally, we do not believe the allegations raised here concerning a
corporate firm's exclusion from a procurement properly may be viewed as
involving civil rights violations.
The protest is denied.
B-197220, October 20, 1980, 60 Comp.Gen. 38
Travel Expenses - Overseas Employees - Renewal Agreement TRAVEL -
UNAUTHORIZED MODE - RENTED CAR - CONSTRUCTIVE COST BASIS OF
Reimbursement
Under travel orders authorizing travel by common carrier, employee
performed portion of renewal agreement travel by rent-a-car. Employee
may be reimbursed expenses for unauthorized mode of travel limited to
constructive cost of travel by common carrier. Since travel was not
performed by privately owned vehicle (POV), reimbursement for rental car
expenses is not limited to the lower cost of mileage for travel by POV
even though Department of Defense regulation provides that, where less
costly than common carrier, renewal agreement travel by POV will be
considered advantageous to the Government.
Matter of: Ronald D. Beeman - Unauthorized mode of travel, rental
car, October 20, 1980:
This action is in response to a request for a decision submitted by
the National Security Agency regarding the use of a rental car in
connection with renewal agreement travel.
The decision request, forwarded by the Per Diem, Travel and
Transportation Allowance Committee, has been assigned PDTATAC Control
No. 79-42.
The questions presented concern an employee's entitlement to
reimbursement for rental car expenses where use of a commercial rented
car was not authorized as advantageous to the Government. Specifically,
three questions have been asked:
1. Where modes of transportation authorized in renewal agreement
travel orders were Government and commercial air, rail, bus, and
privately owned conveyance not advantageous to the Government, may the
employee be reimbursed the actual round-trip rental automobile costs of
$211.50 when comparative cost of rail travel and air travel between the
overseas duty station and the port of embarkation are higher?
2. If the answer to question one is in the affirmative, should the
orders authorize the use of a rental car for such travel and if the
orders do not authorize rental automobile, would administrative approval
on the travel voucher suffice for payment of the claim?
3. Would the answers to questions one and two apply, regardless of
whether the travel was in connection with permanent change of station;
renewal agreement travel; and, regardless of whether the expenses were
incurred overseas or within the continental United States when the cost
of the rental cos was less costly than travel by rail or air between the
same points of travel?
The facts of this case which are pertinent to the questions presented
concern that portion of the renewal agreement travel of a Federal
civilian employee from his post of duty outside the continental United
States to a port of embarkation and his travel upon return from the port
of debarkation to the port of duty outside the United States. The
employee and his family performed travel from his overseas duty station
to the serial port of embarkation by rent-a-car at a cost of $95.50;
and, upon return, from the serial port of debarkation to his duty
station by rent-a-car at a cost of $116. The total rent-a-car cost was
$211.50.
For the 434 miles traveled by rent-a-car, the employee has been paid
a mileage allowance of $73.78 based on the $.17 per mile rate authorized
for travel by privately owned vehicle where that mode of travel has been
determined to be advantageous to the Government. In limiting the
employee's reimbursement, the agency relies on the fact that paragraph
C2151-3 of the Joint Travel Regulations (JTR), Volume 2, states that
renewal agreement travel by privately owned vehicle will be considered
advantageous to the Government and will be reimbursed at the $.17 per
mile rate when it is determined that the cost of such travel is less
than the cost of travel by common carrier. The employee seeks
reimbursement for the $137.72 amount he incurred for rental car expenses
in excess of the mileage allowance paid.
In answer to the first question, the employee may be reimbursed for
the rent-a-car expenses claimed inasmuch as they do not exceed the cost
of commercial carrier transportation authorized. The authorization of a
particular mode or modes of travel on an employee's travel order does
not defeat the employee's right to reimbursement for travel expenses on
a constructive cost basis when the employee travels by a mode of
transportation other than authorized. See generally, Lawrence B.
Newell, B-181151, January 3, 1975.
Provisions of the Federal Travel Regulations and of Volume 2 of the
Joint Travel Regulations, as applicable to Department of Defense
civilians, requiring approval of the use of rental vehicles, are not for
application when reimbursement is to be on a constructive cost basis.
As in all constructive cost cases the actual cost to the employee,
regardless of mode, is compared to the cost by an allowable mode.
In A. L. Strasfogel, B-186975, March 16, 1977, we held that an
employee whose travel by commercially rented vehicle was not authorized
as advantageous to the Government was nonetheless entitled to
reimbursement for rental car expenses limited to the constructive cost
of travel by common carrier. As in the instant case, the travel was
performed under circumstances in which travel by privately owned vehicle
was advantageous to the Government. Nonetheless, the employee's
reimbursement was not limited to the mileage to which he would have been
entitled if he had traveled in his own automobile. As indicated in
Anthony P. DeVito, B-196950, March 24, 1980, authorization of travel by
privately owned vehicle as advantageous to the Government does not limit
reimbursement for travel by unauthorized rental car to less than the
cost by common carrier or other authorized mode. Such authorization may
result in additional entitlement where the constructive mileage payment
for travel by privately owned vehicle exceeds the cost of commercial
transportation, but it does not serve to reduce that entitlement unless
the employee actually travels by privately owned vehicle. Compare
Ernest D. Ellsworth, B-196196, August 19, 1980, and cases cited therein.
Because the employee was authorized travel by common carrier and
since his claim as well as his entitlement to reimbursement for rental
car expenses is limited to the constructive cost by that mode of travel,
payment may be made based on approval of his travel voucher. We would
point out for the sake of clarification that although the travel order
in the Strasfogel case was amended to authorize use of rental car
limited to cost of common carrier that claim could have been paid on a
constructive cost basis without regard to the amendment. Question
number 2 is answered accordingly.
With respect to question number 3, we note that the Strasfogel,
DeVito, and Waldman cases all involved travel for relocation purposes.
Just as there is no reason to differentiate between change of station
and renewal agreement travel, the principles of constructive cost
reimbursement stated above apply to travel within the United States as
well as to travel overseas.
B-196100.2, October 20, 1980, 60 Comp.Gen. 36
Contracts - Negotiation - Offers or Proposals - Preparation - Costs -
Arbitrary and Capricious Government Action
Claim for proposal preparation costs is denied since record fails to
establish agency's actions were fraudulent, arbitrary or capricious, but
only that agency was mistaken in believing best and final offers could
be requested without first conducting discussions concerning technical
deficiencies in proposals. Contracts - Negotiation - Offers or
Proposals - Preparation - Costs - Recovery Criteria - Court Decision
Effect
Recent decision of Court of Claims stating recovery of proposal
preparation costs requires showing only that claimant had substantial
chance of award rather than, as previously held by General Accounting
Office, that it would have received award but for agency's failure to
properly consider its proposal, did not eliminate requirement for
showing of arbitrary or capricious agency action before recovery can be
permitted.
Matter of: Decision Sciences Corporation - Claim for Proposal
Preparation Costs, October 20, 1980:
In Decision Sciences Corporation, B-196100, May 23, 1980, 80-1 CPD
357, we sustained a protest of the award of a contract to Messer
Associates, Inc. by the Internal Revenue Service (IRS) under request for
proposals No. IRS-79-66. We held that the IRS erred in failing to
conduct meaningful discussions with Decision Sciences Corporation (DCS)
whose lower price proposal was within the competitive range.
We further held that, despite DSC's assertions, the record did not
establish that the deficiency was the result of fraudulent, arbitrary or
capricious action by the agency but, rather, that the agency was
mistaken in its belief that in this case it could request best and final
offers without first conducting discussions concerning technical
deficiencies in proposals.
DSC has since submitted a claim for recovery of its proposal
preparation expenses which it estimates to be at least $25,000. For
reasons discussed below, this claim is denied.
This Office first permitted reimbursement of bid/proposal preparation
costs in T & H Company, 54 Comp.Gen. 1021(1975), 75-1 CPD 345, where we
adopted the standard announced in Keco Industries, Inc. v. United
States, 492 F.2d 1200 (Ct. Cl. 1974). In applying this standard, we
have held that recovery of such costs requires a showing that the
agency's actions were so arbitrary or capricious as to have deprived the
claimant of an award to which it was otherwise entitled. Morgan
Business Associates, B-188387, May 16, 1977, 77-1 CPD 344; System
Development Corporation, B-191195, August 31, 1978, 78-2 CPD 159. In a
recent case, although the United States Court of Claims denied proposal
preparation costs where an agency lost and did not consider a proposal,
the court stated an offeror need show only that there was a substantial
chance it would have received the award. Morgan Business Associates,
Inc. v. United States, Ct. Cl. No. 274-78, April 2, 1980. In a
footnote, the court specifically denied that its opinion in McCarty
Corporation v. United States, 499 F.2d 633 (Ct. Cl. 1974), provided any
basis for our decisions in Ampex Corporation; RCA Corporation,
B-183739, November 14, 1975, 75-2 CPD 304 and Morgan Business
Associates, supra, which held that proposal preparation cost recovery
required a showing that the claimant would have received the award but
for the agency's failure to properly consider its proposal.
The court did not, however, eliminate the need for a showing of
arbitrary or capricious agency action and it rejected the proposition
that any breach of an agency's duty to give consideration to a proposal
creates an immediate entitlement to proposal preparation costs. Thus,
in the absence of a finding of arbitrary or capricious action, proposal
preparation costs cannot be recovered even if the claimant would have
received the award except for the agency's mistake, inadvertence, simple
negligence or lack of due diligence. Case Information Systems, Inc.,
B-186932, October 25, 1978, 78-2 CPD 299; Fortec Constructors,
B-188770, August 7, 1979, 79-2 CPD 89. In Keco Industries, Inc. v.
United States, supra, the court, while amplifying its position that the
ultimate standard is whether the agency was arbitrary or capricious,
stated that a proven violation of pertinent statutes or regulations
"can, but need not necessarily, be ground for recovery."
In its protest, DCS disagreed with the agency's down-grading of its
proposal for being unclear and not specific as to how much time each
professional would devote to each task. We found the agency's actions
in this regard to have been reasonable. DSC also alleged that the
agency was motivated by bad faith and was biased toward its competitor,
allegations which we found unsupported by the record. The only respect
in which we sustained DSC's protest was that the agency made an honest
error in judgment in concluding that it need not conduct competitive
range discussions in this case, even though it requested best and final
offers. In all other respects, we found the procurement was properly
conducted and the technical and cost evaluations complied with the
criteria and cost evaluation formula specified in the solicitation.
Under certain circumstances, a simple request for best and final
offers may constitute adequate discussions. See, e.g., Dyneteria, Inc.,
B-181707, February 7, 1975, 75-1 CPD 86. Here, in light of the
deficiencies in DSC's proposal, we believe that in order for the
discussions to have been "meaningful", as required by our decisions, the
agency should have preceded its request for best and final offers with
competitive range discussions of the deficiencies it perceived.
However, we remain of the belief that in this case the procurement
deficiency does not reflect such arbitrary action so as to be ground for
recovery of proposal preparation costs.
The claim is denied.
B-138942, October 20, 1980, 60 Comp.Gen. 34
Travel Expenses - Air Travel - Foreign Air Carriers - Prohibition -
Availability of American Carriers - First-Class Travel Restriction
With the limited exceptions defined at paragraph 1-3.3 of the Federal
Travel Regulations, Government travelers are required to use less than
first-class accommodations for air travel. In view of this policy, a
U.S. air carrier able to furnish only first-class accommodations to
Government travelers where less than first-class accommodations are
available on a foreign air carrier will be considered "unavailable"
since it cannot provide the "air transportation needed by the agency"
within the meaning of paragraph 2 of the Comptroller General's
guidelines implementing the Fly America Act.
Matter of: Fly America Act - First-Class Accommodations on American
Carriers vs. Travel on Foreign Carriers, October 20, 1980:
We have been asked to provide guidance on how the regulations
limiting air travel to less than first-class accommodations affect
implementation of the Fly America Act (49 U.S.C. 1517). The specific
issue to be addressed is whether paragraph 1-3.3 of the Federal Travel
Regulations (FTR) (TPMR 101-7, as amended by Temporary Regulation A-11,
Supplement 5) means that U.S. air carrier service would be considered
"unavailable" under the Comptroller General's guidelines of B-138942,
March 12, 1976, when U.S. air carriers are able to furnish only
first-class accommodations.
The purpose of the Fly America Act is to ensure that Government
revenues do not benefit foreign air carriers when service on
certificated U.S. air carriers is available.
56 Comp.Gen. 209, 213(1977). Under paragraph 2 of the guidelines,
availability is defined as follows:
Generally passenger or freight service by a certificated air carrier
is "available" if the carrier can perform the commercial foreign air
transportation needed by the agency and if the service will accomplish
the agency's mission.
Paragraph 3 states that certificated service is considered available
even though "comparable or a different kind of service by a
noncertificated air carrier costs less."
It has been suggested that the language of the guidelines indicating
that cost is not a factor in determining U.S. air carrier availability
is inconsistent with FTR para. 1-3.3 insofar as the latter prohibits use
of first-class service except in very limited circumstances. Paragraph
1-3.3d states that it is "the policy of the Government that employees
who use commercial air carriers for domestic and international travel on
official business shall use less than first-class accommodations."
Although that paragraph contains a parenthetical cross reference to the
Fly America Act requirements incorporated at FTR para. 1-3.6b, it does
not authorize first-class travel by U.S. air carriers when less than
first-class service can be obtained aboard a foreign air carrier. It
permits first-class air travel only in the following very limited
circumstances: when less than first-class service is unavailable for
travel that is so urgent that it cannot be postponed; when the employee
is so handicapped or physically impaired that other accommodations
cannot be used; when first-class travel is necessary for security
purposes or other exceptional circumstances; or when less than
first-class accommodations on foreign carriers do not have adequate
sanitation or health standards. Authorization for first-class air
travel is required to be made in advance by the agency head or his
deputy and the employee's justification for using such accommodations
must be certified on his travel voucher.
We find no inconsistency between the cited regulations and the Fly
America Act guidelines. However, it does appear that the requirements
of the Act need to be clarified insofar as they pertain to the situation
in which a Government traveler is faced with the choice between less
than first-class service by a foreign air carrier and first-class
service aboard a U.S. air carrier. If the service provided by the two
carriers is distinguished only by the class of accommodations available,
and if there is no independent justification for first-class air travel,
the employee's travel should be scheduled aboard a foreign air carrier.
The Fly America Act was not intended to redefine all conditions and
requirements for Government travel. Within the general framework of the
rules otherwise applicable to Government travel, the Act was, however,
intended to shift expenditures of Government funds within the foreign
air transportation market to U.S. air carriers to the extent
practicable.
For example our holdings in 56 Comp.Gen. 219 and 629(1977) reflect an
accommodation between the Fly America Act requirements and the general
rule that employees should not be required to travel during periods
normally used for sleep.
It has long been the Government's policy to limit its employees' use
of first-class accommodations for air travel. The recent amendment to
FTR para. 1-3.3 by Temporary Regulation A-11, Supplement 5, evidences a
policy of even more stringent control over the use of first-class air
service. In view of this policy, the "air transportation needed by the
agency" is air transportation involving less than first-class
accommodations, except in the limited circumstances described at FTR
para. 1-3.3d(3). When a U.S. air carrier is unable to furnish less than
first-class service, it is not considered "available" within the meaning
of paragraph 2 of the guidelines. For this reason, the statement at
paragraph 3 of the guidelines that U.S. air carrier service will be
considered available even though "comparable or a different kind" of
foreign air carrier service is less costly does not have reference to
the cost differential between first-class service by U.S. air carrier
and less than first-class service aboard a foreign air carrier.
B-196042, October 17, 1980, 60 Comp.Gen. 30
Transportation - Household Effects - Overseas Employees - Weight
Limitation - Increases - Renewal Agreement at Same Post
When maximum weight allowance for transportation or nontemporary
storage of household goods for transferred employees without immediate
family is increased during overseas employee's tour of duty, employee
who enters into renewal agreement at same post may be authorized
increased weight allowance at time of renewal for nontemporary storage
or shipment of household goods up to new maximum less initial shipment.
Transportation - Household Effects - Overseas Employees - Weight
Limitation - Increases - Return Travel for Separation
Employee who fulfills period of service at overseas post or who is
excused from this by agency is entitled to ship weight of household
goods up to maximum weight under laws and regulations at time he
separates. Travel and transportation rights and liabilities vest at
time it is necessary to perform directed travel and transportation;
therefore, laws and regulations in effect at time employee reports for
duty have no applicability to return travel and transportation at a
later date. Transportation - Household Effects - Overseas Employees -
Multiple-Location Shipments - Reimbursement Basis
Employee entitled to ship household goods to overseas duty post may
ship goods from or to any locations he wishes but maximum expense borne
by Government is limited to cost of a single shipment by the most
economical route from employee's last official station to his new
official station.
Matter of: Transportation of household effects, October 17, 1980:
The Assistant Secretary of the Army (Manpower and Reserve Affairs),
requests an advance decision on four questions raised by the April 29,
1977 amendment to the Federal Travel Regulations which increased the
weight allowance for transportation or nontemporary storage of household
goods for employees without immediate family transferred overseas. Two
of the questions are, basically, whether a renewal agreement for an
employee serving overseas is tantamount to a transfer so as to entitle
the employee to the increased weight allowance for storage or shipment
of household goods. Another question is whether return to the United
States from overseas duty for separation is tantamount to a transfer so
as to entitle the employee to the higher weight allowance for shipment
of household goods. The final question is whether an employee entitled
to the increased weight allowance for transportation of household goods
overseas may have his goods shipped from various locations other than
his actual place of residence prior to the transfer. As will be
explained, all questions are answered affirmatively.
This request for an advance decision was approved by the Per Diem,
Travel and Transportation Allowance Committee and assigned Control
Number 79-32.
The Assistant Secretary indicates that under paragraph C8002-2c of
Volume 2 of the Joint Travel Regulations (2 JTR), the military services
have allowed civilian employees working overseas, who initially ship
less than their maximum weight allowance of household goods, to ship the
balance of their weight allowance upon executing a renewal agreement.
He points out that this regulation is consistent with our decision in 38
Comp.Gen. 653(1959), wherein we approved such a practice.
The Assistant Secretary now raises the four questions because on
April 29, 1977, the General Services Administration issued Temporary
Regulation A-11, Supplement 4, which contained many amendments to the
Federal Travel Regulations (FTR).
Among these amendments was one to FTR, para. 2-8.2a (FPMR 101-7, May
1973), which increased the maximum weight allowance from 5,000 pounds to
7,500 pounds for transportation or nontemporary storage of household
goods for transferred employees without immediate family. The questions
arise because paragraph 2b of the notice transmitting the revisions in
the regulations specifies that an employee's entitlement to the
increased relocation allowances accrues only if the "employee's
effective date of transfer, i.e., the date the employee reports for duty
at a new official station (is) on or after June 1, 1977."
The first question presented is:
1. May an employee's household goods in nontemporary storage, which
were previously excess to the authorized maximum weight allowance, and
which were being stored at an employee's personal expense, be converted
to nontemporary storage at Government expense upon execution of a
renewal agreement to serve an additional tour of duty at the same
overseas station, not to exceed the increased weight allowance?
The weight allowance of household goods for employees without
immediate family was previously increased from 2,500 pounds to 5,000
pounds on October 12, 1966. At that time, the weight allowance in the
applicable regulation, section 6.2 of Bureau of the Budget Circular No.
A-56 (now FTR, para. 2-8.2) was increased under a transmittal notice
which in paragraph g limited the increased weight entitlement to
employees transferring after a certain date as was done in paragraph 2.b
of the transmittal letter to Temporary Regulation A-11.
In response to a question as to when the increased limits under
Circular No. A-56 of October 12, 1966, would apply to an employee whose
goods in storage exceeded 2,500 pounds, we held that the employee would
receive the increased allowance upon completion of his tour of duty and
commencement "of a subsequent tour of duty at the same or some other
overseas post." B-160901, April 6, 1967, citing section 6.7(b)(5) of
Circular No. A-56 (now contained in FTR, para. 2-9.2d). Similarly, the
increased weight allowance authorized by the April 29, 1977 amendment
accrues to one entering into a renewal but only after his travel orders
are appropriately amended. B-160901, April 6, 1967.
The following is the second question:
2. Is an employee, who was limited to the lower maximum household
goods weight allowance while assigned overseas, entitled to the newly
established higher maximum weight allowance upon return to the United
States for separation? Is return travel for separation considered to be
the same as permanent change-of-station travel from one duty post to
another for weight allowance purposes?
Under 5 U.S.C. 5724(d), an employee who transfers outside the
continental United States is entitled to travel and transportation
expenses to and from the post to the same extent within the same
limitations as new appointees under 5 U.S.C. 5722.
New appointees' entitlement to return travel is limited by the
requirement that they fulfill a required period of service or are
separated for reasons beyond their control which are acceptable to the
agency. 5 U.S.C. 5722(c). This same limitation regarding entitlement
to return travel is made expressly applicable to employees transferred
overseas under FTR, para. 2-1.5g(4). For overseas employees, we have
held that the fulfillment of this period of service is condition to the
vesting of the employee's entitlement to travel. See 44 Comp.Gen. 767,
769(1965). Accordingly, the employee has no entitlement to return
travel and transportation for separation at the time he reports for duty
overseas; and the applicable laws and regulations regarding travel at
the time he reports have no application to this contingent right of
return travel. Rather, the general rule applies that the employee's
legal rights and liabilities in regard to travel and transportation
allowances vest as and when the necessary travel and transportation is
performed under competent orders. See 54 Comp.Gen. 638, 639(1975); and
48 Comp.Gen. 119, 121-122(1968).
Accordingly, an overseas employee who returns to the United States
for separation after fulfilling his service obligation is entitled to
ship the maximum weight of household goods under the laws and
regulations in effect at the time of return and, for this purpose, the
return is treated the same as a transfer.
The following is the third question presented:
3. Is an employee without an immediate family, serving overseas,
entitled to the new maximum weight allowance of 7500 pounds incident to
the execution of a renewal agreement signed after 1 June 1977 for a tour
of duty at the same duty station in which he had just completed the
initial tour? In this situation, considering the absence of a different
permanent duty station, has a transfer occurred for weight allowance
purposes?
In B-160901, April 6, 1967 (discussed above), we also approved the
increased weight allowances for shipment of household goods for
employees without immediate family whose travel orders are amended upon
completion of a period of overseas employment and commencement of a new
period of duty at the same post under a renewal agreement. Therefore,
employees without immediate family who enter into renewals may be
authorized shipment of household goods up to 7,500 pounds (less the
initial shipment) under the authority of 38 Comp.Gen. 653(1959), as
implemented by 2 JTR para. C8002-2c. Thus, for this increased weight
allowance, the renewal satisfies the requirement of a transfer in the
transmittal notice.
The fourth question presented is:
4. If an employee is entitled to ship an increased weight allowance
of household goods to the same or a different overseas duty station, may
such property be shipped, at Government expense, from a geographical
location other than the employee's place of actual residence prior to
transfer overseas?
For example, if an employee's place of actual residence was Washington,
DC, but some of the employee's personal effects or household goods were
left with relatives residing in Florida, or, during the interim, the
employee had inherited or been given certain other property located in
some different geographic area within the United States, could these
various increments be shipped at Government expense to the employee's
overseas station? If so, would there be any limitation, other than the
maximum weight allowance, in the amount the Government would pay for
such multiple shipments?
Paragraph 2-8.2d of the FTR and para. C8002-4 of 2 JTR authorize
multiple shipments from different locations with the limitation that the
total amount which may be paid or reimbursed by the Government shall not
exceed the cost of a single shipment by the most economical route from
the employee's last official station to the new official station.
Therefore, in the example given the additional goods could be shipped by
the amount payable by the Government may not exceed the cost of their
shipment as one shipment from the place of actual residence, Washington,
D.C.
B-196914, October 14, 1980, 60 Comp.Gen. 28
District of Columbia - Contracts - Specifications - Descriptive
Literature Requirement - Propriety - Services v. Supplies Procurement
Decision is affirmed upon reconsideration where protester has failed
to show that decision was as matter of law incorrect in holding that
descriptive literature may be required only in connection with products
and not services since applicable regulations and General Accounting
Office decisions are clear on this point.
Matter of: Biospherics, Inc. - Reconsideration, October 14, 1980:
Biospherics, Inc., the awardee of the contract under invitation for
bids (IFB) No. 0060-AA-66-1-0-BM for onsite laboratory services for
wastewater treatment for the District of Columbia (DC) requests
reconsideration of our decision, Lapteff Associates, Martel
Laboratories, Inc., Kappe Associates, Inc., B-196914, B-196914.2,
B-197414, August 20, 1980, 80-2 CPD 135. In that decision, we concluded
that the solicitation was defective and the three low bids were
improperly rejected as nonresponsive. We recommended that the contract
award for 1 year not be disturbed, but recommended that the options for
additional years of performance not be exercised and that the
procurement be solicited on a proper basis.
Clause 28 of the IFB required that bidders submit a detailed outline
and narrative indicating how they proposed to comply with required
quality control and quality assurance requirements. The IFB clause also
provided a bidder could be found nonresponsive for failure to comply
with the requirement. The three low bids were rejected for failing to
satisfactorily comply with the requirements of clause 28.
We determined that the solicitation was defective because the DC
procurement procedures' descriptive literature requirement did not apply
to services, but instead was limited by language and purpose to
products. We also referred to the descriptive literature provision of
the Federal Procurement Regulations Sec. 1-2.205-5 (1964 ed. amend. 13).
Further, we noted that our review of the case law cited by Biospherics
did not provide support for the view that the term descriptive
literature or descriptive data had been applied to information
concerning how a bidder proposes to perform services, even of a
technical nature such as laboratory services.
We stated that we knew of no regulation or decision of our Office
which permits a contracting agency to determine bid responsiveness by
requiring bidders to furnish with their bids a description of how they
propose to perform the contract. We characterized such information as
bearing on bidder responsibility, the proposed method of performance,
not bid responsiveness which concerns whether the bidder has offered to
do what is required by the solicitation. We concluded that a
contracting agency cannot make a matter of responsibility into a
question of responsiveness by the terms of the solicitation.
Biospherics asserts our decision is wrong as a matter of law. It
states that the regulations and our decisions do not limit the use of a
descriptive literature clause for the procurement of supplies and that
only by happenstance have we never had a decision applying descriptive
literature to services. In fact, Biospherics contends that our position
is inconsistent with regulation and in support thereof quotes the
following footnoted instruction to contracting officers in connection
with the descriptive literature clause included in FPR Sec.
1-2.202-5(d)(1):
Contracting officer shall insert significant elements such as design,
materials, components, or performance characteristics, or methods of
manufacture, construction, assembly, or operation, as appropriate.
Since the instruction contemplates obtaining information relating to
"methods of performance," Biospherics contends that the bids were
properly rejected for failure to include the prescribed data relating to
the method of performance. Biospherics also supports its position that
the use of a descriptive literature requirement was proper in these
circumstances, arguing, by analogy, that the Changes clause of standard
form 32, which, by its language, applies only to supplies, has been
extended by cited Board of Contract Appeals (BCA) cases to services.
Our bid protest procedures require that a request for reconsideration
must specify any errors of law made or information not previously
considered. 4 C.F.R. 20.9(a)(1980). We do not believe Biospherics has
met this requirement.
In our decision, we reviewed the purpose and language of DC's
descriptive literature provision and the FPR's and concluded that by
definition and purpose descriptive literature refers to information
which describes products and explains their operations. We concluded
that the quality control and quality assurances requirements of the
subject solicitation were not that type of information within the
meaning of the DC procurement procedures.
Under the DC procurement procedures, the term "descriptive
literature" is defined to mean information, such as drawings and
brochures, which shows the characteristics or construction of a product
or explains its operation. Further, under the applicable provision, the
term descriptive literature is explicitly defined to include only
information required to determine acceptability of the product and
explicitly excludes other information such as that furnished in
connection with the qualifications of a bidder or used in operating or
maintaining equipment.
It is clear, therefore, contrary to Biospherics' contention, that our
decision correctly stated that the bids of the three protesters were
improperly rejected as nonresponsive pursuant to a requirement
explicitly prohibited by regulations. It is also clear that the lack of
any decisions of our Office applying descriptive literature requirements
to services results not from happenstance, but from a proper application
of the regulations. See Hub Testing Laboratories, B-199368, September
18, 1980, 80-2 CPD 204, which applied the rationale of our decision in
this case to a recent procurement.
Whether the descriptive literature requirement may logically be
applied to services, as Biospherics contends, need not be considered in
view of the clear regulatory prohibition and Biospherics' failure to
demonstrate any error of law in our prior decision in this regard. We
also believe the analogy to the situation here which Biospherics
attempts to draw from BCA cases is irrelevant since those cases involved
the interpretation of a contract clauses, whereas we are concerned with
a regulatory requirement applicable to the formation of a contract.
As a final matter, Biospherics requests a conference because of the
importance of the case. Our bid protest procedures do not explicitly
provide for conferences in connection with reconsiderations. 4 C.F.R.
20.9(1980). We believe a request for a conference should be granted
only where the matter cannot be resolved without a conference. In light
of the previous discussion, we do not believe this is such a case.
Serv-Air, Inc.-- Reconsideration, B-189884, March 29, 1979, 79-1 CPD
212.
Since Biospherics has not presented evidence demonstrating any error
of fact or law in the original decision nor provided any substantive
information not previously considered, our decision is affirmed.
B-200170, October 10, 1980, 60 Comp.Gen. 15
Funds - Recovered Overcharges - Distribution - Department of Energy
In distributing funds it has received under consent order with
alleged violator of petroleum price and allocation regulations,
Department of Energy must attempt to return funds to those actually
injured by overcharges. Energy has no authority to implement plan to
distribute funds to class of individuals not shown to have been likely
victims of overcharges. Regulations - Waivers - Agency Ignoring Own
Regulations - Department of Energy
Department of Energy regulations, which create mechanism for persons
injured by violations of price and allocation regulations to claim
refunds, are mandatory. Department lacks authority to waive regulations
in individual cases. Energy - Department of Energy - Authority and
Responsibility - Oil Price and Allocation Regulation - Recovered
Overcharges - Status: Trust v. Miscellaneous Receipt Funds
To extent that Department of Energy receives moneys that it will
return to victims of oil price and allocation regulations, it acts as
trustee and funds need not be deposited in general fund of Treasury.
However, to extent that Department seeks to distribute funds to class of
individuals of its own choosing, rather than those overcharged, funds
are not held in trust and must be deposited in Treasury as miscellaneous
receipts.
To The Honorable John D. Dingell, House of Representatives, October
10, 1980:
You have requested that we review the legality of plans by the
Department of Energy (Energy) to distribute $25 million it holds under
the terms of a consent order with Getty Oil Company. The consent order
resulted from allegations by Energy that Getty had violated Federal oil
price and allocation regulations. Energy has announced that it plans to
distribute $21 million of the Getty funds to 20 states in which Getty
sells heating oil to be used to benefit low-income residents. The
remaining $4 million will be distributed through the Department of
Defense (Defense) to lower pay grade members of the armed services who
reside off base in states where Getty does business.
On July 23, 1980, you wrote to the Secretary of Energy concerning the
Getty fund, requesting, among other things, a legal memorandum by
Energy's General Counsel, justifying the proposed plan for distribution.
In the legal memorandum, dated August 20, 1980, Energy argues that it
has implied power to order restitution as a remedy for violations of
price and allocation regulations; that it has consistently interpreted
its own enforcement powers as including any action necessary to
eliminate or compensate for the effects of violations; that the Getty
distribution plan is based on restitution and is therefore within
Energy's powers; that the Getty funds are not moneys received for the
use of the United States, and therefore need not be deposited into the
Treasury as miscellaneous receipts; and that Energy's own regulation,
which provides that when the victims of price regulation violations
cannot be identified overcharge refunds may be made directly to the
Treasury, is not mandatory and need not be followed in this case.
We conclude that, because Energy's distribution plan does not effect
restitution, as we define that term, and because Energy has not followed
its own regulations, Energy may not lawfully implement the Getty
distribution plan.
The Consent Order was approved by Getty Oil Company on November 26,
1979, and by Energy on December 3, 1979. By its terms the Order
settled, with stated exceptions, all claims and disputes between Getty
and Energy concerning Getty's compliance with oil price and allocation
regulations during the period August 19, 1973, through December 31,
1978.
The Order provided that Getty would deposit $25 million into an
escrow account with National Savings and Trust Company, Washington, D.C.
The Order stated that "Getty will have no responsibility for, or
participation in, the withdrawal, distribution or investment of funds
from said escrow account." Such matters were to be subject to an escrow
agreement between Energy and the bank. Under the Order Getty further
agreed to surrender its entitlement to $50 million in future gasoline
and propane price increases.
Under the terms of the Order, performance by Getty was to constitute
full compliance with all Federal oil price and allocation regulations.
The Order specifically provided that execution of the Order would
constitute neither an admission by Getty nor a finding by Energy that
Getty had violated any statutes or regulations.
The Order made no provision for the distribution of the $25 million
nor did it state the purposes for which the money would be used.
Further, the order contains no provision that Energy's procedural
regulations would not apply with respect to these funds.
Energy announced the Getty Consent Order in a press release dated
December 5, 1979. The release indicated that the $25 million in the
escrow account would be "used to defray heating oil costs of low-income
persons." The release further stated that details of the distribution of
the funds would be announced after the Order became final.
On December 11, 1979, Energy published notice of the Order in the
Federal Register and requested comments. See 44 Fed.Reg. 71453. This
notice again indicated that the Getty fund would be used to defray
heating oil costs of economically disadvantaged persons. Subsequently,
on February 14, 1980, Energy published notice that the Getty Consent
Order had become final. See 45 Fed.Reg. 9992. In this notice Energy
indicated that the $25 million would be used "to mitigate energy costs
of economically disadvantaged persons."
The notice also stated that Energy would "determine how to distribute
the funds."
Energy has considered various plans for distributing the Getty fund.
Among these were distribution to states which had the greatest need for
assistance in meeting the heating oil burden of the poor; distribution
to states in proportion to Getty's total middle distillate sales in
those states during the winter of 1978-1979, with the states using the
money to assist the poor; distribution to states in proportion to
Getty's nonindustrial sales of middle distillates, with the money being
used to assist the poor; and a plan under which half the money would be
used to reduce prices of Getty propane users and half would be paid to
indigent servicemen living off base. Also under consideration were
joint programs with the Department of Housing and Urban Development and
the Community Services Administration to make grants for energy-related
purposes.
The current plan for distributing the Getty money was announced July
11, 1980. Under this plan $21 million is to be distributed to 20 state
governments in rough proportion to Getty's total heating oil sales in
those states. Before receiving the money, each state must submit a plan
for using the funds to defray heating oil costs of the poor. The
remaining $4 million is to be distributed directly to lower pay grade
servicemen in States where Getty sells heating oil.
Under the distribution plan as announced, the State of Missouri was
to receive $1,344,000. On July 15, 1980, the Governor of Missouri
proposed to Energy that Missouri's share of the Getty fund be made
available immediately to provide assistance to low income individuals
suffering the effects of a severe heat wave. In response to this
request, on July 18, 1980, Energy agreed to make Missouri's share of the
Getty money available:
a. To defray costs of purchase and installation of fans and other
low-cost mechanisms, and lease or rental of air conditioners.
b. To pay for emergency transportation to temporary shelter, and for
the shelter of, those severely affected by the heat.
c. To help defray higher than normal utility bills incurred by those
affected by the heat.
I. Energy Cannot Implement Its Plan Because It Is Not Designed To
Effect Restitution And Is Thus Beyond Energy's Remedial Authority
Section 503 of the Department of Energy Organization Act, 42 USC.
7193 (Supp. I 1977) (Organization Act) authorizes the Secretary of
Energy or his representative to issue a "remedial order" to any person
believed to have violated any regulation, rule or order promulgated
under the Emergency Petroleum Allocation Act of 1973, as amended, 15
U.S.C. 751 et seq.
(Allocation Act). The remedial order is to be in writing and is to
describe with particularity the nature of the violation, including a
reference to the provision of the regulation alleged to have been
violated. The remedial order become a final order of the Secretary
unless contested within 30 days, which case the issue will be decided by
the Federal Energy Regulatory Commission.
The Organization Act provides no guidance as to what a "remedial
order" is intended to be. The legislative history indicates that
section 503 of the act is not creating a new enforcement power, but
rather is providing a means for those accused of violations to challenge
the determination within the agency.
The bulk of the enforcement and remedial provisions concerning
regulations issued under the Allocation Act is contained in section 5 of
the Allocation Act itself, 15 U.S.C. 754. Section 5 first provides that
sections 205 through 207 and sections 209 through 211 of the Economic
Stabilization Act of 1970, as amended, 12 U.S.C. 1904 note
(Stabilization Act), shall apply to price and allocation regulations
under the Allocation Act. Section 5 then provides for both civil and
criminal penalties for violation of the price and allocation
regulations.
Of the provisions of the Stabilization Act incorporated into the
Allocation Act, sections 209 and 210 create enforcement powers. Section
209 authorizes the United States to bring suit against an alleged
violator in a United States District Court and authorizes the court to
enjoin a person from violating a regulation. Further, the court may
order the person to comply with the regulation and may order restitution
of moneys received in violation of the regulation. Section 210
authorizes those adversely affected by violation of the regulations to
bring suit for declaratory judgment, injunction, or damages.
Energy acknowledges that it has no express statutory authority to
order restitution as a remedy for violation of its price and allocation
regulations. However, it argues that it impliedly has this power as
necessary to enforce its regulations.
As we indicated above, the Allocation Act provides several methods
for the enforcement of regulations issued under its terms. The Act
provides for civil and criminal penalties; authorizes the United States
to bring suit for injunctions; authorizes the United States district
courts to enjoin violation and compel compliance with the regulations,
and to order restitution of any overcharges; and authorizes private
injured parties to bring suit for declaratory or injunctive relief or
damages.
Although the Act specifically grants the power to order restitution
to the district courts, and does not specifically grant this power to
Energy, it has been determined that the Federal Energy Administration
(Energy's predecessor) has implied power to order violators to refund
overcharges. Bonray Oil Co. v. Department of Energy, 472 F.Supp. 9
(W.D. Okl. 1978), aff'd per curiam, 601 F.2d 1191 (TECA 1979).
Energy interprets Bonray Oil as confirming that it has, by
implication, a broad restitutionary power. However, the court in Bonray
Oil did not go so far. In Bonray, Energy's predecessor issued a
remedial order finding that Bonray had violated the price and allocation
regulations, and ordering Bonray to make refunds to its overcharged
customers. After affirming the determination that Bonray had violated
the regulations, the District Court ruled that Energy's predecessor had
the power to order a violator of its regulations to make direct refunds
to the customers it had overcharged. Bonray Oil only confirms Energy's
authority, as part of a remedial order which determines that violation
have occurred, to order the violator to return overcharges directly to
its customers.
In our opinion, under Bonray Oil, and the Organization and Allocation
Acts, Energy's remedial authority is limited to ordering a violator to
make refunds to overcharged customers.
In its regulations Energy has set forth the scope of the remedial
action it may take as follows:
(a) A Remedial Order, a Remedial Order for Immediate Compliance, an
Order of Disallowance, or a Consent Order may require the person to whom
it is directed to roll back prices, to make refunds equal to the amount
(plus interest) charged in excess of those amounts permitted under DOE
Regulations, to make appropriate compensation to third persons for
administrative expenses of effectuating appropriate remedies, and to
take such other action as the DOE determines is necessary to eliminate
or to compensate for the effects of a violation * * * . Such action may
include a direction to the person to whom the Order is issued to
establish an escrow account or take other measures to make refunds
directly to purchasers of the products involved, notwithstanding the
fact that those purchasers obtained such products from an intermediate
distributor of such person's products, and may require as part of the
remedy that the person to whom the Order is issued maintain his prices
at certain designated levels, notwithstanding the presence or absence of
other regulatory controls on such person's prices. In cases where
purchasers cannot be reasonably identified or paid or where the amount
of each purchaser's overcharge is incapable of reasonable determination,
the DOE may refund the amounts received in such cases directly to the
Treasury of the United States on behalf of such purchasers. (10 CFR
205.199I).
Energy argues that it, and its predecessors, have for a long time
applied a broad interpretation of its remedial authorities, including
the concept of restitution. Energy claims that the regulations have
always made clear that remedy includes any action necessary to eliminate
or to compensate for the effects of a violation. Moreover, Energy
asserts that, in reenacting authorizing legislation for Energy and its
predecessors while this regulation was in effect, the Congress has
approved this interpretation of the statutory powers.
As previously stated, we find nothing in the governing statutes which
goes beyond remedial purposes including restitution. An examination of
10 CFR 205.199I (quoted above) shows that the underscored words upon
which Energy relies are weak support, indeed, for the expansive
authority it asserts. The regulation provides that remedial orders may
require rollbacks of prices, refunds equal to the amount of actual
overcharges, compensation to third parties for administrative expenses,
as well as such other action as Energy determines is necessary. It
further defines what "such other action" means by stating that it may
require the creation of an escrow account or "other measures to make
refunds directly to purchasers of the products involved," and may
require the person to whom the order is directed to maintain prices at a
certain level. The regulation finally states that, where overcharged
purchasers cannot be identified or the amount each purchaser was
overcharged cannot be determined, the amount of the refund may be
deposited in the Treasury of the United States on behalf of the
purchasers.
In our opinion, each of the specified remedies is designed to force
the violator of the regulation to remit its unlawful gains and for the
customers of the violator to recover the amounts they have been
overcharged, if possible. The regulation does not permit Energy to
order "any action," but rather only "such other action"-- that is,
action similar to the specified remedies-- which will eliminate or
compensate for the effects of the violation. The further definition of
"such action" makes it clear that its purpose should be to force the
violator to remit overcharges and, if possible, to return them to the
customers who have actually been overcharged.
Energy also argues that, in reenacting authorizing legislation for
Energy and its predecessors while the regulation on remedies was in
effect, the Congress has approved Energy's interpretation of its powers.
However, Congress has not approved or ratified any broad interpretation
of Energy's remedial powers.
Ordinarily, the mere reenactment of an agency's authorizing
legislation does not signify Congressional approval of the agency's
administrative interpretations unless it is shown that the Congress was
aware of these interpretations. Mobile Oil Corp. v. Federal Energy
Agency, 566 F.2d 87, 100 (TECA 1977). Ratification may be inferred only
from a consistent administrative interpretation of a statute shown
clearly to have been brought to the attention of the Congress and not
changed by it. Id.
As we are not aware that Energy has ever communicated such a broad
interpretation of its own regulations to the Congress, we do not
interpret the inaction of the Congress as ratification.
Energy claims that the Getty distribution plan satisfies the
statutory and regulatory requirements for restitution. It states that
these requirements are met if the plan has as its purpose the
elimination of the effect of alleged violations sustained by ultimate
consumers. We do not agree that the Getty plan is designed to
accomplish this purpose.
To determine whether the Getty plan is in fact restitutionary, it is
first necessary to examine the nature of the violation, so as to
determine who the injured parties were. The Getty Consent Order is
devoid of any facts from which we can determine the nature of the
violation. However, we accept Energy's assessment that some time
between August 19, 1973, and the end of 1978, Getty charged prices in
excess of those permitted to purchasers of petroleum middle distillates,
including but not limited to home heating oils, and that the $25 million
placed in escrow represents those middle distillate overcharges. Thus,
those who suffered the effects of the violation were all purchasers or
users of Getty middle distillates during the years in question.
In order for any distribution of the Getty funds to satisfy the
statutory and regulatory requirements for restitution, it must be made
in approximate proportion to the injury actually sustained to Getty
customers and to ultimate consumers of Getty products who were the
victims of the overcharges. In our view, Energy's plan does not meet
this test.
With respect to the $4 million to be distributed to servicemen, the
only connection is that these servicemen currently reside in states in
which Getty did business during the winter of 1978-79. In all other
respects distribution to these servicemen is unrelated to Getty's
violation.
The terms of the distribution to servicemen are described in an
agreement between Energy and Defense:
1. An eligible recipient is any enlisted member at or below grade
levels designated by DOE who is on active duty in the U.S. Military
Services on May 30, 1980, in any state designated by DOE as served by
Getty Oil, and who, with one or more dependents, occupies non-government
quarters in that state.
2. DOD will prepare a listing of potentially eligible personnel and
will expeditiously distribute the entire sum transferred by the Office
of Special Counsel on a equal per capita basis among eligible recipients
deemed qualified by DOE in the manner and at the times most convenient
to the DOD.
It is clear that any lower grade enlisted member of the services,
with dependents, residing off base in a state in which Getty does
business is eligible to receive a portion of the "refund." Energy has
made no attempt to limit payments to individuals who were even likely to
have been victims of the Getty overcharges. Although the Getty
overcharges took place between 1973 and 1978, the date for determining
eligibility is May 30, 1980. Considering the high mobility of enlisted
members of the Armed Forces, it is questionable that those eligible to
receive Getty payments under the plan would have been living in the same
area during the period of violations. Moreover, eligibility is
unrelated to use of Getty middle distillates. A service member may live
in a residence heated by electricity, natural gas, propane, coal, or
wood, and yet be eligible for a share of the "refund."
The plan of distribution to servicemen is not related to the Getty
violations. Rather than being a plan to remedy the effects of
violations, this proposed distribution is a plan for $4 million in
assistance to individuals whom Energy considers to be in need.
The proposed distribution to 20 states is also not sufficiently
related to the Getty violations to constitute a plan of restitution.
Under the distribution plan, Energy will transfer a portion of $21
million to each of the states. The states will be required to formulate
plans for use of the money. Under draft Energy criteria, the money will
be provided to low income residents to defray heating oil costs, either
through direct payments or by funding energy-related programs that will
result in heating oil savings. Low income residents are defined as
those at or under 150 percent of the poverty level.
Again there seems to have been no attempt to link the prospective
recipients within the states to the Getty violations. Although the
Getty violations took place between 1973 and 1978, recipients of the
payments will be individuals residing within the states in 1980.
Distribution will be limited (presumably) to users of hom heating oil,
but there has been no attempt to make payments only to Getty customers.
Although the victims of the Getty violation were all users of Getty
middle distillates, only users of home heating oil will benefit from
Energy's distribution plan. And although all consumers of Getty hom
heating oil were victims of the Getty violations, only individuals with
incomes at or below 150 percent of the poverty level are eligible to
benefit under the Energy distribution plan.
Energy argues that illegal pricing by one supplier within a market
affects pricing conduct by its competitors and thus all heating oil
consumes are affected.
The issue, however, is limited to distribution of the Getty overcharges
to Getty customers and Energy's rationale is, in any event, highly
speculative.
Energy asserts that agricultural and industrial users of middle
distillates were excluded because, unlike residential users, they were
able to pass through the added costs rather than having to absorb them.
However, these nonresidential users were ultimate consumers of Getty
middle distillates and thus victims of the overcharges. They are as
much entitled to receive refunds as are other Getty customers or
ultimate consumers. Moreover, it is not clear that market conditions
would have permitted non-residential consumers to fully pass through the
Getty overcharges.
Energy argues that low income consumers are entitled to receive the
entire "refund" because they are likely to have been most harmed by
overcharges and are least likely to be able to pursue private remedies.
However, all ultimate consumers of Getty heating oil, regardless of
income, were injured by the violations and should be entitled to a
portion of the refunds. The fact that an individual has a higher income
than 150 percent of the poverty level does not deprive that individual
of the right to receive restitution for overcharges, nor does it free
Energy of the obligation to enforce its regulations on behalf of all
consumers.
In short, although the Energy distribution plan may embrace persons
who have been injured by the Getty violations, their inclusion results
more by happenstance than by design. Fundamentally the plan provides
assistance for groups of lower income energy users with a nominal but
not very real connection to Getty. We do not question the merit or
desirability of providing aid to these groups. We assert only that it
is the Congress, not The Department of Energy which must initially
determine the manner and the extent to which this should be done.
Accomplishing such public policy objectives does not constitute
restitution for unlawful overcharges.
In this connection, we recognize also that it is frequently not
possible to identify each individual customer or consumer who has been
overcharged nor is it always possible to make a precise determination of
the amounts each individual has been overcharged. So long as a good
faith effort was made to identify overcharged individuals, we would not
view a distribution scheme which lacked dollar for dollar precision as
unauthorized. However, the Energy distribution scheme in the Getty case
does not sufficiently relate distributees to those injured to support a
finding of restitution.
In the case of the distribution already made to the State of
Missouri, it is difficult to postulate a rationale under which the use
of Getty funds to aid the victims of a heat wave can in any way be
related to restitution for Getty overcharges.
II. Energy Cannot Implement Its Plan Because Energy Has Failed To
Follow Its Own Regulations
Energy's regulations (10 CFR Part 205, Subpart V) set forth a
procedure for distribution of overcharge refunds when Energy cannot
readily identify those individuals entitled to refunds or the amount of
refunds these individuals are entitled to receive. The scope and
purpose of subpart V are set forth as follows:
This subpart establishes special procedures pursuant to which refunds
may be made to injured persons in order to remedy the effects of a
violation of the regulations of the Department of Energy. This subpart
shall be applicable to those situations in which the Department of
Energy is unable to readily identify persons who are entitled to refunds
specified in a Remedial Order, a Remedial Order for Immediate
Compliance, an Order of Disallowance or a Consent Order, or to readily
ascertain the amounts that such persons are entitled to receive. (10
CFR 205.280.)
Under these regulations, an Energy enforcement officer files a
petition with Energy's Office of Hearings and Appeals indicating that
the officer has been unable to identify the victims of overcharges or
the amounts these victims are entitled to receive. After considering
the matter and soliciting comments from the public, the Office of
Hearings and Appeals issues a decision and order setting forth the
manner in which individuals may apply for refunds and in which the
refunds will be distributed. After all applications have been processed
and refunds made, and after deducting the costs of the proceeding, any
remainder of the refund is to be deposited in the United States Treasury
or distributed in any other manner determined by the Office of Hearings
and Appeals.
Although Energy claims it has been unable to identify the victims of
the Getty overcharges, it has not used the Subpart V procedure. Energy
indicates that as part of the agreement which produced the Consent
Order, it agreed with Getty that the Subpart V procedure would not be
used in distributing the Getty fund. Therefore, it argues, the Subpart
V procedure was not available to it in this case.
We have examined the Getty Consent Order and we find no indication
that Energy has agreed to refrain from using its Subpart V procedure.
Nor does the press announcement, or do public notices of the Order,
indicate that the procedure established by regulation is not to be
followed. We question whether Energy is bound by an unwritten agreement
it may have had with Getty, particularly as we conclude that Energy is
not authorized to forego use of its Subpart V procedure when called for.
In our view, it is clear that the regulation is designed for
protecting the rights of overcharged customers and that the Subpart V
procedure is mandatory.
Subpart V is a statutory regulation issued under the authority of
section 644 of the Organization Act (42 U.S.C. 7254). Such a
regulation, so long as it is in effect, is binding upon the agency which
has issued it. See, e.g., United States v. Nixon, 418 U.S. 683,
694-96(1974). An agency may not waive its statutory regulations in
individual cases. See 57 Comp.Gen. 662, 663(1978); 49 Comp.Gen. 145,
147(1969).
We conclude that, because Energy's plan for the distribution of the
Getty funds is not restitutionary and because Energy has not followed
its regulatory procedures, Energy may not lawfully implement the plan.
Energy raises the issue as to whether the Getty funds were received
for the use of the United States and thus should have been deposited in
the Treasury of the United States, as required by 31 U.S.C. 484. Energy
argues that, since the basic purpose of Energy's receipt of this money
was its return to overcharged customers, it was not received for the use
of the United States but rather for the use of others. Energy cites two
cases for the proposition that not all funds received by a Federal
agency are public funds which need be deposited in the Treasury (Varney
v. Warehime, 147 F.2d 238, 245 (6th Cir. 1945), and Emery v. United
States, 186 F.2d 900 (9th Cir. 1951)).
We agree that under 31 U.S.C. 484, only moneys received for the use
of the United States need be deposited in the Treasury as miscellaneous
receipts. Moneys properly held by a Federal agency in a trust capacity
are not required to be deposited as miscellaneous receipts of the
Treasury. To the extent that Energy receives funds that it will return
to overcharged customers, either directly when those customers can be
identified or through the Subpart V procedure, it need not deposit them
in the general fund of the Treasury.
In the Getty case, however, Energy has not attempted to distribute
the funds to those who were overcharged and entitled to refunds.
Rather, from the time that Getty agreed to place the funds in an escrow
account, Energy has been seeking to use them to carry out energy
policies unrelated to returning funds to overcharged persons.
Energy contends it is merely holding this money as trustee for its
rightful owners. Yet with each formulated plan for distribution, Energy
has constantly changed the beneficiaries of this so-called trust.
Energy has not made it clear just exactly for whom it is holding this
money in trust. In our opinion, by claiming for itself the unlimited
right to determine (and to change the determination at will) who shall
receive payment, in what amount, and the purposes for which the money
shall be used, Energy may not be considered as acting as a trustee.
In sum, to the extent that Energy seeks to distribute the Getty funds
to a class of individuals of its own choosing, rather than to the actual
overcharged Getty customers, it is not holding the funds in trust and
under 31 U.S.C. 484 it must deposit them in the Treasury as
miscellaneous receipts.
You have specifically requested that we determine whether the
Department of Defense is authorized to supplement the salary of
servicemen by making the payments under the Energy distribution plan.
As we have already indicated, Energy may not lawfully implement its plan
and therefore payments to servicemen cannot be made.
However, assuming that Energy's plan provided for reimbursement of
overcharges to servicemen actually overcharged, we would not question
the processing of payments by Defense on behalf of the Department of
Energy. We have examined the legal memorandum prepared by the General
Counsel of Defense, and we agree that these payments to servicemen would
not violate any specific provision of law. We do not consider that
these payments, unrelated to any Defense operation or expenditures,
would constitute an augmentation of Defense's appropriations.
The current Energy plan for distribution of the Getty funds is
unauthorized and Energy cannot lawfully implement it. Under Subpart V
of Part 205 of its regulations Energy must use the procedures it has
adopted for distributing refunds in instances where victims of
violations cannot be readily ascertained. Any portion of the Getty
funds which cannot be distributed under Subpart V must be deposited in
the Treasury as miscellaneous receipts.
You have asked what action this Office would take to prevent DOE from
implementing its distribution scheme in the event we determined that the
plan is unlawful.
We will apprise the Department of Energy that we take issue with any
failure to account properly for the funds involved either as
reimbursement to appropriate persons or as deposits in the Treasury
within a reasonable time after implementation of the Subpart V
procedure.
The authority of the Department of Energy to enter into Consent Orders
on other than injunctive or restitutionary terms has been challenged in
court. Under such circumstance we would not be inclined to take any
further action, since the court will ultimately resolve the issues we
have covered.
B-199171, October 10, 1980, 60 Comp.Gen. 11
Contracts - Architect, Engineering, etc. Services - Procurement
Practices - Department of Defense - Protest Timeliness - Failure to Set
Aside
Where agency does not issue solicitation for Architect-Engineering
(A-E) services but synopsizes procurement in Commerce Business Daily,
and synopsis shows procurement will not be set aside for small business,
protest that procurement should have been set aside is untimely unless
filed prior to deadline specified in synopsis for receipt of
qualification statement. Contracts - Architect, Engineering, etc.
Services - Contractor Selection Base - "Brooks Bill" Application -
Evaluation Process - Documentation
Agency evaluators must document basis for evaluation and ranking of
competing A-E firms to show judgments are reasonable and consistent with
evaluation criteria even though such judgments may necessarily be
subjective.
Matter of: Wadell Engineering Corporation, October 10, 1980:
Wadell Engineering Corporation (Wadell) protests the award of an
architect/engineer (A/E) contract by the Western Division, Naval
Facilities Engineering Command (Navy) to PRC-R. Dixon-Speas Associates
(Dixon-Speas). The contract is for a comprehensive study to assure that
development in and around the El Toro Marine Corps Air Station is
compatible with the noise level and accident potential resulting from
aircraft operations.
Wadell contends that the contracting officer erroneously decided not
to designate the procurement as a small business set-aside and that the
Navy did not properly apply the published evaluation criteria in its
selection of the A/E contractor. Because we agree with the protester
that the reasonableness of the agency's evaluation process is
questionable, the protest is sustained.
Under our Bid Protest Procedures, 4 C.F.R.PART 20(1980), Wadell's
first contention is untimely. These procedures require that protests
based upon alleged improprieties in any type of solicitation that are
apparent prior to the closing date for receipt of initial proposals be
filed before that date. 4 C.F.R. 20.2(b)(1).
In this case, we believe that the Commerce Business Daily (CBD)
synopsis is tantamount to a solicitation (since a separate solicitation
for A-E services is not issued) and that it was apparent from the
synopsis that the procurement was not being conducted as a small
business set-aside. (See section 1-1003.9 of the Defense Acquisition
Regulation (DAR) (1976 ed.) requiring that the synopsis state that the
procurement is a set-aside.) Therefore, we believe Wadell was required
to protest before the deadline specified in the synopsis for receipt of
qualifications statements. CF. Information International, Inc., 59
Comp. Gen.-- (1980), 80-2 CPD 100. Since Wadell did not protest until
after it had learned of the proposed award to Dixon-Speas, this aspect
of its protest is untimely and is dismissed.
Regarding Wadell's objection to the Navy's selection process, we note
that this was a procurement of A/E services, and the Navy advises that
it followed the selection procedures for such services set forth at DAR
Sec. 18-401 et seq., and implemented by the Naval Facilities (NAVFAC)
Contract Manual at paragraph 5-303. We are further advised that these
procedures are all in accordance with the Brooks Bill, 40 U.S.C. 541 et
seq. (1976).
Generally, the Brooks Bill prescribes that the requirement for A/E
services be publicly announced. The contracting 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. Discussions must be held with "no less than three firms
regarding anticipated concepts and the relative utility of alternate
methods of approach" for providing the services requested. The
contracting agency then ranks in order of preference, based on
established and published criteria, no fewer then three firms considered
most qualified. Negotiations are held with the highest ranked firm. If
the procuring agency 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. Randolph
Engineering, Inc., B-192375, June 28, 1979, 79-1 CPD 465.
DAR Sec. 18-402.2(g) (1976 ed.) requires that the selection of A/E
firms be in accordance with the policy established by the Brooks Bill
and the evaluation criteria established in advance for the selection.
The NAVFAC Contract Manual at paragraph 5-303.2 also requires that, in
accordance with the Brooks Bill, A/E requirements be publicized in a
notice setting forth the significant specific evaluation factors to be
applied.
Here, notice of the project appeared in the CBD in an announcement
which specified the following evaluation criteria:
Professional qualifications of the staff to be assigned to the
project; recent specialized experience of the firm in preparation of
Air Installation Compatible Use Zones (AICUZ) reports; past experience
of the firm with respect to performance on Department of Defense
contracts; professional qualifications of the firm to accomplish the
contemplated work within a minimum reasonable time limit; location of
the firm in the general geographical area of the project; volume of
work previously awarded to the firm by the Western Division Naval
Facilities Engineering Command.
Nine firms responded by submitting statements of their qualifications
on Standard Form 255, "Architect-Engineer and Related Services
Questionnaire for Specific Project." Following evaluation of these
forms, the Navy's Pre-Selection Board recommended that Wadell and three
other firms be considered for the project.
The Navy's Selection Board then interviewed each firm and on that
basis evaluated their experience and capabilities. After concluding
individual reviews and evaluations, a secret ballot by the voting
members of the Board resulted in the elimination of Wadell from the
competition and the selection of Dixon-Speas as the most qualified of
the three remaining firms. The recommendation of the Section Board was
approved on April 17, 1980.
Wadell maintains that the Navy improperly applied the evaluation
criteria. In this regard, the protester questions the agency's judgment
that Dixon-Speas is more qualified than Wadell in terms of experience,
professional staff, ability to perform the work within the designated
time period, and geographical location of the firm's offices in
proximity to the project site.
Our review of an agency's judgment in these matters is limited to
examining whether the selection of the A/E contractor is reasonable,
based on published criteria and in accord with the policy expressed in
the Brooks Bill. See Gruzen/Gersin, B-195439, November 19, 1979, 79-2
CPD 362. In this case, we agree with the protester that the Navy's
evaluation process is subject to question.
Although the Navy reports that it has presented us with a complete
description of the evaluation, and that the procedures employed by the
Selection Board met the requirements for A/E procurements, the record
does not demonstrate that the selection was reasonable and in accordance
with the established and published criteria. While the contracting
officer's "Determination and Findings" states generally that evaluation
was based on the selection criteria, there is no documentation of the
evaluators' reasons for selecting and ranking the firms which appear on
the final slate.
We are advised by the Navy that since the slating and selection
procedure involves individual evaluation of firms to be slated and a
listing in order of priority of the firms for selection, all done by
secret ballot, "scoring sheets" or documents of that nature will not be
found. The Navy contends that because the slating and selection are
done by architects and engineers who are called upon to exercise their
professional judgment in applying the criteria announced in the CBD, the
process is necessarily a highly subjective one which does not lend
itself to reasoned statements of the basis on which the selection is
made.
We have recognized that technical judgments by their nature are often
subjective; nonetheless, the exercise of these judgments in the
evaluation of proposals must be reasonable and must bear a rational
relationship to the announced evaluation criteria upon which competing
offers are to be selected. See Bunker Ramo Corporation, 56 Comp.Gen.
712 (1977), 77-1 CPD 427. We fail to see the distinction between the
exercise of these judgments in the selection of A-E contractors and the
selection of other contractors where the subjective judgments of agency
evaluators are necessarily involved.
Implicit in the foregoing is that these judgments must be documented
in sufficient detail to show that they are not arbitrary. In this
regard, we note that the NAVFAC Contract Manual at paragraph 5-303.5(e)
requires that the Selection Board's recommendation of a particular firm
for selection include an explanation of the reasoning on which such
recommendation is based.
We therefore find no merit to the Navy's position.
Where, as in this case, the record before us is devoid of any
supporting rationale for the selection decision in a negotiated
procurement, we are unable to conclude that the agency had any rational
basis for its decision. See, e.g., National Health Insurance, Inc.,
B-186186, June 23, 1976, 76-1 CPD 401. As noted above, the record
contains nothing more than a statement that the evaluation was based on
the published criteria; we see no explanation as required by the NAVFAC
Manual and the Navy advises that there is in fact no documentation in
existence which explains the evaluators' reasons for selecting and
ranking the firms appearing on the final slate. We therefore have no
basis to conclude that the agency's selection process was reasonable and
based on the published criteria. Accordingly, this basis of protest is
sustained.
Wadell has stated that the award of the contract, in its opinion,
should have been made to it. However, the record has not established
that Wadell would have been entitled to the award but for the Navy's
failure to establish a rational basis for the selection that was made.
It may be, for example, that an appropriately documented record would
show that the selection was reasonable and consistent with the announced
evaluation criteria. Moreover, there are a number of factors involved
in our consideration of whether to recommend corrective action which
might entail termination of an improperly awarded contract. See Cohu,
Inc., 57 Comp.Gen. 759(1978), 78-2 CPD 175. These factors include the
extent of contract performance and the cost to the Government which
might result from a termination. EMI Medical, Inc., 59 Comp.Gen.
269(1980), 80-1 CPD 153. Here, approximately 40 percent of the
performance period has already elapsed and thus a substantial portion of
the $78,000 contract price has already been incurred. In addition,
recompetition at this time could only delay the completion of the
project, and would likely increase the costs as a result. We therefore
do not believe that there is any practical way we can afford any
meaningful relief in this case. Cohu, Inc., supra. We are,
nevertheless, recommending to the Navy by letter of today that
appropriate action be taken on the basis of this decision with respect
to future procurements.
B-199121, October 10, 1980, 60 Comp.Gen. 9
Travel Expenses - Air Travel - Reservation Penalties v. Voluntary Space
Release - Compensation - Employee v. Government's Entitlement - Travel
Before September 3, 1979
Employee, while traveling on official business on May 23, 1976,
received $174.07 for voluntarily vacating his seat on an over-booked air
flight. Our decisions which allow an employee to keep voluntary
payments do not apply prior to September 3, 1978, the effective date of
the Civil Aeronautics Board regulations encouraging payment for
voluntarily vacating a seat on an over-booked flight. The payment,
which was turned over to the Government, may not be returned to the
employee.
Matter of: William J. Gournay - Payment to Employee for Voluntarily
Vacating Seat on an Over-booked Airplane, October 10, 1980:
This action is in response to a request for an advance decision by H.
Larry Jordan, an authorized certifying officer of the Department of
Agriculture, concerning a reclaim voucher submitted by William J.
Gournay, for compensation which was paid to him incident to travel on
official business when he vacated his seat on an over-booked flight.
Mr. Gournay, an employee of Agriculture, states that on Sunday, May
23, 1976, he was scheduled to leave Dulles International Airport near
Washington, D.C., on a United Airlines flight for Portland, Oregon. On
the shuttle bus to the airplane an employee of United Airlines announced
that the flight was over-booked and requested volunteers who would be
willing to take another flight which would arrive in Portland 2 hours
later. After no one had volunteered at first, Mr. Gournay volunteered
because he was not scheduled to start work until the next day. United
Airlines gave Mr. Gournay a check for $174.07 which he turned in to the
Government when he submitted his travel voucher.
After reading our decisions in Charles E. Armer, 59 Comp.gen. 203
(1980), the Edmundo Rede, Jr., B-196145, January 14, 1980, which allowed
an employee to retain payments received for voluntarily relinquishing
his seat on an over-booked airplane, Mr. Gournay submitted a reclaim
voucher for the payment he received for voluntarily leaving his airplane
seat. The certifying officer has submitted the case to our Office to
determine whether our Armer decision has retroactive effect.
The Federal Travel Regulations (FTR) state that penalty payments made
by air carriers, for failure to furnish accommodations for confirmed,
reserved space are due the Government, and not the traveler, when the
payments result from travel on official business. FTR (FPMR 101-7)
para. 1-3.5b (May 1973). Our Office has applied this provision to
circumstances where the traveler is denied boarding on a scheduled
flight even if the Government incurs no extra expense due to the denied
boarding. See 41 Comp.Gen. 806(1962); Tyronne Brown, B-192841,
February 5, 1979.
However, in Armer and Rede our Office ruled that airline payments to
volunteers are distinguishable from denied boarding compensation and
therefore may be retained by the employee. We also held that if the
employee incurs additional travel expenses by voluntarily relinquishing
his seat, these expenses must be offset against the payment received by
the employee.
The major rationale behind the Armer and Rede decisions was to avoid
frustration of the intent of the regulations adopted by the Civil
Aeronautics Board (CAB) on May 30, 1978, and effective September 3,
1978, which require the airlines to seek volunteers to give up their
seats before the airlines deny boarding to any passengers on an
over-booked flight.
The policy behind these regulations is to insure that the smallest
practicable number of people holding confirmed, reserved space on a
flight would be denied boarding involuntarily. See 14 C.F.R.
250.2a(1979). Making our decisions in Armer and Rede applicable prior
to September 3, 1978, would not serve the same purpose since prior to
the issuance of these regulations, airlines were not required to seek
volunteers before passengers were denied boarding.
In addition, our decisions in Armer and Rede created an exception to
the general rule that payments from airlines for denied boarding are due
the Government, not the employee, and those decisions modify prior
decisions which have been relied upon by employees, certifying and
disbursing officers, and agency officials involved in the travel of
Federal employees. To give retroactive effect to our Armer and Rede
decisions prior to September 3, 1978, would we believe, be too
disruptive of settled claims and, as noted above, would not serve the
purpose of the CAB regulation. Therefore, we conclude that our Armer
and Rede decisions should only be applied to travel occurring on or
after September 3, 1978, the effective date of the CAB regulation. See
also our decision of today, William R. Stover, B-199417, involving
travel performed after the issuance of the CAB regulation but prior to
our Armer and Rede decisions.
In the present case, Mr. Gournay performed the travel in 1976, more
than 2 years before the effective date of the CAB regulation. In
addition, there is some question in the record before us whether this
payment was for voluntarily vacating the airline seat since the check
from United Airlines was made payable to the Government for denied
boarding. Accordingly, since we hold that our Armer and Rede decisions
do not apply to travel performed before September 3, 1978, Mr. Gournay's
claim may not be paid.
B-199206, October 7, 1980, 60 Comp.Gen. 6
Officers and Employees - Hours of Work - Flexible Hours of Employment -
Federal Employees Flexible and Compressed Work Schedules Act - Credit
Hours v. Overtime Hours
Under Title I (flexible schedules) of the Federal Employees Flexible
and Compressed Work Schedules Act of 1978, credit hours are hours of
work performed at the employee's option and are distinguished from
overtime hours in that they do not constitute overtime work which is
officially ordered in advance by management. Therefore, since an
employee was ordered to work 5 hours at the end of the pay period when
she was scheduled to take off, and since she had already accumulated 10
credit hours, and since she had already worked 40 hours that week, the 5
hours of work are overtime. Officers and Employees - Hours of Work -
Flexible Hours of Employment - Federal Employees Flexible and Compressed
Work Schedules Act - Compensatory Time Limitation - Overtime Adjustment
An employee on a flexible schedule who is ordered to work 5 hours
which are overtime hours at the end of a pay period may, on her request,
receive compensatory time off for such time so long as she does not
accrue more than 10 hours of compensatory time in lieu of payment for
regularly or irregularly scheduled overtime work.
Matter of: Sharon E. Jenkins - Flexible Work Schedules - Credit
Hours vs. Overtime Hours, October 7, 1980:
Wayne B. Leshe, Chief Accountant and an authorized certifying officer
with the Federal Communications Commission, has asked whether and in
what manner an employee may be compensated in circumstances where, as
the result of exigencies of the service, she is precluded from using
scheduled credit hours under Title I of the Federal Employees Flexible
and Compressed Work Schedules Act of 1978, Public Law 95-390, September
29, 1978, 5 U.S. Code 6101 note.
On November 16, 1979, the Federal Communications Commission executed
a Memorandum of Agreement on Alternate Work Schedules with the National
Treasury Employees Union for the purposes of participating in an
alternate work schedule experiment under the Federal Employees Flexible
and Compressed Work Schedules Act of 1978 (hereinafter called the Act).
Incident to this ongoing program the following claim has arisen. On May
28, 1980, Ms. Sharon E. Jenkins, a GS-6 employee of the agency, applied
for approval to use 5 credit hours on May 30, 1980, during the hours of
12:30 p.m. to 5:30 p.m. The application for the use of 5 credit hours
was approved by Ms. Jenkins' supervisor on May 28, 1980. On the morning
of May 30, 1980, Ms. Jenkins scheduled use of her credit hours was
cancelled by her supervisor as a result of exigencies of Government
business. Ms. Jenkins worked the 5 hours she was scheduled to take off
and these hours were in excess of 40 hours which she had already worked
that week.
Section 106(a) of the Act restricts credit hour accumulation to a
maximum of 10 hours per pay period. Since May 30th was the last work
day of the pay periods, and in view of the 10 credit hour maximum
permissible balance she was already maintaining, Ms. Jenkins could not
carry over 15 credit hours into the next pay period.
The submission points out that Section 4-A6 of the Memorandum of
Agreement referenced above provides the following in regard to credit
hours:
If an employee will have accumulated more than ten credit hours by
the end of a bi-weekly pay period and has failed to obtain prior
supervisory approval to use the credit hours within that pay period, the
excess credit hours will be lost without compensation. However, if the
use of credit hours has received prior supervisory approval and the
employer subsequently places a work requirement on the employee which
prevents the employee from using the excess credit hours during the pay
period, the employee shall be compensated for the loss of these excess
credit hours in accordance with applicable laws and regulations.
The agency promulgated a directive, FCCINST 1253 to implement the
above section of the Memorandum of Agreement. Part III A, Section D3(a)
of the directive further defines the procedures to be used to pay excess
credit hours and reads as follows:
If the total credit hours exceed 10 credit hours at the end of the
pay period, the excess amount will be recorded as follows--
"(a) If the use of credit hours has received prior supervisory
approval and the employee was precluded from taking the credit hours as
a result of orders of supervisor, the number of hours will be shown on
the line paid this period". The number of hours shown will be preceded
by a minus sign. The following statement will be typed in the remarks
section "Payment for - credit hours to be made." The supervisor must
sign this statement. (See Illustration No. 7.)
The first question presented for our consideration is as follows:
Can the FCC pay Ms. Jenkins for the excess credit hours at the end of
the pay period since the excess hours were caused by a supervisory
cancellation of the approval to use the credit hours in question and
they could not be rescheduled.
Section 101 of the Act defines credit hours and overtime hours
respectively as follows:
(1) the term "credit hours" means any hours, within a flexible
schedule established under this title, which are in excess of any
employee's basic work requirement and which the employee elects to work
so as to vary the length of a workweek, or a workday; and
(2) the term "overtime hours" means all hours in excess of 8 hours in
a day or 40 hours in a week which are officially ordered in advance, but
does not include credit hours.
As a result, an employee who is covered by a flexible schedule which
permits him or her to vary the length of the workday (i.e., variable
day, variable week, and maxiflex schedules) may be ordered by management
to work hours that are in excess of the number of hours which the
employee planned to work on a specific day. If the hours ordered to be
worked are in excess of 8 in a day or 40 in a week at the time they are
performed, those hours are compensable as overtime hours.
Accordingly, Ms. Jenkins is entitled to overtime compensation for the
5 hours worked in the week ending May 30, 1980, since those hours were
ordered by her supervisor due to the exigencies of Government business
and since they were in excess in 40 hours in a week at the time they
were performed.
The second question presented for our consideration is as follows:
Could Ms. Jenkins be paid overtime or be given compensatory time off
for the 5 credit hours in question?
The agency's ability to grant Ms. Jenkins compensatory time off in
lieu of payment of overtime compensation for the 5 hours worked in
excess of 40 hours in the week ending May 30, 1980, is limited both by
statute and regulation.
In accordance with section 103(a)(1) of the act, granting compensatory
time off in lieu of payment for the irregular overtime hours which Ms.
Jenkins worked would be permissible only upon her request. Moreover,
the Office of Personnel Management regulation contained at section
620.104 of title 5, Code of Federal Regulations (1980) provides that an
employee on a flexible schedule may earn up to, but no more than, 10
hours of compensatory time off in lieu of payment for regularly or
irregularly scheduled overtime. If an employee enters a flexible
schedule program with more than 10 hours of compensatory time to his or
her credit, that employee may earn no further compensatory time until
his or her compensatory time balance is less than 10 hours.
Accordingly, the agency may grant compensatory time off to Ms.
Jenkins so long as (1) the grant of compensatory time off does not
violate the maximum accrual provisions of 5 C.F.R. 620.104, thereby
resulting in simultaneous acquisition and forfeiture of any hours of
compensatory time off; and (2) the grant of compensatory time off is at
Ms. Jenkins' request. If Ms. Jenkins does not request compensatory time
off or cannot be granted it under 5 C.F.R. 620.104, then she is entitled
to receive overtime compensation under section 103(a)(2) of the Act.
In conclusion we note that Part III A Section D3(a) of FCCINST 1253
may be read to provide payment at the employee's regular hourly rate for
credit hours scheduled and approved but not used as a result of orders
of a supervisor. Consistent with our decision here, where such hours
are in excess of 8 in a day or 40 in a week, that payment procedure
would be contrary to the provisions of sections 103 and 106 of the Act.
Rather, overtime compensation or compensatory time off where
appropriate, must be provided for such hours of work.
B-198427.2, October 3, 1980, 60 Comp.Gen. 1
Contracts - Protests - Timeliness - Solicitation Improprieties -
Apparent Prior to Bid Opening
To extent protester objects after bid opening to inclusion and
evaluation of option periods as set forth in invitation for bids,
protest is untimely under General Accounting Office (GAO) Bid Protest
Procedures, 4 C.F.R. 20.2(b)(1), which require protests based on alleged
solicitation improprieties apparent prior to bid opening to be filed
before such time. This decision modifies B-193843, et al., Aug. 2,
1979. Contracts - Protests - Timeliness - Significant Issue Exception -
Military Procurement of Food Services - Regulation Change
Question whether revised Defense Acquisition Regulation (DAR) 1-1502
permits inclusion of option provisions in solicitation for mess
attendant services is significant issue within meaning of GAO Bid
Protest Procedures. Issue is of widespread interest to procurement
community because of prior GAO decision in Palmetto Enterprises, Inc.,
B-193843, et al., which held prior DAR provision prohibited inclusion of
option provision in food service contracts and thus any evaluation of
option period. Contracts - Options - Limitations on Use - Military
Procurements - Mess Attendant Services - Regulation Change
Current DAR provision 1-1502 permits inclusion of options in
solicitations for food services. On this basis, GAO decision in
Palmetto Enterprises, Inc., B-193843, et al., Aug. 2, 1979, is modified.
Bids - Unbalanced - Evaluation - Options
Bid for base period approximately $180,000 greater than bids for two
one-year options is not mathematically unbalanced where there is no
evidence that bid is based on nominal prices for some work and enhanced
prices for other work and bid for base period represents 36.7 percent of
total bid price with each option year representing 31.6 percent of total
price. Bids - Unbalanced - Not Automatically Precluded
Mathematically unbalanced bid is not materially unbalanced and may be
accepted where there is no reasonable doubt that award would result in
lowest ultimate cost under solicitation's evaluation criteria. General
Accounting Office - Jurisdiction - Labor Stipulations - Service Contract
Act of 1965
Question regarding affiliation of individual on debarred bidders list
for violation of Service Contract Act is not for review by GAO, because
Service Contract Act provides that Federal agency head and Secretary of
Labor are to enforce Act.
Matter of: K.P. Food Services, Inc., October 3, 1980:
K.P. Food Services, Inc. (K.P.) protests the proposed award of a
contract to Military Services, Inc., of Georgia (Military) under
invitation for bids (IFB) N00600-80-B-4988 issued by the Navy. The IFB
is for mess attendant services at the U.S. Naval Academy, Annapolis,
Maryland.
K.P. argues that Military's bid for the basic one year term and two
options years is mathematically and materially unbalanced and must be
rejected by the Navy as nonresponsive. In this connection, the
protester maintains that the Navy cannot properly evaluate or exercise
the options and that it should receive an award based on its low bid
price for the basic one year period. Finally, the protester questions
the affiliation of Military with an individual on the debarred bidders
list.
We deny the protest.
K.P's allegation regarding the propriety of evaluating the option
periods, filed after bid opening, is untimely. The IFB provided that
bids would be evaluated for purposes of award by adding the prices bid
for the option years to the price bid for the base year. Our Bid
Protest Procedures require that protests based upon alleged
improprieties which are apparent prior to bid opening must be filed
before bid opening. 4 C.F.R. 20.2(b)(1)(1980). Thus, to the extent
K.P. objects to the inclusion of the option provisions, its protest is
untimely.
However, we think that the related question concerning the
applicability and interpretation of DAR Sec. 1-1502(c) falls within the
significant issue exception to our timeliness rules. 4 C.F.R. 20.2(c).
We have previously held that under DAR Sec. 1-1502(b)(i) an agency could
not properly include option provisions in an IFB for food services and
that any exercise of those option provisions would be improper.
Palmetto Enterprises, Inc., et al., B-193843, B-193843.2, B-193843.3,
August 2, 1979, 79-2 CPD 74. The Navy now argues that DAR Sec.
1-1502(c) subsequently was promulgated largely in response to our
decision in Palmetto Enterprises, Inc., et al., supra, and now permits
the inclusion of option provisions in solicitations for food services.
We believe this matter may properly be viewed as one of widespread
interest to the procurement community, Wyatt Lumber Company, B-196705,
February 7, 1980, since the defense agencies award numerous food
services contracts each year. Thus, we will treat this aspect of the
protest on the merits.
In a memorandum dated December 18, 1979, the Navy representative to
the DAR Council forwarded to the Naval activities the newly revised DAR
1-1502. Specifically, this provision precludes the inclusion of option
provisions in solicitations in certain situations and provides in
1-1502(c):
In recognition of (i) the Government's need in certain service
contracts for continuity of operation and (ii) the potential cost of
disrupted support, options may be included in service contracts if there
is an anticipated need for a similar service beyond the first contract
period. * * *
K.P. cites our decision in Palmetto Enterprises, supra, for the
proposition that our Office "specifically prohibited options in food
service contracts because the industry is so highly competitive."
Our conclusion in Palmetto Enterprises, Inc., supra, that the agency
improperly included option provisions in the solicitation was based on
prior DAR Sec. 1-1502(b)(i) which stated that option provisions shall
not be included in solicitations if "the supplies or services being
purchased are readily available on the open market." It was on this
basis that we recognized in Palmetto the highly competitive nature of
the food service industry. DAR now has been revised to eliminate the
reference to "services" in 1502(b)(i) and to add the new section "c." In
accordance with Sec. 1-1502(c), the Navy found that there is an
anticipated need for food services beyond the first contract period and
therefore included options in the IFB. Our review of the minutes of the
DAR Council and other background information concerning the revision of
DAR Sec. 1-1502(b)(i) and new section "c" indicates that these changes
were designed to permit options in, among other things, contracts for
food services. Inasmuch as the revised DAR provision has eliminated the
prohibition in 1502(b)(i) concerning service contracts, we think that
the Navy properly included the options in this IFB. Accordingly,
Palmetto Enterprises, Inc., supra, is modified to the extent it is now
inconsistent with the current regulatory provisions governing options in
food service contracts.
Nonetheless, K.P. believes that the Navy did not make the appropriate
"findings" under 1-1502(c)(i) and (ii) concerning the need for
"continuity of operation" and the "potential cost of disrupted support"
before including the option provision in the IFB. Contrary to K.P.'s
belief, DAR Sec. 1-1502 does not require that findings be made
concerning the "continuity of operation" or the "potential cost of
disrupted support" before including an option period in a solicitation:
it merely recognizes that these factors are present in "certain service
contracts." The relevant findings required to be made before an option
quantity can be evaluated for award are set forth in DAR Sec. 1-1504.
DAR Sec. 1-1502 only concerns the inclusion of options in solicitations.
Moreover, the Navy made the requisite findings under DAR 1-1504 that
the option periods could be evaluated for award.
The IFB requested bids for each yearly period-- the basic year,
option year 1 and option year 2-- and designated each period at Lot I,
Lot II and Lot III, respectively.
The bids of Military and K.P., excluding support costs and including
discounts, are as follows: (TABLE OMITTED)
As K.P. points out, its bid for Lot I is almost $74,000 less than
that of Military; Military's bid is low only if Lot II and/or Lot III
are evaluated.
Our Office has recognized the two-fold aspects of unbalanced bidding.
The first is a mathematical evaluation of the bid to determine whether
each bid item carries its share of the cost of the work plus profit, or
whether the bid is based on nominal prices for some work and enhanced
prices for other work. The second aspect, material unbalancing,
involves an assessment of the cost impact of a mathematically unbalanced
bid. A bid is not materially unbalanced unless there is reasonable
doubt that award to the bidder submitting a mathematically unbalanced
bid will not result in the lowest ultimate cost to the Government. Only
a bid which is materially unbalanced cannot be accepted. Propserv
Incorporated, B-192154, February 28, 1979, 79-1 CPD 138; Mobilease
Corp., 54 Comp.Gen. 242(1974), 74-2 CPD 185.
K.P. maintains that Military's bid is front loaded in that its bid
for Lot I is significantly greater than that for Lot II or Lot III even
though all lots contemplate performance of identical services. With
this in mind, the protester argues that Military's bid is mathematically
unbalanced because its bid for Lot I is $182,871 or 14 percent higher
than Military's bid for Lots II and III. Adhering to the second prong
of the test for unbalanced bids, K.P. argues that Military's bid raises
more than a reasonable doubt that its acceptance will result in the
lowest cost to the Government. This doubt exists, according to K.P.,
because under the applicable Defense Acquisition Regulation (DAR)
1-1502(c)(ii) (1976 ed.) the Navy cannot properly include the option
provisions and thus cannot properly evaluate option prices or exercise
the options. However, in view of the above discussion, we find nothing
improper in the use and evaluation of the options included in the
solicitation.
With regard to whether Military's bid is mathematically unbalanced,
while it is true that Military's bids for Lots II and III are
approximately $180,000 less than its bid for Lot I, there is no evidence
that its bid prices for Lots II and III represent nominal prices for
these lots. As Military points out, its bid for Lots II and III each
represent 31.6 percent of its total bid price while Lot I represents
36.7 percent of the total. We do not find the difference in Military's
bid prices so great as to render its bid mathematically unbalanced. In
Properserv, supra, the questioned bid was $18,000 per month for the
basic term (three months) and $14,000, $13,000 and $12,000 per month
respectively for the three option years.
In that case, even though the bid for the basic term was approximately
30 percent greater than the option I bid price and was 50 percent
greater than the third year option bid price, we did not find the bid to
be mathematically unbalanced. Compare Reliable Trash Service, B-194760,
August 9, 1979, 79-2 CPD 107, where the questioned bid was
mathematically unbalanced because the first option year bid price of
$530,468 exceeded the bid prices for the second and third option years
by approximately 90 percent and the bid price for the basic period was
substantially greater than other bidder's prices for the same period.
Even though, as the protester points out, all lots here contemplate the
performance of identical services, that alone does not render the bid
unbalanced, and we will not look behind a bid in an attempt to ascertain
the business judgment that went into its preparation. See e.g. Reliable
Trash Service, supra; S.F. & G., Inc., dba Mercury, B-192903, November
24, 1978, 78-2 CPD 361.
Even if we assumed Military's bid is mathematically unbalanced, we do
not find Military's bid to be materially unbalanced. The IFB provided
that for purposes of award the total price for all option quantities
would be added to the total price for the basic quantity. The record
shows that the requirement for mess attendant services is certain to
exist during the option period and that there is a reasonable
expectation that funds will be available to exercise those options
because of the nature of the service involved. Thus, because the Navy
expects to exercise their options, it can evaluate the options.
Military's bid is not materially unbalanced because it offered the
lowest ultimate cost to the Government. Reliable Trash Service, supra.
In this connection, K.P. cites our decision in Safemasters Company,
Inc., 58 Comp.Gen. 225(1979), 79-1 CPD 38, for the proposition that a
"mathematically unbalanced bid is materially unbalanced unless it is
'low * * * under all possible situations.'" We believe that the
protester has misinterpreted our decision in that case. Safemasters
involved the improper termination of Safemaster's contract because of
improprieties in the award process. We stated that even though the
solicitation improperly contained option provisions, that fact did not
justify termination because none of the bidders including Safemasters
submitted unbalanced bids or otherwise attempted to benefit in the event
the Government failed to exercise the options and, additionally, because
Safemaster's was the "low bidder under all possible situations." That
statement was meant to explain our finding that no bidder would be
prejudiced by award to Safemaster's despite the improper inclusion of
the option provision in the solicitation.
Our statement that Safemaster's was low under "all possible situations"
was not a new definition of a materially unbalanced bid.
Finally, K.P. maintains that an individual (X) who is on the debarred
bidders list for violation of the Service Contract Act, 41 U.S.C. 351 et
seq. (1976) has a substantial interest in Military, and, therefore,
Military is ineligible for award. K.P. argues that circumstances have
changed since the Department of Labor (DOL) ruled in 1979, that X did
not have a substantial interest in Military, and, in fact, X now does
have a substantial interest in Military. However, we will not consider
the question of whether this individual has a substantial interest in
Military because the Service Contract Act provides that the Federal
agency head and the Secretary of Labor are to enforce the Act.
Enviro-Development Company, B-195215, July 12, 1979, 79-2 CPD 30. This
enforcement power includes making determinations regarding affiliations
with debarred individuals or firms. See Integrity Management
International, Inc., B-187555, December 21, 1976, 76-2 CPD 515. Thus
this matter should properly be pursued with the Navy or the Department
of Labor.
The protest is denied.
B-200344, September 29, 1980, 59 Comp.Gen. 761
General Accounting Office - Jurisdiction - Antitrust Matters
Debarment of bidders which pled guilty to anti-trust violations
involving the submission of bids is within the discretion of procuring
agency and not for initial decision by General Accounting Office.
Matter of: National Mediation Board, September 29, 1980:
An authorized certifying officer of the National Mediation Board
(NMB) requests an advance decision as to whether certain firms which
recently pled guilty to criminal violations of Federal anti-trust
statutes should be debarred.
Six firms, including Alderson Reporting Company, Inc. (ARC) and Acme
Reporting Company, Inc. (Acme), submitted bids in response to an
invitation for bids issued by NMB for stenographic reporting services
for fiscal year 1981. ARC is the apparent low bidder for this
requirement. With the exception of Acme, all firms which submitted bids
pled guilty to violations of Federal anti-trust statutes. Essentially,
these violations involved conspiracies to submit noncompetitive bids for
the provision of reporting services to the Government. Acme, pointing
out that Federal Procurement Regulations (FPR) Sec. 1-1.604(a)(3)
authorizes executive agencies to debar a firm for conviction under the
Federal anti-trust statues arising out of the submission of bids,
requested that NMB debar all other bidders.
Although our Office has exclusive authority to debar firms for
violations of the Davis-Bacon Act, 40 U.S.C. 276a-2(a)(1976), see Ryel
W. Bodily and B&H Contractors, B-196703, May 6, 1980, 80-1 CPD 328,
debarment under the Federal anti-trust statutes is not for our initial
consideration.
Rather, the decision to debar for anti-trust convictions is within the
discretion of the procuring agency. Moreover, the existence of the
anti-trust convictions does not necessarily require that the firms be
debarred. FPR Sec. 1.1-604(b)(2). We cannot, therefore, determine for
NMB whether the firms in question should be debarred. We do note,
however, the serious consequences of debarment and emphasize that if NMB
does initiate debarment proceedings it must comply with the procedural
requirements delineated in FPR Sec. 1-1.604-1.
Since NMB apparently is concerned only with this particular
procurement as opposed to future requirements, it may be more
appropriate for NMB to consider the convictions in assessing the
responsibility of the low bidder, rather than doing so within the
context of the more drastic action of debarment. The FPR requires that,
to be considered responsible, a firm must have a satisfactory record of
integrity and business ethics. FPR Sec. 1-1.1203-1(d). An agency may
properly consider anti-trust convictions in making determinations with
respect to integrity. Colonial Baking Company, B-185305, July 20, 1976,
76-2 CPD 59. We cannot, however, determine for NMB whether ARC, or any
of the other bidders, is responsible, since the question of whether a
bidder's lack of integrity is sufficient to warrant a finding of
nonresponsibility in a particular procurement is a matter primarily for
determination by the procuring agency. 51 Comp.Gen. 703(1972); Kahn's
Bakery, Inc., B-185025, August 2, 1976, 76-2 CPD 106. Of course, when a
small business is involved, a nonresponsibility determination must be
referred to the Small Business Administration which has conclusive
authority to certify that a small business is responsible for a
particular procurement. 15 U.S.C. 637(Supp.I 1977).
Finally, for NMB's guidance on this matter, we point out that our
Office recently dismissed in part and denied in part a protest against
the award by the United States Tax Court of a reporting contract to ARC.
See National Reporting Company, B-199497, August 22, 1980, 80-2 CPD
142. G360600A 60 Comp.Gen. (C.D.P. - 4/2/82)
B-198297, September 29, 1980, 59 Comp.Gen. 758
General Accounting Office - Jurisdiction - Contracts - Grants-in-Aid -
Cooperative Agreements
General Accounting Office will consider complaint by bidder on
solicitation issued by recipient of Federal financial assistance through
cooperative agreement. Contracts - Awards - Federal Aid, Grants, etc. -
State Law Compliance - Bid Responsiveness - Licensing-Type Requirement
Recipient of Federal financial assistance through cooperative
agreement properly rejected bid submitted by firm that at bid opening
lacked certificate of responsibility required at bid opening by
recipient's solicitation and state law.
Matter of: Xcavators, Inc., September 29, 1980:
Xcavators, Inc. complains that the Deer Creek Water Management
District (District), a Mississippi public agency, improperly rejected
Xcavators' bid for a contract to perform channel clearing services in
connection with a watershed work plan formulated by the District and the
Soil and Conservation Service, Department of Agriculture (Service). The
District rejected Xcavators' bid because at the time bids were opened
Xcavators lacked a current state Certificate of Contractor
Responsibility required by the invitation for bids for Mississippi law.
The District receives substantial Federal funding from the Service
under the Watershed Protection and Flood Prevention Act, as amended, 16
U.S.C. 1001-1009 (1976 & Supp.I 1977), which authorizes the Secretary of
Agriculture "to cooperate and enter into agreements with and furnish
financial and other assistance to local organizations." 16 U.S.C. 1003.
In this case, the Service in exercising that authority entered into a
"cooperative agreement" with the District in accordance with the Federal
Grant and Cooperative Agreement Act of 1977, 41 U.S.C. 501-509(Supp.I
1977), whereby the Service agreed to fund a substantial portion of the
watershed work plan.
Initially, we point out that in 1975 we stated in a Public Notice
that pursuant to our statutory obligation and authority under 31 U.S.C.
53(1976) to investigate the receipt, disbursement, and application of
Federal funds we would undertake reviews concerning the propriety of
contract awards made by "grantees" in furtherance of "grant" purposes.
40 Fed.Reg. 42406. Our stated purpose was to determine whether there
had been compliance with applicable statutory and regulatory
requirements, and with grant terms. The term "grant" used therein was
intended to describe an agreement, other than a contract resulting from
a Federal agency's direct procurement action, which required significant
Federal funding and imposed certain conditions for payment upon the
recipient.
See E. P. Reid, Inc., B-189944, May 9, 1978, 78-1 CPD 346.
Subsequently, the Federal Grant and Cooperative Agreement Act of
1977, in order to clarify the differences between Federal procurement
relationships and the various Federal assistance relationships,
specifically characterized the terms "contract," "grant agreement," and
"cooperative agreement," and required agencies to properly define the
instruments they use in accordance with those characterizations. With
respect to grant agreements and cooperative agreements, when no
substantial Federal involvement during performance of the contemplated
activity is anticipated the agency must use the former, 41 U.S.C. 504;
if substantial Federal agency involvement during performance is
anticipated, the agency must enter into a cooperative agreement. 41
U.S.C. 505; see Burgos & Associates, Inc., 58 Comp.Gen. 785(1979), 79-2
CPD 194.
Thus, the only basic distinguishing factor between grants and
cooperative agreements under the statute is the degree of Federal
participation during performance. There is no meaningful difference
between the two for purposes of the review contemplated by our Public
Notice. Accordingly, we will review complaints concerning the propriety
of contract awards made by recipients of Federal financial assistance
through cooperative agreements as well as through grant agreements,
provided, of course, that substantial Federal funding is involved.
We now proceed to discuss the background and merits of Xcavators'
complaint.
The District's invitation for bids, No. MISS-DC-2, stipulated that no
bid shall be opened or considered unless the bidder has a current
certificate of responsibility issued by the Mississippi State Board of
Contractors, or a similar certificate issued by a similar board of
another state, and the certificate's number is affixed to the bid's
container. This certification requirement stems from Mississippi Code
Annotated Sec. 31-3-151 (1972), which provides that:
No contract for public works or public projects costing in excess of
$25,000 shall be issued or awarded to any contractor who did not have a
current certificate of responsibility at the time of the submission of
the bid * * * . Any contract issued or awarded in violation of this
section shall be null and void.
The envelope containing Xcavators' bid indicated that Xcavators
possessed certificate of responsibility number 3779, and therefore on
February 29, 1980, Xcavators' bid was opened with several others.
Xcavators was the low bidder. However, the District subsequently
learned from the Mississippi State Board of Contractors that Xcavators'
certificate of responsibility number 3779 had expired at the close of
1979 and Xcavators did not receive a new certificate of responsibility
(or renew the old one) until March 4, 1980, four days after bid opening.
The District therefore rejected Xcavators' bid and proposed to accept
the next lowest bid subject to the Service's approval, obtained shortly
thereafter.
Xcavators complains that it substantially complied with Mississippi
Code Sec. 31-3-15 by securing a certificate of responsibility only 4
days after bid opening, and that in any event the Mississippi statute
contravenes the principle of Federal procurement law that the
requirement in an invitation that a bidder have a particular license to
be eligible for a contract award involves the bidder's responsibility,
i.e., the ability to meet the contractual obligation, which may be
established after bid opening. See What-Mac Contractors, Inc., 58
Comp.Gen. 767(1979), 79-2 CPD 179.
In this respect, Xcavators observes that Attachment O to Office of
Management and Budget (OMB) Circular A-102, which sets forth terms and
conditions for use with cooperative agreements with state and local
governments, provides that "Grantees may use their own procurement
regulations which reflect applicable State and local law," provided in
part that procurement transactions are conducted "in a manner to
provide, to the maximum extent practicable, open and free competition."
Xcavators maintains that this provision mandates that the District
follow the cited Federal licensing principle.
We first note that the cooperative agreement between the Service and
the District does not incorporate the OMB Circular. The agreement only
requires, as a condition to Federal financial assistance, that the
District "receive, protect, and open bids, * * * determine the lowest
qualified bidder and, with the written concurrence of the State
Administrative Officer, make award." While the Service's Administrative
Handbook references OMB Circular A-102 as applicable to all cooperative
agreements, and the Service advises that "sponsors" (fund recipients)
are "required" to follow the Handbook's provisions, it appears from the
record that the requirement essentially is an informal one.
In any event, the policy reflected in Attachment O to OMB Circular
A-102 and our cases in the area recognize that procurements conducted by
recipients of Federal financial assistance generally should be in
accordance with state law, see e.g., The Eagle Construction Company,
B-191498, March 5, 1979, 79-1 CPD 144 (concerning state "buy-state"
preference statutes); Burroughs Corporation, B-194168, November 28,
1979, 79-2 CPD 376, so long as state and local requirements are
consistent with the usually imposed Federal requirement that goods and
services be obtained in such a way as to promote full and free
competition consistent with the nature of the goods or services being
procured.
See Fiber Materials, Inc., 57 Comp.Gen. 527(1978), 78-1 CPD 422. We do
not view the state's licensing requirements in issue here as being
restrictive of competition since the license was readily available and
all bidders were notified of the state requirement that it be obtained
prior to bid opening.
As regards Xcavators' contention that it substantially complied with
the statute, we are aware of no Mississippi court decisions which have
permitted the acceptance of a firm's bid where the firm did not have a
certificate of responsibility on the bid opening date.
Therefore, we believe the District properly rejected Xcavators' bid.
The Complaint is denied.
B-196659, September 29, 1980, 59 Comp.Gen. 754
Bids - Responsiveness - Determination - on Basis of Bid as Submitted at
Bid Opening - Responsive Bid Subsequently Qualified - Effect on Bid
Status
Where bid as submitted conforms to invitation's requirements,
subsequent submission by bidder cannot affect bid's responsiveness.
Contracts - Specifications - Defective - Estimated Quantities - Single
Price Requested
Basic formal advertising principle that award must be made on basis
of bids as submitted contemplates that material elements of contract
obligation be set at bid opening so that bidder cannot elect whether to
accept or reject award after bids have been exposed.
Matter of: Garrett Enterprises, Inc., September 29, 1980:
Garrett Enterprises, Inc. (Garrett) protests the Naval Facilities
Engineering Command's (Navy) award of an indefinite quantity-type
contract for sewer maintenance services to William F. Gavin, Inc.
(Gavin) under invitation for bids (IFB) No. N62472-79-B-4620. Garrett
contends that Gavin's bid was qualified and thus nonresponsive, and that
the bid was unbalanced. We believe that notwithstanding the protester's
arguments, the solicitation was defective and that the award to Gavin
was improper.
The solicitation included a Schedule of Prices which listed 132 items
of work, an estimated quantity for each, and spaces to enter unit
prices, extended prices and a total bid. However, firms were to submit
only total bid prices before the opening date. The low bidder on that
basis then would have 10 days after bid opening as a prerequisite for
award to submit a completed Schedule of Prices; the sum of the extended
bid prices for each line item listed therein had to equal the total bid
initially submitted. If approved by the Officer in Charge of
Construction, the Schedule of Prices would "be part of the contract and
provide the basis for payments and for any withholding." The invitation
further stated:
* * * unbalancing in the Schedule of Prices submitted shall be cause
for withholding approval and requiring submission of a balanced
schedule, and may be cause for rejection of the bid.
The Navy received four bids as follows: (TABLE OMITTED)
Steam Systems, Inc. was permitted to withdraw its bid due to a
mistake.
Since Gavin then was the low bidder, it was advised to submit a
completed Schedule of Prices. With its Schedule, Gavin submitted an
attachment explaining the scope of the work priced. The Navy requested
that Gavin rescind the unsolicited attachment because it was, in the
Navy's view, "inappropriate." Gavin agreed, and the Navy approved
Gavin's Schedule of Prices and awarded the contract to the firm.
Garrett contends that the attachment submitted with Gavin's bid
showed that the unit prices were computed on a basis other than that
prescribed in the IFB. Garrett argues that the bid thus was
nonresponsive, i.e., it did not represent an offer to perform, without
exception, the exact thing called for in the invitation.
However, it is fundamental that the responsiveness of a bid must be
determined on the basis of the bid submitted at bid opening. Fire &
Technical Engineering Corp., B-192408, August 4, 1978, 78-2 CPD 91.
Thus, Gavin's attachment to the Schedule of Prices, submitted after bid
opening, cannot be considered to affect the bid's responsiveness to the
invitation as issued.
Nevertheless, we find that the procurement procedure used here was
improper. The statutory provisions governing contract awards in
formally advertised procurements, 10 U.S.C. 2305(c)(1976), requires
award based on the bid determined to be "most advantageous to the United
States, price and other factors considered."
That provision contemplates that the solicitation and the responding
bids establish, at bid opening, the material terms of the contractor's
obligation-- those factors which should define the bid's
responsiveness-- in order to make the award determination. Storage
Technology Corporation-- Reconsideration, 57 Comp.Gen. 395, 398(1978),
78-1 CPD 257; Computer Network Corporation, 55 Comp.Gen. 445,
451(1975), 75-2 CPD 297. Here, however, the only relevance of the
submission required at bid opening-- the total bid price-- was for the
initial determination of the firm eligible for award.
The contract to be awarded here was an indefinite quantity one with
the issuance of work orders setting a particular performance obligation.
The IFB cautioned that the Government made no representation as to the
actual amount of work to be ordered other than that its value would be
somewhere between $50,000 and $400,000. Clearly then, the critical
factors in determining the most advantageous bid under 10 U.S.C.
2304(c), as well as in administering the contract, were the unit prices
of work to be performed in response to a work order, and they therefore
should have been required to be submitted at bid opening.
Further, the effect of the failure to require unit prices at bid
opening, thereby essentially leaving the bidder with no real obligation
based on the bid as submitted to perform any item of work at any
particular price, was to give the bidder the option to accept or reject
an award after bids were opened and prices exposed; the firm could at
its whim refuse to submit a completed Schedule of Prices, or could
submit an unacceptable one after seeing the results of the competition.
This reservation of control over the bid's acceptability after its
submission consistently has been criticized as being clearly inimical to
the advertised procurement process. See, e.g., Computer Network Corp.,
supra.
Finally, reserving the right after bid opening to require a bidder to
"resubmit" acceptable Schedule prices in the event of "unbalancing"
improperly contemplates negotiation of the material contract terms in an
otherwise formally advertised procurement.
The Navy explained the rationale for requiring that only a total bid
price be submitted at bid opening, with the unit and extended prices
furnished within 10 days thereafter, in a report on an earlier protest
to our Office:
When an IFB contains 40 to 50 bid items which involve the
multiplication of a unit times an estimated quantity, the number of
arithmetical errors in the preparation of bids increases substantially.
On many occasions, this Command has found it necessary to reject low
bids, and procurements have been delayed by protests against award.
Under a single recent IFB, each of the 12 bidders had arithmetical
errors in their bid item computation. The Navy has also made awards to
low bidders not realizing that there were discrepancies between the
total bid price and the unit prices set out in the bid schedule; this
creates substantial post-award embarrassment when a protestor points out
that award may have been made to the wrong bidder * * * . The preferred
approach is to utilize a single bid item and, after bid opening but
before award, obtain a schedule of prices.
We would suggest that if this Navy Command finds that there are
particular problems in procurements of this nature with respect to
mistakes in bidding and the inadvertent acceptance of erroneous bids, it
highlight in its invitations the fundamental burden of the bidder to
properly prepare its bid, and the substantial limitations on the
withdrawal and correction of bids based on claims of mistake. See
Defense Acquisition Regulation Sec. 2-406 (1976 ed.). In addition, we
would recommend an even more diligent application than usual of the
contracting officer's affirmative duty to adequately review bids and
request verification if a discrepancy is noted. See Dunbar & Sullivan
Dredging Co., B-188584, December 23, 1977, 77-2 CPD 497. We view the
procedure used here in an attempt to dispense with the need for basic
arithmetical computations by the parties as an inappropriate substitute
for what is a basic responsibility of every bidder and every contracting
officer.
Parenthetically, we point out that the procedure simply is not even
effective for the stated purpose, since the low total bidder still may
claim mistake after submitting the Schedule of Prices or the Navy still
may accept an erroneous bid. For example, the bidder lower than Gain in
the instant procurement asserted a mistake in its bid as submitted and
was permitted to withdraw.
Accordingly, the Navy should have required the submission of the
Schedule of Prices at bid opening.
In our view, this fundamental defeat in the procurement generally
would necessitate corrective action with respect to the award. However,
since less than one month remains in the basic contract term, we could
recommend only that the Navy not exercise its option in the present
contract. We understand, in this regard, that the Navy does not plan to
exercise the option but instead plans to resolicit. We are recommending
that in future procurements the Navy insure that the material elements
of the contractor's obligation be established at bid opening, i.e., that
the Schedule of Prices be submitted at that time.
In light of the above, we find it unnecessary to further consider
Garrett's contention that the attachment to Gavin's Schedule of Prices
qualified the bid, or that Gavin's unit prices were unbalanced.
B-197297, September 25, 1980, 59 Comp.Gen. 746
Contracts - Protests - Notice - To Contractors
Contention that protester was not given opportunity to respond to
earlier protest is without merit since record shows that protester met
with agency officials after prior protest was filed to discuss protest
and protester's contract was not canceled until 2 weeks later.
Contracts - Awards - Protest Pending
General Accounting Office (GAO) will not question agency decision to
make award prior to resolution of protest where decision to do so was
made in accordance with applicable regulations. Contracts - Negotiation
- Awards - Erroneous - Evaluation of Proposals
Upon discovery that protester's proposal did not meet mandatory
request for proposals (RFP) requirement, agency canceled contract
erroneously awarded to protester. Protester contends, alternatively,
that: (1) RFP requirement was ambiguous; (2) reevaluation using tariff
prices for meeting disputed mandatory requirement would still result in
award to protester. GAO concludes: (1) RFP requirements was not
ambiguous; (2) original award should not have been made to protester.
Contracts - Cancellation - Termination for Convenience of Government v.
Cancellation - Finality of Administrative Findings - Contract Disputes
Act of 1978 Effect
GAO will not decide whether cancellation or termination for
convenience was proper method to terminate contract improperly awarded
to protester. Appropriate forum for deciding issue is agency board of
contract appeals since the facts are in dispute.
Matter of: New England Telephone and Telegraph Company, September
25, 1980:
New England Telephone and Telegraph Company (NET) protests against
the Internal Revenue Service's (IRS) cancellation of NET's contract (for
the lease and maintenance of a Dimension 2000 Private Branch Exchange
system at the IRS Service Center in Andover, Massachusetts) and
subsequent award of a contract for this requirement to Rolm New England
(Rolm)-- the only other offeror.
The central issues in this protest are: (1) whether the IRS properly
determined that the original award to NET was illegal and, therefore,
subject to cancellation rather than termination for convenience; and
(2) whether the work in question should have been resolicited rather
than awarded to Rolm. For the reasons set forth below, we conclude that
the IRS improperly awarded the original contract to NET. However, we do
not believe it appropriate for us to decide the question of the correct
method of ending NET's contract. We also conclude that the subsequent
award to Rolm under this solicitation was proper and, therefore,
resolicitation was not required here.
Request for proposals (RFP) No. 79-3 was issued by the IRS on April
9, 1979. The RFP solicited proposals for the acquisition and
maintenance of telephone systems for the IRS Service Center in Andover,
Massachusetts, and for the IRS National Computer Center in Martinsburg,
West Virginia, and stated that one or more contracts would be awarded.
The successful offerors would be required to design, install, and
maintain the telephone system at the designated IRS facility for a
10-year period. The solicitation indicated that firm-fixed-price
contracts would be awarded for lease, lease-to-ownership, or outright
purchase of the telephone system. The initial contract was to terminate
on September 30, 1979, but since known requirements covered a 10-year
period, the contract could be extended for as long as 120 months at the
option of the IRS.
The RFP called for fixed prices for the initial contract period and
for each option year, and proposals were to be evaluated on the basis of
firm-fixed prices for the total 10-year system's life. Preproposal
conferences were held at the Martinsburg facility on May 4, 1979, and at
the Andover facility on May 11, 1979. On September 27, 1979, contract
No. TIR 79-106 was awarded to NET for the lease and maintenance of a
Dimension 2000 Private Branch Exchange system to fulfill the Andover
telephone requirement. The initial contract expired on September 30,
1979, and the contract option was exercised to extend the contract until
September 30, 1980.
On December 13, 1979, the IRS received a letter from Rolm charging
that "insufficient, inaccurate price information was submitted, and that
improper equipment was offered" by NET and that there were
inconsistencies between the contract awarded to NET and the requirements
of the RFP. On December 28, 1979, Rolm filed a protest with our Office
against the contract awarded to NET for the Andover telephone
requirement.
In its protest to us, Rolm alleged, among other things, that the award
to NET had been improper because:
1. NET had proposed rotary dial instruments rather than tone dial
(i.e., push button) instruments as required by the RFP. Also, NET's
proposal omitted line charges for each tone instrument.
2. NET's proposal did not include multiline equipment charges
(specifically, line illumination charges) as required by the RFP.
3. NET had failed to disclose that, under its proposed two-tier rate
structure, both maintenance charges (Tier B) and equipment charges (Tier
A) could be increased during the 10-year period of the contract.
Accordingly, these prices were not fixed as called for in the RFP.
The IRS issued a "stop work" order to NET on January 2, 1980, while
an analysis of Rolm's protest was undertaken. On January 4, 1980, the
IRS held a meeting with representatives of NET and the American
Telephone and Telegraph Company (AT&T) (NET's parent corporation) to
discuss the protest allegations. Rolm's allegations were discussed and
responses were elicited from NET's representatives. The award to NET
was reexamined by the contracting officer in light of Rolm's protest and
the responses given by NET at the January 4 meeting. Subsequently, the
IRS concluded that the contract had been illegally awarded to NET.
By letter dated January 17, 1980, the contracting officer notified
NET that its contract was canceled because of "material
misrepresentations, mistakes and omissions" contained in NET's proposal.
NET protested to our Office against the cancellation of its contract on
January 28, 1980. On February 1, 1980, during the pendency of NET's
protest, the IRS awarded a contract for acquisition and maintenance of a
Dimension 2000 Private Branch Exchange system at the Andover facility in
accordance with a lease-to-ownership plan proposed by Rolm in response
to RFP 79-3. On February 11, 1980, Rolm withdrew its protest in our
Office.
NET argues that the IRS never gave NET an opportunity to respond to
the allegations raised by Rolm in its earlier protest. Instead, NET
contends that the IRS simply adopted Rolm's unsubstantiated allegations
and prematurely canceled NET's contract. Furthermore, NET argues that
the award of a contract to Rolm prior to resolution of NET's protest by
our Office was improper under our Bid Protest Procedures, 4 C.F.R.part
20(1980), and section 1-2.407-8(b) of the Federal Procurement
Regulations (FPR) (1964 ed.amend. 68).
Under section 20.3(a) of our Bid Protest Procedures and section
1-2.407-8(a)(3) of the FPR (1964 ed.amend. 139), parties having a clear
interest in a protest should be notified by the contracting agency that
a protest has been filed in our Office and given the bases therefor, so
that they may have an opportunity to submit their views and any relevant
information on the protest to the contracting officer and our Office.
In the present case, the IRS convened a meeting with NET representatives
on January 4, 1980, and discussed the bases of Rolm's protest with them.
NET was given an opportunity to respond to Rolm's allegations at that
meeting, and there is no indication that the IRS failed to furnish NET
with the written materials concerning Rolm's protest. Since NET's
contract was not canceled until January 17, NET had sufficient time to
comment and submit any relevant documentation on the matter before
cancellation was effected. Thus, the IRS complied with the policy goals
of these provisions.
Regarding the award to Rolm during the pendency of NET's protest, FPR
Sec. 1-2.407-8(4)(iii) (64 ed.amend. 68) provides that an award may not
be made prior to resolution of a written protest unless the contracting
officer determines a prompt award will be advantageous to the
Government. The contracting officer made such a determination on
January 31, 1980, obtained approval at a higher level within the IRS,
and notified our Office on February 1, 1980, of his intention to award
to Rolm pending resolution of NET's protest in accordance with FPR Sec.
1-2.407-8(b)(3) (1964 ed.amend. 68). Therefore, since the contracting
officer acted in accordance with applicable regulations, the decision to
proceed with award in spite of NET's protest is not subject to objection
by our Office. Moreover, even if these procedural requirements were not
met, the legality of the award to Rolm would not be affected. SAI
Comsystems Corporation, B-196163, February 6, 1980, 80-1 CPD 100.
Accordingly, this point of NET's protest is denied.
Section "F" of the RFP contained the mandatory requirements for the
phone system to be installed. In the solicitation as originally issued,
offerors were given the option of providing either rotary dial
instruments or tone dial instruments. Section F.2.13 of the RFP
originally stated:
Unless otherwise stated herein, provide tone or rotary dial switching
equipment and instruments, whichever is the least cost to the
Government. If a rotary dial system is proposed, then unless otherwise
stated herein, provide enough switching equipment to process calls from
at least 20 lines equipped for tone dialing.
Amendment No. 1, issued May 23, 1979, "removed" the above provision
and "inserted" new paragraph F.2.13 which reads:
Provide tone switching equipment and instruments.
NET admits that it offered rotary dial instruments, but argues that
the RFP did not specify that tone dial rather than rotary dial
instruments were required. Specifically, NET contends that the RFP must
be considered ambiguous as to a mandatory requirement for tone dialing
because it did not contain the phrases "touch tone" or "tone dial."
There are admitted technical differences between rotary and tone
instruments. Rotary instruments operate on an electrical impulse system
while tone instruments operate through tone generated frequencies. All
parties agree that tone instruments are more expensive than rotary
instruments. Moreover, it is clear that the original and new paragraphs
F.2.13 were to cover the same technical areas of the RFP; also, all
offerors were aware that the original paragraph F.2.13 contained the
phrase "tone dial."
Given these circumstances, we conclude that the wording of the
amendment reasonably conveyed the IRS's intent that tone dial
instruments were required and that rotary dial instruments would not be
acceptable. Accordingly, the original award to NET was in error since
that determination was based on the assumption that NET had, in fact,
complied with the material RFP requirement concerning the mandatory use
of tone dial instruments.
Further, we agree with the IRS's argument that it had no way of
reasonably discovering the error prior to award since the error could
have been discovered only by asking NET whether its proposed price
covered tone dial instruments or by asking appropriate regulatory
authorities for NET's tone dial prices. We agree that the IRS was under
no duty to pursue these inquiries in light of the RFP requirement for
tone dial instruments which reasonably led the IRS to assume that NET's
price, in fact, covered these instruments.
When this award error became obvious in light of Rolm's protest, the
IRS reevaluated the proposals using NET's tariff rates (as fixed under
Massachusetts law) for tone dial instruments and related line charges.
The IRS reports that, when NET's proposal price is increased for "tone
dial corrections," Rolm rather than NET is the successful offeror under
the RFP's award provision, which stated that price would count 80
percent of the award decision. NET's failure to comply with the tone
dialing requirement, according to the IRS, lowered its proposed price by
approximately $62,000 over the projected 10-year life of the system.
Considering the total evaluated proposed prices of Rolm ($758,933) and
NET ($808,343) it is clear that the pricing effect of the tone charges
was material and, as noted above, affects the relative standing of the
offerors. NET has not challenged these calculations which were set
forth in a May 22, 1980, IRS report, made available to NET.
Accordingly, and recognizing that NET has the burden of showing that
these calculations were erroneous, we conclude that the original award
should have been made to Rolm.
NET argues that, even if the IRS improperly awarded NET's contract,
the IRS could not legally cancel that contract rather than terminate it
under the Termination for Convenience clause of the contract.
Accordingly, NET contends that it is entitled to appropriate termination
costs.
The Court of Claims has held that "the binding stamp of nullity"
should be imposed only when the illegality is "plain" or "palpable."
John Reiner & Co v. United States, 325 F.2d 438, 440 (163 Ct.Cl.
381(1963)). In determining whether an award is plainly or palpably
illegal, we believe that if the award was made contrary to statutory or
regulatory requirements because of some action or statement by the
contractor, or if the contractor was on direct notice that the
procedures being followed were violative of such requirements, then the
award may be canceled without liability to the Government except to the
extent recovery may be had on the basis of quantum meruit. On the other
hand, if the contractor did not contribute to the mistake resulting in
the award and was not on direct notice before award that the procedures
being followed were wrong, the award should not be considered plainly or
palpably illegal, and the contact may only be terminated for the
convenience of the Government. See 52 Comp.Gen. 215, 218(1972), and
cases cited therein.
The IRS argues that the contract awarded to NET was plainly or
palpably illegal under the Reiner standard. In support of its
cancellation of the contract, the IRS argues that NET contributed to the
erroneous award in several ways and that NET was on direct notice that
the contract awarded was not in accordance with the RFP requirements.
The IRS alleges that NET submitted its proposal in bad faith,
offering rotary dial instruments even though NET knew from the face of
the solicitation that tone dial instruments were required. The IRS also
argues that NET knew about the tone dialing requirement by means other
than the RFP. IRS insists an NET representative and a representative of
AT&T were informed at preproposal conferences that all references to
rotary dialing had been eliminated and that tone dial instruments would
be required. However, the NET representative states that he has no
recollection of any such IRS statement and denies that any
representative of AT&T informed him of the IRS requirement for tone
dialing.
The IRS also argues that the contract should be viewed as void
because of NET's failure to quote "line illumination charges" for the
work. NET replies that it reasonably omitted these charges because the
RFP did not stipulate the number of lines on which the charges were to
be based (a prerequisite, in NET's view, for an informed price for these
charges) but instead indicated that the "exact selection of equipment"
would not take place until after award-- thus suggesting that the
decisions as to the final number of lines and corresponding charges were
to be postponed until after award.
In reply, the IRS insists that NET should have submitted charges based
on the assumption that "at a minimum, 270 lines would require line
illumination and the associated charges."
The IRS also insists that NET improperly failed to inform the IRS
that the company's Tier "A" (equipment charges) prices were subject to a
unique escalation factor set forth under applicable Massachusetts tariff
rates. The IRS notes that the RFP provided a common escalation factor
for evaluation purposes only for Tier "B" (maintenance charges).
Because NET knew that its Tier "A" prices were also subject to
escalation, the IRS argues that NET should have informed the IRS of this
fact so that an additional 7-percent pricing evaluation factor could
have been added to NET's proposed price. The IRS insists that NET knew
that the IRS was not aware of NET's Tier "A" escalation circumstance and
that NET, therefore, because of its superior knowledge, had a duty to
disclose this unique escalation factor. NET argues that it clearly
informed the IRS in its proposal that it had to use a two-tier tariff
plan under Massachusetts law and that, therefore, its prices were not
truly "fixed" as required by the RFP. NET points out that, on September
27, 1979, the contracting officer signed a "Memorandum of Understanding"
which recognized that NET's prices were subject to increase if mandated
by appropriate regulatory agencies.
Ordinarily, the determination whether a contract should be terminated
for the convenience of the Government is an administrative decision
which rests with the contracting agency and is not subject to review by
our Office. However, it is appropriate for us to review the validity of
the procedures leading to award of the contract to the terminated
contractor. See Electronic Associates, Inc., B-184412, February 10,
1976, 76-1 CPD 83, and cases cited therein. Accordingly, we have
reviewed the procedures leading to the award to NET and, as indicated
above, we find the award to have been made improperly. On the other
hand, however, deciding whether cancellation or termination for
convenience was the correct method to rectify the improper award here is
a matter for resolution under the contract disputes procedures in this
case.
Even though we decided whether a contract had been properly canceled
on the basis of illegality in 52 Comp.Gen. 215, supra, we do not think
such a decision would be appropriate here. First, 52 Comp.Gen. 215 was
decided before the enactment of the Contract Disputes Act of 1978, Pub.
L. No. 95-563, 92 Stat. 2383 (41 U.S.Code 601 note), which gives NET the
right to be heard on this issue by the agency board of contract appeals.
Moreover, on this matter, in the present case, there is a factual
dispute as to whether an NET representative was told at the preproposal
conference that rotary dial instruments would not be accepted. We
believe that the proper forum for resolving such factual disputes is the
agency board of contract appeals.
That NET has a forum for resolving the propriety of the cancellation
and this factual dispute is implicit in section 8(d) of the Contract
Disputes Act of 1978 (41 U.S.C. 607) which reads:
* * * the agency board is authorized to grant any relief that would
be available to litigant asserting a contract claim in the Court of
Claims.
As stated by the Armed Services Board of Contract Appeals in Starlite
Services, Inc., ASBCA No. 22894, March 9, 1979, 79-1 BCA 13, 743:
* * * To the extent that the appellant seeks to recover for a breach
attributable to defective specifications * * * the Board lacks
jurisdiction to award such relief under an appeal filed prior to 1 March
1979. However, under the provisions of the Contract Disputes Act of
1978, P.L. 95-563, the Board has been vested with authority to render
such latter relief with respect to claims filed or pending before a
contracting officer on or after 1 March 1979.
Accordingly, we believe the issue of cancellation versus termination
for convenience to be a contract administration problem, and thus, NET
must be left to its remedy under the act for resolving the propriety of
the cancellation.
NET argues that the IRS should have resolicited the work in question
rather than making an award to Rolm once NET's contract ended. NET
bases this argument on the controversies regarding line illumination
charges and Tier "A" escalation. These controversies, NET asserts,
raise "questions (as to) whether * * * IRS * * * (had) definite
standards against which it could measure NET and the other bidder."
We cannot conclude that the IRS was required to resolicit in this
circumstance. In an analogous, area, we have held that an agency is not
required to cancel an advertised solicitation merely because of
defective specifications. See Hild Floor Machine Company, Inc.,
B-196419, February 19, 1980, 80-1 CPD 140, wherein we stated that
cancellation of a defective IFB after bid opening may be inappropriate
when award will serve the Government's actual needs and there is no
showing of competitive prejudice.
We see no reason why this reasoning should not apply here, even though
the procurement was negotiated.
NET has not shown how it was prejudiced concerning the line
illumination charges controversy since Rolm's evaluated price including
these charges is lower, as noted above, then NET's evaluated price
without these charges. However NET would price these charges--
including even a "no-cost" for the service-- would not affect the
relative standing of the offerors. Also, we do not see how NET could
have been prejudiced concerning the Tier "A" escalation controversy
since the IRS evaluated (as shown in the IRS's May 22 report) NET's
proposal based on the Tier "A" price proposed by NET without taking into
account possible future Tier "A" increases. Moreover, it is clear that
the award to Rolm is serving the Government's actual needs since all
required, priced services are being furnished. Therefore, we conclude
that the IRS was not required to resolicit the services in question.
The protest is denied in part and dismissed in part.
B-199138, September 23, 1980, 59 Comp.Gen. 742
Contracts - Specifications - Qualified Products - Acceptability -
Evaluation Propriety
Fundamental question which must be addressed when compliance with
Qualified Products List (QPL) clause is at issue is whether essential
needs of Government, as reflected in QPL, will be satisfied by offered
product. Contracts - Specifications - Qualified Products - Status -
Repackaging Effect - What Constitutes "Repackaging"
Transferring product which is qualified in bulk form into pressurized
containers is not simply "repackaging" since product in pressurized form
is subject to specialized QPL tests additional to those established for
product in bulk form. Contracts - Specifications - Qualified Products -
Packaging Requirements - Pressurized Form of Qualified Bulk Product -
Status as Qualified End Item
Where product offered by protester had not been subjected to
additional specialized QPL tests established for product in form offered
by protester and called for by invitation for bids (IFB), protester was
not offering to supply qualified end item as required, and agency acted
reasonably in rejecting protester's bid as nonresponsive. Contracts -
Specifications - Interpretation - Oral Advice
Contention that protester was misled by agency personnel concerning
need for QPL qualification of product is without merit since IFB
provided that oral explanations were not binding and erroneous advice
given by agency personnel cannot act to estop agency from rejecting
nonresponsive bid as it is required to do so by law.
Matter of: Trident Industrial Products, Inc., September 23, 1980:
Trident Industrial Products, Inc. protests the rejection of its bid
under invitation for bids (IFB) No. 6PR-W-JO751-B2-F, issued by the
General Services Administration (GSA). GSA rejected the bid because it
found that Trident did not satisfy the requirements of the "Qualified
Products List" (QPL) clause of the IFB. For the reasons set forth
below, we deny the protest.
The solicitation called for three items of corrosion preventive, one
in bulk form in five gallon cans and two in pressurized form in 16 ounce
aerosol cans. Trident was the low bidder on items numbers 2 and 3, and
aerosol cans. Trident offered to furnished aerosol cans which it filled
with corrosion preventive purchased in bulk from a QPL listed
manufacturer.
The QPL clause of the IFB reads as follows:
Qualified products:
(a) With respect to products described in this solicitation as
requiring qualification, awards will be made only for such products as
have, prior to the time set for opening of offers, been tested and
approved for inclusion in the qualified products lists identified below.
Manufacturers who wish to have a product tested for qualification are
urged to communicate with the office designated below.
(b) The offeror shall insert, * * * the name of the Qualified Source
of material, product designation, and QPL test or qualification number
of each product offered. Qualified products may be packaged in any
container which has the identifying label or markings of the Qualified
Source of material and complies with the packaging requirements cited in
the Bid Schedule. Any offer which does not identify the Qualified
product offered will be rejected.
The relevant packaging and packing requirement cited in the QPL
clause required the use of a 16 ounce aerosol can, and stated that "the
aerosol containers shall be packed in fiberboard boxes to insure
delivery at destination, to provide for redistribution by the initial
receiving activity, and shall be acceptable by common carrier under
National Motor Freight Classification and Uniform Freight
Classification."
GSA points out that the QPL clause contained in the solicitation was
revised to its present form in November 1979 to allow repackagers to
furnish the product of a qualified manufacturer in accordance with our
decision in Methods Research Products Company, 59 Comp.Gen. 43(1979).
79-2 CPD 272. In that case we held that the essential needs of the
Government are for the end item being procured rather than for the
containers holding the end item so that the QPL status of the qualified
product should not generally be regarded as affected by a
nonmanufacturing step such as repackaging the end item.
The protester in Methods Research Products Company (MRP) had
purchased adhesive in five gallon drums from a qualified manufacturer
and repackaged it into bottles and cans. The QPL clause in use at that
time was viewed by GSA as requiring that qualified products must be
delivered in the manufacturer's containers. The stated reason for this
requirement was to ensure product integrity. We found this argument to
be without merit because the packaging did not relate to the QPL status
of the offered product and concluded that the repackaging restriction
under the circumstances present was unduly restrictive of competition.
In the instant case, Trident proposed to furnish the corrosion
preventive compound of a qualified manufacturer, but intended to fill
and pressurize the aerosol cans itself. The contracting officer
rejected Trident's bid because Trident was not itself a qualified
aerosol manufacturer, i.e., the filled aerosol can was not a qualified
product.
The decision to reject Trident's bid is asserted by GSA to be
consistent with the RFP since it was based on the contracting officer's
conclusion that filling and pressurizing the cans is a manufacturing
process rather than a packaging process, and that the filled and
pressurized can was the product or end item under the QPL. According to
the contracting officer, the conclusion that filling and pressurizing
the cans is a manufacturing process is indicated by the need for an
approved formula showing the amounts of corrosion preventive and type
and amounts of propellant, as well as for testing and approval of the
type and size of valve and activator.
At the outset, we believe that GSA has placed undue emphasis on the
manufacturing process discussed in MRP. That discussion related to a
paragraph in GSA's QPL clause which is no longer used and was in way of
explanation of a prior GAO decision which GSA had apparently relied on
in establishing the portion of the QPL clause in question.
In MRP, we indicated that the status of a qualified product generally
will be affected by an additional manufacturing step but not by
repackaging. We noted that one exception to the latter would be where
the original packaging served a special function in the use of the
product.
We did not mean to imply, however, that these are the only
considerations relevant to determining whether a product is qualified as
required.
Rather, the fundamental question which must be addressed when
compliance with a QPL clause is at issue is whether the essential needs
of the Government, as reflected in the QPL, will be satisfied by the
offered product.
In this case, the IFB called for two items of corrosion preventive in
pressurized form and stated that QPL qualification was required for all
items. The relevant QPL lists products qualified under Military
Specification MIL-C-0081309C dated August 30, 1973, as amended. This
specification establishes tests for Class 1 (bulk) and Class 2
(pressurized) corrosion preventive. Class 2, exclusive of propellant,
is subject to the same tests as Class 1 but, significantly, is also
subject to additional specialized tests when in pressurized cans with
propellant. This is reflected in the QPL which specifies the type and
class of corrosion preventive for which each manufacturer is qualified.
Thus, the QPL qualification of the product in pressurized form is
dependent upon its ability to pass the additional specialized tests
applicable to it. These tests establish a number of criteria peculiar
only to the pressurized cans. Accordingly, we do not believe that
transferring the basic product, which is qualified in bulk form, into
pressurized containers amounts to nothing more than repackaging a
qualified product or that it has no affect on the qualified status of
the end product. Since the pressurized product offered by Trident had
been subjected only to those tests established for the basic material
but not the additional specialized tests for the product in aerosol
cans, we conclude that Trident was not offering to supply the qualified
product called for by the IFB. We therefore believe that GSA acted
reasonably in rejecting Trident's bid as nonresponsive.
In support of its position that rejection of its bid was improper,
Trident alleges that it was misled by GSA contracting personnel who
advised that Trident would be fully qualified as a bidder simply by
conforming to the formulations specified for the product in pressurized
form. GSA responds that while contracting personnel did explain to
Trident that some confusion existed over whether Trident must acquire
QPL qualification under our decision in MRP, they never told Trident it
did not have to be qualified under the QPL. GSA asserts that in fact,
Trident was informed that to be on the "safe side" it should seek such
qualification.
In any event, as GSA points out, this Office has held that where the
IFB states that oral explanations are not binding, reliance of the
bidder on an oral explanation is at the bidder's own risk and also that
erroneous advice given by agency personnel cannot act to estop an agency
from rejecting a nonresponsive bid as it is required to do so by law.
Klean-Vu Maintenance, Inc., B-194054, February 22, 1979, 79-1 CPD 126;
CFE Air Cargo, Inc., B-185515, August 27, 1976, 76-2 CPD 198. Paragraph
3 of Standard Form 33A, which was incorporated by reference into the
instant solicitation, clearly states that oral explanations or
instructions given before award will not be binding and that any
explanation desired regarding the meaning or interpretation of the
solicitation must be requested in writing. Furthermore, GSA correctly
found Trident's bid to be nonresponsive. Accordingly, we find no merit
to Trident's argument that it was misled by GSA contracting personnel.
The protest is denied.
B-196326, September 22, 1980, 59 Comp.Gen. 739
Indian Affairs - Contracts - Bureau of Indian Affairs - Indian
Self-Determination Act - Compliance Determination
Indian Self-Determination Act requires Federal agency to include in
prime contract for benefit of Indians provision requiring prime
contractor to afford preference to Indian-owned firms in award of
subcontracts to greatest extent feasible, and requirement is not
satisfied by compliance with Buy-Indian Act. Procurement - Statutory
Changes - Implementation - Effective Date of Application - Preference to
Indian Concerns
Where almost 5 years elapses from time of enactment of statute before
regulation is promulgated requiring Federal agency to include in prime
contract for Indians' benefit subcontracting preference for Indian
firms, agency may not be excused from implementing statutory
requirements because regulation was published after bid opening.
Matter of: J&A, Inc., September 22, 1980:
J&A, Inc. (J&A) protests the award of a contract by the Army Corps of
Engineers (Corps) under a solicitation for the replacement of an
above-ground natural gas distribution system in Barrow, Alaska, with an
underground gas system.
Pursuant to the terms of an agreement between the Department of the
Interior's Bureau of Indian Affairs (BIA) and the Corps, the Corps
advertised, awarded and is to administer the construction contract for
BIA. The basis for protest is that the Corps did not comply with
section 7(b) of the Indian Self-Determination Act, 25 U.S.C.
450e(b)(2)(1976), in that the prime contract did not include a
requirement that Indian organizations and Indian-owned firms be given
preference, to the greatest extent feasible, in the award of
subcontracts where the prime contract with the Federal Government is for
the benefit of native Americans. J&A, which alleges that it would be
eligible for the cited preference in view of its 51-percent Indian
ownership urges this Office to require the Corps to add to the contract
the Indian preference in subcontracting provision published at 44
Fed.Reg. 62514 (October 31, 1979) by the Secretary of the Interior to
implement the statute. The provision was published after bids on the
prime contract were opened; a contract subsequently was awarded
notwithstanding the protest.
The protest is sustained.
As an initial matter, the issue of whether the protester is an
"interested party" under our Bid Protest Procedures, 4 C.F.R.part
20(1980), has been raised. We simply point out that J&A, as an eligible
subcontractor, has a sufficiently direct and substantial economic
interest in urging that the Indian preference should have been included
in the contract to qualify as an interested party for purposes of filing
a bid protest. See Donald W. Close and Others, 58 Comp.Gen. 297(1979),
79-1 CPD 134; Optimum Systems, Incorporated-- Subcontract protest, 54
Comp.Gen. 767(1975), 75-1 CPD 166.
With respect to the substantive issue raised in the protest, section
7(b) of the Indian Self-Determination Act states in pertinent part:
Any contract * * * pursuant to this Act * * * or any other Act
authorizing Federal contracts with or grants to Indian organizations or
for the benefit of Indians shall require that to the greatest extent
feasible--
(2) preference in award of subcontracts * * * in connection with the
administration of such contracts * * * shall be given to Indian
organizations and to Indian-owned economic enterprises as defined in
section 1452 of this title.
It is not disputed that the contract in this case is for the benefit
of Indians.
The Corps' position essentially is that its responsibility with
respect to promoting Indian participation in the project was fulfilled
by complying with the Buy Indian Act, 25 U.S.C. 47(1976), in awarding
the prime contract. The Buy Indian Act, which like section 7(b) of the
Indian Self-Determination Act reflects Congress' intent to further
Indian participation in Federal programs conducted for Indians, states:
So far as may be practicable Indian labor shall be employed, and
purchases of the products of Indian industry may be made in open market
in the discretion of the Secretary of the Interior.
The Department of the Interior's policy with respect to implementing
the above statute requires that before taking any procurement action,
contracting officers determine whether there are any qualified Indian
contractors within the normal competitive area that could meet the
requirement. Only if none are found may non-Indian contractors be
solicited; a qualified contractor for purposes of this policy is one
that is totally Indian-owned. 20 Bureau of Indian Affairs Manual (Supp.
2).
To comply with the Buy Indian Act policy, the Corps requested that
BIA investigate the availability of Indian contractors that might be
able to perform the prime construction contract. After a 3-month
investigation, BIA was able to identify only two potential Indian
contractors. However, the Corps investigated the potential contractors
and found that they did not have the requisite field experience.
Accordingly, the Corps advertised the project without restriction.
We do not agree that compliance with the Buy Indian Act and the
corresponding BIA implementing regulations through reliance on BIA's
investigations relieved the Corps of its responsibilities under section
7(b) of the Indian Self-Determination Act. The Buy Indian Act
"preference" as implemented by the Department of the Interior involves
the setting aside by the Government of procurements for participation by
firms that are 100-percent Indian-owned, and thus the implementing
regulations necessarily require a survey of the competitive area to
determine the feasibility of such a set-aside in a particular case. In
contrast, section 7(b) of the Indian Self-Determination Act simply
mandates that Federal contracts for the benefit of Indians require the
prime contractor to afford preference in subcontract awards to firms
that may be only 51-percent Indian-owned. Thus the statutes contemplate
different preferences and different universes of potential recipients of
these preferences. Further, whereas the Buy Indian Act imposes a duty
on the Federal Government in the initial procurement stage, the Indian
Self-Determination Act requires only that the prime contract require the
preference to be implemented by the contractor. In view thereof, we
cannot agree that simply because it may not be feasible to set a
procurement aside for 100-percent Indian contractors, the requirements
of the Indian Self-Determination Act that the prime contract impose a
duty on the prime contractor regarding the award of subcontracts can be
ignored.
We recognize that, as stated at the outset of this decision, the
Secretary of the Interior did not promulgate the Indian preference in
subcontracting provision to implement section 7(b) until after bids were
opened.
However, while we have recognized that the implementation of a statute
by the Executive branch takes a reasonable time, B-114835, October 19,
1979, we note that almost 5 years from the enactment of the statute
passed before the statute's requirement was implemented. In addition,
almost 2 years passed from the time we specifically recommended to the
Department of the Interior that it definitize the statutory preference.
See Department of the Interior-- request for advance decision, 58
Comp.Gen. 160, 167(1978), 78-2 CPD 432.
Under the circumstances, we do not believe that the publishing of the
Secretary of the Interior's implementing preference provision after bid
opening here excuses the failure of the agency to impose the contractual
duty on the prime contractor required by law in the award of
subcontracts. Therefore, we sustain the protest.
Nonetheless, section 7(b) of the Indian Self-Determination Act only
requires the preference in the award of subcontracts "to the greatest
feasible extent." We have stated that such language confers broad
discretionary authority and thus does not require subcontract awards to
Indian-owned firms. Id. We note that the prime contract has been
awarded to a joint venture that includes a native American concern.
Moreover, while the record indicates that all subcontracts already have
been awarded to non-Indian firms, the prime contractor asserts that it
did give first consideration to Indian-owned enterprises, including J&A,
but found them technically unacceptable.
Accordingly, we find that the Congress' purpose reflected in the
Indian Self-Determination Act has been substantially met in the
procurement despite the nonexistence of an express preference
requirement in the prime contract. In view thereof, we will not
recommend any remedial action with respect to this procurement.
By separate letter, we are advising the Secretary of the Army of the
above-discussed procurement deficiency.
B-197402, September 16, 1980, 59 Comp.Gen. 737
Travel Expenses - Military Personnel - Mode of Travel - Sailboat -
Privately Owned
A service member authorized reimbursement of the cost of transoceanic
transportation used when performing travel upon PCS who traveled by
privately owned sailboat may be reimbursed only necessary expenses
directly connected with the operation of the vessel (fuel, oil and
docking fees), provided they do not exceed the amount which would have
been paid by the sponsoring service for available Government
transportation.
Matter of: Captain William I. Parrish, USN, September 16, 1980:
The Disbursing Officer, Personnel Support Activity, Pensacola,
Florida, requests an advance decision concerning payment on a voucher
submitted for reimbursement of expenses incurred in transoceanic travel
by a privately owned boat or vessel in connection with a permanent
change of station (PCS). The request, forwarded by the Navy Accounting
and Finance Center, has been assigned Control No. 80-4 by the Per Diem,
Travel and Transportation Allowance Committee.
The member is entitled to reimbursement of actual expenses limited to
those expenses directly connected with the operation of the privately
owned boat or vessel used in the transoceanic travel not to exceed the
cost of Government air transportation or Government procured air
transportation.
Captain William I. Parrish was authorized travel by Government air
transoceanic travel at personal expense upon PCS from Kenitra, Morocco,
to Pensacola, Florida, in accordance with paragraph M4159-5 of Volume 1,
Joint Travel Regulations (1 JTR), with reimbursement of the cost of
transoceanic transportation actually used when performing circuitous
travel not to exceed the total amount he would have been entitled to for
travel between his old and new permanent duty stations via the direct
route. Incident to these orders, he used a privately owned sailboat to
make the PCS.
The submission questions whether or not there is an entitlement to
reimbursement for actual expenses incurred. The itemized voucher lists
these expenses as diesel fuel, $200; lube oil, $30; food and
consumable stores, $778.83; transit insurance for the voyage, $500;
and mooring and docking fees, $30.68. The Navy Accounting and Finance
Center endorsement indicates that reimbursement of actual expenses
should be limited to fuel, oil and docking fees not to exceed the cost
of Government air or Government procured air for the transoceanic
travel. No comparative cost of air transportation is furnished.
The travel of members of the uniformed services at Government expense
is governed by section 404 of title 37, United States Code, which
authorizes the payment of travel and transportation allowances to
members upon a PCS under regulations prescribed by the Secretaries
concerned. It has also been held that there is a statutory assumption
by the Government of an obligation to pay the necessary travel expenses
without such express authorization for the payment of commuted
allowances, which constitutes construed authority for reimbursement on
an actual expense basis. See 47 Comp.Gen. 405(1968).
In accordance with such authority, paragraph M4159-5 of 1 JTR,
provides in effect that when a member performs circuitous travel
involving transoceanic travel the member is entitled to reimbursement
for the cost of the transportation utilized not to exceed transportation
by Government aircraft or vessel or Government procured transportation
or transportation procured at personal expense, depending on the
circumstances involved.
The provisions of 1 JTR, dealing with permanent change-of-station
travel to, from, or between points outside the United States do not
specifically provide what expenses are considered actual expenses when a
member is authorized to use his privately owned boat for travel from a
point outside the United States to a point within the United States.
However, other provisions of 1 JTR, while not specifically applicable to
travel outside the United States, do specifically set forth what are
considered actual expenses when a member is authorized to use his
privately owned boat. In such cases reimbursement is limited by the
regulation to fuel, oil, and docking fees. See 1 JTR, paragraph
M4203-3(g), and 47 Comp.Gen. 325(1967).
In that regard it is our view that the limitation on the actual
expenses with regard to privately owned boats contained in 1 JTR,
paragraph M4203-3(g), would be applicable in determining actual expense
incurred in connection with a transoceanic crossing. Thus, it is our
view that the member is entitled to reimbursement on an actual expense
basis not in excess of the regulatory limitations.
Accordingly, the purchase of diesel fuel and lube oil for the
transoceanic travel, as well as payment of moving and docking fees, were
necessary expenses directly connected with the operation of the
privately owned sailboat payable under the authority of paragraph
m4159-5 of 1 JTR, provided they do not exceed the cost of air
transportation authorized. However, expenditures for insurance and food
and consumable stores used in the trip for personal expenses and there
is no authority in the regulation for their payment.
It would appear, however, that Captain Parrish may be entitled to per
diem computed in accordance with 1 JTR 4204-1 on a constructive travel
basis.
The voucher submitted with the request is returned for payment, if
otherwise correct, in accordance with this decision.
B-195903, September 15, 1980, 59 Comp.Gen. 733
Subsistence - Per Diem - Reduction - Quarters Furnished - On Board
Vessels - Department of Defense Employees
Insofar as applicable to non-lodging portion of per diem, the "3 days
in port" rule of 50 Comp.Gen. 388(1970) was not affected by enactment of
section 853 of Defense Appropriation Act, 1978, restricting use of
appropriated funds to pay lodging cost when Government quarters are
available. Since October 1, 1977, amendment to 2 JTR 4552-3b(6) to
reflect appropriation restriction did not define per diem entitlement
when meals were procured ashore, the "Government Quarters Available"
rate of per diem, prescribed by 2 JTR 4552-3d should be paid after the
third day in port for period from Oct. 1, 1977, until Dec. 1, 1978.
Matter of: Ernest F. Saker - Temporary Duty Aboard Vessels - Per
Diem, September 15, 1980:
The question presented is what method the Naval Oceanographic Office
should have used to determine the amount of per diem payable to its
employees who were on temporary duty assignments aboard ships outside
the continental United States (CONUS) for the periods during which these
ships were in port. For the reasons stated below, we hold that for the
period in question, October 1, 1977, to December 1, 1978, the Naval
Oceanographic Office should compute the per diem payments for employees
involved by paying one-half of the locality per diem rate for all
in-port periods beyond 3 days.
The issue was presented by a letter from the Disbursing Officer,
Naval Oceanographic Office, dated July 26, 1979, forwarding a travel
voucher submitted by Mr. Ernest F. Saker, a civilian employee of that
office. Mr. Saker served on temporary duty assignments aboard survey
vessels between October 1, 1977, and December 1, 1978. The question is
how his per diem should be computed.
Prior to October 1, 1977, the method to be used in computing per diem
for Naval Oceanographic employees on temporary duty assignments aboard
ships outside CONUS was set out in Volume 2 of the Joint Travel
Regulations (2 JTR), paragraph C4552-3b(6) which provided that:
Aboard Government Ships. The per diem rates in subpar. 2c are
prescribed for travel and temporary duty aboard a Government ship
outside the continental United States. In the event the traveler uses
commercial quarters during stopovers in port, the following per diem
rates are applicable for the stopover period:
1. when assigned to extended voyages of 7 or more consecutive
calendar days, the rate of per diem for the first 3 days in port is the
appropriate $2 or $4 rate prescribed in subpar. 2c, increased by the
actual charges for meals, if any, and rounded to the next higher dollar,
and the rate of per diem beginning with the 4th day in port is the
appropriate rate prescribed in Appendix A (a 24-hour period is treated
as a day);
2. when assigned to voyages of less than 7 consecutive calendar
days, the appropriate per diem rate prescribed in Appendix A;
3. when quarters aboard ship are not available during stopover in
port involving voyage of 7 days or more, the appropriate per diem rate
prescribed in Appendix A.
If an employee for his personal convenience uses available
accommodations aboard a Government ship while the ship is in port, the
appropriate $2 and $4 per diem rate prescribed in subpar. 2c, increased
by the actual charges for meals, if any, and the resulting amount
rounded to the next higher dollar is applicable for the stopover period.
When an employee reports to a Government ship for temporary duty while
the ship is in port, he is paid the same per diem rate as all other
employees assigned to duty aboard the ship. The rule in par. C4553-3a
will be observed when computing the per diem for the the per diem rate
changes. In port increased per diem rates will continue through the
quarter day in which the ship sails.
The "subpar. 2c" referred to above is 2 JTR para. C4552-2c,
applicable to travel within CONUS Prior to October 1, 1977, that
paragraph provided:
Government Ship. Except as limited in subpar. 3b(6), a per diem rate
of $2 is prescribed for travel and temporary duty aboard a Government
ship when meals and quarters are furnished without charge, and a per
diem rate of $4 is prescribed when the traveler is required to pay for
quarters. Neither rate is subject to further reduction. When the
traveler is required to pay for meals, the appropriate $2 or $4 rate of
per diem will be increased by the actual charges for meals and the
resulting amount will be rounded to the next higher dollar. Receipts
for actual charges for meals will not normally be required but may be
required in individual cases. In the event that the traveler must
maintain commercial quarters ashore for use following the completion of
one or more short trips at sea, the rates of per diem prescribed in this
subparagraph will be increased, before rounding to the next higher
dollar, by the actual daily commercial cost of quarters maintained
ashore during the period of travel aboard the Government ship.
Paragraphs C4552-3b(6) and C4552-2c mutually refer to each other and
must be read together to understand the rules for computation of per
diem of civilian employees serving tours of temporary duty aboard ships
while in port whether in or outside CONUS. These sections, when read
together, reflect the "3 days in port" rule established in our decision
50 Comp.Gen. 388(1970). In holding that employees could not be required
to occupy quarters aboard vessels during periods exceeding 3 days in
port that decision drew no distinction between ports within and those
outside CONUS. The way in which the rule is set out in 2 JTR may be
less than clear, but the overall meaning was recognized by the Court of
Claims in Boege v. United States, 206 Ct.Cl. 560(1975), and we
understand that prior to October 1, 1977, the "3 days in port" rule was
applied whether or not the port was in CONUS.
Effective October 1, 1977, section 853 of the Department of Defense
(DOD) Appropriation Act, 1978, Public Law 95-111, September 21, 1977, 91
Stat. 908, was enacted. Under that section employees of the DOD could
be required to use available Government quarters while on temporary duty
assignments or face a reduction in their per diem or actual subsistence
allowance.
This section rendered the "3 days in port" rule in the above-quoted
section moot as to the lodgings portion of the per diem payment.
Section 853 provided that:
* * * None of the funds appropriated by this Act or available in any
working capital fund of the Department of Defense shall be available to
pay the expenses attributable to lodging of any person on official
business away from his designated post of duty * * * when adequate
government quarters are available, but not occupied by such person.
Following the enactment of this restriction on the use of
appropriated funds, several paragraphs in 2 JTR were amended by Change
146, December 1, 1977, effective October 1, 1977, to incorporate its
limitations. The most extensive amendment was to paragraph C4552-3b(6)
which, after revision, provided that:
Aboard Government Ships. The per diem rates in subpar. 2c are
prescribed for travel and temporary duty aboard a Government ship
outside the continental United States. When an employee reports to a
Government ship for temporary duty while the ship is in port, he is paid
the same per diem rate as all other employees assigned to duty aboard
the ship.
The reference to "subpar. 2c" was still to paragraph C-4552-2c which
was also revised. The only revision, however, was the deletion of the
phrase "Except as limited in subpar. 3b(6) * * * " from the beginning of
the paragraph. With these revisions, 2 JTR no longer contained any
provisions implementing the "3 days in port" rule.
From October 1, 1977, until December 1, 1978, the regulations did not
specifically define the per diem entitlement of employees who procured
their meals ashore. We have been advised that when the ships were in
port, as a general rule, Naval Oceanographic Office employees on
temporary duty aboard those ships could continue to eat their meals on
the ships if they chose to do so. The Naval Oceanographic Office was
charged by the commands operating the vessels only for the meals
actually eaten by their employees while the ships were in port. There
was no specific guidance in either paragraph C4552-2c or in paragraph
C4552-3b(6) as to how per diem was to be computed when meals were
procured ashore and no mention of the "3 days in port" rule. Whether
the employees actually used the quarters on board the vessels was
irrelevant since the appropriation restriction meant that, under any
circumstances, only the subsistence portion of the per diem could be
paid.
We have not modified or overruled the "3 day in port" rule. While 2
JTR was amended effective October 1, 1977, to reflect the fact that the
lodgings portion of per diem could not be paid, even after 3 days in
port, the amendments failed to incorporate the 3 days in port rule
insofar as it pertains to the other elements of per diem entitlement.
Understandably, the Naval Oceanographic Office was unsure of the manner
in which it should compute per diem for its employees who were on
temporary duty assignments aboard vessels while those vessels were in
port.
The documentation furnished in connection with Mr. Saker's claim
indicates that the Naval Oceanographic Office felt that the rate of per
diem established under 2 JTR C4552-3d for "Government Quarters
Available" should be paid, at least after the third day in port. As in
effect subsequent to October 1, 1977, that paragraph provided:
Government Quarters Available. When Government quarters are
available with or without a charge to the traveler, the prescribed per
diem rate will be 50% of the applicable overseas per diem locality rate
for the area. When a charge for the use of Government quarters is paid
by the traveler, the per diem payable will be increased in an amount
equivalent to the charge for quarters. The resultant amounts not to be
rounded off to the next higher dollar. The period of applicability of
the rate prescribed by this subparagraph will be as indicated in par.
C4553-3b. In no case will the total per diem payable exceed the
applicable overseas per diem locality rate for the area.
All of the above sections remained unchanged until paragraph
C4552-3b(6) was amended by Change 158, December 1, 1978, to provide
that:
Aboard Government Ships. The per diem rates in subpar. 2c are
prescribed for travel and temporary duty aboard a Government ship
outside the continental United States. When an employee reports to a
Government ship for temporary duty while the ship is in port, he is paid
the same per diem rate as all other employees assigned to duty aboard
the ship. When the employee procures meals ashore at personal expense,
after the third day in port, reimbursement is authorized in the amount
of 14% of the locality per diem rate for the port for each meal
procured, not to exceed three meals daily (50 Comp.Gen. 388).
This change, at least for stopovers in ports outside CONUS, returned
the "3 days in port" rule to 2 JTR. Change 167 dated September 1, 1979,
amended paragraph C4552-2c to incorporate a similar version of the "3
days in port" rule to travel within CONUS.
The December 1, 1978 change to paragraph C4552-3b(6), however, did
not clarify the manner in which per diem was to be computed during the
preceding 14 months. In response to inquiries by the Naval
Oceanographic Office, the Chief of Naval Operations, by letter dated
November 20, 1978, advised that the revision to paragraph 4552-3b(6)
reflected a change in DOD policy and could not be applied retroactively.
This response, however, did not explain what in fact the policy was
during the 14-month period in question. The same lack of clarification
exists as to the policy in effect prior to September 1, 1979, for
stopovers at points within CONUS.
The current provisions of 2 JTR now, more clearly than at any other
time, provide for the application of the "3 days in port" rule to other
than the lodgings portion of per diem in all ports no matter where they
are located. These most recent amendments accurately reflect the sense
of our holding in 50 Comp.Gen. 388(1970). Consistent with the sense of
that decision and with DOD's current implementation authorizing per diem
for meals ashore after the third day in port, we believe that the
regulations in effect between October 1, 1977, and December 1, 1978,
applicable to stopovers outside CONUS, should be read in the manner
suggested by the Naval Oceanographic Office to authorize per diem after
the third day in port at the rate prescribed by 2 JTR C4552-3d for
"Government Quarters Available."
This construction is consistent with the fact that there is nothing to
indicate that the October 1, 1977 changes to 2 JTR were for any purpose
other than to bring the regulations into accord with the restriction on
the use of appropriated funds to pay for lodgings when Government
quarters were available. For the period from October 1, 1977, to
September 1, 1978, the provisions of 2 JTR for travel within CONUS
should be similarly construed.
Therefore, for the period in question, October 1, 1977, to December
1, 1978, when Mr. Saker and employees on temporary duty aboard vessels
procured meals ashore after the third day in port, for ports outside
CONUS, their per diem should be computed in accordance with paragraph
C4552-3d. For ports inside CONUS, if the lodgings-plus system is
applicable, and meals are procured ashore after the third day in port,
an average cost of lodgings of zero should be used. For ports covered
by the actual expense system, actual expenses for meals procured ashore
after the third day in port should be paid.
B-193144, September 15, 1980, 59 Comp.Gen. 728
Attorneys - Fees - Agency Authority to Award - Discrimination Complaints
- Rehabilitation Act of 1973
Equal Employment Opportunity Commission (EEOC) may provide in its
regulations for administrative payment of attorneys fees to prevailing
party in Federal employee complaints filed under Rehabilitation Act of
1973, as amended, since scope of regulatory and judicial authority is
same as granted under Title VII of Civil Rights Act of 1964, as amended.
Attorneys - Fees - Agency Authority to Award - Discrimination
Complaints - Age Discrimination in Employment Act of 1967
EEOC may provide in its regulations for administrative payment of
attorneys fees to prevailing party in Federal employee complaints filed
under Age Discrimination in Employment Act (ADEA) of 1967, as amended.
Scope of authority granted to EEOC to regulate is virtually the same as
granted in Title VII of Civil Rights Act of 1964, as amended, and
legislative history of 1978 amendments to ADEA shows no intent to
deprive prevailing Federal employees of right available to non-Federal
employees to receive attorneys fees awards.
Matter of: Equal Employment Opportunity Commission - Administrative
Payment of Attorneys Fees, September 15, 1980:
We have been asked whether the Equal Employment Opportunity
Commission (EEOC) may include, in its regulations, provisions for the
payment at the administrative level of attorneys fees to prevailing
parties in "handicap" and "age" discrimination cases. For the reasons
set forth below, we hold that the EEOC, if it chooses to do so, may
provide for payment of attorneys fees to prevailing parties at the
administrative level in those cases.
The EEOC has issued interim revised regulations implementing Title
VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. 2000e-16 et
seq. (Title VII), which include provisions for the payment of attorneys
fees at the administrative level. 45 Fed.Reg. 24130(1980). They wish
to include provisions for the payment of attorneys fees in connection
with complaints brought under the Rehabilitation Act of 1973, as
amended, 29 U.S.C. 701 et seq., and the Age Discrimination in Employment
Act (ADEA) of 1967, as amended, 29 U.S.C. 621 et seq. By letter of May
16, 1978, B-167015, to the Attorney General, we indicated that if the
Civil Service Commission, which was then charged with the task of
drafting the Title VII regulations, chose to provide for the
administrative payment of attorneys fees in those cases, we would not
object to such regulations. By Reorganization Plan No. 1 of 1978, F.R.
19807, 92 Stat. 3781, February 23, 1978, the EEOC was given the
authority to administer and/or enforce, among others, Title VII of the
Civil Rights Act of 1964, as amended; the Rehabilitation Act of 1973,
as amended; and the Age Discrimination in Employment Act of 1967, as
amended.
The Rehabilitation Act of 1973 was amended by Public Law 95-602,
November 6, 1978, 92 Stat. 2955, adding, inter alia, 29 U.S.C. 794a,
which provides, in pertinent part, that:
(a)(1) The remedies, procedures, and rights set forth in section 717
of the Civil Rights Act of 1964, including the application of sections
706(f) through 706(k), shall be available, with respect to any complaint
under section 791 of this title, to any employee or applicant for
employment aggrieved by the final disposition of such complaint, or by
the failure to take final action on such complaint. In fashioning an
equitable or affirmative action remedy under such section, a court may
take into account the reasonableness of the cost of any necessary work
place accommodation, and the availability of alternatives therefor or
other appropriate relief in order to achieve an equitable and
appropriate remedy.
(b) In any action or proceeding to enforce or charge a violation of a
provision of this subchapter, the court, in its discretion, may allow
the prevailing party, other than the United States, a reasonable
attorney's fee as part of the costs.
This section makes it doubly clear that a prevailing party may be
awarded attorneys fees, as section 706(k) of Title VII authorizing
attorneys fees in court actions is included in those sections
incorporated by reference. The statutory authorization for promulgating
the implementing regulations under the Rehabilitation Act is the same as
the statutory authorization for promulgating implementing regulations
under Title VII. We have already indicated that we will not object to
Title VII regulations which authorize administrative payment of
attorneys fees. Similarly, if the EEOC chooses to authorize
administrative payment of attorneys fees for cases under the
Rehabilitation Act of 1973, we would not object to such regulations.
Unfortunately, the question raised regarding the ADEA may not be
disposed of as easily. When the ADEA was originally enacted in 1967, it
did not apply to Federal employees. It does not create a separate
enforcement mechanism. Rather, 29 U.S.C. 211(b), 215, 216, and 217.
The right to recover attorneys fees is specifically set out in section
216(b). Through the FLSA Amendments of 1974, Public Law 93-259, April
8, 1974, 88 Stat. 55, 74 (29 U.S.C. 633a), the ADEA was made applicable
to the Federal Government.
In the 1974 Amendments, the only additions to the then-existing
procedural and enforcement structure were to provide, in language
virtually identical to that used in Title VII, for the enforcement of
the Act for Federal employees by the Civil Service Commission (CSC),
with a grant to CSC of the same wide-ranging authority to issue
regulations that was given in Title VII. These provisions were codified
in 29 U.S.C. 633a(b). It should also be noted that a Federal employee
in section 633a(c) was given the right to bring "a civil action in any
Federal district court of competent jurisdiction for such legal and
equitable relief as will effectuate the purposes of this chapter."
Similar language is used in section 626(c) to give the right to bring a
civil action to all other individuals covered by the ADEA. These
Amendments did not change the definition of the class covered by the
ADEA, i.e., individuals who were 40 to 65 years of age.
The ADEA was next amended by the Age Discrimination in Employment Act
Amendments of 1978, Public Law 95-256, April 6, 1978, 92 Stat. 189.
This Act did several things. It changed the definition of the protected
class, for individuals who were not employees of the Federal Government,
to people who were 40 to 70 years of age. For Federal employees, or
applicants for Federal employment it extended the Act's coverage to
anyone over 40. Some very specific exemptions for tenured college
professors and policy-making executives were created.
It also confirmed, at least for non-Federal employees, the right to a
jury trial.
The 1978 Amendments also added section 633a(f) which provides that:
Any personnel action of any department, agency, or other entity
referred to in subsection (a) of this section shall not be subject to,
or affected by, any provision of this chapter, other than the provisions
of section 631(b) of this title and the provisions of this section.
Section 631(b) defines the protected class of Federal employees as
those over 40 years of age.
A literal reading of section 633a(f) would appear to limit the
remedies and enforcement provisions to those described in section 633a.
In that section there is no specific authority to award attorneys fees
to complainants. We are not convinced that this provision must be read
that literally.
In Moysey v. Andrus, 21 Fep cases 836(D.D.C. 1979), the court, along
with the merits of the claim, had to deal with the issue of whether or
not Federal employees could file a class action under the ADEA. The
defense argued that the FLSA provisions governed and under those
provisions an individual may be a party-plaintiff only if he gives his
written consent. The plaintiff argued that under section 633a(f) the
restraints on class actions imposed by the FLSA no longer applied to
suits by Federal employees and that the normal class action procedures
under the Federal Rules of Civil Procedures should be applied. The
court, after reviewing the legislative history of section 633a(f), held
that the FLSA procedural provisions were incorporated through a section
other than 633a; therefore, section 633a(f) eliminated their
applicability to Federal employee cases. The court's interpretation of
section 633a(f) is literal, and apparently applies to both procedural
and substantive rights.
In Harris v. United States Department of the Treasury, 489 F.Supp.
476(N.D.Ill. 1980), the court more narrowly construed the language of
633a(f) in holding that a Federal employee was entitled to a jury trial
in an ADEA action. In footnote 11 of the decision the court discusses
the meaning of section 633a(f):
As the defendants admits, it is reasonable to assume that the purpose
of Sec. 633a(f) was to establish that "substantive rights and
obligations for Federal employers would be different in some situations
from those for private employers." Defendants' Memorandum in Support of
Motion to Strike at 15a. For example, Sec. 623 provides certain
defenses for private employers which are unavailable to government
employers. There is no indication that Sec. 633a(f) was intended to
establish different procedures by which public and private employees
could vindicate their substantive rights under the ADEA. 489 F.Supp.at
480.
Compare Nakshian v. Claytor, 22 FEP 41(D.C.Cir. 1980), also
confirming the right of a Federal employee to a jury trial. The fact
that the Moysey and Harris cases reach differing conclusions as to the
meaning of section 633a(f) would seem to indicate that the section is
not as simple to interpret as it might seem.
Prior to the 1978 Amendments, the right of the prevailing party to
receive attorneys fees was clear because of the incorporation by
reference of the FLSA procedures. If section 633a(f) is interpreted as
it was in Moysey, then the right to attorneys fees, even in the District
Court, for Federal employees under the ADEA depends upon a finding that
the language of section 633a(c), providing for "such legal and equitable
relief as will effectuate the purposes of this chapter," given the court
the authority to award attorneys fees. This would be contrary to the
general rule that attorneys fees may be awarded against the Federal
Government only when specifically authorized. Alyeska Pipeline Service
v. Wilderness Society, 421 U.S. 240(1975). For non-Federal sector
employees, the right to attorneys fees depends not on such a broad
interpretation of section 626(c), the analog of 633a(c), but on the FLSA
procedural rights.
The right of a prevailing party to receive an award of attorneys fees
is an important right. Clearly prevailing parties in "handicap"
discrimination cases and in Title VII cases may receive attorneys fees
awards. Thus, prior to the ADEA Amendments of 1978 the remedies
available for all three types of discrimination complaints included a
right in the prevailing party to receive an award of attorneys fees. We
find nothing in the 1978 Amendments or their legislative history that
indicates that the Congress intended to eliminate the right of a
prevailing Federal employee in an ADEA case to receive an award of
attorneys fees. In fact, both the 1974 and 1978 Amendments generally
broadened the rights of Federal employees, and to construe section
633a(f) to eliminate the right to receive attorneys fees runs counter to
this widening of their rights. The fact that the general statements in
both sections 626(c) and 633a(c) that a court of competent jurisdiction
may grant "such legal or equitable relief as will effectuate the
purposes" of the ADEA were not revised by the 1978 Amendments seems to
indicate that the Congress did not intend to significantly lessen the
remedies available to Federal employees by eliminating their right to an
award of attorneys fees.
Based on the above, we are inclined to interpret section 633a(f) as
did the court in Harris v. United States Department of the Treasury, as
an indication of differing substantive rights and obligations. As with
the procedural right to a jury trial addressed in Harris, we do not
believe section 633a(f) was intended to deprive Federal employees of an
important part of the remedy available to non-Federal employees under
the ADEA-- the right to receive attorneys fees. Since we believe that
Federal employees may be awarded attorneys fees by courts in ADEA cases,
just as in Title VII cases, and since the language granting the
authority to regulate and enforce the ADEA is virtually the same as it
is in Title VII, we hold that the EEOC may include provisions in ADEA
regulations for the payment, at the administrative level, of attorneys
fees to a prevailing party.
B-199005, September 12, 1980, 59 Comp.Gen. 726
Bids - Acceptance Time Limitation - Extension - After Expiration
Bidder which limited bid acceptance period to 30 days, as permitted
by solicitation, may not be permitted to revive bid by extending
acceptance period after expiration of 30-day period because acceptance
of bid would give protester unfair advantage and be prejudicial to other
bidders that offered standard 60-day acceptance period.
Matter of: Timberline Foresters, September 12, 1980:
Timberline Foresters (Timberline) protests the Department of
Agriculture Forest Service's failure to request an extension of the
acceptance period of its bid and award of a contract at a higher price
to Kimball Forestry Consultants (Kimball) for item 2 under invitation
for bids (IFB) No. R2-80-43. We find the protest timely filed but
without merit.
The IFB, a total small business set-aside, is for Stage II timber
inventory in three districts (items 1-3) of the Shoshone National
Forest. Bid opening was held on February 28, 1980. Timberline, the
third low bidder on item 2, limited its bid acceptance period to 30
calendar days, as permitted by the solicitation, instead of the standard
60-day acceptance period. However, Kimball, the fourth low bidder on
the item, agreed to the 60-day bid acceptance period.
Following bid opening, the Forest Service unsuccessfully sought
information upon which to make a responsibility determination about the
apparent low bidder for all three bid items and later referred the
matter to the Small Business Administration (SBA). See Federal
Procurement Regulations (FPR) Sec. 1-1.708-2 (1964 ed.amend. 192);
Tennessee Apparel Corporation, B-194461, April 9, 1979, 79-1 CPD 247.
Timberline's bid expired on March 29, 1980. Upon SBA's advice that the
bidder in question had failed to timely apply for a certificate of
competency, the Forest Service awarded item 2 to Kimball on April 24,
1980, since the second low bidder was ineligible for award and
Timberline's bid had expired.
Timberline complains that it was neither notified that the Forest
Service anticipated delay in making the award nor was given an
opportunity to extend the acceptance period prior to the expiration of
its bid. The protester states that upon request an extension would have
been granted and concludes that as the lower bidder on item 2 it should
have been awarded the contract.
The Forest Service takes the position that Timberline's protest to
our Office more than 7 weeks after the firm's bid expired and 4 weeks
after the award to Kimball is not timely filed in accordance with our
Bid Protest Procedures, 4 C.F.R. 20.2(1980). Although the protestor
could have checked with the procuring activity before its bid expired if
it had a continuing interest in being considered for the award, we think
that the mere expiration of its bid did not put Timberline on notice of
a basis of protest because no award has been made and Timberline
believed that it could revive its bid upon request. Similarly, we
cannot agree with the Forest Service that the April 24 award to Kimball
required the filing of a protest within 10 working days. The agency
provided notice of the award to the successful bidders by letter dated
May 6, 1980.
The record, however, does not disclose the date upon which Timberline
either received the notice or learned that the award was made to
Kimball. Where, as here, doubt exists as to when a protestor knew or
should have known the basis for its protest, we resolve that doubt in
favor of the protestor. Memorex Corporation, 57 Comp.Gen. 865,
867(1978), 78-2 CPD 236; Dictaphone Corporation, B-193614, June 13,
1979, 79-1 CPD 416. We therefore consider the protest timely filed.
The protest is, nevertheless, without merit. Contrary to the
protestor's assertion, we do not believe that the contracting officer
was required to advise Timberline of any delay in the award or to
request extension of the acceptance period prior to the expiration of
its bid. We have held that the regulatory provision, FPR Sec.
1-2.404-1(c) (1964 ed.amend. 121), to which the protester apparently
refers, was not intended to apply to situations in which only one of
several acceptable bids was inadvertently allowed to expire, but to
situations where failure to request extensions would require
readvertisement. 42 Comp.Gen. 604, 607(1963).
By limiting its bid acceptance period to 30 days, Timberline not only
took the risk that the Government might not be able to make award within
that time, but also avoided the risk of increased performance costs
during the following 30-day period which Kimball assumed by granting a
60-day bid acceptance period. 48 Comp.Gen. 19(1968). The contract was
in fact awarded to Kimball during that period. Timberline's bid could
not properly have been extended after the expiration of its 30-day
acceptance period because that would have afforded the protester an
unfair advantage over Kimball and other bidders that offered a longer
acceptance period. Peck Iron and Metal Company, Inc., B-195716, October
17, 1979, 79-2 CPD 265; Mil-Std Corporation, B-197610, March 7, 1980,
80-1 CPD 182.
The protest is denied.
B-197602, September 12, 1980, 59 Comp.Gen. 725
Pay - Retired - Survivor Benefit Plan - Spouse - Annulment of Widow's
Remarriage - Annuity Reinstatement Date
Where the beneficiary of Survivor Benefit Plan annuity payments
remarried before the age of 60 causing her annuity payments to be
terminated and the second marriage was subsequently annulled,
beneficiary is entitled to have her annuity payments reinstated
effective as of the first day of the month in which the decree annulling
her remarriage was rendered. See 10 U.S.C. 1450(b)(1976).
Matter of: Jean B. Ford, September 12, 1980:
The issue in this case is whether a Survivor Benefit Plan (SBP)
beneficiary, whose annuity was terminated as a result of a subsequent
marriage is entitled to have her SBP annuity reinstated effective from
the date her subsequent marriage was decreed annulled or from the time
the annuity was initially discontinued. For the reasons stated below,
the annuitant is entitled to begin receiving her SBP annuity effective
the first day of the month in which the decree annulling her remarriage
was rendered.
The question was presented for an advance decision by the Chief,
Accounting and Finance Division, Directorate of Resource Management,
Headquarters Air Force Accounting and Finance Center, and has been
assigned Air Force submission control No. DO-AF-1337 by the Department
of Defense Military Pay and Allowance Committee.
Mrs. Jean B. Ford began receiving an SBP annuity after the death of
her first husband, Technical Sergeant DeWayne G. Ford, USAF, retired, on
July 17, 1976. On October 16, 1978, Mrs. Ford remarried and informed
the Air Force of this on October 30, 1978. Her annuity was discontinued
on March 31, 1979. The annuity should have been terminated in October
1978, and as a result an overpayment of the annuity was made. This
marriage was subsequently annulled on September 10, 1979, by the
District Court, 57th Judicial District, Bexar County, Texas. While
there is no doubt that Mrs. Ford is a proper beneficiary to receive SBP
annuity payments there is a question as to the effective date of the
reinstatement.
The provisions relating to the SBP are found at 10 U.S.C. 1447 et
seq. (1976). Under 10 U.S.C. 1450(b) an annuity payable to the
beneficiary terminates effective as of the first day of the month in
which eligibility is lost. Section 1450(b) also provides that an
annuity for a widow shall be paid to the widow while the widow is living
or if the widow remarries before reaching age 60, until the widow
remarries. In the present case since Mrs. Ford remarried prior to
reaching age 60, she was no longer entitled to receive her SBP as of
October 1, 1978.
Section 1450(b) further provides for the resumption of the SBP
annuity if the subsequent marriage is terminated by death, annulment, or
divorce.
If the subsequent marriage is terminated then payment of the annuity is
resumed effective as of "the first day of the month in which the
marriage is so terminated."
Although the above-cited language seems clear, the Accounting and
Finance Officer asks whether Mrs. Ford's annuity payment is to be
reinstated from October 1, 1978, the date the annuity payment was
stopped due to her second marriage, or from September 1, 1979, the first
day of the month in which her second marriage was terminated. The basis
for the Air Force's question is our decision, 54 Comp.Gen. 600(1975), in
which we held that an annuity under the Retired Serviceman's Family
Protection, 10 U.S.C. 1431 et seq. could be reinstated under certain
state law effective the date the annuity payments were terminated by the
marriage, since the annulment operated to void the marriage from its
inception.
In other words the question is, does the legal significance of an
annulment operate to void the marriage from its inception, for the
purposes of the SBP, notwithstanding the language of 10 U.S.C. 1450(b)
to the contrary.
Under the RSFPP, a beneficiary loses entitlement to the annuity when
he or she remarries. There is no provision under that Plan for the
reinstatement of the annuity. Accordingly, it is necessary to examine
the effect of an annulment under pertinent state law to establish
whether an annuity can be reinstated and to determine the proper date to
be used in reinstating the annuity.
Subsection 1450(b) of title 10, U.S. Code, specifically provides for
the reinstatement of the annuity payments in the case of termination of
the subsequent marriage and further provides that the annuity will be
reinstated on the first day of the month in which the marriage is
terminated. Thus, there is no need to examine state law in such cases
since the Congress has specifically stated the condition under which an
annuity may be reinstated and the effective date of the reinstatement,
whether the marriage is terminated by death, divorce, or annulment.
Accordingly, Mrs. Ford is entitled to have her SBP annuity reinstated
effective September 1, 1979, the first day of the month in which her
remarriage was decreed annulled. Her SBP account should be adjusted
accordingly.
B-199793, September 11, 1980, 59 Comp.Gen. 723
Telephones - Private Residences - Prohibition - Coast Guard Services -
Cuban Refugee Immigration Into Florida
Although official duties of the District Commander of the Seventh
Coast Guard District require that he be available 24 hours a day to
respond to problems arising from the Cuban Refugee Freedom Flotilla, 31
U.S.C. 679 prohibits the District Commander from being reimbursed by the
Government for the costs associated with installing and maintaining a
telephone in his residence.
Matter of: Telephone Usage - Private Residence, September 11, 1980:
The issue is whether the District Commander of the Seventh Coast
Guard District is entitled to be reimbursed for the costs associated
with installing and maintaining a telephone in his office at his
quarters in order to conduct official business. In light of the express
statutory provision of 31 U.S.C. 679(1976) prohibiting payment of such
costs, the District Commander may not be reimbursed.
The question was presented by letter of July 25, 1980, from Ms. Velma
M. Jones, Authorized Certifying Officer, Seventh Coast Guard District.
The District Commander of the Seventh Coast Guard District is in
charge of the Cuban Refugee Freedom Flotilla in the Florida Straits.
His duties require that he be available at all times for daily contact
with the various local, state and Federal agencies involved.
Presently, the District Commander has a telephone in his quarters for
his and his family's personal use and for which he personally pays.
However, since the District Commander must be available 24 hours a day
the extra telephone activity at his residence has created a burden on
his immediate family to the extent that they can neither place nor
receive personal calls. Thus, to alleviate this situation the District
Commander had a telephone to be used for official business installed in
his office at his quarters.
It is for this telephone which reimbursement is sought.
Section 679, title 31, United States Code (1976), applies to this
situation. That section provides as follows:
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, except
for long-distance telephone tolls required strictly for the public
business, and so shown by vouchers duly sworn to and approved by the
head of the department, division, bureau, or office in which the
official using such telephone or incurring the expense of such tolls
shall be employed: Provided, That the cost of installation and use of
telephones in residences leased or owned by the Government of the United
States in foreign countries for the use of the Foreign Service may be
allowed from Government funds, under such regulations as may be
prescribed by the Secretary of State, except that the restrictions in
this section relating to long-distance tolls shall also apply to
telephone installed in such official residences.
We have consistently held that 31 U.S.C. 679 constitutes a mandatory
prohibition against the payment of costs associated with the
installation of telephones in quarters occupied as private residences by
Government officers or employees even though the telephones were
extensively used for the transaction of public business and from an
official standpoint the telephones were desirable or necessary. See
B-175732, May 19, 1976; B-130288, February 27, 1957; 33 Comp.Gen.
530(1954); 11 id. 87(1931); and 4 id. 19(1924). Moreover, we have
held that using a room in a private residence as an "office" where a
regular office with a telephone is available elsewhere does not
constitute an exception to the prohibition of 31 U.S.C. 679. 21
Comp.Gen. 997(1942); 7 id. 651(1928). Exceptions have been made only
when the private residence in question serves as the only location
available under the circumstances for the conduct of official business.
See e.g., 4 Comp.Gen. 891(1925) permitting an isolated lighthouse keeper
to have a telephone installed in his combined office and home at
Government expense. See also 19 Comp.Dec. 212(1912); 19 id. 350(1912).
Since the District Commander is already provided with an office by
the Coast Guard, we do not feel that the present situation falls within
the above-stated exception. It is unfortunate that his family may
suffer some inconveniences due to the nature of his duties in connection
with the Cuban refugees. However, the relief sought may not be granted
in light of the statutory prohibition of 31 U.S.C. 679.
Accordingly, the District Commander may not be reimbursed by the
Government for the costs associated with installing and maintaining a
telephone in his office in his residence in order to carry out his
official duties.
B-198274, September 11, 1980, 59 Comp.Gen. 717
Contracts - Termination - Not in Government's Best Interest - Small
Business Set-Aside - Ineligible Bidder/Offeror Award
Because any interference with awarded contract might impair agency's
ability to perform all required tasks before 1981 White House
Conference, and since protester does not appear to be immediately in
line for award on termination of contract, General Accounting Office
(GAO) will not recommend termination of contract even if awardee on
small business set-aside contract is finally found to be other than
small business. Contracts - Protests - Timeliness - Solicitation
Improprieties - Apparent Prior to Closing Date for Receipt of Proposals
Protest against inclusion of alternate late proposal provision in
request for proposals in untimely because it was not filed with GAO
until more than 10 days after date set for receipt of initial proposals.
Contracts - Protests - Timeliness - Basis of Protest - Date Made Known
to Protester - Information Not for Official Disclosure
Protest against application of late proposal provision to
competitor's proposal and alleged "sham" permitted by consideration of
late proposal is untimely because protest was not filed with GAO until
more than 10 days after protester knew of facts giving rise to bases of
protest, even though facts were not for official disclosure. Contracts
- Protests - Procedures - Bid Protest Procedures - Time for Filing -
Significant Procurement Issue Exception - Applicability
Significant issue exception to GAO's Bid Protest Procedures is not
applicable where protester admits wording of contract clause in question
permits protested action.
Matter of: Capital Systems Group, Inc., September 11, 1980:
Capital Systems Group, Inc. (Capital), protests the Department of
Health and Human Services' (HHS) award of a contract to Prospect
Associates (Prospect) under request for proposals (RFP) No. NIH AG
79-04. The RFP was issued as a 100-percent small business set-aside
procurement for the National Institute on Aging to support the 1981
White House Conference on Aging.
In its protest to our Office, Capital argues that: (1) the contract
should be terminated because Prospect has been determined to be other
than small business for this procurement; (2) the RFP should not have
included the alternate late proposal provision permitted by Federal
Procurement Regulations (FPR) Sec. 1-3.802-2 (1964 ed.amend. 193); (3)
even if this provision was properly included in the RFP, the "technical
advantage" exception of the provision was improperly applied to allow
consideration of the late proposal submitted by Prospect; (4) Prospect
is in fact a front for a large business and to permit it to compete is a
"sham on the procurement process"; and (5) even if its protest to the
General Accounting Office (GAO) is untimely, the protest raises a
significant issue that GAO should consider under the significant issue
exception to its timeliness rules.
For the reasons indicated below, we find several of Capital's grounds
of protest untimely; moreover, despite the fact that Prospect may not
be a small business, we are unable to recommend termination of
Prospect's contract.
The RFP was issued on March 9, 1979, with proposals due, after four
amendments, on August 24, 1979. Fourteen proposals were received by
that date and were shortly thereafter submitted to the technical
evaluation team. Eventually, a suspense date of November 9, 1979, was
established for the evaluation team to determine which proposals were
technically acceptable. Meanwhile, on October 3, 1979, Capital
protested the inclusion of CDP Associates' (CDP) proposal in the review
because, according to Capital, CDP had become a large business as of its
new fiscal year. The contracting officer then referred the question of
CDP's size status to the Small Business Administration (SBA). However,
on October 11, 1979, CDP withdrew its proposal. Then, on October 15,
1979, Prospect submitted a late proposal indicating that CDP would be a
subcontractor.
The RFP contained the alternate provision for the consideration of
late proposals as authorized by the above regulation. This provision
permits the consideration of a late proposal if:
It offers significant cost or technical advantages to the Government,
and it is received before a determination of the competitive range has
been made.
HHS determined that Prospect's late proposal could be considered
under this provision. Then, on November 9, 1979, the technical
evaluation team found four firms, including both Capital and Prospect,
technically acceptable. On December 20, 1979, the contracting officer
determined these four firms to be in the competitive range for
discussions.
Beginning in January 1980, negotiations were conducted with all
offerors in the competitive range. Then, by letter dated February 22,
1980, to HHS, Capital protested Prospect's status as a small business
because of claimed affiliation with CDP. Capital's letter also made the
following arguments: (1) In the event its "size protest fails," Capital
may "feel compelled to question whether * * * Prospect's (late proposal
offers) either significant cost or technical advantages to the
Government"; and (2) Prospect's late proposal lists "CDP (as) a major
subcontractor * * * (in order to permit) CDP to continue to maintain a
major role in the performance of * * * any resultant contract."
HHS referred the protest to SBA and, by letter dated February 29,
1980, notified Capital of this action. Negotiations were continued, and
on March 24, 1980, HHS received best and final offers from all offerors.
Then, on March 28, 1980, Capital filed its protest with our Office.
Finally, on April 9, 1980, SBA's Philadelphia Regional Office issued a
determination that Prospect was a small business concern for purposes of
this HHS procurement.
Capital then appealed this decision to SBA's Size Appeals Board.
On June 4, 1980, HHS awarded the subject contract to Prospect. On
June 6, 1980, SBA's Size Appeals Board reversed the regional office
decision and held that Prospect was other than a small business.
Nevertheless, on August 3, 1980, the Size Appeals Board informed
Prospect's attorney that the "case will be reconsidered" pursuant to
Prospect's request.
Although we have recommended that an agency terminate a contract
award where the SBA has decided that the awardee was not a small
business (See, for example, R. E. Brown Co., Inc. B-193672, August 29,
1979, 79-2 CPD 164), we do not believe a similar recommendation should
be made here even if SBA's Size Appeals Board affirms its prior decision
on reconsideration. We so conclude because we cannot question HHS's
implicit position that any disruption of Prospect's contract might
"seriously impai(r) HHS's ability to perform all the required tasks
before the 1981 conference." Moreover, unlike the cited case, Capital
apparently would not necessarily be immediately in line for any possible
award upon termination.
A. Late Proposal Provision
Our Bid Protest Procedures provide that a protest based upon alleged
improprieties in a solicitation which are apparent prior to the date set
for bid opening or the closing date for the receipt of initial proposals
must be filed prior to such date. See 4 C.F.R. 20.2(b)(1)(1980).
Here, the date set for the receipt of initial proposals was August
24, 1979. However, Capital did not file a protest with our Office
challenging the propriety of the RFP's late proposal provision until
March 25, 1980. Under our Bid Protest Procedures, therefore, this
ground of protest is clearly untimely and not for consideration on the
merits.
B. Application of Late Proposal Provision and "Sham Issue"
Our Bid Protest Procedures also provide that any protest not covered
under section 20.2(b)(1) must be filed with our Office not later than 10
working days after the "basis for the protest" is known or should have
been known. See 4 C.F.R. 202.(b)(2)(1980). A "basis for protest"
exists if: (1) a protester's interests are "directly threatened under a
then-relevant factual scheme"; and (2) the "agency conveys to the
protester its intent on a position adverse to the protester's interest."
Brandon Applied Systems, Inc., 57 Comp.Gen. 140(1977), 77-2 CPD 486.
It is clear that as of the date of the February 22 letter, Capital,
as noted above: (1) believed Prospect's proposal did not deserve
consideration under the "significant cost or technical advantage"
exception of the late proposals clause; and (2) knew that Prospect was
proposing CDP as a major subcontractor for the work. Nevertheless,
Capital's February 22 letter expressly disavowed any intent to lodge a
protest about these facts since Capital insists they were only "rumors"
as of that date.
Conceding that all of these facts were not for official disclosure
since the negotiated procurement was before award as of February 22, we
still consider that these facts constituted "bases of protest" as of
that date under the above definition. Merely because a protester
insists that it does not intend to file a protest cannot be held to
extinguish base(s) of protest if, in fact, those bases exist. Moreover,
it is our view that the facts recited in Capital's February 22 letter
sufficiently threatened Capital's interests as of that date as to all
later bases of protest subsequently filed with our Office; further,
given the accuracy of these facts, it is beyond question that the source
of Capital's knowledge must be sufficiently highly placed within HHS so
that Capital should have reasonably accepted the facts as "official"
from the beginning notwithstanding the breach of secrecy involved.
Capital therefore must be charged as of February 22 with notice of bases
of protest as to the above grounds of protest.
Further, although Capital insists it was not given details
surrounding HHS's determination of Prospect's technical advantage as of
February 22, it is our view that this position is inconsistent with the
position implicit in its February 22 letter that Prospect's proposal did
not deserve consideration under the "cost or technical advantage
exception" provision in question. In these circumstances, this position
implies a knowledge of facts sufficiently detailed to give rise to a
basis of protest notwithstanding Capital's continuing request to HHS for
additional details regarding HHS's decision to allow Prospect's late
proposal into the competition.
Assuming, for the sake of discussion, that Capital should not be
charged with all these bases of protest as of February 22, we
nevertheless believe that Capital may be charged with notice of all
these bases of protest as of March 6, 1980, the date on which Capital
admits to knowledge of a February 29 HHS letter. This HHS letter
informed Capital that its size protest had been referred to SBA.
Specifically, HHS stated its understanding that Capital was
"protestin(g) the consideration of Prospect * * * as a possible
recipient of award under the RFP" and informed Capital that Prospect's
size status had been referred to SBA.
Thus, we believe this letter expressly confirmed Capital's chief
"rumor"-- namely, that Prospect indeed was competing for the award. We
consider that the explicit confirmation of this chief "rumor" should
have reasonably led Prospect to an implicit realization that its other
"rumored" facts were also correct and, for practical purposes,
"official," thereby giving notice of all bases of protest now asserted.
Indeed, even Capital admits that, when an HHS representative informed it
by telephone on March 25, 1980, of the pendency of Capital's size
protest, it was put on notice of all bases of protest later protested to
our Office. In our view, the March 25 phone conversation conveyed no
more information than was already known by Capital as a result of its
receipt of HHS's February 29 letter.
Capital also argues that despite the February 29 letter, it was still
not certain that Prospect had submitted a proposal. It cites FPR Sec.
1-1.703-2(a) (1964 ed.amend. 192) for the proposition that once a
contracting officer receives a size protest, he has absolutely no
discretion, but must refer the matter to SBA regardless of whether the
firm that has been challenged has submitted a proposal or not. Thus,
Capital contends that it did not receive information that confirmed its
belief that Prospect was one of the offerors until March 25, 1980.
We do not agree. Section 1-1.703-2(a) of the Federal Procurement
Regulations provides:
(a) Any bidder or offeror or other interested party may challenge the
small business status of any other bidder or offeror on a particular
procurement * * * . Any contracting officer who receives a timely
protest * * * shall promptly forward such protest to the SBA * * * .
This provision does not require the contracting officer to refer all
size status protests to SBA, but only those affecting a firm that also
happens to be a bidder or offeror for the "particular procurement"
involved.
Therefore, since HHS's letter of February 29, 1980, informed Capital
that its size protest had been referred to SBA, Capital knew, or should
have known, that Prospect was a competitor. Thus, as explained above,
all the above grounds of protest should have been filed with our Office,
at the latest, no later than 10 days after Capital's receipt (on March
6) of HHS's letter of February 29, 1980. But as indicated above, we did
not receive Capital's protest until March 28, 1980. Under our Bid
Protest Procedures, therefore, these other grounds of protest are
untimely filed and not for consideration on the merits.
Capital argues that even if the protest is untimely, it presents a
significant issue under section 20.2(c) of our Bid Protest Procedures
and should be considered under this exception to our timeliness rules.
Capital contends that its protest "goes to the very heart of the
competitive negotiation system of the United States government." It
believe that, regardless of the exact language of the RFP's late
proposal provision, HHS should not be allowed to accept a proposal
submitted 53 days late.
The significant issue exception is limited to matters which are of
widespread interest to the procurement community. Wyatt Lumber Company,
B-196705, February 7, 1980, 80-1 CPD 108. Since Capital admits the
present wording of the clause permits consideration of a late proposal
before the competitive range has been determined (which is the factual
situation here), we do not consider the issue to be "significant."
B-192267, September 10, 1980, 59 Comp.Gen. 713
Foreign Differentials and Overseas Allowances - Education for Dependents
- Maximum Rate - Administrative Discretion - Trust Territory of the
Pacific Islands
Under chapter 270 and section 912.1 of the Standardized Regulations,
the High Commissioner of the Trust Territory of the Pacific Islands has
the discretionary authority to establish the rate of the overseas
educational allowance, 5 U.S.C. 5924(4)(A), received by Department of
the Interior employees assigned to the government of the Trust Territory
of the Pacific Islands below the maximum rate established by the
Department of State Standardized Regulations, section 920, for the
geographical areas of the Trust Territory. His exercise of this
discretion based on budgetary constraints is not improper.
Matter of: Carl M. Bauer, September 10, 1980:
The issue presented concerns the authority of the High Commissioner
of the Trust Territory of the Pacific Islands to establish the rate of
the overseas educational allowance received by Department of the
Interior, Office of Territorial Affairs, employees assigned to the
government of the Trust Territory of the Pacific Islands (TTPI).
Specifically, we are asked whether the High Commissioner may establish
the education allowance at a rate below that indicated at section 920 of
the State Department Standardized Regulations for the geographical area
of the TTPI. For the following reasons the High Commissioner has such
authority.
The question arises from a claim presented to our Claim Group by Mr.
Carl M. Bauer, an employee of the Department of the Interior, Office of
Territorial Affairs, assigned to the government of the TTPI and
stationed in Saipan. Since the issues raised by Mr. Bauer's claim are
novel and potentially affect all overseas Federal employees, we are
rendering a decision in this instance.
Mr. Bauer, and his family reside in Saipan. During the school year
1977-78, Mr. Bauer's youngest daughter attended high school at the
Canadian Academy, Kobe, Japan. Mr. Bauer's daughter attended this
school under the provisions of section 272.3 of the Department of
State's Standardized Regulations (Government Civilians, Foreign Area)
(GC, FA). When seeking reimbursement for his daughter's away-from-post
educational expenses Mr. Bauer was informed that based on budgetary
constraints the High Commissioner had established the maximum
away-from-post dependent educational allowance to be $5,300, for all
Federal employees assigned to the government of the TTPI and stationed
within the geographical area of the TTPI. The rate established by the
High Commissioner was less than the amount Mr. Bauer had spent for his
daughter's education and less than the rate established by the
Department of State in section 920 of the Standardized Regulations for
the geographic area of the TTPI.
Mr. Bauer questions whether the High Commissioner of the TTPI has the
authority to establish the rate for an away-from-post dependent
educational allowance below the maximum rate prescribed by the
Department of State. In questioning the High Commissioner's authority
Mr. Bauer points out that other Department of the Interior employees not
assigned to the government of the TTPI but working for the Office of the
Comptroller for Guam and assigned to Saipan are receiving the maximum
rate for the overseas educational allowance.
At the outset a brief discussion concerning the Trust Territory of
the Pacific Islands is necessary. The United States became the
administering authority of the TTPI when the President of the United
States, on July 18, 1947, approved the Trusteeship Agreement between the
United States and the Security Council of the United Nations. At first,
the Secretary of the Navy had administrative authority for the islands.
However, in 1951 administration of the islands was transferred to the
Department of the Interior. Executive Order No. 10265, 16 Fed.Reg.
6419(1951). In legislating to implement the Trusteeship Agreement
Congress authorized the President to vest the administrative power
conferred on the United States by the Trusteeship Agreement "in such
person or persons" to be exercised "in such manner and through such
agency or agencies as the President may direct or authorize." Act of
June 30, 1954, 68 Stat. 330, as amended, 48 U.S.C. 1681(a)(1976). By
Executive Order No. 11021 (1962), the President redelegated his
authority for civil administration of the entire Trust Territory to the
Secretary of the Interior. The Secretary of the Interior, in turn,
delegated executive authority for the Trust Territory to the High
Commissioner. See Secretarial Order No. 2918, part II, section 1, 34
Fed.Reg. 157(1969). The High Commissioner is appointed by the President
and confirmed by the Senate Act of May 10, 1967, 81 Stat. 15, codified,
48 U.S.C. 1681a(1976).
We should point out that the Secretary of the Interior's delegation
of his authority to the High Commissioner is proper. See 5 U.S.C.
302(1976) giving the Secretary of the Interior broad power to delegate
his authority in matters of personnel administration. In addition,
Executive Order 11021 specifically provides that the Secretary's
administrative authority for the TTPI may be exercised by his designee.
One of the responsibilities delegated to the High Commissioner is to
exercise the personnel management authority of the Secretary of the
Interior over all Department of the Interior employees assigned to the
government of the TTPI. Part 205, Department of the Interior's
Department Manual, chapter 8. This delegation encompasses the Secretary
of the Interior's authority concerning the payment of overseas
allowances under 5 U.S.C. 5924(1976) and the Standardized Regulations.
Various overseas allowances are authorized to be paid to civilian
employees of the United States located in foreign areas by the Overseas
Differentials and Allowances Act of September 6, 1960 (Act), now
codified in 5 U.S.C. 5921 et seq.(1976). One of these allowances is an
education allowance which is a part of the cost-of-living allowances
authorized by 5 U.S.C. 5924(1976). The pertinent part of section 5924
provides that:
The following cost-of-living allowances may be granted, when
applicable, to an employee in a foreign area:
(4) An education allowance or payment of travel costs to assist an
employee with the extraordinary and necessary expenses, not otherwise
compensated for, incurred because of his service in a foreign area or
foreign areas in providing adequate education for his dependents, as
follows:
(A) An allowance not to exceed the cost of obtaining such
kindergarten, elementary and secondary educational services as are
ordinarily provided without charge by the public schools in the United
States, plus, in those cases when adequate schools are not available at
the post of the employee, board and room, and periodic transportation
between that post and the nearest locality where adequate schools are
available, without regard to section 529 of title 31 (31 USCS 529). The
amount of the allowance granted shall be determined on the basis of the
educational facility used.
Section 5922(c), title 5, United States Code, bestows broad powers to
regulate overseas allowances and differentials for civilian employees of
the Government on the President. He in turn has delegated this
authority to the Secretary of State by Executive Order No. 10903,
January 9, 1961, as amended, 5 U.S.C. 5921 note (1976). The Secretary
of State, acting under this authority, issued the Department of State
Standardized Regulations.
We have consistently held that the granting of allowances under the
Overseas Differentials and Allowance Act is a discretionary matter. In
35 Comp.Gen. 289(1955) we specifically held that the granting of an
education allowance is permissive. See Matter of Brookshire, B-196809,
May 9, 1980, and cases cited therein for examples of other allowances
which are discretionary.
With regard to overseas allowances the Department of the Interior has
recognized that the Department of State is responsible for establishing
allowances and differentials for employment in designated foreign areas
and for prescribing the rates for all foreign area differentials and
allowances. Part 370, Department of the Interior Department Manual,
chapter 591, subchapter 2.1B and 2.2B. Moreover, the Department Manual
states that persons in Mr. Bauer's position must be paid foreign
differentials and allowances. Part 370, Department of the Interior
Department Manual, chapter 591, subchapter 3.1.
Since Mr. Bauer has been granted an education allowance, the issue
which remains to be addressed is whether he is entitled to educational
expenses based on the maximum rate prescribed in the Standardized
Regulations, or whether the High Commissioner acted within the scope of
his authority in prescribing a reduced maximum of $5,300.
The State Department's regulations governing payment of the education
allowance are set forth at Chapter 270 of the Standardized Regulations.
Section 274.11, in discussing the amount of that allowance, provides:
An employee normally may be granted for each school year, or fraction
thereof, on behalf of his/her child in grades 1-12, the rate indicated
in section 920 for his/her post, grade and educational facility selected
* * * . However, the officer designated to authorize allowances is
required to authorize smaller amounts when he/she determines that the
employee's expenses for education justify such lesser amounts.
Although section 274.11 specifies the circumstances in which an
amount smaller than the rate indicated at section 920 must be paid,
Chapter 270 does not define the circumstances under which a reduced
allowance may be paid. However, the following portion of section 912.1
makes it clear that authorization of an amount lower than the section
920 rate is a matter within the administrative discretion of the
authorized official:
* * * For the education and the supplementary post allowance the
employee receives either the rate indicated in section 920 or 941.3 or a
lower amount at the option of the officer designated to authorize
allowances. * * *
Thus, in addition to being required to authorize a lower amount when
justified by the employee's expenses, the designated official also has
the discretion to authorize a reduced amount in other circumstances.
The Department of the Interior has suggested that section 013 of the
Standardized Regulations confirms its authority to prescribe a reduced
education allowance when justified by budgetary constraints. That
section states that "(w)hen authorized by law, the head of an agency may
* * * grant * * * cost of living allowances * * * to employees of
his/her agency and require an accounting thereof, subject to the
provisions of these regulations and the availability of funds." This
regulation is addressed specifically to the initial determination to
grant an allowance. It does, however, point out the appropriateness of
considering funding availability in establishing an employee's
entitlement to cost of living and other specified allowances. While the
regulations applicable to certain other overseas differentials and
allowances limit the circumstances in which the rate or maximum set
forth in the Standardized Regulations may be reduced, in view of the
discretion afforded by section 912.1 in establishing the education
allowance, we find no impropriety in the High Commissioner's
determination, based on funding considerations, to establish a maximum
rate of $5,300 for the education allowance.
As was stated in the beginning, Mr. Bauer contends that he should
receive the maximum rate since other Department of the Interior, Office
of Territorial Affairs, employees stationed in Saipan are receiving the
maximum. We should point out that the employees to whom Mr. Bauer is
referring are assigned to the Office of the Comptroller of Guam.
The position of the Government Comptroller for Guam was established
by section 5 of the Act of September 11, 1968, Pub. L. 90-497, now
codified at 48 U.S.C. 1422d(1976). Under this Act the Office of the
Comptroller for Guam is under the control of the Secretary of the
Interior. Department of the Interior, Office of Territorial Affairs,
employees are assigned to the Comptroller's Office.
Mr. Bauer's situation, however, is distinguishable from that of the
employees assigned to the Comptroller's Office. First, separate
appropriations are made for the Trust Territory of the Pacific Islands
and for the Office of the Comptroller for Guam. Thus, Mr. Bauer's
compensation and allowances are paid from different funds. Secondly,
the Secretary of the Interior has delegated his authority over the
Comptroller's office to the Assistant Secretary Policy, Budget and
Administration, Department of the Interior, rather than to the High
Commissioner of the Trust Territory of the Pacific Islands. Thus,
within the Office of Territorial Affairs the Trust Territory of the
Pacific Islands and the Comptroller's Office are treated as separate
entities.
As discussed above, the statute and the regulations only pave the way
for employees in the same geographical area to receive education
allowances at the same rates. Since the regulations give the designated
official discretion to set a lower rate, and since the High Commissioner
and the Assistant Secretary-- Policy, Budget and Administration-- have
been delegated authority over distinct functions within the Office of
Territorial Affairs, we find no illegality in the fact that these two
officials have exercised their discretion differently.
Accordingly, the High Commissioner of the Trust Territory of the
Pacific Islands has authority to establish rates for the overseas
educational allowance below the rate prescribed by the Department of
State in the Standardized Regulations. Mr. Bauer is only entitled to
receive the rate established by the High Commissioner.
B-180095, September 8, 1980, 59 Comp.Gen. 710
Unions - Federal Service - Dues - Allotment For - Agency Failure to
Discontinue - Recoupment of Payments - Benefit to Employee Consideration
Accounting and Finance Officer inquiries whether Government is
required to reimburse employees for union dues allotments which were
continued after employees were no longer part of a bargaining unit.
Reimbursement is not required even though not stopping the allotments in
accordance with 5 C.F.R. 550.322(c) was an agency error because
employees have a responsibility to notify agency of improper allotment
withholding and because agency action merely paid dues for employees who
were union members and owed dues. Employees are not entitled to
reimbursement for allotment payments which inure to their benefit.
B-194692, July 24, 1979. For same reason there is no requirement to
recoup allotment payments from union. 54 Comp.Gen. 921(1975) and
B-180095, Dec. 8, 1977, modified (amplified).
Matter of: Recoupment of Union Dues - Fort Stewart/Hunter Army
Airfield, September 8, 1980:
This decision is in response to a request by a Finance and Accounting
Officer at Headquarters, 24th Infantry Division and Fort Stewart, Fort
Stewart, Georgia, regarding the recovery of dues paid to a union through
allotments after union members were no longer a part of the bargaining
unit represented by the union. We have concluded that the erroneously
withheld allotments need not be paid to the employees since they have a
duty to advise the agencies if an allotment is being erroneously
withheld and since the dues payments were owed the union and inured to
the benefit of the employees. Therefore, no action need be taken to
recoup the erroneous allotments from the unions.
The facts of the case may be summarized as follows: Headquarters,
24th Infantry Division and Fort Stewart, the United States Army Medical
Department Activity, and the United States Army Communications Command
Detachment, all located at Fort Stewart/Hunter Army Airfield, Georgia,
and hereafter called employer, entered into a written Agreement pursuant
to Executive Order 11491, as amended, with Local No. 1922 of the
American Federation of Government Employees, hereafter called union.
The Agreement obligated the employer to withhold voluntarily allotted
union membership dues in accordance with applicable regulations.
Under 5 U.S.C. 5525 Federal employees may make allotments of their
pay under policies and procedures prescribed by the head of the agency.
These policies and procedures are coordinated by the Office of Personnel
Management under authority delegated by the President. See 5 U.S.C.
5527 and section 2(b), Executive Order No. 10982, December 25, 1961, as
amended, 5 U.S.C. 5527 note. Regulations relating to labor union dues
allotments are contained in 5 C.F.R. 550.321 to 550.324(1977). Under
these regulations, particularly subsection 550.321(a), an employee is
permitted to make an allotment for dues to a labor organization when the
employee is a member of a labor organization which has exclusive
recognition in the unit in which he is employed and the agency has
agreed in writing to do so.
Section 550.322(c) requires the agency to discontinue the allotment when
the employee is reassigned or promoted outside the unit for which the
labor organization has been accorded exclusive recognition. The problem
here arises because the employer, through administrative error on its
part, continued to deduct and transmit dues to the union on the basis of
allotments of employees who were not longer in the bargaining unit
covered by the Agreement. In total, $11,106.50 was erroneously
transmitted to the union from the allotments of 71 employees between
January 9, 1972, and June 18, 1977.
In light of our decision 54 Comp.Gen. 921(1975), the finance and
accounting officer has requested answers to several questions dealing
with allotments to labor organizations which have been continued after
employees leave the bargaining unit. The holding in 54 Comp.Gen. 921
was upheld by the Court of Claims in Lodge 2424, International
Association of Machinists and Aerospace Workers, AFL-CIO v. United
States, 215 Ct.Cl. 125(1977). In that case an employee's allotment had
been continued after he left the bargaining unit. The agency, upon
discovery of the error, refunded the erroneous deductions to the
employee and recovered the funds by setting off the amount of $80.33
from the next payment of dues allotments to the union. The conclusion
reached was that the Government could recoup erroneously deducted
allotments from subsequent allotment payments due the union. It was
determined that an arbitrator's award of $80.33 to the union in payment
of money so withheld could not be implemented.
At the outset we note that the instant case differs from the
situation in 54 Comp.Gen. 921 in that the agency has not paid the
employees the erroneous allotment deductions nor recovered any money
from the union. Further, the legal question involved has been the
subject of a decision in the United States District Court for the
Northern District of Alabama, American Federation of Government
Employees Local 1858 (AFL-CIO) v. Clifford Alexander, Secretary of the
Army, Civil Action No. 78-W-5023-NE, decided April 14, 1978, with final
judgment entered February 12, 1979. In that case the union sued for and
was granted an injunction to restrain defendant from setting off against
current allotment checks to the union and dues of two union members who
had been promoted out of the bargaining unit but whose voluntary dues
allotment had been continued. In that case the allotments had not been
returned to the employees.
In 54 Comp.Gen. 921 the employees concerned had been refunded the
erroneous deductions of union dues and we did not question that action
since the deductions were clearly erroneous.
Further, the Office of Personnel Management in its report to us on this
case stated that "the agency is solely responsible for terminating
allotments for employees who leave the bargaining unit covered by the
agreement." The report concludes that the Government must refund the
erroneous deductions unless recovery is waived by the employee.
Although we must agree that allotments were erroneously withheld in
these circumstances, we do not believe that the Government is required
to pay over the erroneously withheld allotments to the employees. It is
the primary responsibility of an agency to cancel allotments of union
dues when an employee is no longer in the bargaining unit, but the
employee should not be relieved of the duty to advise the agency
promptly if allotments are being improperly withheld.
We are particularly constrained to that view because employees may be
members of a labor organization whether or not they are members of a
bargaining unit covered by a written agreement. Therefore, when an
employee leaves a unit covered by a bargaining agreement, only the right
to have his union dues paid by voluntary allotment ends. His union
membership continues until he takes some action to terminate it. If
through administrative error the allotment continues to be paid to the
union, the employee is presumed to have knowledge of the fact his
allotment has continued since in most cases the allotment is shown on
Leave and Earnings Statements each pay period. Thus, the employee is or
should be aware that his union dues are being paid by allotment, and he
is in a position to know that such deductions are improper. In any case
the employee does not lose the money in question since it is owed to the
union. Further, the union is not being unjustly enriched, since it is
entitled to dues from its members. See Matter of Sergeant Richard C.
Rushing, USA, B-194692, July 24, 1979, in which it was held that the
individual "would not be entitled to a refund (of an allotment) if he
had an interest in, or the proceeds from the allotment inured to his
benefit."
It is our position that, to the extent that the proceeds of the
allotments inured to the benefit of the employees in this case in that
their union dues were paid, there is no requirement to reimburse the
employees. Further, in view of the difficulties which such
reimbursements cause, they should not be made unless an individual case
presents facts which would justify such action.
Since we have determined that the Government is not required to
reimburse the employees, there is no need to recoup the money from the
union.
Decisions 54 Comp.Gen. 921(1975) and B-180095, December 8, 1977, are
amplified accordingly.
B-197356, September 5, 1980, 59 Comp.Gen. 708
Military Personnel - Dislocation Allowance - Members Without Dependents
- Unable to Occupy Assigned Quarters - Home Port Change - Expense
Reimbursement in Lieu of Allowance
A naval officer without dependents is not entitled to a dislocation
allowance when he is required to obtain non-Government quarters because
his ship is declared uninhabitable due to overhaul and repair upon the
ship's arrival at a new home port. However, an officer in this
situation is entitled to reimbursement under the provisions of 10 U.S.C.
7572(b) for expenses incurred incident to obtaining private quarters.
Matter of: Dislocation allowance - Lt. (jg.) Gary W. Westfall,
September 5, 1980:
This is in response to a request for an advance decision as to
whether Lieutenant (jg.) Gary W. Westfall, a member without dependents,
is entitled to a dislocation allowance incident to obtaining off-base
quarters in connection with a change in home port of his ship. The
answer is no.
This request for decision was presented by the Central Disbursing
Officer, Naval Supply Center, Oakland, California, and was forwarded to
this Office by endorsement of the Per Diem, Travel and Transportation
Allowance Committee dated January 4, 1980, and has been assigned PDTATAC
Control No. 80-1.
The record indicates that the home port of the U.S.S. Pollack was
changed from San Diego, California, to Mare Island Naval Shipyard in
Vallejo, California, for regular overhaul effective March 21, 1979.
However, the ship did not actually leave San Diego until April 18, 1979,
because of a change in the shipyard overhaul commencement date. When
the ship arrived at Vallejo on April 21, 1979, the Commanding Officer
declared the ship uninhabitable due to conditions incident to the
vessel's overhaul and repair. The member, who was permanently attached
to the vessel and who had been living aboard, was forced to obtain
off-base quarters because no Government quarters were available.
Under the provisions of 37 U.S.C. 407(a) a member without dependents
is entitled to a dislocation allowance when he is transferred to a
permanent station where he is not assigned to Government quarters.
Section 411(a) of title 37, United States Code (1970), provides in
pertinent part that for the administration of specified sections of that
title, including section 407, the Secretary concerned shall define the
words "permanent station." The definition shall include a shore station
or the home yard or home port of a vessel to which a member of a
uniformed service who is entitled to basic pay may be ordered. It
provides further than an authorized change in the home yard or home port
of such a vessel is a change of permanent station (section 411dd)).
A definition of permanent station is contained in Appendix J of
Volume 1 of the Joint Travel Regulations promulgated pursuant to section
411(d) of title 37, United States Code. For the member, himself, the
ship is his permanent station. In cases where a member has dependents,
the permanent station includes the home port of the vessel for the
purposes of transportation of dependents and household goods.
Thus, a member without dependents who is assigned to quarters on a
ship is at his permanent station. If the quarters are declared
uninhabitable when there is no change in the home port, the member is
not entitled to a dislocation allowance on moving into non-Government
quarters. Likewise, when his permanent station, the ship, is assigned
to a different home port and he continues to be assigned quarters on the
ship until declared uninhabitable, he is not entitled to the dislocation
allowance. See B-184289, September 16, 1975, involving an identical
factual situation.
This is distinguishable from the case of a member without dependents
who receives a permanent change of station and on reporting to a vessel
is not assigned quarters on the ship because they have been declared
uninhabitable and as a result becomes entitled to a dislocation
allowance. See 48 Comp.Gen. 480, 485(1969). In such a case the member
did change his duty station while in this case the ship remains the
member's duty station.
Accordingly, in the circumstances of Mr. Westfall's case he is not
entitled to a dislocation allowance.
However, section 7572(a) of title 10, United States Code, provides
that the Secretary of the Navy may provide lodging accommodations when
Government quarters are not available where the member is deprived of
quarters on board ship due to repairs and who is not entitled to a basic
allowance for quarters may be reimbursed for the expenses incurred in
obtaining quarters under regulations prescribed by the Secretary of the
Navy. Paragraph 30212 of the Department of Defense Military Pay and
Allowances Entitlements Manual provides for reimbursement for the
expenses associated with obtaining quarters not to exceed the applicable
basic allowance for quarters where the officer is not receiving basic
allowance for quarters.
Accordingly, Mr. Westfall may be reimbursed in accordance with 10
U.S.C. 7572(b) only, and he is not entitled to a dislocation allowance
under 37 U.S.C. 407(a). The voucher accompanying the request for
decision will be retained here.
B-194983, September 3, 1980, 59 Comp.Gen. 705
Public Utilities - Government Use - Damage, Loss, etc. Claims -
Government Indemnification
General Services Administration (GSA) may procure power under tariff
or contract requiring customer to indemnify utility against liability
arising from delivery of power. GSA has authority to procure power for
Government under tariffs. Where no other practical source exists,
tariff requirement is applied uniformly to purchases, without singling
out Government, and risk of loss is remote, GAO will interpose no
objection to existing practice of agreeing to tariff, with indemnity
requirement, nor to proposed contract with similar indemnity provision.
However, GSA should report situation to Congress.
Matter of: Government indemnification of public utilities against
loss arising out of sale of power to Government, September 3, 1980:
This decision concerns the propriety of agreement by the General
Service Administration (GSA) to certain indemnity provisions in
procuring public utility services for Government agencies and
establishments pursuant to section 201(a) of the Federal Property and
Administrative Services Act of 1949, as amended, 40 U.S.Code 481(a).
GSA states in its request for our decision:
Increasingly, the public utilities are attempting to insert an
indemnity provision which, among other things, holds the Government
liable to protect and save the utility companies harmless and
indemnified from injury or damage to persons and property occasioned by
the provision of the utility services.
A typical indemnification provision reads as follows:
"Customer assumes all responsibility for the electric power and
energy delivered hereunder after it leaves company's lines at the point
of delivery, as well as for the wires, apparatus and appurtenances used
in connection therewith where located at or beyond the point of
delivery; and Customer hereby agrees to protect and save Company
harmless and indemnified from injury or damage to persons and property
occasioned by such power and energy or by such wires, apparatus and
appurtenances located at and beyond said point of delivery, except where
said injury or damage shall be shown to have been occasioned by the
negligence of Company or its contractors.
Further, Company shall not be responsible for injury or damage to anyone
resulting from the acts of the employees of Customer or of Customer's
contractors in tampering with or attempting to repair and/or maintain
any of Company's lines, wires, apparatus or equipment located on
Company's side of the point of delivery; and Customer will protect,
save harmless and indemnify Company against all liability, loss, cost,
damage and expenses, by reason of such injury or damage to such employee
or to any other person or persons, resulting from such acts of
Customer's employees or contractor."
GSA also points out that:
In many instances, the public utilities will not consent to any
contract without an agreement by the Government to indemnify or protect
the public utility from liability in case of injury or property damage.
* * *
The companies argue that they are required to include liability or
indemnity provisions by the tariffs under which they provide utility
services. They hold that they cannot legally provide the services
without such protection.
With respect to the latter argument, the Supreme Court has ruled
several times that such provisions in the rate schedule cannot preclude
the Government from negotiating contracts for utility service which
would omit the indemnification provision. (See Public Utilities
Commission of California v. United States, 355 U.S. 534(1958); Paul v.
United States, 371 U.S. 245(1963); United States v. Georgia Public
Service Commission, 371 U.S. 285(1963)).
GSA has been for sometime and is now procuring electricity under
tariffs which include indemnity provisions of the kind now proposed to
be included in contracts. The Acting Administrator is concerned that,
since the proposed clause contains no limitation on the maximum
liability of the Government, he is precluded by law from entering into
contracts with these clauses. He is aware of our long line of decisions
which hold that, unless otherwise authorized by law, an indemnity
provision in a contract which subjects the United States to a contingent
and undetermined amount of liability would violate 31 U.S.C. 665(a) (the
Anti-deficiency Act) and 41 U.S.C. 11 (the Adequacy of Appropriations
Act) since it can never be said that sufficient funds have been
appropriated to cover such contingencies. See, for example, 7 Comp.Gen.
507(1928); 16 id. 803(1937); and 35 id. 85(1955). See also
California-Pacific Utilities Co. v. United States, 114 Ct.Cl. 703,
715-716(1971).
In 54 Comp.Gen. 824(1975), we proposed that a clause be inserted in
any contract providing for assumption of risk for contractor-owned
property which limits the amount of such risk to appropriations
available for indemnity payments at the time a loss arises, with no
implication that the Congress will be required to appropriate funds to
make up for any deficiency. This solution would be unacceptable to the
utilities, according to GSA, because there is no real assurance that
they would be protected in the event of a large award for personal
injury.
As a possible solution, GSA's letter suggests adding the following
proviso to the proposed indemnification clause:
Provided, however, that nothing herein shall bind or obligate the
Government for any liability beyond that for which it would be liable
under the Federal Tort Claims Act.
The precise effect of this proviso is unclear. If the intent is to
restrict the Government's liability to the liability it would incur even
without the indemnification clause, i.e., liability under the Federal
Tort Claims Act (FTCA) to the victim of the United States' negligence,
then we find it unobjectionable. However, the proviso would not make
funds available to indemnify the utility for payments which it might
make to the victim, should the victim choose to seek recovery from the
utility instead of from the United States.
The problem cannot be resolved without new legislation if we adopt an
overly technical and literal reading of the Anti-deficiency Act in this
situation. We do not think such a reading is appropriate under these
circumstances. GSA is authorized to procure utility services for the
Government and to do so under utilities' tariffs. The procurement of
goods or services from State-regulated utilities which are virtually
monopolies is unique in important ways. As a practical matter, there is
no other source for the needed goods or services. Moreover, the tariff
requirements, such as this indemnification undertaking, are applicable
generally to all of the same class of customers of the utility, and are
included in the tariff only after administrative proceedings in which
the Government has the opportunity to participate. The United States is
not being singled out for discriminatory treatment nor, presumably, can
it complain that the objectionable provision was imposed without notice
and the opportunity for a hearing.
Under the circumstances, we have not objected in the past to the
procurement of power by GSA under tariffs containing the indemnity
clause and there is no reason to object to the purchase of power under
contracts containing essentially the same indemnity clause. As noted
already, this has of necessity been the practice in the past. The
possibility of liability under the clause is in our judgment remote. In
any event, we see little purpose to be served by a rule which prevents
the United States from procuring a vital commodity under the same
restrictions as other customers are subject to under the tariff if the
utility insists that the restrictions are non-negotiable. However,
because the possibility exists, however remote, that these agreements
could result in future liability in excess of available appropriations,
GSA should inform the Congress of the situation.
B-199794, September 2, 1980, 59 Comp.Gen. 704
Leaves of Absence - Sick - Recredit of Prior Leave - Reemployment -
After Congressional Office Position
Former General Accounting Office (GAO) employee worked more than 3
years in Congressional office before accepting position with National
Aeronautics and Space Administration (NASA). Although employee could
not earn or use accrued sick leave in Congressional position, such
employment is Federal service and is not considered break in service.
Sick leave accrued in GAO position should be credited for use by NASA in
accordance with 5 C.F.R. 630.502(e).
Matter of: Anthony J. Gabriel - Recredit of Sick Leave following
Congressional employment, September 2, 1980:
This decision is in response to a request from The Honorable Eldon D.
Taylor, Inspector General, National Aeronautics and Space Administration
(NASA), concerning the entitlement of Mr. Anthony J. Gabriel, a NASA
employee, to recredit of sick leave earned prior to a period of
Congressional employment. The question presented is whether
Congressional employment constitutes a break in Federal service for the
purpose of the regulations governing recredit of unused sick leave.
Mr. Gabriel was formerly employed by the General Accounting Office
(GAO) in a position covered by the Annual and Sick Leave Act, 5 U.S.C.
6301 et seq., and prior to his resignation on January 15, 1977, he had
accrued 1,808 hours of sick leave. Mr. Gabriel was then employed by the
Appropriations Committee of the House of Representatives until April 30,
1980, at which time he was employed by NASA in a position covered by 5
U.S.C. 6301 et seq. Mr. Gabriel's sick leave was not transferred or
made available for his use while he was employed by the House
Appropriations Committee since the committee does not have a sick leave
system and such Congressional employment is not covered by 5 U.S.C. 6301
et seq. See 5 U.S.C. 6301(2)(B)(vi). The question raised by NASA is
whether Mr. Gabriel's sick leave may be recredited since there has been
a period of more than 3 years between Mr. Gabriel's employment in
positions covered by the statutory leave system.
Under the authority of 5 U.S.C. 6311, the Office of Personnel
Management (OPM) has issued regulations governing the recredit of sick
leave. See 5 C.F.R. 630.502(1980). These regulations provide, in
pertinent part, as follows:
(b)(1) Except as provided in paragraph (b)(2) of this section, 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.
(e) An employee who transfers to a position to which he cannot
transfer his sick leave is entitled to a recredit of the untransferred
sick leave if he returns to the leave system under which it was earned,
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 as 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).
Although Congressional employment is not subject to the statutory
leave system, such employment is Federal service. See, for example, 5
U.S.C. 2105 and 8331(1). Therefore, we conclude that Congressional
employment does not constitute a break in service as contemplated under
5 C.F.R. 630.502. We have been informally advised by officials at OPM
that they concur in this opinion.
Accordingly, since Mr. Gabriel has not undergone a break in service,
his sick leave should be recredited by NASA under the provisions of 5
C.F.R. 630.502(e).
B-198761, September 2, 1980, 59 Comp.Gen. 699
Officers and Employees - Transfers - Government v. Employee Interest -
Merit Promotion Transfers - Relocation Expense Reimbursement - Absence
of Agency Regulations
Employee, who transferred from Department of the Interior, New
Orleans, to Commission on Civil Rights, Washington, D.C., claims
relocation expenses on basis that transfer was under merit promotion
program. Agency denied claim because transfer was for convenience of
employee and because of budget constraints. Employee may not be denied
relocation expenses of transfer pursuant to selection under merit
promotion plan on basis that the employee initiated the job request by
replying to a vacancy announcement. Budget constraints do not justify
denial of relocation expenses on transfer in interest of Government.
Fontanella, B-184251, July 30, 1975, modified (amplified). This
decision was later modified (extended) by B-201256, April 27, 1981.
Matter of: Eugene R. Platt - Relocation Expenses, September 2, 1980:
This decision is in response to a request for reconsideration of
Settlement Certificate No. Z-2821423, March 26, 1980, by which our
Claims Division disallowed Mr. Eugene R. Platt's claim for relocation
expenses incurred incident to his transfer from New Orleans, Louisiana,
to Washington, D.C.
In September 1979, the Commission on Civil Rights posted a vacancy
announcement for a position of Writer-Editor under its Merit Promotion
Program. It posted the announcement at its headquarters in Washington,
D.C., and at all of its regional offices. Copies were also sent to
several community groups and the Federal Research Service Inc.
Applications were received from 104 individuals, including Mr. Platt.
Mr. Platt states that, while he was a technical publication editor,
GS-9, for the Bureau of Land Management, Department of the Interior, New
Orleans, he learned of the vacancy announcement for a writer-editor with
the Commission on Civil Rights in Washington, D.C. to be filled under
the merit promotion program. He applied for the position and had a
telephone interview with his prospective supervisor, during which Mr.
Platt alleges that he was told the "normal reimbursement" would be made
if he were selected. Later, an official with the personnel office
telephoned Mr. Platt with an offer of employment at GS-11. The official
made it clear to Mr. Platt that the Commission would not pay relocation
expenses. The Civil Rights Commission reports that this policy was
initiated in response to an Office of Management and Budget (OMB)
bulletin ordering all agencies to reduce travel costs.
On December 5, 1979, the Commission sent Mr. Platt a written offer
confirming the telephonic one, stating that the expenses of
transportation and movement of household goods would not be paid and
requiring a written response to the offer within a 5 day period. /1/ On
December 10, 1979, Mr. Platt indicated in writing his acceptance, with
no qualifications or conditions. On December 20, 1979, Mr. Platt
reported for duty in Washington, D.C., having traveled from New Orleans
at his own expense. No travel orders were ever issued by the Commission
and no travel advance was made.
Mr. Platt maintains that, even though the Commission made clear
before he accepted the job offer that it had no intention of paying his
relocation expenses, he should be reimbursed for three reasons. /2/
First, Mr. Platt maintains that budget constraints cannot form the basis
for denying an employee relocation expenses, citing our decision David
C. Goodyear, 56 Comp.Gen. 709(1977). Second, he maintains that the move
was for the benefit of the Government since, before he applied for the
job, an official vacancy announcement was published and circulated which
indicated that the vacancy was to be filled pursuant to the merit
promotion program. Lastly, he contends that since other Government
agencies normally reimburse employees for such moves, he too should be
reimbursed.
We shall consider the question of Mr. Platt's entitlement first.
Reimbursement of travel and relocation expenses upon an employee's
change of station under 5 U.S.C. 5724 and 5724a(1976) is conditioned
upon a determination by the head of the agency concerned or his designee
that the transfer is in the interest of the Government and is not
primarily for the convenience or benefit of the employee, or at his
request.
In this connection see para. 2-1.3, Federal Travel Regulations (FPMR
101-7) (May 1973). See also Michael J. DeAngelis, B-192105, May 16,
1979; and Paul J. Walski, B-190487, February 23, 1979.
The regulation, however, does not furnish any guidance to agencies as
to the factors to be considered in making that determination. In order
to assist agencies, we offered the following guidance in Dante P.
Fontanella, B-184251, July 30, 1975:
Generally, however, if an employee has taken the initiative in
obtaining a transfer to a position in another location, an agency
usually considers such transfer as being made for the convenience of the
employee or at his request, whereas, if the agency recruits or requests
an employee to transfer to a different location it will regard such
transfer as being in the interest of the Government. Of course, if an
agency orders the transfer and the employee has no discretion in the
matter, the employee is entitled to reimbursement of moving expenses.
See Rosemary Lacey, B-185077, May 27, 1976, where the same guidance
is set forth.
In applying the Federal Travel Regulations and our guidance to
specific cases, we have recognized that the determination of whether a
transfer is in the interest of the Government or primarily for the
convenience or benefit of the employee or at his request is primarily a
matter within the discretion of the employing agency. B-186684,
February 2, 1977; B-184251, July 30, 1975; and B-143845, July 26,
1961. We do not believe that we should overturn an agency's
determination unless it is arbitrary or capricious or clearly erroneous
under the facts of the case.
In several cases, we have denied relocation expenses on the ground
that the transfers in question were lateral transfers to positions
without greater promotion potential and, therefore, were outside the
merit promotion program. Hence, we sustained the agencies'
determinations that the transfers were for the employee's convenience.
Jack C. Stoller, B-144304, September 19, 1979; Paul J. Walski,
B-190487, February 23, 1979; Ferdinando D'Alauro, B-173783.192,
December 21, 1976.
We have allowed relocation expenses on merit promotion transfers
where an agency's own regulations provided that such transfers are in
the Government's interest. Thus, in Stephen P. Szarka, B-188048,
November 30, 1977, an Air Force employee was selected for a position in
California that had been advertised by an agency-wide vacancy
announcement under the merit promotion program. When the selection was
made, the employee was informed that he would have to pay his own
expenses of transferring from Florida. We overruled the agency's
determination that the transfer was for the employee's benefit because
the Air Force, by regulation, had determined the transfers under the
merit promotion program were in the interest of the Government.
We have been advised that the Commission on Civil Rights does not
have any agency regulations on the subject of relocation expenses and
merit promotion transfers. Thus, we are faced in this case with the
basic question of whether, in the absence of agency regulations
mandating payment of relocation expenses under the merit promotion
program, employees who relocate their permanent duty station pursuant to
selection under the merit promotion program must be considered to be
transferred in the interest of the Government.
The Commission on Civil Rights bases its denial of reimbursement of
relocation expenses to Mr. Platt on several grounds. The first is that
he was not recruited nor requested to transfer by the Commission since
it had merely issued a vacancy announcement and had no personal contact
with him or any other person who submitted an application. The second
ground asserted by the Commission is that Mr. Platt took the initiative
in applying for a new job in a new city, accepted the job offer with the
condition that there would be no reimbursement for relocation expenses,
and therefore must be considered to have relocated for his own
convenience. In the alternative the Commission states that Mr. Platt
should be denied recovery as a matter of pure contract law principles
since he had accepted the written offer of a position with knowledge
that he would not be paid relocation expenses.
We need not discuss the Commission's alternative argument because the
issue is not one of contract law. Rather the question is one of
employees' rights under the governing statutes and regulations.
It is evident that the wide dissemination of vacancy announcements is
a means of attracting qualified eligibles for vacant positions. The
primary purpose of the merit promotion program is "to ensure systematic
means for selection for promotion according to merit." 5 C.F.R.
335.103(1979). Through open competition eligible persons are given the
opportunity to compete for vacancies, and agencies are able to reach a
wider pool of applicants, and refer the best qualified candidates to a
selecting official. The fact that employees have to apply for such
vacancies, or that the promotion may be, and usually is, also in the
employee's best interest, does not change the fundamental truth that the
purpose and intent of merit promotion is to serve the Government's
interest by obtaining the best qualified persons for vacant positions.
In regard to the Commission's determination not to authorize
reimbursement in response to a directive to reduce travel costs, we
stated in our decision David C. Goodyear, 56 Comp.Gen. 709(1977), cited
by Mr. Platt, that FTR para. 2-1.3 required an agency to make a
determination as to whether an employee's transfer is in the interest of
the Government or primarily for the convenience or benefit of the
employee.
We then held:
The Navy's statement that "budget constraints" did not at that time
permit payment of relocation expenses except in manpower shortage
categories, misconstrues the purpose and scope of the requirement to
make a determination as to whether a particular transfer is in the
interest of the Government. The requirement in FTR para. 2-1.3 refers
to determining whether or not the transfer is in the interest of the
Government. No provision is made to permit such determination, in
effect, to be predicated on the cost of relocation expenses * * * .
Thus, "budget constraints" cannot form the basis for denying an employee
relocation expenses if his transfer has been found to be in the
Government's interest.
We believe the agency decision in this case is based on improper
understanding of our decisions. The primary reasons given by the agency
for the denial of the request for transfer expenses were (1) budget
constraints, and (2) that it did not recruit or request the employee to
transfer, but that he initiated the action by applying for the job. In
our decision David C. Goodyear, 56 Comp.Gen. 709(1977) we held that
budget constraints cannot form the basis for denying an employee
relocation expenses if his transfer has been found to be in the
Government's interest. Further, in Dante Fontanella, B-184251, July 30,
1975, we stated that if the agency recruits or requests an employee to
transfer to a different location it will normally regard such transfer
as being in the interest of the Government. Our view is that when an
agency issues an announcement of an opening under its Merit Promotion
Program that such action is a recruitment action within the scope of
Fontanella. Thus, the fact that an employee requests the position as a
result of such announcement is not a proper basis to conclude that the
transfer is at the request of or primarily for the convenience of the
employee. With respect to the budget constraint aspect, the policy of
the agency was to restrict travel and transportation to reduce the
amount spent for such purposes during the fiscal year 1980. One policy
restriction imposed by the agency was "(W)e will not pay for
transportation or the movement of household goods of any person hired
from outside the agency." That budget restraint may not, under Goodyear,
serve as a basis for denial of the claim by Mr. Platt if the transfer is
otherwise in the Government's interest.
Thus, on the record before us we find no appropriate basis for a
determination by the agency that the transfer was at the request of or
primarily for the convenience of the employee. Rather, the record
strongly suggests the transfer was in the interest of the Government.
Accordingly, we believe the agency should make a new determination in
the case taking cognizance of the clarification of Fontanella as set
forth above.
Absent some other basis than those heretofore advanced by the agency,
our view is that the appropriate determination by the agency under the
facts of the case is that the transfer was in the interest of the
Government.
/1/ We assume that the intent was to exclude all transfer related
expenses under 5 U.S.C. 5724 and 5724a.
/2/ The term "relocation expenses" is used herein as a shorthand
reference to all transfer expenses authorized under 5 U.S.C. 5724 and
5724a.
B-189029, September 2, 1980, 59 Comp.Gen. 691
Pay - Retired - Computation - Alternate Method - Public Law 94-106
Effect
Military retired pay is adjusted to reflect changes in the Consumer
Price Index rather than changes in active duty pay rates, and as a
result a "retired pay inversion" problem arose: service members who
remained on active duty after becoming eligible for retirement were
receiving less retired pay when they eventually retired than they would
have received if they had retired earlier. Subsection 1401a(f), title
10, U.S. Code, was adopted to alleviate that problem, and it authorizes
an alternate method of calculating retired pay based not on a service
member's actual retirement but rather on his earlier eligibility for
retirement. Pay - Retired - Effective Date - Uniform Retirement Date -
Act - Public Law 94-106 Effect
In computing retired pay under 10 U.S.C. 1401a(f), the date
immediately preceding an active duty basic pay rate change should
generally be used as the earlier date of voluntary retirement
eligibility, since this will normally result in a computation most
favorable to the service member concerned. Under the uniform Retirement
Date Act, 5 U.S.C. 8301, the hypothetical earlier retirement would have
become effective on the first day of the following month, but retired
pay could be computed on the basis of retirement eligibility on the date
immediately preceding the active duty pay rate change. Pay - Retired -
Computation - Uniform Retirement Date Act - Public Law 94-106 Effect -
Navy, Marine and Public Health Service Officers
Since the Uniform Retirement Date Act, 5 U.S.C. 8301, generally
provides for retirements to become effective on the first day of a
month, language contained in certain provisions of law authorizing the
voluntary retirement of Navy, Marine Corps, and Public Health Service
officers also providing for retirement on the first day of a month may
be regarded as a surplusage insofar as retired pay computations under 10
U.S.C. 1401a(f) are concerned. Hence, those officers may have their
retired pay computed under 10 U.S.C. 1401a(f) in the same manner as
other service members, i.e., on the basis of retirement eligibility on
the date immediately preceding an active duty pay rate change. Pay -
Retired - Grade, Rank, etc. at Retirement - Three and Four Star General
Officers - Time-in-grade Restrictions - Public Law 94-106 Effect
Where an Army or Air Force officer is retired in the grade of
lieutenant general or general under 10 U.S.C. 3962 or 8962, the
time-in-grade restrictions in 10 U.S.C. 3963 or 8963 do not apply in
selecting an earlier hypothetical retirement date for retired pay
computation pursuant to 10 U.S.C. 1401a(f).
Matter of: Department of Defense Military Pay and Allowance
Committee Action No. 544, September 2, 1980:
This action is in response to a request from the Assistant Secretary
of Defense (Comptroller) for a decision concerning the computation of
retired pay of members of the Armed Forces under subsection 1401a(f) of
title 10, United States Code (1976), in the circumstances described in
Department of Defense Military Pay and Allowance Committee Action No.
544, enclosed with the submission. The discussion in the Committee
Action indicates that certain questions have arisen with respect to the
date of retirement eligibility to be used as the basis for computing
military retired pay under that provision of law as the result of the
decision rendered by our Office in Matter of Lieutenant General William
B. Fulton, USA, Retired, B-189029, November 2, 1977.
Section 1401a of title 10, United States Code, in general directs
that military retired pay be adjusted to reflect changes in the Consumer
Price Index rather than changes in active duty basic pay rates.
Subsection 1401a(f) was added as an amendment to 10 U.S.C. 1401a by
section 806 of the Department of Defense Appropriation Authorization
Act, 1976, Public Law 94-106, October 7, 1975, 89 Stat. 538-539,
commonly referred to as the "Tower Amendment." That subsection reads as
follows:
(f) Notwithstanding any other provision of law, the monthly retired
or retainer pay of a member or a former member of an armed force who
initially became entitled to that pay on or after January 1, 1971, may
not be less than the monthly retired or retainer pay to which he would
be entitled if he had become entitled to retired or retainer pay at an
earlier date, adjusted to reflect any applicable increases in such pay
under this section. In computing the amount of retired or retainer pay
to which such a member would have been entitled on that earlier date,
the computation shall, subject to subsection (e) of this section, be
based on his grade, length of service, and the rate of basic pay
applicable to him at that time. This subsection does not authorize any
increase in the monthly retired or retainer pay to which a member was
entitled for any period prior to the effective date of this subsection.
Subsection 1401a(f) was adopted in order to alleviate the so-called
"retired pay inversion" problem, which was created by the fact that for
several years upward cost-of-living adjustments of retired and retainer
pay under 10 U.S.C. 1401a had occurred in greater amounts and at greater
frequency than increases in active duty military basic duty after
becoming eligible for retirement were losing considerable retirement
pay. The amendment adding subsection 1401a(f) was intended to provide
an alternate method of calculating retired pay or retainer pay. The
computation of a member's retired pay under the alternate method
provided by 10 U.S.C. 1401a(f) is necessarily somewhat complex; it
essentially involves calculating the maximum amount of retired pay based
not on the member's actual retirement but rather on his earlier
eligibility for retirement. See 56 Comp.Gen. 740(1977).
The decision mentioned in the Committee Action, Matter of Lieutenant
General William B. Fulton, USA, Retired, B-189029, supra, concerned the
computation of the retired pay of an Army officer who was retired upon
his request on April 1, 1977, under 10 U.S.C. 3918(1976) on the basis of
his having completed more than 34 years of creditable service.
He was retired in the grade of lieutenant general (O-9) under the
authority of 10 U.S.C. 3962(a)(1976). That statutory provision
authorizes certain general officers of the Army who have served in a
position of importance and responsibility to be retired in the highest
grade held "at any time" on the active list, in the discretion of the
President and with the advice and consent of the Senate.
General Fulton's retired pay entitlement computed on the basis of his
actual retirement as a lieutenant general (O-9) on April 1, 1977, was
less than the monthly retired pay to which he would have been entitled
if he had retired at an earlier date, due to the effects of the "retired
pay inversion" problem previously described. He had been promoted from
the grade of major general (O-8) to that of lieutenant general (O-9) on
September 1, 1975, and his maximum retired pay under 10 U.S.C. 1401a(f)
resulted from a computation based on his retirement eligibility as a
lieutenant general (O-9) on or after September 1, 1975, but before
October 1, 1975 (the date of the 1975 military active duty basic pay
rate change). In the alternative, if that computation could not have
been used, his maximum retired pay rate under 10 U.S.C. 1401a(f) would
have to have been computed on the basis of his retirement as a major
general (O-8) on September 1, 1974. We were asked to render a decision
on the question of whether General Fulton could have been eligible to
retire as a lieutenant general (O-9) on or after September 1, 1975, but
before October 1, 1975, for purposes of computing his retired pay under
10 U.S.C. 1401a(f) at the higher of the two rates.
In our November 2, 1977 decision in the matter, we expressed the view
that General Fulton could not have been retired as a lieutenant general
(O-9) on September 1, 1975, the same day that he was promoted to that
grade on the active list. However, we also expressed the view that he
could have been eligible for retirement at some later time during the
month of September 1975 in that grade. In that case, we said, the
Uniform Retirement Date Act, 5 U.S.C. 8301(1976), would be applicable.
That act provides:
(a) Except as otherwise specifically provided by this title or other
statute, retirement authorized by statute is effective on the first day
of the month following the month in which retirement would otherwise be
effective.
(b) Notwithstanding subsection (a) of this section, the rate of
active or retired pay or allowance is computed as of the date retirement
would have occurred but for subsection (a) of this section.
We said that if General Fulton had been retired during September
1975, under subsection (a) of the Uniform Retirement Date Act his
effective retirement date would have been October 1, 1975. We
concluded, however, that under subsection (b) of the act retired pay
could be computed on the basis of his eligibility for retirement
sometime during the period September 2-- September 30, 1975, if the
resulting computation under 10 U.S.C. 1401a(f) would be most favorable
to him.
As indicated, our decision in General Fulton's case has given rise to
questions concerning the date of retirement eligibility to be used
generally under 10 U.S.C. 1401a(f). In the Committee Action, three
specific questions have been presented regarding the application of the
decision:
I. The Day Before the Date of an Active Duty Basic Pay Rate Change
Should Generally be Used as the Earlier Day of Voluntary Retirement
Eligibility in Computing Retired Pay Under 10 U.S.C. 1401a(f)
Since October 1, 1972, military active duty basic pay rate increases
have in each year occurred only on the first day of October. In the
submission it is stated that because subsection (a) of the Uniform
Retirement Date Act specifically provides for retirement on the first
day of the month following the month in which retirement would be
effective, except as provided by other statute, September 1 is generally
now being used as the hypothetical earlier voluntary retirement date for
members affected by 10 U.S.C. 1041a(f), since it is the latest effective
retirement date a member may have prior to an active duty pay increase
on October 1. Thus, currently retired pay computation under 10 U.S.C.
1401a(f) is usually based on the member's grade and length of service on
the first day of September in any given year the member would have been
eligible to retire prior to the year of his actual retirement.
In the submission it is further stated, however, that in light of the
decision in Fulton, supra, it appears that September 30 should generally
be used for the earlier time of voluntary retirement eligibility in
computing retired pay under 10 U.S.C. 1401a(f). Use of September 30
would be based on subsection (b) of the Uniform Retirement Date Act,
which specifies the rate allowed when qualification for retirement is
met, rather than subsection (a) of that act, which sets the effective
retirement date. It is observed that if determination of the time of
the hypothetical earlier retirement under 10 U.S.C. 1401a(f) should be
based on the date qualifications for retirement are met for retirement
as provided by each retirement statute, then the earlier date for
computation purposes should be at the end of September to cover any
member who had a change of status during September of any year
subsequent to 1971.
Based on the foregoing, the first question presented in the
submission is:
1. Does Comptroller General Decision B-189029, dated 2 November
1977, apply to all military retirees affected by 10 USC 1401a(f) with
regard to the computation of pay on an earlier retirement date? If so,
what date should be used for computation purposes without regard to 5
USC 8301(a)?
The principles of the November 2, 1977 decision pertaining to retired
pay computation based on earlier retirement eligibility under 10 U.S.C.
1401a(f) in the case of General Fulton should be for application to
other service members effected by the "retired pay inversion" problem.
That is, if a member's retired pay based on his actual retirement is
less than his entitlements based on some hypothetical earlier voluntary
retirement, determination of the time of the earlier retirement
eligibility for pay computation purposes under 10 U.S.C. 1401a(f) may be
based on the date qualifications for retirement were met for retirement
as provided by each retirement statute, notwithstanding that the
earliest effective date of such hypothetical retirement would have been
the first day of the following month, if the resulting computation is
most favorable to the member concerned.
It follows that September 30 (rather than September 1) should
generally be used as the hypothetical earlier time of voluntary
retirement in computing retired pay under 10 U.S.C. 1401a(f), for the
reason stated in the submission, i.e., to cover retired personnel who,
like General Fulton, may have had a change of status during September of
any year subsequent to 1971. It appears that the retirees affected
would be those who during the month of September in any year after 1971
received either (1) a promotion, (2) a pay increase based on longevity
of service, or (3) a 2 1/2 percent increase in their retired pay
multiplied by completing more than 6 months of an additional year of
creditable service.
The use of September 30 as the earlier voluntary retirement
eligibility date for years prior to the time of actual retirement in
computing retired pay under 10 U.S.C. 1401a(f) would not, of course, be
most favorable in the case of every member affected by the "retired pay
inversion" problem. For example, if a member was not promoted but
instead reduced in grade during the month of September, it would appear
that the use of a retirement eligibility date earlier than September 30
would be more favorable to the member in computing his retired pay under
10 U.S.C. 1401a(f). See 56 Comp.Gen. 740, 741-743, supra.
Moreover, it is to be noted that while there have been active duty
military basic pay increases on October 1, 1972, and on the first day of
October in every year since then, prior to October 1, 1972, active duty
basic pay increases had occurred on the first day of other months.
Also, in the future, changes in active duty basic pay rates may not all
necessarily fall on the first of October. Thus, while September 30
should ordinarily be used under 10 U.S.C. 1401a(f) as the hypothetical
earlier time of voluntary retirement for years in which an active duty
basic pay increase occurred on the first day of October, the more
general rule for application is that the day before the date of an
active duty basic pay rate change is ordinarily to be used as the
earlier day of voluntary retirement eligibility in computing retired pay
under 10 U.S.C. 1401a(f).
In conclusion the principles of our decision B-189029, November 2,
1977, are for general application to retired personnel affected by 10
U.S.C. 1401a(f). Hence, the day before the date of an active duty basic
pay rate change should be used as the earlier day of voluntary
retirement eligibility in computing retired pay under 10 U.S.C.
1401a(f), if the resulting computation is most favorable to the member
concerned. The first question is answered accordingly.
II. Army and Air Force Generals and Lieutenant Generals
In the submission it is further noted that 10 U.S.C. 3961(1976) and
10 U.S.C. 8961(1976), governing the retired grade of Army and Air Force
members, impose a general requirement that a regular member (unless
retired for disability, or unless entitled to a higher grade under
another provision of law) must retire in the regular grade that is held
on the retirement date. The highest regular grade for Army and Air
Force members is major general (O-8), as prescribed in 10 U.S.C.
3281(1976) and 10 U.S.C. 8281(1976). It is also noted that 10 U.S.C.
3963(1076) and 10 U.S.C. 8963(1976) stipulate that regular Army and Air
Force commissioned officers may retire in the highest temporary grade in
which they served on active duty satisfactorily provided it was held for
a minimum of 6 months.
It is said that a question has arisen as to whether the 6-month
TIME-IN-GRADE REQUIREMENT OF 10 U.S.C. 3963 AND 8963 IS NEGATED FOR ALL
THREE- AND FOUR-STAR ARMY AND AIR FORCE GENERAL OFFICERS (I.E.,
lieutenant general (O-9) and general (O-10) by our earlier decision
concerning General Fulton, or whether the situation of General Fulton
was unique and not equally applicable to the retirement of all three-
and four-star general officers of the Army and Air Force.
Based on the foregoing, the second question presented in the
submission is:
2. Do the provisions of B-189029 apply to all three and four star
General Officers without regard to the requirements in 10 USC 3961, 10
USC 8961, and 10 USC 3963, 10 USC 8963?
As previously indicated, General Fulton was retired in the three-star
grade of lieutenant general (O-9) pursuant to 10 U.S.C. 3962, which
authorizes certain general officers of the Army who have served in a
position of importance and responsibility to be retired in the highest
grade held "at any time" on the active list, in the discretion of the
President and with the advice and consent of the Senate. Hence, we
concluded that a hypothetical time of retirement eligibility in the
grade of lieutenant general (O-9) could be established for him, for
purposes of computing his retired pay under 10 U.S.C. 1401a(f), "at any
time" after his September 1, 1975 promotion from major general to
lieutenant general on the active list.
It is our view that in computing retired pay pursuant to 10 U.S.C.
1401a(f) for those officers retired in grades O-9 and O-10 upon
recommendation by the President and with the advice and consent of the
Senate, the time-in-grade requirements of 10 U.S.C. 3963 and 8963 do not
apply. Therefore, as was held in the Fulton case, when a member is
retired in the O-9 or O-10 grade, in selecting an earlier more
advantageous date for computing his retired pay under section 1401a(f),
the O-9 or O-10 grade may be used in the computation, provided of
COURSE, THAT THE MEMBER WAS SERVING IN THAT GRADE AT THE EARLIER DATE
selected.
Question 2 is answered accordingly.
III. The Date to be Used as the Earlier Time of Voluntary Retirement
Eligibility in the Computation of Retired Pay Under 10 U.S.C. 1401a(f)
Provisions of law authorizing the voluntary retirement of members of
the uniformed services generally do not contain specific language
providing that the effective date of retirement will occur on the first
day of a month or at any other particular time. This includes the
voluntary retirement of commissioned officers of the Army, Air Force,
Coast Guard, and National Oceanic and Atmospheric Administration on the
basis of their having completed 20 years of active service. See 10
U.S.C. 3911, 8911(1976); 14 U.S.C. 291(1976); and 33 U.S.C.
853-1(1976). In our answer to the first question presented in the
submission, we indicated that in computing retired pay under 10 U.S.C.
1401a(f) it is permissible to use the day before the time of an active
duty basic pay increase, as the date of voluntary earlier retirement
eligibility for such service members. As was mentioned, under
subsection (a) of the Uniform Retirement Date Act, 5 U.S.C. 8301, the
effective date of such hypothetical earlier retirement would be the
first day of the following month, but under subsection (b) of that act
the retired pay could be computed on the basis of retirement eligibility
on the date before the new active duty pay rates became effective, if
the resulting computation would be most beneficial to the member
concerned.
The third question presented in the submission is:
3. Would the same date apply for those members eligible to retire
only under a law which specifically provides for retirement on the first
day of a month?
We understand that this question concerns a provision of law
authorizing the voluntary retirement of Navy and Marine Corps officers
who apply for retirement after completing more than 20 years active
service, 10 U.S.C. 6323(1976). Subsection 6323(a) provides as follows:
(a) An officer of the Navy or the Marine Corps who applies for
retirement after completing more than 20 years of active service, of
which at least 10 years was service as a commissioned officer, may, in
the discretion of the President, be retired on the first day of any
month designated by the President.
This statutory language is derived from the act of February 21, 1946,
Public Law 305 of the 79th Congress, 60 Stat. 26, which for the first
time generally authorized all commissioned officers of the Navy, Marine
Corps, and Coast Guard who applied for voluntary retirement after
completing 20 years of active service to be "placed on the retired list
on the first day of such month as the President may designate." This act
superseded several earlier retirement laws, none of which contained
specific language providing for retirements to become effective on the
first day of a month. See Senate Report No. 701, November 8, 1945, and
House Report No. 1441, December 14, 1945. We have found no explanation
in the legislative history of the act of February 21, 1946, as to why
language was included to specifically provide for retirement on the
first day of a month. Moreover, as has been noted, that language has
been deleted from 14 U.S.C. 291, the current codification of the law
authorizing Coast Guard officers to be voluntarily retired after 20
years of active service.
By 10 U.S.C. 1404(1976) the retired pay computation provisions of 10
U.S.C. 1401a(f) are made subject to the Uniform Retirement Date Act
which, as has been mentioned, directs that retirements are to be
effective on the first day of a month except as specifically provided by
statute. Thus, in our view, that language of 10 U.S.C. 6323(a) which
also provides for voluntary retirements on the first day of a month may
be regarded as a surplusage insofar as retired pay computations under 10
U.S.C. 1401a(f) are concerned. Furthermore, it is our view that the
beneficial and remedial purposes of 10 U.S.C. 1401a(f) would be best
served if hypothetical earlier voluntary retirements under its
provisions were to be set in a manner that is as uniform, equitable, and
simple as possible. Hence, we conclude that Navy and Marine Corps
members whose retired pay is computed under the provisions of 10 U.S.C.
1401a(f) and whose hypothetical earlier voluntary retirement is governed
by the provisions of 10 U.S.C. 6323, may also have the day before the
date of an active duty basic pay rate change used as the time of their
earlier retirement eligibility, if the resulting computation is most
favorable to them.
We note that the provision of law authorizing the voluntary
retirement of members of the Commissioned Corps of the Public Health
Service, 42 U.S.C. 212(1976), also contains language making retirements
effective "on the first day of any month." In accordance with the
provisions of 42 U.S.C. 213a(1976), Public Health Service officers may
be eligible to have their retired pay computed under 10 U.S.C. 1401a(f).
Our comments concerning the computation of the retired pay of Navy and
Marine Corps officers under 10 U.S.C. 1401a(f) are equally for
application to Public Health Service officers whose retired pay is so
computed on the basis of a hypothetical earlier voluntary retirement
under the provisions of 42 U.S.C. 212.
The third and last question presented in the submission is
accordingly answered in the affirmative.
B-197842, August 27, 1980, 59 Comp.Gen. 686
Leases - Negotiation - Evaluation of Offers - Undisclosed Factors
Solicitation provided that award would be based on rental price per
square foot (not overall annual price) and other disclosed award
factors. Where agency reports that its evaluation of disclosed factors
showed protester's and awardee's proposals were equal and protester's
price per square foot was lower than awardee's, agency's award
determination based on undisclosed award factors (including lowest
overall life-cycle cost) was improper because principles of negotiated
procurement require agency to advise offerors when disclosed basis of
award is changed. Contractors - Responsibility - Administrative
Determination - Nonresponsibility Finding - Based on Prior
Unsatisfactory Performance
Firm submitting best proposal when properly evaluated in accord with
solicitation's evaluation criteria is not entitled to award of lease
when agency determines that firm is nonresponsible. Further,
nonresponsibility determination is reasonably based where agency cites
firm's recent prior unsatisfactory performance on similar lease contract
even though firm disputes agency's prior default termination and matter
is still pending. Contracts - Protests - Allegations - Not Supported by
Record
Contention-- that awardee was not eligible for award because it did
not satisfy solicitation's zoning requirement-- is without merit where
awardee had proper zoning on adequate portion of property to perform on
contract. Contracts - Awards - Propriety - Price Reasonable -
Unreasonably Low Prices
No legal basis exists to preclude award of lease to firm merely
because it might lose money in performing. Contracts - Performance -
Ability to Perform - Administrative Responsibility to Determine
Whether awardee could deliver building for occupancy by scheduled
date is matter of responsibility and General Accounting Office does not
review affirmative determinations of responsibility except in
circumstances not present here.
Matter of: H. Frank Dominquez d.b.a. Vanir Research Company, August
27, 1980:
H. Frank Dominquez, doing business as Vanir Research Company (Vanir),
protests the award of a lease to Shane Realty and Construction Company
(Shane) by the General Services Administration (GSA) under solicitation
for offers (SFO) GS-09B-08296 for office space and parking for the
Social Security Administration in San Bernardino, California. Vanir
contends that it should have received the award since it is the
responsible firm which submitted the best proposal, and Shane should not
have received the award for certain reasons. In response, GSA
recognizes that some errors were made in the award determination but GSA
contents that termination of the lease would not be in the best interest
of the Government. We conclude that there was a valid basis not to
award to Vanir, and that Shane was eligible for award. Thus, Vanir's
protest is denied.
The SFO provided that GSA needed 16,361 square feet of contiguous
general office space, plus or minus 5 percent, and 12 reserved
off-street parking spaces, for a 5-year period commencing June 13, 1980.
The SFO also provided that for purposes of determining the lowest
price, an annual square foot rate for the amount of space offered and
not an overall yearly rate would be used; in determining which offer
will be the most advantageous to the Government, several listed award
factors-- in addition to the rental proposed and the conformity of the
space offered to the SFO's specific requirements-- would be considered.
GSA reports that since its evaluation of the listed factors resulted in
a determination that Vanir's offer and Shane's offer were equal, the
only remaining disclosed evaluation factor was price per square foot.
Vanir's price was $9 for 16,725 square feet and Shane's was $9.35 for
16,361 square feet. Therefore, based on disclosed evaluation factors,
it appears that Vanir submitted the best proposal.
In addition to the disclosed award factors, however, GSA considered
"other factors": (1) life-cycle cost, (2) seismic safety, (3) Vanir's
ability to perform, and (4) the comparable age of the two buildings.
The life-cycle cost analysis showed that Vanir's price per square foot
was still lower than Shane's ($9.84 vs. $9.79) but the estimated total
cost to the Government was higher with Vanir than with Shane
($818,859.65 vs. $805,614.89).
GSA was not satisfied with Vanir's certification regarding seismic
safety but Shane's was acceptable. GSA was not confident in Vanir's
ability to perform on this award because it was involved in a dispute
with Vanir on another project, which ended in GSA terminating that
contract for default shortly after the award here. Lastly, GSA believed
that the new, energy efficient building offered by Shane was better than
the older building that Vanir proposed.
First, GSA recognized that offerors were not notified that life-cycle
costs would be evaluated in the award determination but GSA states that
(1) overall cost to the Government should be considered in making the
award, and (2) on a prior lease procurement, Vanir was advised that
overall costs had been considered. Vanir states that it disregarded the
information on overall cost consideration relative to the prior
procurement because of the specific language used in this SFO.
In our view, the use of life-cycle cost as the method of evaluating
price (as compared with rental price) is an acceptable method either on
or overall cost basis or on a per square foot basis, provided that
offerors are notified in advance of the basis for evaluation. The best
interest of the Government will be served when offerors can tailor their
proposals to the precise needs of the Government as the relative
importance of those needs are reflected in the disclosed evaluation
scheme. The principles of negotiated procurement require an agency to
advise offerors when the disclosed basis of award is changed. Eastman
Kodak Company, B-194584, August 9, 1979, 79-2 CPD 105. Here, the method
of proposal evaluation was not only changed from rental price evaluation
to life-cycle cost evaluation but also from a per square foot basis to
an overall basis, the latter of which was directly opposed to the SFO's
stated basis of evaluation.
In our view, it was not proper to switch to an overall cost basis
without advising offerors. Further, since Vanir was still lower on a
per square foot of life-cycle costs basis, we do not believe that this
"other factor" would provide a basis to award to Shane.
Second, we can understand why GSA was dissatisfied with the carefully
worded statement from Vanir's Registered Engineer regarding the seismic
safety of the proposed building. Vanir appears to have recognized this
since it sent in a letter offering to make any modifications necessary
to the building to bring it in compliance with the applicable building
code.
If GSA was still dissatisfied with Vanir's certifications, then GSA
could have used the negotiation process to give Vanir an opportunity to
satisfy the certification requirement. Therefore, we do not believe
that this "other factor" would provide a basis to award to Shane.
Third, the SFO required a modern office building with certain
specific features; this represented the Government's minimum needs.
Since it appears that Vanir's proposed building met these needs, it
would be improper to award to Shane based on Shane's proposal to provide
a new building. Thus, this "other factor" would not provide a basis to
deny Vanir the award.
Fourth, GSA recognizes that the final "other factor"-- Vanir's
ability to perform-- concerns responsibility and it should not have been
considered as an award factor.
In sum, we must conclude that Vanir's proposal was better than
Shane's when properly evaluated in accord with the SFO's evaluation
criteria; however, we are not aware of any obligation on GSA's part to
award a lease to a firm that it determines is nonresponsible, which is
essentially what GSA did. As GSA points out, in our decision at 51
Comp.Gen. 565(1972), we stated that an offeror's past performance should
be considered in determining responsibility and past unsatisfactory
performance will ordinarily be sufficient to justify a finding of
nonresponsibility. Here, relying on our decision in Howard Electric
Company, 58 Comp.Gen. 303(1979), 79-1 CPD 137, and other decisions, GSA
has determined that Vanir's prior inadequate performance justifies a
finding of nonresponsibility even though Vanir disputes GSA's view of
its prior performance and the dispute is still pending. Since GSA
nonresponsibility determination is reasonably based on Vanir's alleged
recent unsatisfactory prior performance on a similar contract, we have
no basis to question GSA's determination not to award to Vanir. See
United Office Machines, 56 Comp.Gen. 411(1977), 77-1 CPD 195, aff'd,
B-187193, May 2, 1977, 77-1 CPD 297.
Vanir further argues that GSA's nonresponsibility determination
violates 15 U.S.C. 637(b)(7)(Supp.I, 1977)-- which empowers the Small
Business Administration (SBA) to certify the responsibility of a small
business-- since GSA did not refer the matter to SBA prior to making
award to Shane. This basis of protest was untimely raised as it was
first made more than 10 days after Vanir received GSA's report on the
protest, 4 C.F.R. 20.2(b)(2)(1980), and after the record in this matter
was closed in accordance with our Bid Protest Procedures, 4 C.F.R.
20.3(d)(1980).
There also is a question as to the applicability of the COC procedures
to lease procurements, which we need not address in view of the
foregoing, since such procurements are not listed in the applicable SBA
regulations, 13 C.F.R. 125.1(1980).
We note, however, that GSA initially considered Vanir's
responsibility as an award factor; therefore, GSA apparently believed
that it had no obligation to consider referring a nonresponsibility
determination to SBA. After award, in its report on Vanir's protest,
GSA recognized that a nonresponsibility determination should have been
made instead of considering responsibility as an undisclosed award
factor but at that point preaward referral to SBA under the certificate
of competency (COC) program was impossible.
Vanir contends that Shane was not eligible for award because it did
not satisfy the SFO's zoning requirement and its schedule was
unrealistic and the building costs were so high that Shane could not
perform realistically. Vanir refers to the zoning provision of the SFO,
which provides that the failure to provide satisfactory evidence that
the property is zoned in conformance with the Government's intended use
will automatically make the "bid nonresponsive." Vanir points out that
one portion of Shane's proposed property was not properly zoned. GSA
and Shane respond that Shane could have performed by building on the
properly zoned portion of the property. They explain that the
improperly zoned lot was for parking only and the parking requirement
could have been satisfied with an underground area. In our view,
Shane's proposal did not violate the SFO's zoning requirements and this
aspect of Vanir's protest is without merit.
Vanir also contends that Shane's underground parking suggestion is
"absurd" because of the additional cost that would be entailed. This
contention is dismissed, however, because the fact that Shane may have
lost money in performing is not a legal basis to deny Shane the award.
Finally, Vanir contends that Shane could not and cannot deliver the
building for occupancy by the scheduled date. GSA notes that this
aspect of Vanir's protest concerns Shane's responsibility. This aspect
of Vanir's protest will not be considered because we do not review
affirmative determinations of responsibility except in circumstances not
present here. See Ira Gelber Food Services, Inc., B-196868, February
27, 1980, 80-1 CPD 161.
Vanir's protest is denied in part and dismissed in part.
B-197476, August 26, 1980, 59 Comp.Gen. 683
Compensation - Premium Pay - Standby, etc. Time - Regularly Scheduled -
Leave Periods - Extended Sick Leave Pending Disability Retirement
Federal Aviation Administration employee is not entitled to premium
pay for standby duty while on extended sick leave pending disability
retirement because there is no reasonable expectancy that he will
perform standby service in the future. Moreover, since he is not
entitled to such pay at date of separation and he would not have
received it had he remained in the service, such pay may not be included
in his lump-sum annual leave payment.
Matter of: Standby Premium Pay - Sick Leave Pending Disability
Retirement - Lump-sum Annual Leave Payment, August 26, 1980:
The Assistant Secretary for Administration, Department of
Transportation, has requested a decision as to whether a Federal
Aviation Administration (FAA) employee on extended sick leave expected
to terminate with disability retirement (possibly for 8 months) is
entitled to premium pay for regularly scheduled standby duty and whether
such premium pay should be included in his lump-sum annual leave
payment. Based upon the following discussion, this Office concludes
that the employee's entitlement to premium pay for standby duty on an
annual basis terminates when he goes on sick leave under these
circumstances and that such premium pay may not be included in his
lump-sum annual leave payment.
Under 5 U.S.C. 5545(c)(1) the head of an agency, with the approval of
the Office of Personnel Management (OPM), may provide that an employee
in a position requiring him regularly to remain at, or within the
confines of, his station during longer than ordinary periods of duty, a
substantial part of which consists of remaining in a standby status
rather than performing work, shall receive premium pay for this duty on
an annual basis instead of premium pay provided by other provisions of
this subchapter, except for irregular, unscheduled overtime duty in
excess of his regularly scheduled weekly tour. Paragraph (2) of this
subsection authorizes annual premium pay for administratively
uncontrollable overtime.
OPM's implementing regulations are contained in part 550 of title 5,
Code of Federal Regulations. Section 550.162(a) of these regulations
provides that except as otherwise provided in this section, an
employee's premium pay on an annual basis under 5 U.S.C. 5545(c)(1) or
(2) begins on the date that he enters on duty in the position concerned
for the purposes of basic pay, and ceases on the date that he ceases to
be paid basic pay in the position. Paragraphs (b) and (c) are
exceptions to paragraph (a). Paragraph (b) provides for the payment of
annual premium pay on a seasonal basis. Paragraph (c) limits annual
premium pay during temporary assignments to other duties and training.
Paragraph (e) provides that an agency shall continue to pay an employee
premium pay on an annual basis while he is on leave with pay during a
period in which premium pay on an annual basis is payable under
paragraphs (a), (b), and (c) of this section.
As noted in the submission, the entitlement of an employee on
extended sick leave pending disability retirement to premium pay on an
annual basis for administratively uncontrollable overtime under these
provisions of law and regulations was considered in 43 Comp.Gen.
376(1963) and B-175788, June 1, 1972. These decisions hold in substance
that in this situation section 550.162(e) of the regulations pertaining
to leave with pay status is not conclusive as to entitlement, that this
regulation does not contemplate a situation where there is no reasonable
expectation that the employee will return to work, and that an employee
on leave with pay no longer is entitled to receive premium compensation
when it is administratively determined that there is no basis for
anticipating that his irregular, unscheduled overtime work will
continue.
While, as the submission points out, there are some differences
between annual premium pay for administratively uncontrollable overtime
and such pay for regularly scheduled standby duty, we can find no basis
for concluding that such differences justify a different result with
regard to the issue here involved.
One difference mentioned no longer exists. Formerly section S1-5(b) of
FPM Supplement 752-1 defined the reduction or discontinuance of premium
pay for standby duty (but not for administratively uncontrollable
overtime) as an adverse action within the purview of part 752 of the
Civil Service regulations. However, FPM Supplement 752-1 was revoked by
FPM Bulletin No. 752-8, February 2, 1979, and this premium pay is no
longer considered basic pay for the purposes of adverse actions under
chapter 75 of title 5, United States Code, as amended by the Civil
Service Reform Act of 1978, and the revised regulations in part 752 of
title 5, Code of Federal Regulations (1980).
Accordingly, it is our opinion that the holdings in 43 Comp.Gen. 376
and B-175788, supra, apply with equal force to premium pay on an annual
basis for regularly scheduled standby duty and that an employee on
extended sick leave expected to terminate with disability retirement is
not entitled to such premium pay. This may be viewed as another
exception to the previously cited section 550.162(a) which is required
by a reasonable interpretation of 5 U.S.C. 5545(c)(1). While during the
period of sick leave the employee remains on the rolls and technically
continues to be assigned to his position, he in fact is not, nor is he
expected in the future to be "in a position requiring him regularly to
remain at, or within the confines of, his station during longer than
ordinary periods of duty, a substantive part of which consists of
remaining in a standby status."
The remaining question is whether this employee is entitled to have
premium pay on an annual basis for standby duty included in his lump-sum
payment for annual leave under subsection 5551(a) of title 5, United
States Code. This subsection provides that an employee who is separated
from the service is entitled to receive a lump-sum payment for
accumulated and current accrued annual leave to which he is 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.
As the submission indicates, this question was considered in 36
Comp.Gen. 18(1956) and 38 id. 161(1958). In the former it was held that
an employee who was receiving premium pay for administratively
uncontrollable overtime at the time of his separation was entitled to
have such premium pay included in his lump-sum payment to the extent he
would have received such pay had he remained in the service for the
period covered by the lump-sum payment.
In the latter it was held that employees who received premium pay for
either administratively uncontrollable overtime or standby duty for
"selected periods" and who were receiving such pay at the time of their
separations occurring within a "selected period" were entitled to have
such pay for the duration of the "selected period" included in their
lump-sum payments.
However, as we have indicated, it is our view that the employee in
the case at hand is not entitled to this premium pay during the period
of extended sick leave terminating in disability retirement and he is
not entitled to it at the time of separation. In these circumstances we
can perceive no sound basis for concluding that he would have received
it had he remained in the service until the expiration of the annual
leave. Accordingly, it is our opinion that this employee is not
entitled to have premium pay on an annual basis for standby duty
included in his lump-sum payment for annual leave.
B-196840, August 25, 1980, 59 Comp.Gen. 681
Quarters Allowance - Basic Allowance for Quarters (BAQ) - Dependents -
Husband and Wife Both Members of Armed Services - Dependent Children
From Prior Marriage - Parent Not Occupying Government Quarters
A military member married to a military member occupies Government
quarters with their dependent child. Upon a permanent change of station
of the male member, the female member remains in Government quarters
with the dependent child. Male member is not provided Government
quarters at new station and claims a basic allowance for quarters (BAQ)
at the with-dependent rate since he is paying child support to a former
non-military spouse not residing in Government quarters with dependent
children. The male member is entitled to BAQ at the with-dependent rate
since his BAQ entitlement is determined independent of his military
spouse where they do not reside in the same household.
Matter of: Sergeant Harold L. Sandkulla, Jr., USAF, August 25, 1980:
In this case a military member married to a military member occupied
Government family quarters with their dependent child. The male member
also has a child by a previous marriage for whom he pays child support
and who is in the custody of the former spouse who is a civilian not
occupying Government quarters. The male member upon a permanent change
of station vacates Government family quarters. The female member
remains in the Government family quarters with their dependent child.
The question presented is may the male members be paid basic allowance
for quarters (BAQ) at the with-dependent rate based on the dependency of
the child of his former marriage. In the circumstances described we
find that the male member should be paid BAQ at the with-dependent rate.
The question was presented upon a request for an advance decision
from an Air Force Accounting and Finance Officer, 24th Composite Wing,
APO Miami, on a claim by Sergeant Harold L. Sandkulla, Jr., assigned
submission number DO-AF-1335 by the Department of Defense Military Pay
and Allowance Committee, and forwarded here by Headquarters Air Force.
Under 37 U.S.C. 403(1976) entitlement to BAQ accrues to every member
regardless of sex or grade by virtue of his or her status as a member of
the uniformed services if quarters are not provided by the Government.
56 Comp.Gen. 46, 48(1976).
Where a member is married to a member and they are living in the same
household, we have determined that if one of the members is receiving
BAQ at the with-dependent rate on account of minor children from a
previous marriage not residing in the household, a child born of the
marriage of the two service members does not authorize the payment of
another BAQ at the with-dependent rate, since the child of the present
marriage is automatically included in the class of dependents for which
one of the members is already receiving BAQ at the with-dependent rate.
54 Comp.Gen. 665, 667(1975). Both members are not permitted to claim
the same dependent to qualify for BAQ at the with-dependent rate and
where a member is married and residing with a member only one may draw
BAQ at the with-dependent rate even though some dependents may live
outside the household and others live within the household.
54 Comp.Gen. 665, supra.
However, as in the present case, where married members are living
separate and apart due to their military assignments, though married to
each other, BAQ entitlement should be determined on an individual basis.
In this case, the female spouse and dependent child occupy Government
quarters. Therefore, she is not entitled to BAQ. The male member is
living in non-Government quarters and therefore qualifies for BAQ.
Since the male member, Sergeant Sandkulla, has a dependent for whom he
provides support who is not residing in Government quarters, he is
entitled to BAQ at the with-dependent rate.
Accordingly, the Military Pay Order submitted is being returned for
payment, if otherwise correct.
B-199307, August 22, 1980, 59 Comp.Gen. 678
Contracts - Buy American Act - Brand Name or Equal Procurement - Foreign
Brand Name in Solicitation - Legality
Use of foreign brand name supplies as basis for brand name or equal
procurement does not violate Buy American Act since Act does not totally
preclude purchase of foreign equipment and in any event, Act has been
waived for equipment manufactured in foreign countries in question.
Contracts - Buy American Act - Defense Department Procurement - Waiver
of Act - Memorandum of Understanding - Implementation by Secretary
Allegation that DOD Determination & Findings exempting purchase of
defense materials from Denmark and United Kingdom from application of
Buy American Act cannot take precedence over Act or Congress is without
merit where exemption is based on statutory authority conferred by Buy
American Act and DOD Appropriation Authorization Act, 1976, as amended.
Contracts - Protests - Allegations - Burden of Proof - On Protester
Protester has not met burden of affirmatively proving its case that
Determination & Findings exempting foreign materials from Buy American
Act do not apply to instant procurement when Determination & Findings by
their terms apply to all items of defense equipment other than those
specifically excluded and protester has provided no evidence to support
bare allegation that equipment is excluded from coverage. Contracts -
Specifications - Restrictive - Particular Make - Invitation Sufficiency
Allegation that specifications in brand name or equal procurement
lack sufficient detail to enable protester to submit bid is without
merit where solicitation clearly sets forth salient characteristics of
brand name equipment and protester has not identified any specific
portions of such specifications which it considers lacking in detail.
Matter of: Air Plastics, Inc., August 22, 1980:
Air Plastics Inc. (Air Plastics) protests invitation for bids (IFB)
No. DLA-700-80-B-1157 issued by the Defense Construction Supply Center
(DCSC), Defense Logistics Agency, Columbus, Ohio. Specifically, Air
Plastics contends that the IFB violates the Buy American Act (Act)
because it calls for a product manufactured virtually entirely in a
foreign country.
In addition, Air Plastics argues that the specifications are lacking in
sufficient detail to enable it to submit a bid.
The IFB was issued on April 1, 1980, and requested bids on 14 Vacuum
Dust Collectors, Nilfisk Asbesto-Clene System Model No. GA-73 or equal.
The original bid opening date of May 1, 1980, was extended to May 15,
1980, at Air Plastics' request. Award is being withheld pending
resolution of the protest by this Office.
With regard to Air Plastics' first basis of protest, DCSC points out
that the Act has been waived for supplies manufactured in both Denmark
and the United Kingdom (U.K.) where portions of the Nilfisk
Asbesto-Clene System are manufactured. Air Plastics asserts, however,
that a Defense Department determination to waive the Act cannot take
precedence over an Act of Congress and that the exception determination
does not apply to the instant procurement.
The Act requires that only such manufactured articles, materials and
supplies as have been manufactured in the United States substantially
all from articles, materials or supplies mined, produced or manufactured
in the United States shall be acquired for public use, unless the head
of the agency concerned determines it to be inconsistent with the public
interest or the cost to be unreasonable. 41 U.S.C. 10a(1976).
Executive Order No. 10582, December 17, 1954, as amended, which
establishes uniform procedures for determinations, provides that
materials (including articles and supplies) shall be considered to be of
foreign origin if the cost of the foreign products used in such
materials constitutes 50 percent or more of the cost of all the products
used therein. The order further provides that the price of domestic
articles is unreasonable if it exceeds the cost of like foreign articles
plus a differential. The Act and Executive order are implemented within
the Department of Defense (DOD) by section VI of the Defense Acquisition
Regulation (DAR), which provides for a percentage additive factor for
evaluation purposes to be applied to offers of nondomestic source end
products. DAR Sec. 6-104.4 (1976 ed.).
Thus, we note at the outset that the Act as implemented does not, as
Air Plastics suggests, absolutely prohibit the procurement of foreign
supplies. Rather, it establishes a preference for domestic supplies by
requiring that a differential be added to the price bid on any equipment
of foreign origin. Furthermore, we are unaware of any provision of the
Act, Executive order or regulations which would prohibit basing a brand
name or equal procurement upon foreign brand name supplies.
In any event, as DCSC states, the Act has been waived for equipment
manufactured in Denmark and the U.K. where portions of the Nilfisk
system are manufactured (For purposes of argument, DCSC has assumed that
the Nilfisk system is a foreign end product.) Pursuant to Memoranda of
Understanding (MOU) with Denmark and the U.K., dated January 30, 1980
and September 24, 1975 respectively, DOD has issued Secretarial
Determination & Findings (D&F) dated May 9, 1980, and November 24, 1976,
exempting the purchase of defense materials from Denmark and the U.K.
from application of the Act.
The determinations in the D&F are based on the statutory authority
conferred upon department heads by the Buy American Act to exempt from
the application of the Act those products for which it is determined
such exemption would be in the public interest. They are further based
on the authority of the Secretary of Defense under section 814(a) of the
DOD Appropriation Authorization Act, 1976 (89 Stat. 540), as amended by
section 802 of the DOD Appropriation Authorization Act, 1977 (90 Stat.
930), authorizing the Secretary of Defense to determine that waiver of
the Act would be in the public interest when it is necessary to procure
equipment manufactured outside the United States in order to acquire
NATO standardized or interoperable equipment for the use of the United
States in Europe. Therefore, we find no merit to Air Plastics' argument
that the DOD determination to waive the Act is unauthorized. See
Self-Powered Lighting, Ltd., 59 Comp.Gen. 298(1980), 80-1 CPD 195.
In addition, we are unable to conclude that the exception
determinations do not apply to the instant procurement, as Air Plastics
asserts. The subject D&F's cover all items of Danish or U.K. produced
or manufactured defense equipment other than those excluded under the
MOUs or subject to legally imposed restrictions on procurement from
non-national sources. Air Plastics has provided no evidence to support
its bare allegation that the equipment being procured is not within the
coverage of the D&Fs and we know of nothing in the MOUs or any law or
regulation which would exclude this equipment from coverage. In this
regard, we note that the protester has the burden of affirmatively
proving its case and we cannot conclude that Air Plastics' allegation
meets its burden in that regard. The Nedlog Company, B-195963, January
10, 1980, 80-1 CPD 31.
Air Plastics' second basis of protest is that the specifications are
deficient. Specifically, Air Plastics alleges that DCSC would not
provide it with sufficient information on which it could submit a bid.
In this regard, DCSC points out that this is a brand name or equal
procurement and that it complied with the applicable regulation for such
procurements, DAR Sec. 1-1206.2, by clearly listing the salient
characteristics of the brand name product in the solicitation. DCSC
also indicates that, at Air Plastics' request, the bid opening date was
extended by an additional 10 days in order to allow Air Plastics time to
obtain additional commercial data which Air Plastics believed was needed
in order to submit its bid.
We have held that bidders offering "equal" products should not have
to guess at the essential qualities of the brand name item. Under the
regulations they are entitled to be advised in the invitation of the
particular features or characteristics of the referenced item which they
are required to meet. 48 Comp.Gen. 441(1968).
In this case, the salient characteristics of the relevant Nilfisk
system are clearly set forth in Section F of the solicitation. For
example, Section F advises potential offerors that the desired equipment
is a vacuum dust collector and enclosure for automotive brake work
controlling air-borne asbestos fibers in the work area equal to Nilfisk
Asbesto-Clene System Model No. GA-73, 400 cylinder and 600 cylinder.
Section F further advises that the system must be equipped with high
efficiency air filters having a specified retention efficiency and that
it must have a specified minimum exhaust rate and an exhaust hood
capable of effectively preventing the escape of asbestos during
compressed air cleaning of brake assemblies. The means by which such
effectiveness must be tested and demonstrated are also stated. Section
F goes on to describe several other features of the system which are
deemed to be essential.
Air Plastics has not identified any portion of these specifications
which it considers lacking in sufficient detail and thus has provided no
support for its general allegation. Thus, we must conclude on the basis
of the record before us that there is no merit to the contention that
the specifications are inadequate.
The protest is denied.
B-195644, August 22, 1980, 59 Comp.Gen. 675
Travel Expenses - Private Parties - Attendants - Handicapped Employees -
Permanent Change of Station
Blind employee of Internal Revenue Service who was transferred from
Jackson, Mississippi, to Atlanta, Georgia, claims travel expenses of
attendant who accompanied him and his wife, who is also blind, on
househunting trip and on permanent change of station travel. Travel
expenses of attendant may be paid as necessary expenses of employee's
travel since such payment is consistent with explicit congressional
intent to employ the handicapped and prohibit discrimination based on
physical handicap. H. W. Schulz, B-187492, May 26, 1977; John F.
Collins, 56 Comp.Gen. 661(1977).
Matter of: E. Breland Collier - Travel expenses of attendant for
transferred handicapped employee, August 22, 1980:
Mr. C. J. Pellon, Chief of the Accounting Section, Southeast Region,
Internal Revenue Service, requests an advance decision concerning the
propriety of paying the travel expenses of an attendant who accompanied
a handicapped employee on a househunting trip and on a permanent change
of station move.
Both Mr. E. Breland Collier, the employee in question, and his wife
are blind. In connection with his transfer from Jackson, Mississippi,
to Atlanta, Georgia, Mr. Collier was authorized travel expenses for an
attendant. The attendant, who was not a Government employee, drove the
Colliers to Atlanta on both the househunting trip and the permanent
change of station move. For the househunting trip Mr. Collier is now
claiming per diem for the attendant at three-fourths of the rate to
which he is entitled. That rate is the allowance prescribed for a
spouse accompanying an employee on a househunting trip under paragraphs
2-4.3b and 2-2.2b(1)(a) of the Federal Travel Regulations (FPMR-101-7
(1973)). He is also claiming a per diem allowance of $12 incident to
the permanent change of station travel ($6 for the trip to Atlanta and
$6 for the return trip). In connection with the househunting trip and
the permanent change of station trip Mr. Collier is seeking
reimbursement for mileage at the rate payable for three occupants in a
car. For the attendant's return from Atlanta to Jackson, following the
change of station trip, Mr. Collier has requested reimbursement at the
rate allowed for one occupant of the car.
In our decisions, H. W. Schulz, B-187492, May 26, 1977, and John F.
Collins, 56 Comp.Gen. 661(1977), we held that when an agency determines
that a handicapped employee, who is unable to travel without an
attendant, should perform official travel, the travel expenses of an
attendant, including per diem and transportation expenses, may be paid.
The travel involved in those cases was temporary duty travel, and Mr.
Pellon has asked whether these decisions may be applied and travel
expenses paid where an attendant accompanies an employee on a permanent
change of station move. We believe that the rationale of our
above-cited decisions is equally applicable to travel in connection with
a transfer of station.
In Collins, supra, and Schulz, supra, we pointed out that there is a
commitment within the Federal Government to employ the handicapped and
to prohibit discrimination because of handicap. Executive branch
agencies are required by 29 U.S.C. 791(Supp.III, 1973) to submit to the
Office of Personnel Management an affirmative action program plan for
the hiring, placement, and advancement of handicapped individuals and 5
U.S.C. 7153(1976) provides for the President to prescribe rules
prohibiting, as nearly as conditions of good administration warrant,
discrimination because of physical handicap in the competitive service.
In Collins and Schulz we stated that requiring a handicapped employee to
bear the additional expenses of an attendant might create a financial
burden that could prevent the employee's travel on official business
which would frustrate the above-cited Government policies with regard to
employment of the physically handicapped. Neither Dr. Collins, serving
without compensation on the Department of Commerce Advisory Board, nor
Mr. Schulz who was serving as a consultant to the Energy Research and
Development Agency, could travel without an attendant.
Even though 5 U.S.C. 5703, which governs per diem, travel, and
transportation expenses of consultants and individuals serving without
pay, does not specifically provide for reimbursement of the travel
expenses of a handicapped employee's attendant, we held that in light of
the Government's policies towards handicapped employees, the attendant's
travel expenses were payable as "necessary travel expenses" incident to
the employees' travel under 5 U.S.C. 5703. In Schulz we pointed out
that in situations where an employee is on temporary duty and becomes
ill to such an extent that the services of an attendant are necessary
for the employee's return travel to his permanent duty station, we have
permitted reimbursement for the transportation expenses of the attendant
under the authority of 5 U.S.C. 5702(b). B-176128, August 30, 1972;
B-174242, November 30, 1971; and B-169917, July 13, 1970.
Although Mr. Collier was traveling in connection with a permanent
change of station, we see no reason to vary his or any other handicapped
employee's entitlement to reimbursement for an attendant's travel
according to the type of travel performed.
Requiring the handicapped employee to bear the costs of an attendant for
permanent duty travel could have the same adverse effect on the
Government's effort to employ handicapped individuals which we pointed
out in connection with our decisions concerning the reimbursement of the
travel expenses of an attendant for a handicapped employee on temporary
duty travel.
Also, we have allowed reimbursement for the air fare of an attendant
who accompanied a transferred employee's infant child on a flight to the
new duty station where airline regulations required an adult to
accompany children under 2 years of age. Harold R. Jordan, B-191284,
September 22, 1978.
In our decisions involving reimbursement of the travel expenses of
attendants accompanying handicapped employees on temporary duty travel,
it was clear that the employees in question could not travel without
assistance. It was also clear in the Jordan case cited above that the
transferred employee's child could not travel without an attendant. The
same finding should be made in cases of handicapped employees who
perform permanent change of station travel. In connection with its
determination concerning whether such an employee requires an attendant,
an agency should consider whether an employee's spouse or other family
member is traveling with the employee. In such a situation, it is less
likely that an employee would need an attendant. However, this should
not be interpreted to require the spouse or other family member to
accompany the employee. The Federal Travel Regulations clearly
contemplate that the spouse and other family members may perform
permanent duty travel at a different time than the time that the
employee travels.
Mr. Pellon has also requested our advice concerning the method of
reimbursement. Although Mr. Collier has requested per diem for his
attendant on the househunting trip at three-fourths the rate to which he
himself is entitled, we would have no objection to payment of the full
rate. That reduced rate is prescribed by paragraph 2-2.2b(1)(a) for a
spouse traveling with an employee. One of the major expenses intended
to be covered by the per diem allowance is lodging. While members of
the same family could share rooms and thus reduce lodging expense, this
may not be possible when an employee travels with an attendant. As a
result, we feel that Mr. Collier's attendant may be paid an appropriate
per diem rate, not to exceed the full per diem rate, for the time he
spent on the permanent change of station travel.
In accordance with the foregoing, the travel expenses of Mr.
Collier's attendant may be allowed as necessary travel expenses incident
to his relocation travel. In connection with Mr. Collier's claims for
reimbursement of mileage, we believe they are proper and may be paid.
B-199532, August 21, 1980, 59 Comp.Gen. 671
Foreign Service - Home Leave - Entitlement - Panama Canal Zone - Status
as Home Residence
Department of State Foreign Service employee requests home leave in
Panama Canal Zone. Home leave may not be authorized in Canal Zone since
home leave may only be granted in continental United States or its
territories and possessions and Panama Canal Treaty of 1977, effective
October 1, 1979, provides that Republic of Panama has full sovereignty
over Canal Zone. Since home leave for purposes of "re-Americanization"
is compulsory under 22 U.S. 1148, employee should designate an
appropriate location for this purpose.
Matter of: Nereida M. Vazquez - Home leave, August 21, 1980:
The Department of State requests a decision regarding whether one of
its Foreign Service personnel serving overseas, Nereida M. Vazquez, may
take home leave in the Panama Canal Zone. Since home leave may only be
authorized in the United States or its territories and possessions, Ms.
Vazquez may not be authorized home leave in the Canal Zone which became
part of the Republic of Panama under the Panama Canal Treaty of 1977,
effective October 1, 1979. She must, however, be granted home leave in
an appropriate place within the United States or its territories and
possessions.
On or about January 3, 1978, Ms. Vazquez became an employee of the
Department of State, Foreign Service. Prior to reporting to her
overseas duty post in Rome, Italy, she filled out a Department of State
biographical data form indicating, among other things, that her legal
residence at the time of employment was Arlington, Virginia; her home
leave residence would be the Panama Canal Zone; and her residence for
service separation would be Washington, D.C., or Arlington, Virginia.
The record reveals that Ms. Vazquez' designation of the Panama Canal
Zone for home leave was because she was born there and lived there with
her immediate family until she attended college in the Washington, D.C.
area and subsequently became an employee of the Department of State.
Having completed approximately 2 years of overseas service. Ms.
Vazquez was eligible for home leave and was asked to fill out the
official form for agency processing. Again, as in her biographical data
form, Ms. Vazquez indicated she wished to take home leave in the Canal
Zone. She also changed her legal residence and residence for service
separation to the Canal Zone. Ms. Vazquez signed this form on January
4, 1980.
On June 2, 1980, some 2 months before Ms. Vazquez' scheduled home
leave, the Department of State informed her that she could not designate
the Canal Zone as her home leave residence. The reason given was that
the applicable Department of State regulations only authorized an
employee to take home leave in the United States, the Commonwealth of
Puerto Rico, or territories or possessions of the United States. The
employee was advised to change her residence for home leave.
Ms. Vazquez did not designate a new residence for home leave as she
felt she could not meet the criteria set forth for such a change in the
applicable agency form. Specifically, the form stated that:
* * * Your designation (of a home leave residence) must show a
definite family tie or other compelling interests rather than merely a
desire to visit a particular location and/or relative or for travel for
personal convenience. When you change your home leave residence, you
must indicate (in block 10) the specific reason for your choice of the
location and your intent for its future permanent use. * * *
Ms. Vazquez filed a grievance with the agency and the grievance staff
proposes to allow her to take home leave in the Canal Zone. We are
informed that this decision is based on Department error in not
informing Ms. Vazquez more expeditiously of the noneligibility of the
Canal Zone and because the Canal Zone is the only place which would meet
the standards set forth above for designation of a home leave residence.
Foreign Service personnel's entitlement to home leave arises from the
Foreign Service Act of 1946, c. 957, Title IX, Part D, Section 933(a),
60 Stat. 1028, as amended, 22 U.S.C. 1148(1976). It provides that:
(a) The Secretary (of State) may order to the continental United
States, its territories and possessions, on statutory leave of absence
any officer or employee of the Service who is a citizen of the United
States upon completion of eighteen months' continuous service abroad and
shall so order as soon as possible after completion of three years of
such service.
The statute is clear on its face and expressly states that home leave
may only be taken in the United States or its territories and
possessions. Leave of absence for this purpose accrues under 5 U.S.C.
6305 which similarly provides for the granting of home leave for use in
the United States, "its territories or possessions." Implementing
regulations consistent with this express statutory limitation are found
in Volume 3 of the Foreign Affairs Manual (3 FAM), Section 454.5-1
(August 13, 1968). Travel expenses for home leave purposes are payable
under the related authority of 22 U.S.C. 1136.
Prior to October 1, 1979, there is no question that Ms. Vazquez would
have been entitled to take home leave in the Canal Zone as it was
considered to be a territory or possession of the United States for home
leave purposes. See 53 Comp.Gen. 966, 970-971(1974). On October 1,
1979, the Panama Canal Treaty went into effect and under its provisions
the Republic of Panama regained full sovereignty over the Canal Zone.
Therefore, the Canal Zone can no longer be considered a territory or
possession of the United States.
Because of this change in status of the Canal Zone, the area no
longer can be considered a place which an individual can designate as a
residence for home leave. Thus, Ms. Vazquez may not be authorized to
travel to the Canal Zone for home leave. While the situation is
regrettable, no other result can be reached in view of the express
language of 22 U.S.C. 1148.
We have examined the legislative history of 22 U.S.C. 1148 to see if
it is consistent with that conclusion. Home leave was authorized by
Congress so that a "re-Americanization" of Foreign Service personnel
could be accomplished by having them "renew their knowledge of
developments in the United States and their feelings for the American
way of life." H. Rept. No. 2508, 79th Cong., 2d Sess., p. 10 (July 12,
1946), accompanying H.R. 6967 which became the Foreign Service Act of
1946 referred to previously. Thus, the purpose of home leave is to
ASSURE THAT THE EMPLOYEE IS "RE-AMERICANIZED" AND NOT MERELY TO ENABLE
him to visit with friends and family. Home leave in the Republic of
Panama would be inconsistent with this concept of "re-Americanization."
As a possible basis to authorize Ms. Vazquez' home leave, we have
also examined the applicable provisions of the Panama Canal Treaty
(Article XI) and the Panama Canal Act of 1979, Pub. L. 96-70, Title II,
Sec. 2101 et seq., 22 U.S.C. 3831, which provide for a transition period
of 30 months for certain functions.
Our examination of the treaty and the enabling legislation reveals that
the Republic of Panama is immediately vested with full sovereignty over
the Canal Zone but that the United States retains certain of its law
enforcement and judicial functions for 30 months to enable an orderly
transition. Except for these limited functions, the Republic of Panama
has plenary jurisdiction over the Canal Zone and the Canal Zone is
clearly part of the Sovereign Republic of Panama. See the Department of
State, Selected Documents, No. 6C, January 1978, "The Meaning of the New
Panama Canal Treaties," for a discussion of this and other points of
interest regarding the treaty. Therefore, the treaty and statutory
provisions for transition do not provide a basis to treat the Canal Zone
as a United States possession for purposes of 22 U.S.C. 1148 and 5
U.S.C. 6305.
In deciding that Ms. Vazquez may not be authorized home leave in the
Canal Zone, we do not hold that she is precluded from being authorized
home leave. The home leave provisions of 22 U.S.C. 1148 are compulsory.
See Hitchcock v. Commissioner, 578 F.2d 972, 973 (4th Cir. 1978).
Accordingly, Ms. Vazquez is entitled to home leave and indeed failure to
provide her with this leave would be violative of the compulsory
provisions of the statute.
Under 3 FAM, section 124.3a(2) (May 8, 1970), a change in home leave
address should be supported by a showing of definite family ties or
"other compelling interests" rather than merely a desire to visit a
particular location. We believe that a change of home leave address by
Ms. Vazquez, under the circumstances of this case, which indicates her
reasons for wishing to spend her time there for "re-Americanization"
would be allowable. In this regard we note that Ms. Vazquez' original
Biographic Data Sheet listed Arlington, Virginia, as her legal residence
and residence for service separation. While her subsequent form of
January 4, 1980, changing this to the Canal Zone cannot be recognized,
the designation of some location in the United States, such as
Arlington, would appear to be permissible in the circumstances of this
case. See generally 3 FAM, Section 124.3 (May 8, 1978), particularly
subsections 114.3b (1 and 3); and 6 FAM, Section 125.9 (October 8,
1974).
Accordingly, while Ms. Vazquez may not be authorized home leave in
the Canal Zone she should designate an appropriate home leave residence
for "re-Americanization" purposes.
B-197351, August 18, 1980, 59 Comp.Gen. 668
Coastal Zone Management Act - Grants to States, etc. - Matching Fund
Requirements - Statutory Conflict
Local recipient of a grant under sections 305 and 306 of the Coastal
Zone Management Act of 1972, as amended, 16 U.S.C. 1451 et seq., may use
community development block grant funds to pay the required local
matching share even through section 318(c) of the Coastal Zone
Management Act specifically prohibits use of Federal funds to meet local
matching requirements. B-167694, May 22, 1978, modified.
Matter of: Use of Community Development Block Grant Funds to Pay
Local Matching Share of Coastal Zone Management Grant, August 18, 1980:
This decision is in response to a request from the Department of
Commerce as to whether community development block grant funds may be
used to pay the local matching share required for Federal grants to
States as authorized by section 305 and 306 of the Coastal Zone
Management Act of 1972, as amended.
16 U.S.C. 1454 and 1455. Our consideration of the question is premised
upon the proper inclusion of coastal zone projects within community
development programs meeting all requirements of the community
development act.
The question arises because of two apparently conflicting provisions
of law.
The coastal zone act, which provides for Federal grants on a sharing
basis, specifically precludes the use of Federal funds from other
sources to meet the grantee's cost share. On the other hand, the
Housing and Community Development Act of 1974, 42 U.S.C. 5301 et seq.,
which authorizes grants on an entitlement basis, specifically provides
for payment of non-Federal shares required in connection with Federal
grant-in-aid programs undertaken as part of a community development
program. How are we to reconcile the prohibition of the one with the
authority of the other?
Specifically, section 105(a)(9) of the Housing and Community
Development Act of 1974 provides that:
(a) A Community Development Program assisted under this title may
include only--
(9) payment of the non-Federal share required in connection
with a Federal grant-in-aid program undertaken as part of the
Community Development Program. Pub. L. 93-383, Aug. 22, 1974, 88
Stat. 641; 42 U.S.C. 5305.
And section 318(c) of the Coastal Zone Management Act provides that:
Federal funds received from other sources shall not be used to pay a
coastal state's share of costs under section 305, 306, 309, or 310.
Pub. L. 94-370, July 26, 1976, 90 Stat. 1019, 1031; 16 U.S.C. 1464(c).
The usual rules of statutory construction are not of much help in
defining which of the two acts must bend to the other. The legislative
histories provide little guidance. The legislative history of the
coastal zone act shows a firm intention to assure local interest and
involvement through financial participation in grant projects. The
history makes clear that the prohibitory language was used to assure in
a general sense achievement of the desired local participation. We
perceive nothing to suggest that the prohibition was adopted to overcome
any other Congressional enactment under which program funds might be
provided pursuant to a concept compatible with the practice of applying
federally derived funds to meet local non-Federal matching requirements.
See H.R. Rep. No. 1049, 92d Cong., 2d Sess. 17 (1972).
If the coastal zone act prohibition against using any Federal funds
for matching is specific, the authority provided in the community
development act to do just that is no less so. And it is no answer to
say that the prohibition is in mandatory terms while the authority is
provided in permissive terms; for the "permission" to use Federal grant
funds is for the express purpose of overcoming the very requirements for
local fund matching inherent in the prohibited use of Federal funds.
The prohibition against using Federal funds to meet grant matching
requirements is generally applied even though not expressly stated.
See, for example, 57 Comp.Gen. 710(1978). With this in mind, we have
considered whether expression of the prohibition through statutory
language serves to elevate it beyond its ordinary application. We find
nothing in the statutory statement to suggest any meaning beyond that of
emphatically requiring non-Federal funds to meet the requisite matching.
We also have considered the sequence in which the two provisions at
issue were passed. We find instances in connection with differing
coastal zone programs where the prohibition preceded community
development act authorization and other instances where the
authorization came first. Without any pertinent legislative history for
guidance, we do not under such circumstances consider the time of
enactment a reliable indicator of Congressional intent.
We, therefore, approach the issue of legislative intent on the basis
of reaching the most reasonable result consistent with the purposes of
both acts.
Section 106 of the Housing and Community Development Act of 1974, 88
Stat. 642, 42 U.S.C. 5306, provides an elaborate formula scheme under
which " * * * each metropolitan city and urban county (subject, to be
sure, to various limitations) shall * * * be entitled to annual grants *
* * ;." It is clear in the context of the act that funds granted
thereunder are available to meet all approved project elements, and the
act provides that the Secretary of Housing and Urban Development "shall
approve" applications for funds to be applied to such purposes. 42
U.S.C. 5304(c). Section 105 referred to above lists the permissible
uses of grant funds. One of these permissible uses is for payment of
the non-Federal share required in connection with Federal grant-in-aid
programs undertaken as part of the grantee's approved community
development program. The question is whether the coastal zone act
prohibition should be read as being paramount or subservient to this
authority.
Given the broad scope of the Community Development Act, we see no
reasonable basis upon which to limit its clearly stated authority to use
community development funds to satisfy the coastal zone act requirement
for non-Federal matching, when the coastal project involved is
incorporated as a part of a larger community development program. On
the other hand, the terms of the prohibition in the coastal zone act
need not be read so broadly as to encompass those few formula
entitlement programs, the legislative scheme of which explicitly permits
the Federal funds authorized thereunder to be used in satisfaction of
non-Federal matching requirements.
The prohibition need not be so construed, in our view, in light of
its essential design solely as a mandate for achieving local
participation through local matching funds, and the obvious intention
that community development funds are to be viewed as local resources for
the purpose of satisfying the local matching requirements of other
Federal grant-in-aid programs. Based on this reading, the coastal zone
prohibition would apply to all Federal programs that do not otherwise
require program funds to be treated as local resources for matching
purposes. The ban consequently would apply to the vast majority of
Federal grant programs, but not to Federal community development grant
funds provided pursuant to formula entitlements. Those funds
effectively lose their character as "Federal funds" insofar as that term
is used in the Coastal Zone Management Act, and therefore are available
as local resources to satisfy the match required in connection with a
project properly incorporated as part of the grantee's community
development programs.
The question presented is answered accordingly.
Our decision of May 22, 1978, B-167694, is modified to the extent of
non-Federal matching requirements.
B-196978, August 14, 1980, 59 Comp.Gen. 666
Unions - Federal Service - Dues - Allotment For - "Exclusive
Recognition" Requirement - Revocability of Authorization For Allotment
The Department of the Army received from an employee a signed
authorization to have union dues allotted directly to a union. The
employee then requested that the authorization be returned to her before
any dues had been allotted to the union and the agency agreed. The
union filed a grievance and the agency settled the grievance in favor of
the union and the dues were allotted to the union. Under the Civil
Service Reform Act, 5 U.S.C. 7115(a), an agency must honor a written
authorization for allotment of union dues when it is received and the
employee may not have the union dues returned to her.
Matter of: Margaret Jackson - Withdrawal of Allotment of Union Dues,
August 14, 1980:
This is in response to a request for an advance decision by
Lieutenant Colonel A. T. Holder, Chief, Finance and Accounting Division,
Department of the Army, concerning the request of Mrs. Margaret Jackson
to have her dues allotment cancelled.
On May 24, 1979, Margaret Jackson signed a Request and Authorization
for Voluntary Allotment of Compensation for Payment of Employee
ORGANIZATION DUES (STANDARD FORM 1187). THIS FORM WAS SIGNED BY A Ms.
Kilgore of the American Federation of Government Employees (AFGE) on May
25, 1979, and was sent to payroll for processing where it was received
on May 30, 1979. The form provided that the allotment would become
effective the first full pay period following its receipt in payroll and
in this case the allotment would have been effective on June 10, 1979.
On May 31, 1979, Mr. Jackson changed her mind and decided to withdraw
from the Union and requested that her allotment not be processed and
that the form be returned to her. Initially, payroll complied with
these requests. The Union then filed a grievance and on July 31, 1979,
the Union and agency agreed that upon receipt of Standard Form 1187, the
Civil Service Reform Act (5 U.S.C. Code 1101 note) mandated that the
agency honor the assignment and make an appropriate allotment.
Therefore, the agency and Union agreed that Standard Form 1187 should
not have been returned to the employee and allotments were made to the
Union. Mrs. Jackson then requested that the deduction of Union dues
from her pay be discontinued and that she be refunded all monies
deducted.
The provision of the Civil Service Reform Act, Public Law 95-454,
which covers allotments to representatives is contained in 5 U.S.C. 7115
and provides in part:
(a) If an agency has received from an employee in an appropriate unit
a written assignment which authorizes the agency to deduct from the pay
of the employee amounts for the payment of regular and periodic dues of
the exclusive representative of the unit, the agency shall honor the
assignment and make an appropriate allotment pursuant to the assignment.
* * * Except as provided under subsection (b) of this section, any such
assignment may not be revoked for a period of 1 year.
The clear language of this statute requires an agency to honor the
written assignment once it is received and make an appropriate
allotment. Standard Form 1187 states that it will become effective the
pay period following its receipt in the agency's payroll office. This
statement only shows when the dues allotment will start to be withheld
from the employee's salary and does not mean that the authorization can
be withdrawn before that time.
Although Mrs. Jackson argues that Standard Form 1187 was not effective
until June 11, 1979, the statutory language plainly indicates that the
agency must honor the authorization upon receipt. The statute does not
permit withdrawal after the form is received in the payroll office.
After that time, the employee can revoke the allotment only after 1
year.
The only exception to the 1-year revocation rule is contained in 5
U.S.C. 7115(b) which provides:
(b) An allotment under subsection (a) of this section for the
deduction of dues with respect to any employees shall terminate when--
(1) the agreement between the agency and the exclusive
representative involved ceases to be applicable to the employee;
or
(2) the employee is suspended or expelled from membership in
the exclusive representative.
Obviously, section (b)(2) does not apply since Mrs. Jackson was
neither expelled nor suspended from the Union. Section (b)(1) applies
to situations where the employee is promoted to a management position or
leaves the employ of the agency. See H.R. Rep. No. 1403, 95th Cong., 2d
Sess. 49 (1978). In this situation Mrs. Jackson was still a member of
the bargaining unit but chose to leave the Union. In that regard, 5
U.S.C. 7114 states that "A labor organization which has been accorded
exclusive recognition is the exclusive representative of the employee in
the Union it represents and is entitled to act for, and negotiate
collective bargaining agreements, covering all employees in the unit."
Section (b)(1) does not apply to Mrs. Jackson under these circumstances.
Therefore, Mrs. Jackson could not revoke the allotment once it was
received by the agency for 1 year. Compare 5 U.S.C. 7115(c), applicable
where a labor organization is not an exclusive representative.
Therefore, we hold that Mrs. Jackson may not be refunded any monies
properly allotted to the Union.
B-197206, August 12, 1980, 59 Comp.Gen. 662
Details - Compensation - Higher Grade Duties Assignment - Excessive
Period - Transferred Position - Reclassification by New Agency
Federal Power Commission (FPC) employee was transferred with her
position to Department of Energy (DOE) where she continued to perform
same duties until detailed to a transferred higher-grade position.
During detail the higher-grade position was reevaluated and reclassified
without significant change as DOE position. The employee is entitled to
a retroactive temporary promotion and backpay for period of detail
beyond 120 days. Detail was not one to unclassified duties merely
because former FPC position had not been reclassified as DOE position
and was not interrupted by reclassification, but was a continuous detail
to same position. Details - Compensation - Higher Grade Duties
Assignment - Excessive Period - Prior Office of Personnel Management
Approval - Special Agency Agreements
By special agreement Civil Service Commission authorized Department
of Energy to detail some employees for up to 1 year during organization
of the Department, subject to certain specified conditions. Agreement
does not apply to employee's detail to higher-grade position because
Department of Energy did not comply with conditions of agreement.
Details - Extensions - Office of Personnel Management Approval -
Delegation of Authority
By FPM Bulletin 300-48, effective February 15, 1979, Office of
Personnel Management (OPM) delegated authority to agencies to detail
employees to higher-grade positions without prior OPM approval (1) for
up to 1 year during major reorganizations as determined by the agencies;
and (2) for up to 240 days in other situations. Where detail exceeded
120 days and right to backpay vested under Turner-Caldwell decisions
prior to effective date of bulletin, employee is entitled to backpay up
to effective date of bulletin. On and after effective date, however,
entitlement to backpay is governed by bulletin's provisions.
Matter of: Joyce R. Morrison - Backpay - Detail to Higher Grade,
August 12, 1980:
This decision is rendered in response to a request by the Director,
Headquarters Personnel Operations Division, Department of Energy (DOE),
concerning the claim of Joyce R. Morrison for retroactive temporary
promotion with backpay for the period from July 16, 1978, to October 7,
1979.
Her claim is based on Turner-Caldwell, 55 Comp.Gen. 539(1975), affirmed
56 id. 427(1977), and a line of implementing decisions. These decisions
hold that when an employee is detailed to a classified position in a
higher-grade position for a period in excess of 120 days without prior
Civil Service Commission (CSC) or Office or Personnel Management (OPM)
approval the employee is entitled to a retroactive temporary promotion
and backpay for such period provided he or she meets the qualification
and other requirements for such a promotion.
Ms. Morrison was employed by the Federal Power Commission (FPC) as a
Public Information Officer GS-1081-14, FPC Position No. 5486. The
organizational title of her position was Assistant Director of Public
Information. Her immediate superior was Mr. William L. Webb who
occupied the position of Public Information Officer GS-1081-15, FPC
Position No. 5074. The organizational title of his position was
Director of Public Information. On October 1, 1977, Ms. Morrison and
Mr. Webb, along with their positions, were transferred to the Federal
Energy Regulatory Commission, Department of Energy, by the Department of
Energy Organization Act, Pub. L. 95-91, approved August 4, 1977, 91
Stat. 565, 42 U.S. Code 7101 note. Among other things, this Act
transferred most of the functions and personnel of FPC to the new
commission. (See sections 402 and 701 of the Act.) The Personnel Action
(Standard Form 50) transferring Mr. Webb contained this notation under
Item 30: Remarks: "TYPE OF APPOINTMENT, POSITION, OCCUPATION CODE
GRADE AND SALARY REMAIN UNCHANGED." However the organization title of
his position was changed from Director of Public Information to Director
of the Office of Public Information.
On July 16, 1978, Mr. Webb vacated his position and, effective that
same date, Ms. Morrison was appointed Acting Director of the Office of
Public Information by the Executive Director of the Federal Energy
Regulatory Commission (FERC). Ms. Morrison contends that she performed
the duties of the grade GS-15 Director's position from that date, July
16, 1978, until she transferred to another agency, effective October 7,
1979. During this period, on June 20, 1979, the grade GS-15 Director's
position was redescribed and reclassified without substantive change as
A DOE POSITION. THE EXECUTIVE DIRECTOR HAS CERTIFIED THAT MS. MORRISON
"performed the full range of duties of the position of Acting Director,
Office of Public Information, GS-1081-15" during this period.
DOE acknowledges that Ms. Morrison served as Acting Director of the
Office of Public Information for the period claimed. However, it seems
to be DOE's position that she was detailed to a classified position in
higher grade only from June 20, 1979, the date the grade GS-15 FPC
position was reclassified as a DOE position, to her separation on
October 6, 1979, or 110 days.
While this is not entirely clear, DOE's position appears to be
predicated on a theory that all employees transferred with their
positions to DOE at its inception on October 1, 1977, were in effect
detailed to unclassified duties until their positions were reclassified
as DOE positions.
DOE also contends that Ms. Morrison's detail was covered, at least in
part, by a special agreement whereby CSC, to facilitate the initial
organization of DOE, authorized the detail of some employees for up to 1
year. This agreement required, among other things, that DOE
periodically report to CSC the names of those being detailed for more
than 120 days with an overall justification and that details be recorded
in employees' personnel records. This agreement applied only to details
ending not later than October 31, 1978.
While not mentioned by DOE, another matter which must be considered
is the issuance, during the running of Ms. Morrison's detail, of Federal
Personnel Manual (FPM) Bulletin No. 300-48, dated March 19, 1979. In
this bulletin OPM delegated authority to agencies, effective February
15, 1979, to detail employees to higher-grade positions without prior
OPM approval (1) for up to 1 year during major reorganizations as
determined by the agencies; and (2) for up to 240 days in other
situations.
Ms. Morrison's detail was not covered by the special agreement
between CSC and DOE. As has been pointed our DOE's authority under this
agreement was limited by a number of specified requirements, including
the requirement that the names of those being detailed for more than 120
days be periodically reported to CSC. There is no evidence that Ms.
Morrison's name was ever reported to CSC in connection with this
agreement or that any of the other terms of the agreement were complied
with in her case. Moreover, this agreement did not cover details after
October 31, 1978, and Ms. Morrison's detail extended nearly a year
beyond that date. As a result, Ms. Morrison's detail was not subject to
the provisions of the agreement.
In the circumstances of this case we find that Ms. Morrison was
detailed to a classified position in higher grade from July 16, 1978, to
June 20, 1979, for the following reasons. When General Schedule (GS)
FPC positions were transferred to DOE on October 1, 1977, they did not
lose their status as classified positions, notwithstanding the fact that
they were not formally designated as DOE positions until later.
The employees who were transferred to DOE with their positions continued
to be assigned to classified positions. Employees must occupy positions
classified in accordance with the provisions of chapter 51 of title 5,
United States Code, in order to be paid under the General Schedule. See
FPM Chapter 511, paragraph 1-6a, and 5 U.S.C. 5107. The grade GS-15
position which had been transferred from FPC therefore existed as a
classified position in DOE until it was reclassified and, as had been
noted, Mr. Webb occupied this position in DOE from October 1, 1977, to
July 16, 1978, and was paid on the basis of its classification.
Ms. Morrison's original detail was not terminated and a new one begun
by the reclassification of the grade GS-15 FPC position as an FERC/DOE
position on June 20, 1979, for the following reasons. As has been
previously indicated, the position was redescribed and reclassified
without change in title, series, or grade, and without substantive
change in duties and responsibilities. Thus, throughout the period from
July 16, 1978, to October 7, 1979, Ms. Morrison performed the same
classified duties-- albeit classified during that period in two separate
but substantially identical positions. In somewhat analogous situations
it has been held that substance and not form should control and that the
continuity of the detail is to be determined by the duties performed.
See Marvin R. Dunn, B-192437, September 30, 1978, and William D. Yancy,
B-183086, September 7, 1977.
Finally, we must consider the effect of FPM Bulletin No. 300-48. The
bulletin is dated March 19, 1979, and states that it is effective
February 15, 1979. It does not purport to have any effect earlier than
that date. Moreover, FPM Bulletin 300-48 must be considered in light of
the nature of the remedy provided by our Turner-Caldwell decisions for
overlong details to higher-grade positions. The remedy is a retroactive
temporary promotion for the detailed person beginning on the 121st day
of the detail. Thus, in the circumstances of Ms. Morrison's case, we
conclude that where her continuing detail had exceeded 120 days without
prior CSC or OPM approval and a right to backpay under Turner-Caldwell
had vested prior to the effective date, the employee is entitled to
backpay up to the effective date of the bulletin. However, since the
key to Turner-Caldwell is the lack of authority by the agency to detail
beyond established limits, entitlement to backpay after the effective
date of the bulletin must be based on the new broader limits it
established.
Therefore, applying the foregoing to Ms. Morrison, we find that she
is entitled to a temporary retroactive promotion with backpay beginning
with the 121st day of the detail which began on July 16, 1978, and
continuing through February 14, 1979.
Her entitlement for the remainder of her detail-- February 15 through
October 6, 1979, is governed by the provisions of FPM Bulletin No.
300-48. As we have indicated, the issuance of FPM Bulletin 300-48 had a
direct and controlling application on Ms. Morrison's status under the
continuing detail. In addition, in our discussion of the legal
authority under the Turner-Caldwell line of cases, we noted that an
employee's entitlement to a retroactive promotion and backpay for an
overlong detail is premised on a finding that the agency actually
violated Civil Service Commission regulations governing the permissible
duration of a detail. In accordance with this reasoning, and in view of
the revised regulatory standards contained in the FPM Bulletin No.
300-48, effective February 15, 1979, DOE had the authority to detail
employees to higher-grade positions for up to 1 year during a major
reorganization. As a result, from and after February 15, 1979, Ms.
Morrison's detail would not have violated Civil Service Commission
regulations since the detail was under a major reorganization. We find
no better evidence of this latter finding than the very descriptive
language appearing at the beginning of the Department of Energy
Organization Act, Pub. L. 95-91, approved August 4, 1977, 91 Stat. 565,
which states as follows:
To establish a Department of Energy in the executive branch by the
reorganization of energy functions within the Federal Government in
order to secure effective management to assure a coordinated national
energy policy, and for other purposes.
Therefore, after February 15, 1979, DOE had the authority to detail
Ms. Morrison to the higher-grade position for an additional 245 days
without prior OPM approval (1 year or 365 days less the 120 she had
already performed the same higher grade duties without compensation) and
no additional compensation is due Ms. Morrison.
Ms. Morrison's claim is to be settled in accordance with the
foregoing.
B-195773, August 11, 1980, 59 Comp.Gen. 658
General Accounting Office - Decisions - Reconsideration - Additional
Information Submitted - Available But Not Previously Provided to GAO -
Agency Justification for Award
Where interested party and procuring agency, in request for
reconsideration, come forward with facts which they contend require
overturning prior decision, and such facts were in their possession
during development of protest, evidence of interested party will not be
considered. In future, procuring agency's late submission will be
treated similarly but will be considered in instant matter. Contracts -
Negotiation - Commingling of Sole-Source and Competitive Items - Effect
on Competition
While agency contends other firms could have offered computer system,
independent investigation reveals firms only could furnish hardware, not
required software. Therefore, prior decision concerning sole-source
nature of item is affirmed. General Accounting Office - Recommendations
- Contracts - Prior Recommendations - Modified - Termination Action
Postponement
Recommendation in prior decision (59 Comp.Gen. 438) that contract be
terminated and requirement resolicited is modified in view of agency
contention that such action would disrupt critical computer services and
current contract may continue during resolicitation effort and then be
terminated if incumbent is not successful offeror under new
solicitation.
Matter of: Interscience Systems, Inc.; Cencom Systems, Inc. -
Reconsideration, August 11, 1980:
The Environmental Protection Agency (EPA) has requested
reconsideration of our decision in the matter of Interscience Systems,
Inc.; Cencom Systems, Inc., 59 Comp.Gen. 438(1980), 80-1 CPD 332, which
involved a contract awarded to Sperry Univac (Univac) under request for
proposals (RFP) No. WA79-D169.
The RFP was for various items of automatic data processing equipment
to expand EPA's National Computer Center. The prior decision held that
EPA had improperly included two items (central processing systems
expansion and maintenance of Government-owned Sperry Univac equipment,
subsections 2.1 and 2.5, respectively) in the RFP, for which there was
no reasonable expectation of competition. We recommended that Univac's
contract be terminated under Article XXV of the contract which permitted
the Government to discontinue rental payments on 30 days' notice. We
recommended that sole-source negotiations be commenced with Univac for
subsections 2.1 and 2.5 and that subsections 2.2 and 2.3 be recompeted
in a separate procurement.
EPA states that it had a reasonable expectation of obtaining
competition for subsections 2.1 and 2.5 and that our decision, which
concluded the opposite, was based on circumstantial evidence because EPA
only made a general statement as to that expectation during the protest
proceedings. EPA now submits evidence which, it argues, shows the
existence of potential competition. According to EPA, this evidence was
not submitted previously because GAO had never required an agency to
justify why it was not making a sole-source award, and at no time during
the course of the protest did GAO request supporting findings or
evidence from EPA regarding the expectation of competition.
We think EPA has misinterpreted our prior decision. What we held in
the May 8 decision was that by commingling sole-source items with
competitive items and permitting multiple-award discounts, EPA had
precluded competition on items 2.2 and 2.3 and, in effect, awarded
sole-source contracts for 2.1 and 2.5 under the guise of competition.
In other words, Univac could have lowered its prices on items 2.2 and
2.3 to meet the competition and "get well" on items 2.1 and 2.5 without
concern as to the competition or the need to justify its prices to the
agency. This award was made without the normal protection available in
such an award of securing cost and pricing data. Our recommendation for
corrective action was aimed at EPA curing the defect in the procurement,
i.e., a sole-source award without any assurance that it had obtained a
reasonable price.
The issue of EPA's basis for expecting competition for subsections
2.1 and 2.5 was clearly raised by the protesters and at the bid protest
conference held on the protest attended by all the parties.
EPA came forward with no evidence to support its general statement that
it expected competition. This applies to Univac's submission on EPA's
request for reconsideration citing past instances of procurement which,
it contends, shows it competed under fear of competition. Univac
contends it has "long been aware of this evidence." Univac, as the
awardee and an interested party to the protest, received copies of all
submissions and attended the conference. No substantive submissions or
comments were made by Univac during the protest.
Parties or agencies which withhold or fail to submit all relevant
evidence to our Office in the expectation that our Office will draw
conclusions beneficial to them do so at their own peril since it is not
the function or province of our Office to prepare, for parties involved
in a protest, defenses to allegations clearly raised. Accordingly, we
will not consider the Univac evidence since, previously, it had
knowledge of and was presented ample opportunity to submit that
evidence. See Decision Sciences Corporation-- Request for
Reconsideration, B-188454, December 21, 1977, 77-2 CPD 485. As we have
not previously so ruled concerning a procuring agency, we will consider
the matters raised by EPA. But, in the future, submissions containing
such evidence available to an agency will be treated in the same manner
as that submitted by a protester or interested party.
As concerns the expectation of competition for subsection 2.1, EPA
states that Southwestern Bell Telephone was soliciting a buyer for the
Univac Series 1100 System required by subsection 2.1 at the time the RFP
was issued and has forwarded a classified advertisement from a trade
paper announcing the sale of the unit. SPA further states that such
units were also available from third party brokers.
We have ascertained through independent investigation, which EPA
could have but did not, that none of the items for sale included
software which was required by subsection 2.1 and much of the software
such as Level 36 of Univac 1100 Operating System software, is
proprietary to Univac. Therefore, the "new" evidence submitted by EPA
does not present a basis to alter our prior conclusion that no
reasonable expectation of competition existed for subsection 2.1.
Regarding subsection 2.5, EPA has listed six computer installation
sites where firms other than Univac are maintaining Univac 1100 systems,
which EPA argues shows there are firms capable of maintaining Univac
equipment; therefore, competition was expected on subsection 2.5.
Interscience has responded that it has critically examined these sites
and that none of the maintenance contracts were operating at the levels
of staffing or experience required under this RFP.
We find it unnecessary to resolve this dispute. Even if EPA is
correct about subsection 2.5, the fact that subsection 2.1, the most
costly of all subsection items, was a sole-source item, was enough to
taint the procurement in view of the allowability of multiple-award
discounts in the RFP which commingled sole source and competitive items.
Because of the above, we see no need to discuss EPA's objections to
our observations concerning post-proposal receipt matters which, in our
view, confirmed that no reasonable expectation of competition existed
prior to the solicitation.
EPA takes issue with our conclusion that Univac's awareness of its
sole-source position without competition or cost or pricing data did not
assure reasonable prices. EPA contends that (1) competition existed
(which we have concluded was not the case); (2) the discounts offered
by Univac were substantial and reflect the fact that Univac was offering
prices under the threat of competition because the discounts offered on
the uncontestably competitive subsections were comparable to those
offered on those subsections found to be noncompetitive by our Office;
and (3) Univac's prices were reasonable based on a price analysis and
comparison of the prices with established Univac commercial prices.
Univac offered two separate discounts for each subsection. One
discount figure applied if Univac were awarded one, two or three
subsections and the other applied if Univac was awarded all four
subsections. These discounts more than tripled on the noncompetitive
subsections if Univac was awarded all four subsections. However, for
the competitive subsections the discount declined. Accordingly, the
pricing pattern employed lends no support to EPA's position and despite
EPA's assurances that reasonable prices were obtained because of its
price analysis, the lack of competition and the commingling of
competitive and noncompetitive items did not assure the most favorable
discounts from Univac.
EPA has questioned the remedy we recommended-- termination of the
Univac contract, recompetition of subsection 2.2 and 2.3, and
sole-source negotiations with Univac for subsections 2.1 and 2.5.
According to EPA, the termination without a replacement contractor ready
to perform, will adversely impact on the National Computer Center.
Therefore, to assure continuity of service, the recommendation is
modified so that the Univac contract may continue during the
recompetition and sole-source negotiations. Then if the successful
offeror is other than Univac, the Univac contract should be terminated
when performance is imminent. We expect that EPA will reprocure in a
timely fashion.
EPA contends that there is no need to disturb the award of
subsections 2.1 and 2.5 since these were not protested. As we
recognized in our prior decision and our above discussion, without
adequate competition there is no assurance of the reasonableness of the
price. Therefore, cost and pricing data should be obtained for 2.1 and
if this data does not support the price offered then negotiations should
be commenced with Univac on 2.1.
Finally, EPA should investigate throughly whether competition exists
for subsection 2.5, considering Interscience's position. If competition
exists, then our Office would have no objection to that subsection's
inclusion in the solicitation being issued for subsections 2.2 and 2.3.
(Our comments in the May 8 decision regarding the experience
requirements in drafting such a solicitation are still applicable.) If
no competition is expected, the same procedures outlined for 2.1 should
be followed.
Accordingly, our prior decision is affirmed and the recommendation is
modified in part.
B-191013, B-191013.2, August 8, 1980, 59 Comp.Gen. 640
Contracts - Protests - Procedures - Bid Protest Procedures - Time For
Filing - Initial Adverse Agency Action Date
Once agency denies protest, fact that protester believes agency will
reconsider protest does not toll time for filing a protest to General
Accounting Office (GAO) since GAO Bid Protest Procedures require protest
to be filed within 10 working days of when protester learns of initial
adverse agency action. Contracts - Protests - Timeliness - Solicitation
Improprieties - Benchmarking - Proposed Structure v. Results
Results of benchmark do not provide proper basis for reconsideration
of prior decision dealing with proposed benchmark procedure since
benchmark results do not constitute evidence which should have been
considered. Contracts - Protests - Timeliness - Solicitation
Improprieties - Benchmarking - Proposed Procedure, etc.
Protest of methods used to compute costs from benchmark results is
untimely where methods used were defined in request for proposals but
protest was not lodged before benchmarking was completed. Contracts -
Specifications - Tests - Benchmark - Adequacy - Life Cycle Cost
Evaluation
Since record suggests agency's benchmark-based life-cycle cost
approach might not have been sufficiently accurate to support selection
of awardee's rather than protester's equipment, and since agency's needs
appear to have changed, GAO recommends that agency conduct market survey
to determine, before further contract options are exercised, if reliance
on awardee's equipment is justified.
Matter of: Information International, Inc., August 8, 1980:
Information International, Inc. (III) protests Social Security
Administration (SSA) procurement SSA-RFP-78-0001, for multi-font optical
scanning equipment designed to machine "read" or "scan" W-2, W-2P, and
W-3 forms. The equipment was leased (with an option to purchase) from
Recognition Equipment, Inc. (REI), the low evaluated offeror. We
sustain a portion of III's protests and dismiss or deny the remainder.
The same procurement was the subject of our decision in Information
International, Inc., B-191013, May 31, 1978, 78-1 CPD 406. III also
seeks reconsideration of that decision, in which we dismissed as
untimely two of III's objections to the benchmark that was required as
part of proposal evaluation and found no abuse of discretion by SSA with
respect to its use of an "offset printed test deck" to be "read" during
the benchmark.
Proposals were evaluated by means of a life-cycle cost method in
which various "Bid Equalization Factors" were added to depreciated
equipment costs. An estimated cost to the Government was computed for
each system configuration evaluated. The amount of each of the bid
equalization factors was calculated from data produced during the
benchmark.
The systems proposed by III and REI differ in complexity and
sophistication. REI offered what is called a "direct paper system,"
which reads the original documents. III's system reads a microfilm copy
and includes an error correction process which permits computer
generated images of doubtful characters to be queried, displayed and
manually corrected by keyboard operators working in an adjacent terminal
room.
Benchmark timing data was used to compute production (throughput)
rates which in turn were used to calculate the amount of each vendor's
equipment needed to meet SSA's projected workload, Calculation of REI's
equipment requirements was relatively straightforward. III, however,
qualified proposals for use of two different microfilm cameras (using 16
mm and 35 mm film) and submitted three basic scanning equipment
configurations for each. All of III's configurations share a common
process but utilize resources differently, providing a range of
potential capability at differing costs. Proposals were submitted on
lease, full payment lease, lease with option to purchase and purchase
terms. While REI was required to offer six units initially and options
to furnish two additional units, III's lowest cost evaluated proposal
(35 mm systems on purchase terms) offered three initial so-called dual
scanner installations.
III's benchmark performance largely overcame its significantly higher
equipment cost and brought its lowest evaluated proposal within
approximately $2.55 million (9 percent) of the REI proposal accepted for
award.
Essentially, III says that its proposals should have been evaluated
as lowest in cost, that SSA made a number of errors in computing the
evaluation factors, that SSA improperly made other "adjustments" to
life-cycle costs which improperly penalized III, and that III equipment
would have been shown to have been least costly had the benchmark been
representative of SSA's actual requirements. III also believes SSA
improperly refused to evaluate several III lower cost alternate and
"unsolicited" proposals.
III's major objection in its original protest concerned SSA's
decision to limit benchmark scanning to the most easily read forms--
approximately 70 percent of the total. Our prior decision concluded
that III knew or should have known shortly after December 1, 1977, when
it received a letter of that date from SSA, that SSA had rejected the
objections which it had raised against this "70 percent limitation."
Because III did not file its complaint with us within 10 days
thereafter, we viewed the complaint as untimely.
III contends that the December 1 letter should not have been regarded
as controlling because it had reason to believe that SSA would still
consider the matter in conjunction with consideration of III's other
complaint concerning the benchmark. III has now submitted additional
evidence regarding a telephone conversation between its General Counsel
and SSA's Associate Commissioner for Management and Administration, as
well as a letter from its General Counsel to the Associate Commissioner
dated February 14, 1978. According to III, this demonstrates that SSA
was willing to consider the matter further.
SSA disagrees. It argues that III's evidence is not newly discovered
evidence which could not have been considered earlier and denies that
the Associate Commissioner at any time gave III's counsel reason to
believe that SSA was contemplating reopening the 70 percent matter for
reconsideration.
We find no merit to III's position. The fact that an agency may be
willing to further consider a protest which it first rejects does not
toll the time by which a protest must be lodged with this Office. Had
SSA reexamined III's complaint after December 1, 1977, III's objection
to the 70 percent limitation filed here after that reexamination would
still have been untimely because our protest procedures require a
protest to be filed here within 10 days of initial adverse agency
action.
4 C.F.R. 20.2(a)(1980).
III also argues that its prior protest of the benchmark is
inextricably bound to issues raised by its subsequent protest and should
be considered at this time because the results achieved by the benchmark
are now known.
Our prior decision dealt with a protest filed before benchmarking.
The protester sought our review of the proposed benchmark procedure. We
were not asked to review other aspects of SSA's evaluation of proposals,
or REI's selection, which had not then been made.
We do not believe reconsideration of our decision regarding III
pre-benchmark assertions to be appropriate because even if we agreed
with III in retrospect that SSA's benchmark assumptions were faulty, we
would not agree that its earlier complaints should be considered at this
point simply because the test results are now known. The record does
not show that our decision dismissing two of the allegations and denying
the validity of the other was founded on any error of law or any
misunderstanding of the facts existing during the timeframe with which
our decision was concerned. See, eg., Ordnance Research, Inc.--
Reconsideration, B-194043, June 26, 1979, 79-1 CPD 455.
Consequently, III's request for reconsideration is denied.
At the outset, we decline to consider certain aspects of the protest.
First, we do not believe it appropriate to review III's objections to
SSA's proposed post-scanning error corrections process. SSA's elaborate
post-scanning correction process consisted of several steps including
manually correcting data. III, however, believes errors experienced
during actual operations of the equipment should not be corrected
manually through a separate process long after scanning, but that errors
due to individual misfilmed documents could be more effectively
corrected by refilming documents containing errors during subsequent
scanning. The dispute does not involve completely misfilmed batches of
documents, which SSA would have refilmed in any event.
We view this issue as outside the purview of the bid protest
procedure. It does not concern specification requirements or any other
aspect of the procurement for this equipment, but rather the agency's
plans for operating the equipment once it is in place. While SSA's
application of its corrections process to the benchmark impacted on the
life cycle cost evaluation, the validity of the process itself is not,
in our view, a proper part of this protest.
Second, we also view as inappropriate for our consideration III's
belief that SSA was biased against innovative technology. However wise
III may believe SSA should have been in seeking a more technically
advanced system, we are aware of no legal requirement that SSA obtain
the most technologically sophisticated approach available. On the
contrary, SSA's procurement decisions reflect a belief in the importance
of proven performance-- a particularly legitimate concern considering
the consequences facing SSA if data entry using a scanning process
proved unsuccessful. See Pentech Division, Houdaille Industries, Inc.,
B-192453, June 18, 1980, 80-1 CPD 427; cf. System Development
Corporation, 58 Comp.Gen. 475(1979), 79-1 CPD 303.
We also find that some of III's post-benchmark complaints are
untimely.
Section 20.2(b)(1) of our Bid Protest Procedures states that protests
based upon alleged improprieties in any type of solicitation which are
apparent prior to any closing date for receipt of initial or amended
proposals must be filed by that date. This includes, for example, a
date set for submission of additional technical data requested during
discussions. In this regard, benchmarking is used for proposal
evaluation to produce "descriptive" data which the Government believes
is necessary to assess the capabilities and/or cost of equipment
proposed. See, e.g., 48 Comp.Gen. 320(1968); Computer Network
Corporation, 56 Comp.Gen. 245, 255-256(1977), 77-1 CPD 31. We believe,
therefore, that a date set for submission of an offeror's benchmark data
should be treated as a closing date within the meaning of section
20.2(b)(1). Thus, protests concerning amendments to a solicitation
which define how the benchmark and evaluation of benchmark results will
be handled must be filed by the benchmark submission date. Cf.
Comshare, Inc., B-192927, December 5, 1978, 78-2 CPD 387.
It is in this light that we view III's objection that it should have
been charged for costs associated with hiring only one rather than two
operators per scanner for its dual scanner configuration. The
solicitation provided that offerors would be charged operator costs
based upon the number of operators actually used during the benchmark.
SSA would have charged III with costs associated with one operator had
only one been used for production tasks, but III used two, ostensibly
because it did not have sufficient time (four weeks following an
amendment deleting a mandatory minimum two operator requirement) to
retrain its operators. III was reminded of this solicitation rule
during the microfilming portion of the test. Conceding, therefore, that
two operators were used, III nevertheless argues that other benchmark
parameters were to be determined based on actual measurements of
resources required and that operator requirements should be, too.
In our view, III should have protested SSA's requirement before
benchmarking, or complained then that the time allowed for retraining
was not sufficient. Because the objection was raised after evaluation,
it will not be considered.
III also complains that SSA improperly computed certain so-called
residual error rates by arbitrarily assuming that only one percent of
manually corrected data would contain errors which would require
correction a second time and by making its calculation by counting
"fields" rather than individual character errors. According to SSA, the
one percent figure by fields is the only data available because it has
not kept more detailed statistics in the past.
The 1 percent residual error rate was included in SSA's solicitation
cost tables which indicated how the computation would be performed.
Thus, III should have known from the RFP the basis on which the
calculation would be made and should have protested this matter also
prior to the benchmark.
III raises a number of objections to specific adjustments which SSA
made, or which III believes should have been made, but were not. III
also questions various other aspects of the evaluation. Collectively,
SSA's adjustments and other scoring assumptions had a significant impact
on its calculation of REI's and III's evaluated life-cycle cost so that
III's questions must be addressed before its broader concerns--
attacking the meaningfulness of SSA's cost evaluation as basis for
selection-- can be considered.
A number of III's complaints relate to SSA's evaluation of the
benchmark results, or to its refusal after benchmarking to consider
untested alternate approaches.
For example, after benchmarking III first proposed its so-called
"paired singles" configuration, one of the three basic equipment
configurations III offered. Apparently, III did not conceive of the
paired singles configuration until benchmarking had been completed.
SSA had placed no limit on what configuration could be benchmarked,
and presumably would have allowed the paired singles configuration to be
tested had it been proposed earlier. It refused, however, to consider
the paired singles approach because it was proposed after benchmarking
was completed.
III maintains that the paired singles proposal need not be
benchmarked because all of its elements were tested and because the
benchmark fully established that the equipment would operate at less
than 70 percent of capacity even in the paired singles configuration.
We agree with III that SSA ordinarily could not require that the
paired singles proposals be benchmarked without reason, just as a
contracting activity cannot require unnecessary descriptive data or
reject a proposal which fails to include such data. Dominion
Engineering Works, Ltd., B-186543, October 8, 1976, 76-2 CPD 324.
III admits, however, that there is a question as to whether sharing
resources as proposed with the paired singles approach would limit
performance. It attempts to meet this objection by presenting a worst
case mathematical analysis showing that it is the computational capacity
of the processor which is the critical limiting factor and that adequate
capacity would be available.
Even assuming the reasonableness of III's technical argument, we
believe SSA's refusal to consider the paired singles proposal without
benchmarking is rationally founded. The financial risks facing SSA were
substantial. It chose to use benchmarking because it wanted to base
award on proven rather than theoretical performance. In this regard,
SSA points out that during the course of this procurement III proposed
several different approaches and made numerous performance claims, some
of which were not borne out in practice. Not all of III's proposed
approaches qualified by passing benchmark minimum performance
requirements. In SSA's view, analytical abstract calculations
predicting the behavior of interrelated system components may not
necessarily correlate with actual results, imposing in effect
unacceptable risks. SSA's decision therefore reflects its best
judgment; that judgment has not been shown to be arbitrary.
Moreover, we note that III knew before it ran the benchmark that SSA
would insist that each system proposed be benchmarked because III was
told specifically that SSA would not agree to limit benchmarking to the
double scanner system. None of the factors III cites to support its
claim that the paired singles approach did not occur to it earlier
because SSA's requirements were constantly changing involve matters
which III would not have considered before benchmarking. Obviously,
III, by not proposing this approach prior to benchmarking, ran the risk
of not having that approach accepted.
III also complains that SSA improperly adjusted certain 0enchmark
data, or failed to adjust all offeror's data equally, giving REI an
unfair advantage. For example, SSA found that in some instances
character and field substitution and reject rates did not correspond.
REI's proved to be especially sensitive to the location of characters
within prescribed areas on the test forms. Where characters appeared
outside the box assigned to a specific field, the equipment placed them
in the wrong field. SSA says it disregarded such errors if the
characters printed on the form were read correctly but were placed in an
incorrect field.
III believes, however, that the adjustment favored REI and was unfair
because edit functions were tested during the benchmark.
SSA admits that REI obtained a larger adjustment in substitution rate
than did III but argues that this was proper in the circumstances,
noting that:
Since these types of errors are easily corrected through field
editing and because editing of the data was not part of the (benchmark)
requirement, it was decided that the properly read but dislocated
characters should not be counted as substitutions. III had a smaller
amount of adjustment because its scanning parameters were established
differently than REI's.
In this regard, we see no basis for protest if an agency adjusts
benchmark data in evaluating it, provided the adjustments made are
reasonably related to the announced evaluation criteria and provided the
basis on which benchmarks were run or evaluation criteria used are not
altered. We find nothing improper with the adjustments made which are
based on SSA's belief that dislocated characters would be improperly
counted if they were treated as substitution characters which appears to
be overall consistent with the life-cycle costing evaluation criterion.
Cf. AEL Service Corporation, 53 Comp.Gen. 800(1974), 74-1 CPD 217.
Unless III could establish, as it has not, that (1) it set its machine
parameters for benchmarking in reliance on the included edit
requirement; (2) these parameters were set to minimize the kinds of
errors which SSA later corrected; and (3) III otherwise could have
adjusted its parameters to better optimize performance, it has no basis
for complaint.
Further, III complains that SSA arbitrarily imposed: (1) a 30-second
penalty for job set-up; and (2) a 3-percent penalty for operation of
output edit software, which was tested but not required to be used
compiling benchmark data.
III has not presented evidence establishing that these adjustments
were unreasonable, per se. Job set-up time was not measured by the
benchmark because only one work unit (5,000 documents) was tested. A
similar penalty was applied in computing REI throughput. The effect of
the penalty was to downgrade throughput somewhat to afford SSA assurance
that the quantity of equipment acquired would provide some margin for
set-up time. Likewise, the 3 percent was assessed to account for system
degradation while editing functions were being performed. A 10-percent
degradation was observed during the benchmark, but SSA agreed to the
lower figure to account for expected enhanced performance once the
higher level language used during the benchmark was converted to the
DEC-10 machine language which would have been used if III had received
award. Consequently, III's objections to these adjustments are without
merit.
We agree with III, however, that several of SSA's adjustments, and
its refusal in one instance to consider an adjustment, were
inappropriate.
For example, we agree with III that SSA improperly applied the 30
second penalty to magnetic tape changes by arbitrarily adding 30 seconds
to the processing time required for each 5,000 document unit. As III
points out, a 2,400 foot reel of magnetic tape will hold the information
recorded on 35 batches of documents, or approximately 175,000 documents.
SSA insists that the requirement is necessary, nevertheless, because
the 5,000 page limitation is required to meet subsequent operational
steps which SSA would use in annual reporting.
Imposing a 5,000 page limit is not the only way information in 5,000
page blocks could be handled. Data can be "blocked" electronically in
5,000 page units even though many 5,000 page units are recorded on one
tape, and we understand such a procedure is possible for use on the
equipment SSA planned to use, which would significantly reduce the
number of tapes needed. SSA's approach appears to be based on its
experience with REI type equipment. III's in-line correction process,
however, would have reduced significantly the amount of post-scanning
processing which might be required otherwise. SSA's evaluation of III's
approach on the basis of what SSA would require by use of REI's system
is unreasonable.
In addition to the 30 second and 3 percent penalties, SSA added a
90-second allowance for film changes at the scanner. III agrees that 90
seconds is a reasonable time for the changes, but questions the manner
in which it was applied, pointing out that one scanner in a dual scanner
configuration normally continues to operate while film is being changed
in the other.
SSA states that it:
* * * is aware of the situation cited by III * * * . However, SSA
could not accept the premise that there would be no situations in which
both films would not have to be changed simultaneously. The quality of
the scanner input and the number of fonts involved would be among the
various factors which will affect the read rate of the scanners.
Regardless of attempts taken to preclude such simultaneous changing of
the film in both scanners in a dual-scanner system during full
operations, there will be random occasions when both film transports run
out of film at, essentially, the same time.
Believing that it would be speculative to attempt to gauge the rate
that this would occur, SSA nevertheless estimates that III would require
about 1,100 film changes per month using 35 mm film, or 560 changes if
16 mm film were employed.
To the extent that film changes are statistically meaningful, changes
in both scanners of a dual scanner system should be counted. Knowing
approximately what number of film changes are required, SSA could have
estimated statistically the likelihood that two film changes would be
required within any 90 second period.
Although probably de minimus, the extent to which film changes in a dual
scanner system are not statistically independent events could have been
evaluated by measuring any changes in throughput of one scanner while
the other was not operating.
III also believes that some kind of factor should have been applied
in evaluating REI's benchmark results to account for possible paper jams
just as III was penalized for costs associated with manually
reprocessing individually misfilmed documents. SSA views III's
complaint as untimely. We disagree. Although III knew that numerous
adjustments were made to its scores, it was entitled to assume that
comparable appropriate adjustments were being made to other proposals.
Accordingly, we treat III's complaint as untimely. We disagree.
Although III knew that numerous adjustments were made to its scores, it
was entitled to assume that comparable appropriate adjustments were
being made to other proposals. Accordingly, we treat III's complaint as
timely since it was filed within 10 days of the date it knew no such
adjustments had been made.
SSA argues that both the effect of paper jams on REI's direct paper
systems and misfilmed documents on the III process were evaluated. They
were evaluated differently, SSA asserts, because the processes differ.
REI ran the benchmark as a single continuous process. Paper jams or
other technical problems in its system would have showed up directly in
reduced throughput, because problems would have to be corrected as they
arose. This could not occur with the III process, since until the
microfilm used was developed there could be no determination as to
misfilmed documents. Since SSA could not measure misfilming errors
during the III benchmark it compensated by applying an adjustment based
on experience with other microfilm uses.
As a result, III was evaluated using so-called "real world data";
REI was evaluated on this item on the basis of actual benchmark results.
SSA does not address whether this was equitable. How much of a
difference would have resulted from use of actual forms received by SSA
rather than the neatly stacked offset printed forms actually used is
unclear but it seems apparent that the difference should have had an
effect on REI's evaluation. Thus we believe a "real world" adjustment
should also have been applied to REI's test results.
III raises several complaints whose relationship to SSA benchmark is
less direct, but which are important nevertheless in laying a foundation
on which we may review SSA's life-cycle cost evaluation.
For example, III maintains that microfilm purchase and processing
costs were evaluated improperly. Except for III's full service plan
offering to set up contractor-owned contractor-operated (COCO)
processing facilities, III's proposals assumed that the Government would
furnish film and processing. III maintains, however, that by
considering only Eastman Kodak Film and processing, SSA overestimated
III's life-cycle cost by at least $500,000. In III's view, SSA should
have surveyed potential film and processing suppliers to determine
pricing, using the Federal Supply Schedule (FSS) as a starting point.
SSA states that it used Kodak pricing because III specified Kodak
film in its proposal and used it during the benchmark. SSA admits that
III proposed Rochester Film products as an alternate source, but states
that the Rochester Film proposal was received after the closing date for
receipt of best and final offers.
III admits that it identified two types of Kodak film by number and
used Kodak film in the benchmark. We believe that by failing to
indicate that other film might be acceptable, III ran the risk that SSA
would believe the film chosen might be critical to contract performance
and evaluate on that basis. Consequently, we do not object to this
aspect of the evaluation.
III also objects to SSA's rejection of its so-called best and final
"zero preventive maintenance" proposal, in which it entered "zero" for
scheduled daily preventive maintenance time. Arguing that the concept
of preventive maintenance is made obsolete by modern semiconductor
technology, III maintains that maintenance should be scheduled only as
required. III says daily scheduled maintenance down time is
unnecessary, because modern equipment, e.g., memory, is constantly
monitored and shows gradual degeneration, thereby permitting planned
replacement. In III's view, it is unrealistic to deduct one or two
hours from available working time to allow time for maintenance which
will not be performed.
SSA asserts that III's complaint is untimely, and rejects III's view
that preventive maintenance time and down time are conceptually
interchangeable. Noting that offerors were required from the outset to
state how much time was to be set aside for preventive maintenance, SSA
asserts that III's protest on this issue should have been filed before
the closing date for receipt of initial proposals. Arguing that
"prescheduled maintenance" is preventive maintenance regardless of what
III wishes to call it, SSA questions how III could achieve a 92 percent
(or for that matter, a 90 percent) availability rate without scheduling
some kind of maintenance.
III counters that the issue is timely and that, moreover, its
equipment achieves a 97 to 98 percent availability rate.
We do not view III's complaint as untimely because nothing in the RFP
prevented consideration of an offer proposing zero time for preventive
maintenance. SSA may not have meant to allow a zero time proposal. It
did not preclude one, however, and III protested as soon as it learned
its zero time offer had been rejected. The rule SSA relies upon applies
only to defects which are apparent on the face of a solicitation. 4
C.F.R. 20.2(b)(1).
With respect to the merits of the issue, we point out that the burden
is on the offeror in submitting his best and final offer to
affirmatively demonstrate its merits. The contracting officer need not
reopen negotiations, or speculate as to whether an unsubstantiated
proposal could be supported with adequate technical data, but may
downgrade or reject the proposal as the circumstances warrant. Here,
III's zero preventive maintenance proposal marked a significant
departure from its earlier approach, and SSA did not find anything
convincing in III's proposal with respect to the validity of this
approach. We find no basis for taking exception to SSA's rejection of
this approach.
From SSA's answer to this allegation, however, we have some doubt
regarding SSA's consistency in applying its life cycle costing
technique. In explaining its position, SSA argues that downtime and
time allocated for preventive maintenance:
were never envisioned as, nor should they be considered,
interchangeable elements. The 90 percent up time (10 percent possible
downtime) requirement is only a threshold factor. SSA does not plan for
the OCR system to be down for 10 percent of the time, in addition to
preventive maintenance. The 90 percent criterion is the level below
which the contractor must pay penalties.
Interchangeable or not, III correctly notes that downtime and time
for preventive maintenance were treated as cumulative. SSA added their
separate contribution together, in effect, by deducting both from total
available time to compute monthly operating time and production figures.
Moreover, an offeror naturally is induced to trade preventive
maintenance for availability to maximize the calculated cost
effectiveness of its equipment. We note that REI submitted an alternate
proposal, also rejected, offering 75 minutes daily preventive
maintenance (down from 2 1/2 hours) plus 6 hours of weekly (weekend)
maintenance.
We agree with SSA that unscheduled downtime and time during which the
equipment will be shut down for scheduled servicing are different. We
see no basis either for objecting to SSA's use of a threshold figure for
determining when liquidated damages should apply, or for that matter, to
its use of a 90 percent figure for computing throughput and equipment
requirements, provided the contracting activity reasonably believes that
a 10 percent downtime rate will be experienced.
Our concern is that SSA did not believe that a 10 percent downtime
figure will occur. In its own words, it did "not plan for the * * *
system to be down 10 percent of the time." Based on the experience of
other users of III equipment, SSA seems to accept a 92 percent rate as
achievable. SSA, III says, included planned downtime for preventive
maintenance in computing the 92 percent figure from III experience data
at other installations in effect discounting it twice. Correctly
calculated, the data shows that 97 to 98 percent is achievable. Thus,
we think there is some question as to the reliability of SSA's costing
approach as it impacts on the overall cost evaluation.
At this point, we turn to examine the impact which errors in SSA's
adjustments could have had on its evaluation of the REI and III
proposals, and in this light, to examine III's complaint that SSA's
methodology did not in fact provide a valid analytical measure of the
relative cost of its and REI's probable life cycle costs. Our review of
the accuracy of SSA's methodology will focus on III's 35 mm purchase
proposal, because that proposal was evaluated as lowest in cost and
because our analysis indicates that no evaluating error made by SSA
would permit any other III proposal to displace the 35 mm purchase as
least costly.
SSA did not attempt to differentiate through the benchmarking between
the vendors' ability to read a particular portion of SSA's projected
workload. If we understand its intended methodology correctly, it
assumed that REI and III would be able to process the projected 70
percent workload. Contrary apparently to III's view of what should have
been done, SSA instead attempted to compute the cost impact which could
be expected due to random sources of error, in effect introducing a
source of "noise" (randomly formed characters) and measuring system
response to it.
REI produced significantly higher figures, and received
correspondingly greater cost penalties. The difference in magnitude of
the REI and III's scores, however, is of little importance, because the
accuracy of SSA's cost evaluation depends upon the precision with which
these projected figures were measured in calculating the cost
difference.
It is difficult in this regard to understand how the benchmark
results could bear any rational relationship to projected comparative
costs-- at least to within an accuracy of better than $2.55 million, the
original difference separating the III and REI proposals. Our
calculations indicate that costs were extremely sensitive to numeric
balance field substitution errors while the cost of processing rejected
balance fields or reinstatement items was of comparatively negligible
importance. One single numeric (balance field) substitution "error" has
a $24,000 cost impact. A single "error" in SSA's construction of test
set reproduced ten fold would have had an impact of almost a quarter of
a million dollars. A minimum of one hundred seven individual SSA
character "errors" in a 5,000 page test deck could account for the
entire difference SSA calculated between REI and III life-cycle costs.
By attempting to use a single test deck to measure throughput and
accuracy, rather than multiple test decks and appropriately adjusted
weighting factors, SSA had to assure that the deck would be meaningful
for two quite different purposes. To the extent that processing time
might reflect the difficulty of the material read, the test deck had to
be representative of the total projected annual reporting workload,
leaving only a very small portion of the benchmark to have any effect on
accuracy.
SSA's methodology, however, included virtually no checks in the
benchmark process. Apparently, SSA lacked any quality controls save
visual inspection of portions of the test materials and the standards
imposed on the offset printing process. It would have us believe that
it nevertheless could distinguish test results to an accuracy
approaching one part in ten thousand, the accuracy required to measure
the impact of balance field substitution errors with the precision
needed to support SSA's cost justification for selecting REI. SSA
evaluated test results by comparing each vendor's data with what SSA
"knew" had been typed on the original 500 page test set. So far as we
are aware, SSA did not attempt to manually keyboard the test deck
contents to determine what if any minimum (residual) error rate it had
introduced. SSA, moreover, found that offset printing produced changes,
eliminating fine lines.
Forced by III to admit that it did not budget for post-scanning
processing costs at rates determined by the benchmark, SSA argues that
its representation in III's prior protest that the benchmark would
produce meaningful results was not meant to convey the notion that there
would be an exact correspondence between benchmark and actual
performance-- only that the results would be representative. It did
order the quantity of equipment which its benchmark based throughput
calculations indicated would be needed.
This, however, amounts to applying a double standard-- one to compare
accuracy and a second for calculating equipment requirements.
Meaningful results consistent with a life cycle costing approach are
obtained regardless of the scale chosen to measure costs. Scoring will
not be meaningful or rationally founded, however, if disproportionate
weights are assessed different elements making up the total. A rational
relationship is not maintained where any one significant contribution to
total costs-- here, out-of-pocket equipment cost-- is keyed to a fixed
unit of measure while other equally significant costs are not. Nor is
it enough that SSA believes the accuracy portion of the benchmark
produced relative performance data. III won that round, but lost
because its equipment was more expensive that REI's. A weighting factor
error of two in the accuracy, i.e., if SSA's test should have been twice
as difficult, makes a $12 million difference ($7 million for balancing
alone) in the parties' relative standing.
Further, we question the adequacy of SSA's throughput results. SSA
did not use the entire test deck to determine III scanner throughput
rates.
Evaluation was based on a 1,000 page microfilm sample for the single
scanner system. A 4,000 page sample (divided into four 1,000 page
subsamples) was used to time throughput for the III dual scanner system.
III's scanners read the material in 12 (single scanner) to 18 (dual
scanner) minutes per 1,000 page subsample. Using SSA's 435.6 usable
hours per month estimate, the 8 year evaluation period consists of
1,672,704 usable minutes-- a magnification of more than one hundred
thousand times the (15 minutes) average scanner test period. Timings of
the four subsamples included in the dual scanner test varied in extreme
by more than one-half percent. Moreover, to test a hypothesis that no
deterioration would be experienced, some disk and core were removed, and
one 16 mm single scanner configuration was tested, twice. Oddly,
performance using less equipment improved by 2.28 percent.
The effect of a variation of but a few percent can have
disproportionate impact where as here offeror's cost proposals are
evaluated based on an integral number of units, by rounding any
calculated fractional equipment to the next whole number. Use of a
quantified evaluation procedure can, and indeed in this case did, skew
the relationship between a change in scanner throughput rates and
equipment costs.
Calculating the potential impact of scanning throughput error is
somewhat complex because III was free to propose any combination of
single or dual scanning systems it wished, provided that SSA's peak
monthly workload figures were met.
Raw and adjusted throughput rates for III's 35 mm equipment are as
follows in pages per minute: (TABLE OMITTED)
In this connection, SSA adjusted III's throughput rate downward by
including time for tape and film changes as well as the three percent
edit program degradation factor. (The GAO adjusted figure includes a 30
second tape change factor only once every 175,000 pages and does not
assume that the dual scanner stops each time a film change is needed for
either scanner.)
Our review indicates that SSA's minimum throughput requirement would
have been met by a III proposal offering less equipment, if the
corrected SSA throughput rates are too low by as little as three
percent. A comparable increase in REI's computed throughput rates has
no such effect, however, because REI's equipment requirements are
altered downward only by a 10 percent variation and then only in years 1
through 3.
If, instead, SSA's benchmark procedure produced faulty throughput
rates so that the calculated throughput rates are too high, the
difference is more easily absorbed by the equipment proposed by III than
that offered by REI. A decrease of only 1.5 percent in REI throughput
would require that an additional machine be added during years 4 and 5
because REI met SSA's requirement by furnishing only 8 units because SSA
did not require that it furnished document numbering during those two
years. (REI is required to furnish document numbering during years 1
through 3 and after year 5 while III was required to propose
microfilming equipment with numbering throughput the evaluation period.
Evidently, SSA viewed automatic numbering as merely a matter of
convenience.)
The protester has stated several complaints which we consider to be
only incidental to our decision.
For example, III complains that SSA required that microfilming
throughput rates be computed using a so-called "document flipper"
because the III TDC (planetary) cameras otherwise would invert the
sequence in which the documents are arranged. SSA says it expects to
hire poorly qualified temporary personnel to retrieve and process
documents for correction during reinstatement processing, and
consequently, needs to assure that a consistent document sequence is
maintained. The cost of the flipper itself is insignificant. We find
this issue to be inconsequential.
Throughput rates for 35 mm microfilming equipment were determined by
running two 500 page samples. Times of 13 minutes, 22 seconds and 11
minutes, 42 seconds were produced for the III proposed 35 mm camera
using the document flipper. Although equipment requirements were based
on the total time required for the two runs, the 6.6 percent difference
between each of them and their average alone is enough to account for
one camera of the eight SSA required that III offer to meet year 1
through 3 requirements.
SSA's computations, in this regard, showed that its initial workload
could be processed if 7.3 cameras, and supporting staff and facilities,
were provided. This 7.3 camera figure, however, includes a five percent
degradation SSA estimated would result from use of the document flipper.
Adjusting SSA's figures to eliminate this factor, but considering the
6.6 percent spread, shows a requirement for between 6.5 and 7.4 cameras
with slightly less than 7 cameras the most likely estimate. The years 4
and 5 figures would be 9.8 and 11.4 with 10.5 cameras most likely.
The effect of a one camera savings for years 1 through 3 thus has a
limited effect on SSA's calculation of III's evaluated cost reducing the
difference in III and REI pricing by less than $100,000, to almost
inconsequential proportions.
III further complains of SSA's refusal to consider its so-called
"full service proposal" in which III offered to establish a COCO
facility to process all SSA machine readable forms. Conceding evidently
that the full service proposal could not be considered under the RFP,
III states that it was offered as an unsolicited proposal and that SSA's
failure to consider it "is simply another piece of evidence that SSA's
purpose was to obtain familiar technology, not to save cost." Although
SSA tenders a multitude of reasons supporting its decision to reject
this proposal, it is enough to point out that SSA could not accept it
because it was clearly outside the scope of the procurement and because
the Federal Procurement Regulations (FPR) do not anticipate acceptance
of an unsolicited proposal to furnish supplies or services which would
normally be procured by competitive methods. FPR Sec. 1-4.901. To have
accepted this proposal would have amounted to a sole-source award
without justification.
III also believes SSA counted existing SSA-OWNED or leased REI
equipment in computing REI equipment requirements, but not in
determining how much equipment III would have to furnish. Nothing in
the record supports III's concern. At the outset of the procurement SSA
owned one REI scanner and leased another, using them to process
Quarterly Report requirements. The second machine was leased in part to
meet excess requirements until the current procurement was completed.
The lease since has been terminated, while the first REI machine
continues to be used to meet other SSA scanning requirements. There
would have been no proper basis for III to have objected, however, if
SSA had advised offerors that existing surplus capacity would be
considered or if SSA were to use any surplus capacity for annual
reporting purposes.
Finally, III raises various questions regarding actual performance
under the REI contract. The possibility, of course, that a contract
does not work out as expected is not material to a bid protest, because
the reasonableness of the assumptions made during the procurement
process must be judged by examining the circumstances as they were then
believed to exist. Performance, moreover, is ordinarily a matter of
contract administration which is not considered by this Office.
Although we believe the benchmark methodology used may have provided
a reasonable basis for determining the competitive range, we agree with
III that the validity of the benchmark as an analytical tool for
distinguishing between its and REI's proposals is questionable.
Great precision is required of the accuracy portion of the benchmark if
it is to serve as a basis for drawing a rational distinction between the
III and REI proposals based on differences in indirect costs. Moreover,
because indirect costs were added to direct (equipment and equipment
related manpower, space and facilities) costs, it would not have been
sufficient had SSA managed, as it believes it did, to measure a
"relative difference" in III and REI performance. The two types of
costs must be measured using a standard which permits them to be
compared. SSA's use of validation methods-- specification of off-set
printing standards coupled with visual inspection of but a fraction of
the test materials-- appear on their face inadequate to assure that
anything close to the necessary degree of accuracy was maintained. Its
evident lack of concern that all factors (e.g., actual anticipated
availability and the effect of 200 rather than 26 type-fonts, as
discussed in the SSA technical evaluation) be considered and its belief
that relative accuracy data was sufficient leave us without any
foundation from which to conclude that the comparatively close cost data
computed for III and REI necessarily reflects a measured difference in
the life cycle cost of either the REI or III system. The record thus
suggests to us that the life cycle cost evaluation was inconclusive with
respect to measuring the costs the Government could reasonably assume it
would incur.
However, we are aware of no evidence indicating SSA acted other than
in good faith, or that SSA would not have awarded III a contract had III
been able to establish that its approach would be more cost effective
than REI's. We believe this result occurred because the procurement was
structured for direct paper systems using a benchmark that was conceived
to discriminate between relatively similar equipment. SSA restructured
its solicitation, allowing microfilm based processes, once it became
clear that III might be able to compete. The benchmark was adapted to
permit comparison of microfilm and direct paper systems, but was pressed
beyond its limits not as a result of any SSA desire to preclude III but
because III's performance and higher equipment costs focused the
competition along lines which the benchmark methodology was incapable of
handling.
In view of the uncertainty and difficulty SSA faced, and the
inconclusive nature of the evaluation scores it computed, we believe it
would be appropriate for SSA to validate its initial procurement
decision. Thus, we believe SSA should conduct a market survey to
determine whether continued reliance on REI equipment actually serves
the Government's best interest, providing in connection with the survey
as opportunity for further testing, using statistically representative
samples selected from actual annual reporting data.
In this connection we note that while SSA professes to be satisfied with
the REI equipment SSA's anticipated working environment has changed
since the procurement was conducted. For example, although SSA had
microfilmed earnings documents for more than 20 years, it viewed
microfilming as an unnecessary expense with scanning and as a unique
cost to be charged to III. Since making award, SSA has entered into an
agreement with the IRS which requires that SSA microfilm all forms for
the IRS. We also understand that original documents are being retained
on site until the microfilm copy is developed, altering in part the
assumptions on which SSA states its approach to post-scanning processing
was based. Since microfilming costs alone contributed more than five
million dollars to the cost of the III proposal, a quite different
result might be achieved were the procurement conducted today.
Moreover, a test conducted today should suffer few of the difficulties
SSA faced, because SSA knows what its experience has been and has actual
forms from which a statistically representative workload sample could be
selected. A much larger sample could be used, reducing the statistical
significance of any one individual anomaly.
By separate letter to the Secretary of Health and Human Services, we
are recommending such action be considered before any decision is made
to exercise further REI contract options. See B & W Stat Laboratory,
Inc., B-195391, March 10, 1980, 80-1 CPD 184.
B-198324, August 6, 1980, 59 Comp.Gen. 637
Purchases - Small - Small Business Concerns - Certificate of Competency
Procedures Under SBA - Applicability
Army contracting officer's failure to refer determination of
nonresponsibility of small business to Small Business Administration,
although consistent with applicable regulation, is contrary to Small
Business Act. While contract award is not disturbed, General Accounting
Office recommends that Defense Acquisition Regulation 1-705.4(c),
covering Certificate of Competency procedures, be promptly revised to
eliminate exception to referral requirement for proposed awards not
exceeding $10,000, since amended Small Business Act provides for no such
exception.
Matter of: Z.A.N. Co., August 6, 1980:
The Z.A.N. Co. (ZAN) protests the award of a contract by the U.S.
Army Troop Support and Aviation Materiel Readiness Command (TSARCOM),
St. Louis, Missouri, for a total of 477 each ring assembly, engine, for
the UH-1 helicopter. We are sustaining the protest.
The invitation for bids, No. DAAJ09-80-B-0009 (PFR), issued January
29, 1980, with an opening date of February 29, 1980, was a total small
business set-aside. ZAN, offering to provide the rings for $19.90 each
or a total of $9,492.30, was the low bidder; the L.O.M. Corporation
(LOM), at $34.91 each for a total of $16,656.84, was second-low.
Although ZAN's bid was responsive, due to a poor performance record
and a negative preaward survey of ZAN's plant which had been performed
during January in connection with another TSARCOM procurement, the
contracting officer determined that the firm was not responsible. He
therefore awarded the contract to LOM without referring the question of
ZAN's responsibility to the Small Business Administration (SBA) or
requesting another preaward survey.
ZAN's primary basis of protest is the Army's failure to refer the
matter to SBA. ZAN disputes the nonresponsibility finding, arguing that
it was based on a preaward survey conducted without its participation
and knowledge, and states that it has twice manufactured the identical
item for the Government.
Section 8(b) of the Small Business Act, 15 U.S.C. 637(b)(7) (Supp. I
1977), was amended by Section 501 of Public Law 95-89, effective August
4, 1977, to empower the SBA to certify "all elements of responsibility,
including but not limited to, capability, competency, capacity, credit,
integrity, perseverance, and tenacity" of any small business seeking to
receive and perform a specific Government contract. Under the Act, a
contracting officer may not, for any of the above reasons, preclude a
small business from award "without referring the matter for a final
disposition" to the SBA.
Defense Acquisition Regulation (DAR) Sec. 1-705.4(c) (DAC No. 76-19,
July 27, 1979), however, states that the Certificate of Competency (COC)
procedure applies only to proposed awards exceeding $10,000. For this
reason, the Army maintains that its finding of nonresponsibility without
referral to the SBA was proper. In addition, the Army notes that our
Office previously has denied protests based on failure to refer
questions of responsibility to the SBA when the regulations provided an
exception.
The Army relies primarily on Sigma Industries, Inc., B-195377,
October 5, 1979, 79-2 CPD 242, a case which the Army states involved the
same contracting officer, the same Command, and the same fact situation
as the instant case. In Sigma, the contracting officer found the low
bidder nonresponsible on the basis of a negative preaward survey
completed a month before bid opening in connection with a different
procurement.
We agree that the case stands for the proposition that a contracting
officer may reasonably rely on such a survey; it is distinguishable,
however, since in Sigma the SBA had refused to issue a COC 4 days before
bid opening, in effect confirming the determination of
nonresponsibility. In the instant case, there is no indication that the
question of ZAN's responsibility was ever referred to or decided by the
SBA.
The Army also cites Orlotronics Corporation, B-180340, May 14, 1974,
74-1 CPD 254, and Solar Laboratories, Inc., B-179731, February 25, 1974,
74-1 CPD 99, in which we held that under DAR (then the Armed Services
Procurement Regulation), the procuring agency was not required to obtain
a COC when proposed awards did not exceed $10,000. These cases,
however, were decided before the effective date of the Small Business
Act amendments, and we do not believe they are controlling here.
In two recent decisions involving Forest Service procurements, our
Office has sustained protests based on failure to refer when proposed
awards did not exceed $10,000. See J. L. Butler, 59 Comp.Gen.
144(1979), 79-2 CPD 412, involving a procurement conducted according to
the small purchase procedures; The Forestry Account, B-193089, January
30, 1979, 79-1 CPD 68. In the latter case, we recommend that the
contracting officer immediately refer the matter to appropriate SBA
officials, and if a COC was issued and the protester was still willing
to accept award under the invitation for bids, that the contracts
otherwise awarded by terminated for the convenience of the Government.
In both cases we noted that the Federal Procurement Regulations (FPR)
Subpart 1-3.6 (1964 ed.amend. 153) had been amended to reflect the Small
Business Act amendments and to require the contracting officer to refer
all questions of responsibility to the SBA.
In the 3 years since the effective date of Pub. L. 95-89, the DAR
also has been revised in part to reflect those amendments. Defense
Acquisition Circular (DAC) 76-18, March 12, 1979 at 26, for example,
deleted the urgency exception previously provided by DAR Sec.
1-705.4(c)(iv). But the exemption for proposed awards of $10,000 or
less has not been removed.
The SBA has issued final rules, effective October 19, 1979, which
cover the COC procedure. They require contracting officers to notify
SBA of nonresponsibility determinations, and indicate that the SBA will
conclusively determine all elements of responsibility by issuing or
refusing to issue a COC. 13 C.F.R. 125.5(1980). These regulations
permit no exception to the referral requirements.
The record in this protest includes correspondence which indicates
that SBA regards the current DAR as contrary to statute. As we have
informed the Army, by letter dated November 23, 1979, the SBA advised
our Office that it concurred with our decision in The Forestry Account,
supra, stating:
* * * We know of nothing in either the Small Business Act * * * , as
amended * * * , or legislative history which suggests exempting
Government small purchases of less than $10,000 from the SBA COC
Program.
This same position had been expressed by the SBA in a June 4, 1979,
letter to the DAR Council in which the SBA recommended eliminating the
$10,000 exception from 1-705.4(c), stating:
* * * Denying COC consideration to many small firms by arbitrarily
establishing a $10,000 threshold cannot be justified.
In an August 17, 1979, letter to the Department of Defense (DOD), the
Deputy Administrator of the Small Business Administration stated:
* * * (W)hen a small business concern is to be denied the award
because the contracting officer has found the concern is not
responsible, said concern has a legal right to request referral of the
matter to the Small Business Administration regardless of the monetary
value of the contract. * * *
The August letter, however, indicated that SBA might agree to
preclude the use of COC procedures on DOD procurements of $10,000 or
less where the relatively informal small purchase procedures were used.
This matter is not in issue here since this procurement was conducted
pursuant to normal formal advertising procedures.
We have independently reviewed the legislative history of the 1977
Small Business Act amendments, and we agree that there is no indication
that Congress intended to limit the authority of the SBA to proposed
awards of more than $10,000. See H.R. Rep. No. 95-1, 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.
The protest is therefore sustained.
We believe this decision should apply only prospectively, however,
since the contracting officer acted reasonably and in good faith and in
reliance on the existing DAR provision and on decisions of our Office
which indicated that the SBA was primarily responsible for clarifying
apparent conflicts between the statute and the regulation. See, for
example, What Mac Contractors, Inc., 58 Comp.Gen. 767(1979), 79-2 CPD
179. We are, by letter of today to the Secretary of Defense,
recommending that DAR Sec. 1-705.4(c) be promptly revised to eliminate
the exception to the COC procedure for proposed awards of $10,000 or
less, and that in the interim, contracting activities be advised to
follow the holding of this decision.
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 Government Affairs, and House and Senate Committees on Appropriations
concerning the action taken with respect to our recommendation.
B-197439, July 29, 1980, 59 Comp.Gen. 635
Small Business Administration - Investment Companies - Authority To
Invest In - Minority Enterprise Small Business Investment Companies
(MESBICs) - Leveraging Propriety - Non-Private Fund Matching
The Small Business Administration (SBA) does not have authority to
"leverage against" (partially match) funds invested by the Federal
Railroad Administration in minority enterprise small business investment
companies (MESBICs) because, generally, SBA may only leverage against
investments made by private sources in MESBICs.
Matter of: Authority of SBA to Leverage Against Minority Business
Resource Center Investments in Minority Enterprise Small Business
Companies, July 29, 1980:
During a review of a Federal Railroad Administration program by the
General Accounting Office (see GAO Report CED-80-55, Feb. 1, 1980), a
question arose concerning the Small Business Administration's (SBA's)
practice of partially matching investments of other Federal agencies in
minority enterprise small business investment companies (MESBICs).
SBA's matching is accomplished through a process known as "leveraging."
Leveraging means investing in MESBICs (or other small business
investment companies) through the purchase or guarantee of debentures,
or through the purchase of preferred securities. 13 C.F.R. 107.3.
SBA sometimes bases its investments in MESBICs on the amount of
Federal funds invested by other agencies-- i.e., it leverages against
(partially matches) investments made by other Federal agencies. One of
the agencies that invests Federal funds in MESBICs is the Minority
Business Resource Center, established within the Federal Railroad
Administration pursuant to 49 U.S.C. 1657a. The Minority Business
Resource Center is authorized to invest money (called venture capital)
to enable minority businessmen to take advantage of business
opportunities related to maintenance and improvement of railroads. 49
U.S.C. 1657a(c)(6). The Center has been investing in MESBICs based on
this authority, and SBA has agreed to leverage against (partially match)
these investments.
The question is whether SBA has authority to leverage against
investment by Federal agencies. We think not, unless a statute
specifically authorizes it in particular cases.
The law that authorizes SBA to leverage investments in MESBICs only
authorizes leveraging against private money. Section 303(c)(2)(ii) of
the Small Business Act, as amended, 15 U.S.C. 683(c)(2)(iii), authorizes
SBA to purchase or guarantee debentures in MESBICs, provided:
* * * the amount of debentures purchased or guaranteed and
outstanding at any one time pursuant to this paragraph (2) from a
company having combined private paid-in capital and paid-in surplus of
less than $500,000 shall not exceed 300 per centum of its combined
private paid-in capital and paid-in surplus less the amount of preferred
securities outstanding under paragraph (1) of this subsection, nor from
a company having combined private paid-in capital and paid-in surplus of
$500,000 or more, 400 per centum of its combined private paid-in capital
and paid-in surplus less the amount of such preferred securities.
Since the Minority Business Resource Center is clearly a Federal
entity, its contributions to MESBICs are not private capital or surplus
and the above quoted provision does not authorize SBA to leverage
against them. We are aware of nothing in the law or legislative history
that suggests otherwise.
According to a letter from SBA's General Counsel, 13 C.F.R.
107.101(d)(2), quoted below, authorizes SBA to leverage against the
Center's investments in MESBICs:
Nonprivate funds for licensees. (i) A Licensee (MESBIC) may include
nonprivate funds (e.g., funds granted under Title VII of the Community
Services Act of 1974, as amended) in its Private Capital for purposes of
sections 302(a), 303(c) and 306 of the Act: Provided, however, That the
minimum capital of $150,000 ($500,000 on or after October 1, 1979)
specified by section 302(a)(1) of the Act may not include nonprivate
funds and that for Leverage purposes nonprivate funds will be included
in Private Capital only to the extent that private funds totaling at
least ten percent of the nonprivate funds are also included.
"Nonprivate funds" are defined in the regulations as including funds
derived from the Federal Government. See 13 C.F.R. 107.101(d)(2)(ii),
which provides:
(ii) For purposes of this paragraph (d)(2), "nonprivate funds" shall
mean funds obtained, directly or indirectly, from another agency or
department of the Federal Government or from any State or subdivision
thereof, except as limited by Public Law 92-512 (commonly known as the
General Revenue Sharing Act) and regulations of the Treasury Department,
31 CFR Part 51.
The regulation thus specifically allows Federal funds to be included
as "private" funds in determining SBA's investment. The Small Business
Act, however, provides no basis for treating Federal funds as "private"
funds for leveraging purposes. Accordingly, the legal authority for
such a result must be found elsewhere. The Community Services Act,
cited in the above SBA regulation, does specifically authorize money
invested in MESBICs to be considered private money. See 42 U.S.C.
2985a(a)(1) (1976). By the same token, the inclusion of this specific
authority in the Community Services Act, which was added in 1975, tends
to confirm that Federal funds cannot generally be considered to be
private for purposes of SBA leveraging. Absent a provision like 42
U.S.C. 2985(a)(1), therefore, we see no legal basis for SBA to leverage
against Federal funds invested in MESBICs.
B-198194, July 28, 1980, 59 Comp.Gen. 630
Transportation - Requests - Issuance, Use, etc., - Fraudulent Use -
Carrier's Entitlement to Payment
Common carrier, which, without negligence and in good faith, honors
Government transportation request (GTR) regular on its face although
fraudulent, is entitled to payment for services rendered.
Transportation - Requests - Issuance, Use, etc. - Fraudulent Use -
Traveler Identification - "Due Care" Standard
Common carriers honoring GTR are required only to exercise due care
to establish identity of traveler as party to whom GTR was issued.
Matter of: Civil Aeronautics Board, July 28, 1980:
The Comptroller of the Civil Aeronautics Board (CAB) requests an
advance decision concerning the propriety of paying claims of various
airlines for travel services furnished pursuant to unauthorized and
illegal use of Government transportation requests (GTR).
The report of the CAB shows that an employee of the CAB, occupying
the position of "Voucher Examiner," apparently misappropriated a large
number of GTRs. These GTRs were used by the employee for personal
travel or were given or sold to third parties for personal travel mostly
by several different airlines. The CAB has paid $6,134.74 in claims for
airline travel on the fraudulent GTRs. The remaining claims aggregating
$32,113.60 are being held in abeyance pending the decision of our
Office.
The CAB has requested a decision by the Comptroller General answering
the following questions: First, have the carriers a claim against the
Government for services rendered pursuant to unauthorized GTRs?; and,
second, if not, does the Government have a claim against the carriers
for $6,134.74 of charges paid on such unauthorized GTR travel?
Our Office has repeatedly held that a carrier, which, in good faith
and without negligence, has furnished transportation on request or by
other contractual arrangements, is entitled to payment, although the
transportation was unauthorized, and that the underlying pecuniary
liability for the unauthorized use will be the responsibility of the
Government if the forgery is untraceable, the custodians are free of
liability, and the carrier has exercised the acceptable degree of
procedural safeguard. 4 Comp.Gen. 630(1925); 14 id. 631(1935); 21 id.
559(1941); 25 id. 360(1945); B-190576, February 10, 1978; Cf. 48
Comp.Gen. 773, 774(1969).
In 25 Comp.Dec. 811(1919), it was held that "The agents of
transportation companies cannot be acquainted with the officers and
employees of the Government, and a request if in proper form and
apparently good upon its face, without erasure or alteration, may be
honored accordingly, thus involving the Government in the payment for
the services indicated thereon."
The CAB refers to the provisions formerly published in Title 5 of the
GAO Policy and Procedures Manual for Guidance of Federal Agencies and
now published by the General Services Administration (GSA) in 41 C.F.R.
part 101, which places on a carrier an obligation to require the
traveler to establish his identity as the traveler or party authorized
to receive the ticket. The CAB interprets this requirement as "meaning
carrier's are supposed to ask for a travel authorization and a Federal
ID card before accepting a GTR * * * ."
Section 101-41.208-1, upon which CAB bases its contention, provides:
GTR's shall be completely filled out and properly signed by the
issuing officer so as to be valid for presentation to obtain
transportation services and/or accommodations. Carrier agents shall not
honor GTR's which are incomplete or unsigned or which show erasures or
alterations not validated by the initials of the issuing officer.
Carriers shall require the person presenting a valid GTR to establish
his identity as the traveler or party authorized to receive the ticket,
exchange order, refund slip, or other transportation document. In the
absence of satisfactory identification, the GTR shall not be honored.
In accordance with the regulation for honoring GTRs the reverse side
of the GTR only states-- "Carriers shall not honor requests showing
erasures or alterations not validated by initials of the issuing
officer." A valid GTR is defined in the first part of that provision as
a GTR which is completely filled out and "properly signed by the issuing
officer." In the present instance none of the GTRs were properly signed
by an issuing officer. Therefore, while apparently valid on their face,
none of the GTRs were valid within the terms of the regulation and the
further provisions of the same regulation, expressly limited to the
presentation of a valid GTR, do no, by the express terms, apply here.
We do not believe, however, that the result would be any different.
"Satisfactory identification" is not defined in the regulations. The
CAB would limit "satisfactory identification" to a travel authorization
and a Federal identification card.
Section 101-41.203-1 of the governing regulations requires that all
transportation services must be procured with GTRs except as expressly
exempted either in the regulations or in writing by the General
Accounting Office or the Administrator of GSA. While use of a GTR is
limited to official business, 49 Comp.Gen. 578, 580(1970), it is not
limited to Government employees. A-9895, December 12, 1925; 16
Comp.Gen. 1036(1937); 19 id. 976(1940); 25 id. 268(1945).
Consequently, the traveler very well might not have a Federal
identification card.
Also while ordinarily a travel authorization will be issued in
advance of the performance of travel, the Federal Travel Regulations in
section 1-1.4 provides "Ordinarily, an authorization shall be issued
prior to the incurrence of the expenses", recognizing that not
infrequently Government agents in the field will need to perform
Government travel prior to the issuance of a written travel
authorization.
The history of the identification requirements of GTRs shows that
since the establishment of the GTR system it has always been the rule,
insisted upon alike by the transportation companies and the Government,
that the request must be signed by some responsible officer as well as
receipted by the traveler to whom the transportation was furnished.
A-14235, May 16, 1928. Our Office has issued regulations which
addressed various problems and circumstances concerning identification
of the traveler using GTRs. Thus, from 1926 to 1946 an official
identification card was required. See GAO General Regulations No. 46, 5
Comp.Gen. 1056(1926). The requirement for an official identification
card was rescinded by General Regulations No. 108, 26 Comp.Gen. 978,
982(1946). This was superseded by General Regulation No. 123, 34
Comp.Gen. 782, 787(1955), which introduced the requirement for
"satisfactory identification," carried forward in the GSA regulation, 41
C.F.R. 101-41.208-1, quoted above.
Prior to General Regulation 46 ticket agents might accept any
suitable official means of identification. Thus, when General
Regulation 46 and the prescription of and requirement for an official
identification card was rescinded carriers were once again required only
to exercise due care to establish the identity of the traveler by a
suitable means of identification as the party to whom the GTR was
issued. What constitutes due care may vary with the circumstances. The
record does not show what, if any, identification was required by the
involved carriers.
Section 101-41.208 of title 41 of the Code of Federal Regulations
furnishes information and guidance to common carriers for the validation
of GTRs and identification of travelers. We understand that carriers of
the airline industry have issued instructions (Standard Practice for
handling GTRs) to its agents for compliance with these GSA regulations.
Since the record contains no evidence to the contrary, it is reasonable
to assume that the carriers' agents fully complied with their
instructions and with the GSA regulations in accepting and honoring the
involved GTRs.
See 31A C.J.S. Evidence 134(1964).
All of the GTRs submitted to our Office bear an apparently official
stamp of the CAB, Finance Division, B-18, and address in the "bill to"
space on the GTR. All but one were apparently issued by an issuing
officer other than the traveler. They were issued for service by a
named carrier, with specified routing and in all but one instance with
the specified service. They were therefore complete and valid on their
face. The carriers were therefore entitled to payment for the services
rendered even though the GTRs were fraudulently issued.
GTR No. D7906128, American Airlines, was apparently signed by the
same party both as issuing officer and as traveler. Since only a
Government employee would be authorized to sign in both capacities the
carrier should ordinarily have required an official identification card
and refused to honor the GTR in the absence of a Government
identification or satisfactory explanation for the absence of such an
identification together with other satisfactory identification.
GTR No. D3620786, United Airlines, did not have the type of service
entered on the copy of the GTR in our file. Section 101-41.208-1 of the
GSA regulations quoted above requires that GTRs be completely filled out
and provides that "carrier agents shall not honor GTRs which are
incomplete * * * or which show erasures or alterations not validated by
the initials by the issuing officer." Since GTR No. D3620786 does not
show the type of service required it is incomplete on its face and
should not have been honored by the airline. Accordingly, the carrier
would not ordinarily be entitled to payment for this transportation
service in the absence of a satisfactory explanation for the failure to
show the service required.
GTR No. D362180 was originally made out for transportation on Eastern
Airlines which was struck out and Trans World Airlines substituted. The
change is not initialed by the issuing officer as provided in the
regulations. A change in service is also required to be explained on a
reverse of the GTR. A copy of the reverse of the subject GTR was not
furnished with the record. On the basis of the present record,
therefore, payment should not be made for the service on this GTR.
Accordingly, in answer to the first question, the carriers do have
valid claims against the Government for unauthorized GTR travel, with
the exception of the three GTRs discussed above the answer to the second
question is that the Government does not have a claim against the
carriers for the $6,134.74 already paid.
B-195731, July 28, 1980, 59 Comp.Gen. 626
Transportation - Household Effects - Military Personnel - Emergency,
etc. Conditions - Training Assignment Extention - Change of Local
Residence
Under the statutory authority of 37 U.S.C. 406(e)(1976), Volume 1 of
the Joint Travel Regulations may be amended to allow a service member
any necessary drayage and storage of household goods when he experiences
an involuntary extension of assignment at a permanent duty station upon
completing a training program there, and he is required for reasons
beyond his control, such as the refusal of his landlord to renew a lease
agreement, to change his residence on the local economy incident to that
extension of his assignment. Military Personnel - Training Duty Station
- Involuntary Extension at Same Station - Change of Local Residence -
Transportation Allowances
Neither 37 U.S.C. 406(e) nor any other provision of statutory law
contains authority which would permit the amendment of Volume 1, Joint
Travel Regulations, to allow the drayage of a service member's household
goods to a new residence when his duty assignment at a given location is
extended, and he then elects solely as a matter of personal preference
to move to new living quarters.
Matter of: Transportation Allowances - Service Member's Change of
Residence Incident to Extension of Assignment, July 28, 1980:
This action is in response to a request for a decision submitted by
the Assistant Secretary of the Army (Manpower and Reserve Affairs) on
the question of whether the provisions of 37 U.S.C. 406(e)(1976) will
permit the amendment of Volume 1, Joint Travel Regulations, to allow for
the drayage of household goods from one residence to another in
situations where a service member is assigned to a permanent duty
station for the purpose of participating in a training program, and his
assignment at that duty station is involuntarily extended when he
completes the period of training.
Within certain limitations the regulations may be so amended.
In the submission it is said that a member of a uniformed service is
occasionally given a limited duty assignment to attend a training
program for a period in excess of 20 weeks, which is too long to qualify
as a temporary duty assignment but too short for long-term relocation.
In such circumstances, it is said, the service member concerned may
acquire short-term rental accommodations convenient for the assignment.
In unusual instances, the member is not reassigned to a different duty
station at another location upon the completion of the training program;
instead, he is given orders extending his assignment for several
additional years at the same duty station where he participated in the
training program. When this occurs, it is said, the member may find it
either necessary or desirable to change his place of residence in the
vicinity of the duty station. However, the Joint Travel Regulations do
not currently authorize the move to be accomplished at Government
expense, since no permanent change of duty stations is involved, and
consequently the member must personally bear the costs of moving his
household goods to his new residence.
A case in point is described in the submission to illustrate the
problem. It is indicated that in 1978 an officer was assigned to a
1-year training assignment at the Pentagon to participate in a program
of the Air Force Institute of Technology. He rented a small condominium
apartment under a 1-year lease in the Washington, D.C. area in
contemplation of his reassignment to another location after he completed
the training program. However, upon completing the 1-year program in
1979 he was not reassigned to a different duty station, but was instead
given orders for a 4-year controlled tour of duty at the Pentagon. He
was unable to extend the lease on the condominium apartment he had
rented except on a limited short-term basis because of the owner's plans
to reoccupy or sell the unit, and it is indicated that for this reason
he was required to move to another residence in the Washington, D.C.
area. It is suggested that the necessary movement of household effects
to the new residence results in an unreasonable financial hardship on
the officer due to circumstances beyond his control.
It is also suggested that even if the officer had not been compelled to
move because of the loss of his lease or other circumstances beyond his
control he might reasonably in any event have wanted to move to bigger
or more desirable living quarters as a matter of personal preference or
convenience.
In the submission it is noted that the statutory provisions of 37
U.S.C. 406(e) authorize the drayage of household goods from one
residence to another in "unusual" circumstances when orders directing a
change of station have not been issued. It is said that extensions of
duty by reassignment from training to permanent duty without change of
station, such as the one in the case described, occur infrequently and
generally because of special abilities or outstanding performance of
duty by the member concerned. Thus, a question has arisen as to whether
the circumstances may be considered "unusual" in the sense of 37 U.S.C.
406(e), and whether Volume 1 of the Joint Travel Regulations may
therefore be amended to allow payment of the member's expenses of
packing and drayage for the relocation of his household effects to
another residence if he finds it to be either necessary or desirable to
move to new living quarters when his assignment at a permanent duty
station is extended upon his completion of a training program there.
Section 406 of title 37, United States Code, provides that a member
of a uniformed service who is ordered to make a change of permanent
station is entitled to transportation of household effects, including
packing, crating, drayage, temporary storage and unpacking. As an
exception to the orders requirement, subsection (e) of section 406
authorizes the movement of household effects without regard to the
issuance of orders directing a change of station "under unusual or
emergency circumstances, including those in which * * * the member is
serving on permanent duty outside the United States * * * ."
Administrative directives issued under the statutory authority of 37
U.S.C. 406 are contained in Volume 1 of the Joint Travel Regulations.
Involuntary extension of a service member's tour of duty at a duty
station outside the United States was viewed by our Office in 51
Comp.Gen. 17(1971) as a circumstance of an "unusual" nature within the
contemplation of 37 U.S.C. 406(e) since it was the usual practice to
rotate such members back to the United States. The specific situation
considered in that decision involved an officer whose tour of duty at
Ottawa, Canada, had been involuntarily extended, and who was then
required to change his residence at Ottawa because he was unable to
obtain a concurrent extension of the lease on the house he was renting
at the time.
On the basis of our decision in 51 Comp.Gen. 17, supra, paragraph
M8311 was added to Volume 1 of the Joint Travel Regulations by change
number 225 to those regulations, dated October 1, 1971. Paragraph M8311
currently provides as follows:
M8311 DRAYAGE AND STORAGE INCIDENT TO INVOLUNTARY EXTENSION OF TOUR
OF DUTY
A member is entitled to any necessary drayage and storage of
household goods without regard to prescribed weight allowance, when the
tour of duty at a location outside the United States is involuntarily
extended and the member is required for reasons beyond control, such as
refusal of landlord to renew lease agreement, to change residences on
the local economy. The member is entitled to:
1. drayage of household goods to other local economy quarters;
2. nontemporary storage of household goods (included necessary
packing, crating, and drayage to the nontemporary storage facility)
until a date not later than the effective date of subsequent permanent
change-of-station orders:
3. drayage from nontemporary storage, including necessary unpacking
and uncrating, when, during the extended tour, the member relocates to
other local economy quarters.
That paragraph pertains only to a service member stationed outside
the United States. The statutory provisions of 37 U.S.C. 406(e)
authorize the movement of a member's household effects without regard to
issuance of permanent change-of-station orders in unusual circumstances
"including" those in which the member is stationed "outside the United
States," but the statutory language does not thereby necessarily limit
or restrict the application of the law to situations arising solely
outside the United States. Hence, we have held that 37 U.S.C. 406(e)
also authorizes the drayage of a member's household effects in "unusual"
circumstances arising at duty stations within the United States as well.
See 52 Comp.Gen. 769, 772(1973).
There does not appear to be any compelling reason to make a
distinction between service members stationed outside or inside the
United States in situations of this nature involving the involuntary and
unusual extension of a duty assignment. Since it is indicated that it
is, in fact, "unusual" for members to be given involuntary extensions of
assignments at training sites in the United States, it is our view that
Volume 1 of the Joint Travel Regulations may properly be amended to
allow a service member any necessary drayage and storage of household
goods when he experiences an involuntary extension of assignment at a
permanent duty station upon completing a training program there, and he
is required for reasons beyond his control, such as the refusal of his
landlord to renew a lease agreement, to change his residence on the
local economy.
However, we reaffirm our longstanding view that the term "unusual or
emergency circumstances" as used in 37 U.S.C. 406(e) refers to
conditions of a general nature incident to military operations or
military needs, and not to conditions or needs of a personal nature.
See 38 Comp.Gen. 28 (1958); 45 id. 159(1965); 45 id. 208(1965); 49
id. 821(1970); and 57 id. 266(1978). Hence, it remains our view that
the Joint Travel Regulations may not properly be amended to authorize
drayage of a member's household effects to a new residence when his
assignment at his permanent duty station is extended if that extension
is voluntary, or if the change of residence is merely a matter of
personal convenience, preference, or desire. Compare 52 Comp.Gen.
293(1972). Thus, if a service member is permanently reassigned to a new
duty station to participate in a training program, and his assignment at
that duty station is extended upon his completion of the training
program, drayage of his household effects to another residence at the
time of the extension could not properly be authorized simply on the
basis of his personal desire to move to bigger or better living
quarters. Rather, drayage could properly be authorized by regulation
only if the member's assignment is involuntarily extended, and he is
compelled by necessity to move to another residence incident to the
extension of his assignment.
In conclusion, Volume 1 of the Joint Travel Regulations may be
amended to authorize a service member any necessary drayage and storage
of household goods when his tour of duty at a location in the United
States is involuntarily extended upon his completion of a training
program at that location, and he is required for reasons beyond his
control, such as the refusal of his landlord to renew a lease agreement,
to change his residence on the local economy. However, the regulations
may not be amended to authorize drayage of a service member's household
goods to a new residence when his duty assignment at a given location is
extended, and he then elects solely as a matter of personal preference
to move to new living quarters.
The question presented in the submission is answered accordingly.
B-199060, July 22, 1980, 59 Comp.Gen. 624
Courts - Judgments, Decrees, etc. - Res Judicata - Correction of
Military Records Subsequent to Judgment
Air Force member who successfully sues in Federal District Court for
reinstatement to active duty and damages may not recover on an
administrative claim for backpay in excess of $10,000 jurisdictional
limitation of district court under 28 U.S.C. 1346(a)(2). Since claim
filed concerns same parties and issues, including amount of damages as
decided by district court, doctrine of res judicata precludes
consideration of this claim.
Matter of: Captain John H. VanderMolen, USAFR, July 22, 1980:
The question in this case is whether a claimant who successfully sues
the Government in United States District Court for backpay may then file
an administrative claim and receive the amount of backpay in excess of
the $10,000 jurisdictional limitation of the court under 28 U.S.C.
1346(a)(2)(1976). As will be explained, the claim may not be paid.
The question is submitted for an advance decision by Ernest E. Heuer,
Chief, Accounting and Finance Division, Directorate of Resource
Management, Headquarters Air Force Accounting and Finance Center, and
concerns the claim of Captain John H. VanderMolen, USAFR.
The following recitation of the facts of this case will only deal
with those relevant to a resolution of the question raised. We note,
however, that the factual background leading up to the suit by Captain
VanderMolen can be found in VanderMolen v. Stetson, 571 F.2d
617(D.C.Cir. 1977).
Captain VanderMolen brought suit in the United States District Court
claiming his February 19, 1971 discharge from the Air Force was illegal
and he sought reinstatement to active duty and damages. Since the
claimant's alleged period of wrongful discharge constituted a potential
claim in excess of $10,000, Captain VanderMolen waived recovery in
excess of this amount.
He did so because the district court's jurisdiction is limited to
considering claims of this type against the Government which do not
exceed $10,000. 28 U.S.C. 1346(a)(2).
After the District Court for the District of Columbia granted the
Government's motion for summary judgment and dismissed the claimant's
case, the Court of Appeals for the District of Columbia reversed this
decision. The Court of Appeals ruled that his discharge was illegal and
that he was entitled to backpay in accordance with law not to exceed
$9,999.99. Additionally, the court remanded the case to the trial court
to determine if the Air Force's cancellation of the claimant's scheduled
promotion to captain was supportable. VanderMolen v. Stetson, 571 F.2d
617, 627-628(D.C.Cir. 1977).
On the basis of the trial court's action, the Air Force corrected the
member's records to reflect constructive active duty as a lieutenant
from February 20, 1971, to April 18, 1972, and as a captain from April
19, 1972, to May 24, 1978, the date he was released from active duty.
According to the Air Force, for this period Captain VanderMolen was
entitled to active duty pay and allowances of $123,833.58 less civilian
earnings of $59,203.78 and Veterans' Administration benefits of
$5,975.88. He received $9,999.99 on the basis of the court judgment as
well as $1,000.71 in adjustments to his accrued leave settlement. The
Air Force encloses a voucher for the balance on the basis of an
administrative claim filed by Captain VanderMolen; however, they
question whether the claim may be paid in view of the claimant's waiver
of recovery in excess of $10,000.
In our decision B-157414, April 26, 1978, we discussed in detail the
effect of a Federal District Court judgment in a classification suit
specifying a backpay award to Federal employees which potentially
exceeded $10,000. We ruled that the court litigation constituted a full
and final resolution of the issues including the Government's liability
to the claimants. Therefore, as explained in 47 Comp.Gen. 573(1968),
the doctrine of res judicata precluded us from considering a case
involving the same parties and issues as were before the court. See
also 53 Comp.Gen. 813(1974).
Accordingly, since Captain VanderMolen has chosen to have the Federal
District Court fully adjudicate the issues involved in his claim against
the Government, we may not consider his claim for additional amounts he
believes due arising out of the same facts and for the same period
covered by the court's judgment.
Additionally, the Air Force raises certain questions regarding the
barring acts' (31 U.S.C. 71a) effect on this claim. Since the claim is
not for allowance, we shall not answer these questions. We do, however,
feel constrained to comment on one further issue.
The Air Force awarded backpay from the date of wrongful discharge,
February 20, 1971, until May 24, 1978. We have informally verified the
date of the court order with a member of the Air Force Judge Advocate
Corps and have been informed that the district court issued its judgment
on May 3, 1978. Therefore, the court judgment covers the period from
February 20, 1971, to May 3, 1978, and for this period the award to
Captain VanderMolen is limited to $10,000.
For the period after judgment from May 4, 1978, to his discharge on
May 28, 1978, Captain VanderMolen's back-pay should be computed in
accordance with law, and he is entitled to receive the amount due him,
if any.
B-198981, July 22, 1980, 59 Comp.Gen. 622
Travel Expenses - Temporary Duty - Rental of Apartment - Broker's Fee to
Locate
Employees of Department of Housing and Urban Development's Chicago
Regional Accounting Office assigned to temporary duty at New York
Regional Office for 6 months for training purposes may be reimbursed
under Federal Travel Regulations para. 1-9.1d for brokers' fees charged
for locating rental housing if fees are necessary and sum of fees and
rent is less than cost of hotel rooms for same period.
Matter of: Lengthy temporary duty assignments - reimbursement of
brokers' fees to obtain rental housing, July 22, 1980:
This is in response to a request from the Department of Housing and
Urban Development (HUD) for an advance decision as to whether certain
employees of HUD, on temporary duty for about 6 months in New York City,
for training purposes, may be reimbursed for brokers' fees charged for
locating rental housing.
The employees, assigned from HUD's Chicago Regional Accounting Office
to the New York Regional Office for training, have been attempting to
rent apartments in order to reduce the cost of lodging during their
temporary duty assignments which began May 18, 1980, and are expected to
last approximately 6 months. The HUD reports that the employees have
had difficulty locating suitable apartments without the services of a
broker.
The brokers' fees are negotiable and range in amount between 1 and 2
months' rent. HUD has informed us that even including the brokers'
fees, payment of the usual apartment rents will be less costly than
rental of hotel rooms during the same period.
The HUD has asked for our decision in this matter because it has
found no specific authority in the Federal Travel Regulations or in
prior Comptroller General decisions for payment of brokers' fee in these
circumstances. We believe that there is authority for reimbursement of
the brokers' fees if certain criteria are met.
Although we have never decided a case involving brokers' fees charged
for locating a rental apartment in connection with temporary duty, we
have decided cases involving fees paid by transferred employees to
secure rental housing at their new permanent duty stations. See
B-169335, May 22, 1970, and B-177395, March 27, 1973. While B-169335
involved a fee the employee was required to pay for housing in
Wiesbaden, Germany, B-177395 involved brokers' fees the employees paid
in order to locate housing when they were transferred to New York City.
The type of fee in B-177395 was apparently the same type of fee as that
in the present case. In those cases we held that since the payment of
such fees was an established practice, they could be reimbursed as a
part of the miscellaneous expenses allowance paid to transferred
employees.
We see no reason why brokers' fees may not be paid to employees on
extended temporary duty assignments under the authority of paragraph
1-9.1d of the Federal Travel Regulations (FTR) (FPMR 101-7 (May 1973)).
That regulation, which is among those governing reimbursement of
miscellaneous expenses to employees traveling on official business,
provides as follows:
d. Other expenses. Miscellaneous expenditures not enumerated
herein, when necessarily incurred by the traveler in connection with the
transaction of official business, shall be allowed when approved.
The HUD employees are acting properly in their attempt to reduce
their lodgings costs since paragraph 1-1.3a of the FTR requires an
employee to exercise the same care in incurring expenses while traveling
on official business as a prudent person would when traveling on
personal business. In addition, FTR paragraph 1-7.3d requires an agency
to reduce per diem for extended stays when travelers are able to secure
lodgings and meals at lower costs. Furthermore, we have held, in
Willard R. Gillette, B-183341, May 13, 1975, that the Government is
entitled to the benefits of reduced lodgings costs from rental of
quarters for an extended period.
Accordingly, the HUD may reimburse its employees for brokers' fees
under FTR paragraph 1-1.9d, if they can show it was necessary to incur
those expenses to obtain lower cost lodgings and if the sum of the
brokers' fees and the rental cost is less than what they would have
incurred for hotel rooms during the same period.
B-193813, July 22, 1980, 59 Comp.Gen. 619
Officers and Employees - Training - Transportation and/or Per Diem -
Cost Comparison Requirement
Where agency is sending employees on training assignments, before
agency decides to pay for the transportation of employee's dependents
and household goods, cost comparisons, on individual basis, are required
by 5 U.S.C. 4109 and the applicable agency regulations. In this case
since proper cost comparisons were not made prior to issuing orders
authorizing payment for transportation of employee's dependents and
household goods, such orders were not competent and may be retroactively
modified to implement Grievance Examiner's recommendations to allow
payment of per diem. In each of these cases a cost comparison showed
that per diem would have been less costly, but apparently actual, as
opposed to projected, transportation costs were less than per diem.
Matter of: Ms. Lynn C. Willis et al. - Training - Per Diem, July 22,
1980:
We have been asked to decide whether the Department of the Army may
implement a Grievance Examiner's "Findings and Recommendations," calling
for the retroactive modification of travel orders to permit payment of
per diem during a long-term training assignment, instead of shipment of
household goods and transportation of dependents to the training
location. For the reasons set forth below the "Findings and
Recommendations" may be implemented.
On about September 1, 1976, nine Army employees began a 15-week
training course at the U.S. Army Management Engineering and Training
Activity (AMETA) at Rock Island Arsenal, Rock Island, Illinois. These
nine employees had just been accepted as Automatic Data Processing (ADP)
Career Field Interns within the U.S. Army Materiel Development and
Readiness Command (DARCOM). All nine employees were either career or
career-conditional Federal employees, holding appointments at the grade
GS-5 level. Under the terms of the agreement signed by each employee,
upon entrance into the ADP Career Field Intern program, after completing
the training each intern would be assigned to a permanent duty location
where he or she would work in the ADP field, and each intern would
become eligible for non-competitive promotions to grades GS-7 and GS-9
after stated intervals.
Of the nine interns involved here, two, Mr. Kenneth Nienkamp and Ms.
Deborah Kieffer, were to return to their original duty station following
the training assignment. Six of the interns, Mr. Fred Smith, Ms. Lynn
C. Willis, Ms. Mary Mitchell, Mr. Joseph Page, Mr. John Fetrow, and Ms.
Deborah Williams, were to be assigned to a new duty station at the
completion of the training assignment, and the location of that duty
station was known prior to the beginning of the training course.
One intern, Mr. Robert Hawks, was to be assigned to a new duty station,
but its location was not known at the time the training began.
From the record it appears that prior to the assignment of this
"class" of interns (identified in the record as AMETA Class #22), DARCOM
decided that the interns would only be authorized transportation of
their household goods and immediate family, not per diem. The
circumstances surrounding this decision will be discussed below. The
members of AMETA Class #22 were given as little as 1 day's notice of the
fact that they would not receive per diem while attending the training
program.
The nine individuals involved jointly took the steps necessary to
initiate a grievance. They pursued their grievance through all the
required stages resulting in the "Report of Findings and
Recommendations" filed by Mr. Joseph C. Klein, the assigned Grievance
Examiner. Mr. Klein recommended that Mr. Nienkamp, Ms. Kieffer, Ms.
Willis, Mr. Fetrow, and Mr. Hawks be granted per diem for the period of
training instead of transportation of household goods and dependents as
originally authorized. He recommended that the remaining four
individuals' entitlements remain as originally authorized.
This matter was submitted to us by the Assistant Secretary of the
Army, Manpower and Reserve Affairs, because of language contained in the
syllabus of our decision 34 Comp.Gen. 355(1955), to the effect that
claims for travel expenses which are based on retroactive modification
of travel orders should be submitted to this Office. The submission
raises the question of whether orders authorizing movement of an
employee's family and household goods to a training location may be
amended even after transportation to the training site has begun on the
basis that cost comparisons justifying such transportation in lieu of
paying per diem as required by law and regulation were not made.
The authority for paying expenses of training is found in 5 U.S.C.
4109(1976), which provides in pertinent part that the head of an agency
may authorize payment of the necessary costs of travel and per diem to
persons undergoing training. The cost of transportation of 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. * * * "
We have held that under this discretionary authority it is up to the
head of the agency to determine what part, if any, of the training
expenses will be paid.
Matter of Raymond F. Moss, B-180599, November 14, 1974. We have
recognized that agencies may in fact require employees to pay some of
the indirect costs of training. Matter of Thomas B. Cox, B-187213,
October 1, 1976.
Although the discretionary authority of agency heads allows them to
pay or reimburse less than the full cost of training, under section
4109(a)(2)(B), they may pay for the transportation of an employee's
family and household goods only if the estimated cost of that
transportation is less than the aggregate cost of per diem for the
period of training.
Before DARCOM decided to pay only for the transportation of the
employee's dependents and household goods for AMETA Class #22, they
performed cost comparisons on the basis of average costs not
specifically related to each individual case. The Grievance Examiner
requested advice from the Office of the Chief, Civilian Personnel, Field
Operations Agency, Headquarters, Department of the Army, as to the
proper method of doing the cost comparisons. In a second endorsement to
that letter, the Examiner was advised that "(c)ost comparisons must be
performed on an individual case by case basis and not on estimated
generalized averages." We agree with that advice and concur with the
Examiner's Finding that DARCOM did not comply with the mandate that
individualized cost comparisons be done before employees may be paid or
reimbursed for the transportation of their dependents and household
goods while on training assignments. The Examiner's recommendation that
five of the nine interns be granted per diem for the period of training
is predicated on his determination that in each of those five cases the
projected costs for transportation of dependents and household effects
exceed the projected costs of per diem. Apparently, although the
projected transportation costs exceeded projected per diem, actual
transportation costs incurred by the employees were not equal to per
diem.
While, as a general rule, travel orders may not be retroactively
modified to either increase or decrease the rights and/or benefits due
employees, this rule applies only to competent orders. Where orders are
clearly in conflict with a law or regulation they may be modified to
make them consistent with the applicable law or regulation. Matter of
Charles O. Doughtery, B-188106, March 3, 1977, and B-151457, May 23,
1963.
While we would not normally question a travel order authorizing
transportation of dependents and household goods in connection with a
training assignment, here, as a result of the immediate objections of
the employees involved, it has been demonstrated that the authorization
of such transportation was not properly included in certain travel
orders.
In the circumstances the orders are invalid to the extent that they
restrict the employees concerned to reimbursement of these
transportation costs instead of per diem which would otherwise have been
paid. Therefore, we will not object to payment on a per diem basis to
those employees whom the Grievance Examiner found were entitled to per
diem instead of the costs of transportation of dependents and household
goods. Our answer in that regard is the same even if the employee
concerned has been paid this cost of transportation of dependents and
household goods. Such employee may be paid the difference between the
transportation cost paid and the allowable per diem.
Regarding the temporary storage cost incurred by Ms. Willis, since it
was known in advance of her training assignment that she was to be
transferred to St. Louis, she may be reimbursed for those expenses
incident to that permanent change of station in accordance with our
decision B-161795, June 29, 1967.
B-197935, July 18, 1980, 59 Comp.Gen. 614
Bids - Responsiveness - Responsiveness v. Bidder Responsibility - Small
Business Concerns - Subcontracting Plan Requirement
Neither pertinent statute nor solicitation clause implementing
statute indicates that failure to submit small business subcontracting
plan will result in rejection of bid as nonresponsive. Article and
statute only require bidder selected for award to submit plan.
THEREFORE, MATTER RELATES TO RESPONSIBILITY, NOT RESPONSIVENESS, DESPITE
other solicitation statement that plan must be submitted with bid.
Matter of: Devcon Systems Corporation, July 18, 1980:
Devcon Systems Corporation (Devcon) protests any award to the Ansul
Company (Ansul), under invitation for bid Nos. LGM-9-7558B1 and 7558/1
issued by the Department of Transportation, Federal Aviation
Administration (DOT). The solicitation was for the design, delivery,
and installation of a fire protection system at 20 air route traffic
control centers. No award has been made.
We find that the protest has no merit.
Article XII, "Small Business and Small Disadvantaged Business
Subcontracting Plan (Advertised)," was incorporated into the
solicitation by amendment No. 3 which explicitly provided that the plan
required by Article XII "MUST be submitted with the bid." Seven bids
were received. Ansul was the low bidder and Devcon second low.
Although Ansul acknowledged amendment No. 3, the bid did not include a
small business subcontracting plan. The president of Devcon immediately
advised the agency representative that Ansul's bid was nonresponsive for
failure to include a small business subcontracting plan.
Devcon then protested Ansul's bid as being nonresponsive to the
requirements of amendment No. 3 to our Office. Subsequently, Ansul
submitted a small business subcontracting plan to the contracting
agency. DOT informs us that this plan was considered acceptable and
that Ansul has been determined to be a responsible bidder.
Devcon contends that amendment No. 3 identified bid opening as the
time limits prescribed by the contracting agency for bidders to submit a
small business subcontracting plan and that Ansul's failure to submit a
plan by bid opening rendered Ansul's bid ineligible for award under the
terms of Article XII. In this regard, Devcon refers to subsection (c)
of Article XII, which states:
(c) The bidder understands that:
(2) If it does not submit a subcontracting plan with the time limits
prescribed by the contracting agency, it will be ineligible to be
awarded the contract.
Since amendment No. 3 emphasized that bidders had to submit a small
business subcontracting plan with their bids, Devcon argues that Ansul's
failure to do so constituted a failure to comply with the requirements
of the solicitation, thereby making Ansul's bid nonresponsive.
Devcon also asserts that the legislative history of Public Law
95-507, OCTOBER 24, 1978, 92 STAT. 1757 (15 U.S. CODE 683), WHICH IN
part, required the submission of subcontracting plans, demonstrates that
Federal agencies were to determine from bids whether the bidder intended
to meet the requirement for having a small business subcontracting plan.
Devcon points out that Article XII implements the act. Devcon refers
to 1978 U.S. Code Cong. & Ad. News p. 3872, which states that the
purpose of establishing criteria at the outset of each formally
advertised procurement is to insure that each bidder knows what
subcontracting goals must be met if the bidder wishes to compete for the
contract.
DOT takes the position that the submission of a small business
subcontracting plan is a matter of responsibility, rather than
responsiveness. DOT avers that neither the act nor Article XII
specifies that submission of a small business subcontracting plan is a
matter of responsiveness because only a bidder selected for award need
submit a plan and such bidder can be determined only after opening.
Moreover, the implementation of the plan relates to responsibility. In
support, DOT refers to the following provisions of the act and Article
XII.
Section 211(5)(A)(iv) of the act (15 U.S.C. 637) provides that in
every advertised procurement exceeding a given value the solicitation
"shall contain a clause requiring any bidder who is selected to be
awarded a contract to submit to the Federal agency concerned a
subcontracting plan * * * ."
Paragraph (5)(B) of section 211 states in part:
If, within the time limit prescribed in regulations of the Federal
agency concerned, the bidder selected to be awarded the contract fails
to submit the subcontracting plan required by this paragraph, such
bidder shall become ineligible to be awarded the contract. * * *
Article XII of the solicitation provides:
(a) The offeror represents that it is aware:
(1) Of the subcontracting plan requirement in this provision and, if
selected for award, it will submit within the time specified by the
contracting officer, a subcontracting plan that will afford the maximum
practicable opportunity to participate in the performance of the
contract to small and small disadvantaged business concerns * * *
(b) If the contracting officer believes that the subcontracting plan
submitted pursuant to this Section does not reflect the best effort by
the bidder to award subcontracts to small and small disadvantaged firms
to the fullest extent consistent with the efficient performance of the
contract, he shall notify the agency's director of the Office of Small
and Disadvantaged Utilization who shall in turn notify the Small
Business Administration and request a review of the plan pursuant to
section 8(d)(10)(11) of the Small Business Act. Such request for an SBA
review shall not delay award of the contract. * * *
(c) The bidder understands that:
(3) Prior compliance of the bidder with other such subcontracting
plans under previous contracts will be considered by the contracting
officer in determining the responsibility of the offeror for award of
the contract.
DOT further notes that on October 29, 1979, the Office of Federal
Procurement Policy requested comments on proposed changes to supplement
the Federal Procurement Regulations (FPR) and the Defense Acquisition
Regulation already implementing section 211 of the act. See 44 Feb.Reg.
62093(1979). This proposed guidance was the basis for DOT's Article
XII. Final Office of Federal Procurement Policy regulatory guidance
superseding in its entirety previous regulatory guidance was issued by
policy letter 80-2 on April 29, 1980, with an effective date of June 1,
1980. See 45 Fed.Reg. 31028(1980). Policy letter 80-2 states that the
FPR shall be amended to conform with the regulatory policy contained in
that letter. DOT states that this final regulatory guidance has not
materially changed the wording of Article XII.
Ansul asserts that the mere fact that amendment No. 3 called for the
small business subcontracting plan to be submitted with the bid did not
convert a clear responsibility requirement into a matter of
responsiveness. Ansul cites our prior decisions wherein we held that
even in cases where bidders were warned that failure to conform to a
request for information may result in a rejection of their bids, the
information, if called for to determine the responsibility of the bidder
rather than the responsiveness of the bid, may be changed or provided
subsequent to bid opening without prejudice to the contracting agency's
consideration of the bid.
See 39 Comp.Gen. 655, 658(1960); id. 881, 883 (1960); 41 id. 106,
108(1961).
As to the legislative history of the act, Ansul claims that Devcon
has cited passages that refer to the contracting agency's setting of
subcontracting criteria at the time the solicitation is issued and that
the cited passages do not refer to the submission of the actual plans.
Rather, Ansul contends that the legislative history of the act is clear
that the contracting agency is without authority to require bidders to
submit small business subcontracting plans with their bids. In support
of this contention, Ansul points out that the Conference Report on the
legislation states that under the Senate bill, only the low bidder on a
formally advertised procurement is required to submit a subcontracting
plan. The Conference Report then notes that the conference adopted the
Senate provision for formally advertised procurements. House Conference
Report No. 95-1714, 95th Cong., 2nd sess. (1978). Thus, Ansul
emphasizes that the Congress rejected the House bill which required all
bidders on formally advertised procurements to submit summary plans for
small business subcontracting.
There is a definite distinction between matters related to bid
responsiveness and those concerned with bidder responsibility.
"Responsibility" as used in Federal procurement refers to bidder's
ability or capacity to perform all of the contract requirements within
the limitations prescribed in the solicitation. "Responsiveness"
concerns whether a bidder has unequivocally offered to provide the
product in total conformance with the material terms and specifications
of the solicitation. See J. Baranello and Sons, 58 Comp.Gen. 509(1979),
79-1 CPD 322. The determination of responsiveness must be made from the
bid documents as of the time of bid opening. Werner-Herbison-Padgett,
B-195956, January 23, 1980, 8-1 CPD 66. Requirements bearing on the
responsibility of a bidder may be met after bid opening. Starline,
Incorporated, 55 Comp.Gen. 1160(1976), 76-1 CPD 365.
We find nothing in the act or Article XII which indicates that
failure to comply with its terms will result in a rejection of a bid as
nonresponsive. Devcon has cited several of our decisions involving
affirmative action programs which explicitly hold that a bidder's
failure to commit itself prior to bid opening to the minimum affirmative
action requirements of the solicitation requires rejection of the bid.
See Armor Elevator Company, Inc., B-190193, December 12, 1977, 77-2 CPD
457; Regional Construction Company, Inc., B-189073, October 7, 1977,
77-2 CPD 277.
However, the decisions cited by Devcon involved solicitations issued
under regulatory provisions which specifically required that bidders
include particular individual goals as affirmative action commitments.
Here, neither the act nor Article XII required bidders to be locked into
a small business subcontracting plan at the time of bid submission.
Rather, only the bidder selected by the Federal procuring agency for
award of the particular contract was required to submit a small business
subcontracting plan. Even then, under Article XII, award could be made
despite the fact that the submitted plan is deficient. Although
amendment No. 3 explicitly stated that bidders had to submit small
business subcontracting plans with their bids, bidders were not required
to identify or to commit themselves to particular small businesses or
small disadvantaged businesses. Cf. Donald W. Close Co. and others, 58
Comp.Gen. 297(1979), 79-1 CPD 134. A matter relating to bidder
responsibility cannot be treated as one of responsiveness merely because
of a statement to that effect in the solicitation. See Thermal Control,
Inc., B-190906, March 30, 1978, 78-1 CPD 252. Also, Ansul acknowledged
the amendment and thereby was bound to comply with the requirements of
Article XII.
DOT asserts that our decision in 39 Comp.Gen. 247(1959) is on its
facts very close to those here. We agree. In that case, the
solicitation contained advice that bidders furnish with bids certain
information concerning subcontractors; however, the solicitation also
contained a provision which required the same information to be
submitted after award at the request of the contracting officer. We
stated:
Where designated information is by the terms of the invitation
required to be submitted with the bid, the inference arises that such
information is regarded by the Government as material so that the
failure to accompany the bid with such information requires that the bid
be rejected. To that extent, the language of the invitation may be
regarded as somewhat misleading. On the other hand, we believe that
invitations, like contracts, should be so interpreted as to give meaning
to each part. As indicated above, to give the provision in question the
meaning you urge would render paragraph GC-6 meaningless. For that
reason and since such interpretation would be inconsistent with cited
regulatory provisions, we do not feel justified in disturbing the award
as made. * * * 39 Comp.Gen. supra, 249-250.
Similarly, to give the language of amendment No. 3 requiring the
submission of a small business plan with the bid the interpretation
advanced by Devcon would, in our opinion, unreasonably render Article
XII meaningless as well as be inconsistent with the clear language of
the act. In our view, the solicitation reasonably conveyed the
"responsibility" nature of the plan. See Starline, Incorporated, supra.
The protest is denied.
B-194158, B-194900, July 18, 1980, 59 Comp.Gen. 612
Travel Expenses - Temporary Duty - Rental of Apartment - Security
Deposit Forfeiture - Deposit Reimbursement - Travel Cancelled
Employee of the Internal Revenue Service, who was scheduled for an
extended temporary duty assignment, made a nonrefundable $150 deposit to
lease an apartment. Subsequently the assignment was cancelled, and the
deposit was forfeited through no fault of the employee. Employees may
be reimbursed reasonable deposits made in anticipation of ordered travel
when travel is cancelled and deposits are forfeited. Overrules
B-194900, Sept. 14, 1979. This decision was later modified (amplified)
by B-198699, Oct. 6, 1980, and modified (extended) by 60 Comp.Gen.--
(B-196851, August 6, 1981).
Matter of: Chris C. Rainey and Sidney A. Morse, July 18, 1980:
By a letter of February 13, 1979, Elizabeth A. Allen, an authorized
certifying officer with the Internal Revenue Service, requested an
advance decision on the reclaim voucher of Chris C. Rainey for
reimbursement of a forfeited rent deposit in the amount of $150.
Mr. Rainey, an employee of the Internal Revenue Service whose duty
station is Lafayette, Louisiana, was selected to teach a tax auditor
course in New Orleans, Louisiana, from November 27 to December 22, 1978.
He was scheduled to report to New Orleans on November 6, 1978, to begin
preparation for the course. His reporting instructions, dated October
18, 1978, advised that no reservations had been made for out-of-town
instructors. On October 19, 1978, he made arrangements to rent an
apartment for the period November 5 through December 21, 1978, at $345
per month. On October 23, 1978, he deposited $150 to guarantee the
apartment. Subsequently the training assignment was cancelled, and he
forfeited the deposit.
Mr. Rainey was sent to New Orleans on an unrelated matter from
November 7 until November 9, 1978, and secured hotel lodging for the
nights of November 7 and 8. The agency disallowed Mr. Rainey's claim
for the $150 apartment deposit which he claimed on the voucher for that
travel. However, the Accounting Unit suggested that he should have
stayed in the apartment on November 7 and 8. Mr. Rainey pointed out in
filing his reclaim voucher that the cost of that course of action would
have been more than the cost of his staying in a hotel in that it would
HAVE REQUIRED PAYING A FULL MONTH'S RENT OF $345 ($150 DEPOSIT + $195)
for two nights lodging.
Reimbursement of the forfeited deposit is unrelated to Mr. Rainey's
subsequent trip to New Orleans and should be considered separately. He
has been reimbursed for that trip and no expenses from that trip are at
issue here.
Regarding the forfeited rent deposit the effect of the Federal Travel
Regulations (FPMR 101-7, May 1973) at paragraphs 1-1.3a and 1-7.3 is to
encourage the use of lodgings at reduced rates for extended assignment.
Mr. Rainey acted judiciously in securing lodging accommodations at a
reduced rate. A motel or hotel room rented on a daily basis would have
cost substantially more than the apartment he intended to occupy.
Generally an individual employee is responsible for reserving and
paying for his lodging out of his travel allowance. When he does not
enter a travel status because a planned assignment is cancelled, he
normally incurs no expenses. Mr. Rainey's situation is one of those
occasions where expenses are incurred without travel being performed.
It is well established that in similar situations when the Government
is a party to the agreement (a Government official acting in his
official capacity makes the hotel, motel, or other reservation), the
forfeited room charge or deposit may be paid by the Government. See 41
Comp.Gen. 780(1962); 51 id. 453(1972); B-192767, May 3, 1979.
However, those decisions as well as B-181266, December 5, 1974, contain
language to the effect that if an employee who is reimbursed on a per
diem basis made the reservations, he could not be reimbursed the
forfeited deposit. However, that conclusion is not consistent with the
conclusion reached in 48 Comp.Gen. 75(1968). In discussing a Department
of Defense proposal to issue regulations we held that regulations could
be issued permitting reimbursement of forfeited deposits on an actual
expense basis if the expense was incurred in anticipation of travel
under valid travel orders which were cancelled prior to the commencement
of travel. We are aware of no regulations which have been issued under
that decision. However, in Matter of Sidney A. Morse, B-194900,
September 14, 1979, a contrary rule was applied and some other decisions
have failed to recognize the authority contained therein and have
restated the prior rule in contexts where it was not controlling.
Upon further evaluation we have determined that the rule stated in 48
Comp.Gen. 75 regarding reimbursement of forfeited deposits was correct
and should be affirmed. Our conclusion in that regard is not based upon
a new provision of law but upon a reevaluation of existing law in light
of actual circumstances encountered by Government travelers. Thus, it
is our view that reimbursable travel costs may include forfeited
deposits.
While the issuance of regulations providing for payment of these costs
and prescribing conditions would be useful, regulations are not required
to permit reimbursement. Accordingly, we hold that when an employee or
member of the uniformed services in reasonable expectation of ordered
travel reserves a room for which he must pay a deposit and forfeits that
deposit because his official travel is cancelled, the Government will
reimburse reasonable costs incurred. Similarly, in a decision issued
today, B-195352, we held that if an employee or member rents
accommodations for a period of time incident to long-term temporary duty
but is required to leave the temporary duty site early because of a
change in orders and is unable to obtain a refund of an appropriate part
of the rend paid the Government will reimburse the employee for rent
covering the period when the quarters were not occupied due to a change
in orders, provided that the employees acted reasonably in renting the
room in the circumstances involved.
Accordingly, the reclaim voucher of Mr. Rainey in the amount of $150
may be certified for payment, if otherwise proper. The decision in
Morse, supra, is overruled and instructions will be issued to permit
payment of the forfeited deposit in that case.
B-195352, July 17, 1980, 59 Comp.Gen. 609
Travel Expenses - Actual Expenses - Reimbursement Basis - Lodging -
Prepaid Rent Forfeiture - Temporary Duty Period Shortened
Employees whose 40-day temporary duty assignments were unexpectedly
cut short after 2 days by orders to return to their permanent duty
station may be reimbursed for total amount of unrefundable prepaid rent
if agency determines employees acted reasonably in securing lodging for
the extended period. Unrefundable rent was incurred pursuant and prior
to cancellation of travel orders. Reimbursement therefor is allowable
as a travel expense to the same extent as it would have been allowed if
the orders had not been cancelled. Texas C. Ching, B-188924. June 15,
1977, and similar cases will no longer be followed. This decision is
modified (extended) by 60 Comp.Gen. 53 and by 60 Comp.Gen. -- (B-196851,
August 6, 1981).
Matter of: Raymond G. Snodgrass and John C. VanRonk - Lodging
Expenses - Curtailed Temporary Duty, July 17, 1980:
At issue is the entitlement of Raymond G. Snodgrass and John C.
VanRonk to reimbursement of an unrefunded portion of rent they forfeited
when their temporary duty assignments were cut short by orders to return
to their official duty station.
This action is in response to a request for an advance decision from
the Central Disbursing Office, Regional Financial Services Department,
Naval Supply Center, Oakland, California, forwarded here by indorsement
of July 5, 1979, from the Per Diem, Travel and Transportation Allowance
Committee (PDTATAC Control No. 79-21).
Mr. Snodgrass and Mr. VanRonk, civilian employees of the Department
of the Navy employed at the Mare Island Naval Shipyard, were directed to
perform temporary duty at the Long Beach Naval Shipyard from January 22,
1979, to March 2, 1979, or until their assignment was completed. They
were required to work at Mare Island until January 22. Therefore, they
traveled on January 24 and reported to their temporary duty site on
January 24 without any change in their orders. Both employees rented
apartments for the period of January 24, 1979, to February 28, 1979, and
paid the total rent and required security deposits in advance. However,
they were recalled to their official duty station and returned there on
January 26. Therefore, they spent only about 2 days at Long Beach.
The apartment management held Mr. Snodgrass and Mr. VanRonk liable for
the rent attributable to the period from the beginning of their leases
to the date the apartments were rented to other tenants, which amounted
to $307.06 for Mr. Snodgrass and $223.06 for Mr. VanRonk. Both
employees obtained a refund for the balance of the rental period and for
the security deposits.
The Disbursing Officer requested an advance decision due to an
apparent inconsistency in our decisions concerning reimbursement of
unrefundable prepaid lodging expenses forfeited when an employee's
temporary duty is unexpectedly shortened. In 51 Comp.Gen. 12(1971),
cited by Mr. Snodgrass and Mr. VanRonk as the basis for their request
for reimbursement, a Naval Officer, who was assigned to temporary duty
for 4 days, rented a hotel room since there were no facilities at the
temporary duty station. In connection with the rental of the room the
officer was required to make an advance payment of $9. He was at the
temporary duty station for only 6 1/2 hours when he was recalled to his
official duty station. He requested reimbursement of the advance charge
since he was unable to obtain a refund. Although payment of per diem
was precluded because the officer was absent from his official duty
station for less than 10 hours, we allowed reimbursement of the advance
charge as an administrative cost since his return to his permanent duty
station was occasioned by official need for his services.
By contrast, in Texas C. Ching, B-188924, June 15, 1977, although we
also held that a civilian employee whose temporary duty was unexpectedly
cut short could be reimbursed the unrefunded rent for a lodging he
leased on a monthly basis, we stated that reimbursement was to be made
by dividing the total rent paid by the total number of days of actual
occupancy, so long as the individual daily expenditures calculated on
that basis did not exceed the maximum authorized per diem for those
days.
In light of these cases, the Disbursing Officer questions whether Mr.
Snodgrass and Mr. VanRonk may be reimbursed the total amount of
unrefunded rent or whether they may be reimbursed only the prorated
amount for the period of time they were at their temporary duty station.
We hold that the employees may be reimbursed the total amount of the
unrefunded rent for periods after they vacated the apartments. Our
reasoning is as follows.
In 51 Comp.Gen. 12, supra, we allowed reimbursement of the advance
hotel charge even though the member was not entitled to per diem since
he reasonably and necessarily incurred the expense pursuant to orders
and was required to return to his permanent station for official duty.
In similar cases involving cancellation of permanent changes of station,
we have held that expenses, incurred pursuant to orders and before
notification of cancellation, were allowable provided they would have
been reimbursable if the transfers had been consummated. B-174051,
December 8, 1971; William E. Weir, B-189900, January 3, 1978, and cases
cited therein. However, despite the similarity of the facts in the
transfer cases to those in the temporary duty cases when lodgings are
rented for the period of anticipated temporary duty, we have in the
latter permitted only a proration of the lodging costs over the period
of actual temporary duty. Ching, supra.
Upon review, we believe the result in the two types of cases should
be the same since similar statutes and regulations are involved. In
each case the employee has incurred an expense pursuant to orders. In
each the employee cannot be reimbursed in the manner contemplated by his
orders since the orders were cancelled for the benefit of the
Government.
Furthermore, Federal Travel Regulations (FPMR 101-7), paragraph
1-1.3a (May 1973), requires an employee to exercise the same care in
incurring expenses while traveling on personal business. In addition,
FTR paragraph 1-7.3d require an agency to reduce per diem for extended
stays when travelers are able to secure lodgings and meals at lower
costs. We have held, in Willard R. Gillette, B-183341, May 13, 1975,
that the Government is entitled to the benefits of reduced lodgings
costs resulting from rental of quarters for an extended period.
Accordingly, we hold that when an employee has acted reasonably in
incurring allowable lodging expenses pursuant to temporary duty travel
orders before they have been cancelled for the benefit of the Government
and 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 cancelled. The proration method
used in Ching and similar cases will no longer be followed.
The determination of whether the employee has acted reasonably in
obtaining the accommodations is the responsibility of the agency.
Included in this determination should be a consideration of whether the
employee sought to obtain a refund of the prepaid rent or otherwise took
steps to minimize the costs once the temporary duty was cancelled.
In the instant case the employees were ordered to perform temporary
duty for about 40 days away from their permanent duty station. In view
of the relatively long period of temporary duty they rented apartments
on a monthly basis.
We believe that the record before us reflects that the two employees
acted reasonably in securing lodgings and minimizing the amount of the
unrefundable cost for the extended periods, and the vouchers may be paid
to reimburse the employees on an actual expense basis as applicable for
the days the apartments were occupied and for any unrefunded costs not
covered by those payments, if otherwise proper.
B-197368, July 15, 1980, 59 Comp.Gen. 605
Mileage - Carpool Arrangement - Effect - Temporary Duty Near
Headquarters - Travel Expense Reimbursement - Cost - Comparison Basis
Employee who frequently performs temporary duty near his headquarters
claims mileage for travel between residence and temporary duty station.
Agency regulations require deduction of normal commuting expenses from
such mileage claims, but regulations do not provide guidance on
computing expenses incurred in use of carpool. In absence of agency
regulations, employee's normal commuting expenses should be determined
on weekly basis and be divided by five to determine daily expense.
Subsistence - Per Diem - Fractional Days - Absence From Headquarters
Less Than 24 Hours - Travel Time/Distance Comparison - Agency Authority
Employee claims per diem for travel to nearby temporary duty station
where travel time exceeds 10 hours. Social Security Administration
(SSA) denied claims since SSA regulation precludes per diem except where
travel exceeds employee's normal travel time or distance of normal
commute to permanent duty station. SSA regulation falls within
discretion set forth in Federal Travel Regulations and Health,
Education, and Welfare travel regulations and is consistent with our
decisions. See Buker and Sandusky, B-185195, May 28, 1976.
Matter of: Howard M. Feuer - Claims for mileage and per diem while
on temporary duty near headquarters, July 15, 1980:
This decision is in response to a request from S. Ronald Luiso,
Director, Division of Accounting Fiscal and Budgeting Services, Region
II, Department of Health, Education, and Welfare (HEW), for a decision
on the claims of Mr. Howard M. Feuer, an Area Director of the Social
Security Administration (SSA), for mileage and per diem incident to his
performing temporary duty near his headquarters. The issues are whether
Mr. Feuer is entitled to per diem where such temporary duty does not
require overnight lodging away from his residence and how his mileage
claims may be properly computed.
The agency report states that in his function as an Area Director,
Mr. Feuer is frequently required to visit SSA offices near his permanent
duty station.
Under agency travel regulations, an employee who repeatedly performs
such travel may be reimbursed for allowable expenses which are in excess
of his normal commuting expenses. Mr. Feuer commutes to his permanent
duty station by carpool, and the certifying officer, in the absence of
regulations concerning the use of carpools, has determined Mr. Feuer's
normal commuting expenses by means of a "constructive cost concept".
Under this method, the agency took the round-trip mileage between Mr.
Feuer's residence and permanent duty station (76), divided it by two
since Mr. Feuer carpools with another individual (38), and multiplied
that figure by the mileage rate for use of privately owned vehicles (17
cents and later 18 and one-half cents per mile) to determine his normal
commuting expenses ($6.46 or $7.03 per day). This figure was then
deducted from Mr. Feuer's claims for mileage between his residence and
the various temporary duty stations.
Mr. Feuer disputes this computation by arguing that on Monday,
Wednesday, and Friday he has no commuting expenses to his permanent duty
station since the other carpool member drives and pays for all tools and
expenses. Therefore, Mr. Feuer claims full reimbursement for temporary
duty travel on Monday, Wednesday, or Friday without deduction for his
normal commuting expenses and no reimbursement for temporary duty travel
on Tuesday or Thursday, the day Mr. Feuer normally drives the carpool to
the permanent duty station.
The agency questions, in the absence of regulations involving the use
of carpools in determining normal commuting costs, what method of
computation should be used:
1. Constructive cost concept;
2. Mr. Feuer's method; or
3. Difference in mileage to temporary duty station and mileage to
permanent duty station.
It is well established that employees must place themselves at their
regular places of work and return to their residences at their own
expenses. 32 Comp.Gen. 235(1952). Our decisions have also held that
when an employee is assigned to a nearby temporary duty post he may be
reimbursed his full travel expenses or only that amount which exceeds
his normal commuting expenses to his permanent duty station. 36
Comp.Gen. 795(1957); 32 id. 235, supra. The determination to limit
reimbursement for travel to a temporary duty station is within the
discretion of the employing agency with due consideration given to the
interests of both the Government and the employee, and it is not within
the jurisdiction of our Office to question the decision of the agency to
so limit travel reimbursement. See Brian E. Charnick, B-184175, June 8,
1979, and August 5, 1975; and B-164189, June 25, 1968.
Under the provisions of the HEW Travel Manual, para. 5-50-30B,
approving officials may limit reimbursement for repeated travel from
home to a temporary duty station to those expenses in excess of normal
commuting costs. The same policy is set forth in the SSA Administrative
Directives System Guide (N.Y. ORC. F: 240-11, July 15, 1978). In the
examples set forth in the SSA regulation, an employee who has the same
commuting expense each day will have his travel reimbursement determined
on a daily basis, but there is no guidance set forth in these
regulations to determine the normal commuting expenses of an employee
using a carpool.
In William A. Gates, B-188862, November 23, 1977, a decision cited by
the agency as limiting Mr. Feuer's reimbursement, we considered the
claim of an employee for mileage for reporting to a nearby temporary
duty station. We held in Gates that under Department of Transportation
(DOT) regulations normal commuting costs could be deducted from the
employee's mileage claims only on those days that he reported to his
headquarters office at some time during the day and not on days when he
reported to the temporary duty station only. In this case Mr. Gates
computed his claim on the basis of his total mileage for the 4-week
period minus the miles he ordinarily would have driven as a member of a
carpool during the same period (normally drove once per week, 35 miles
round trip).
The applicable DOT regulation in the Gates case used mileage for
comparison purposes. Implied in our decision is that the weekly figures
used by Mr. Gates would be reduced to a daily figure in order to apply
it to only those days in which he visited the headquarters office. In
view of our decision in Gates and the examples cited in the SSA
regulations, which compute normal commuting expenses on a daily basis,
we believe Mr. Feuer's normal commuting costs should be computed on a
daily basis.
The methods proposed by the agency, constructive cost (total mileage
divided by two) or mileage comparison (distance to temporary site less
distance to headquarters) do not adequately reflect Mr. Feuer's true
commuting costs in his carpool arrangement. On the other hand, Mr.
Feuer's proposal (full claims Monday, Wednesday, or Friday, no claims
Tuesday or Thursday) would not necessarily reflect an offset of normal
commuting costs depending upon which day of the week he was required to
perform temporary duty. In the absence of agency regulations, we
conclude that Mr. Feuer's daily normal commuting costs should be
computed on the basis of his total weekly costs divided by 5 (weekly
mileage as driver in carpool, times applicable mileage rate, plus tolls,
divided by 5). The resulting figure would be deducted from Mr. Feuer's
mileage claims for temporary duty travel, regardless of which day of the
week Mr. Feuer performed temporary duty.
Mr. Feuer's claim for temporary duty travel should be recomputed
consistent with the above discussion and not on the basis of the three
proposals set forth by the certifying officer.
At this time we do not intend to establish "precise guidelines" on
the use of carpools as suggested by the agency in this case. Other
agencies may have adopted different policies (in Gates DOT compared
distances traveled rather than commuting costs) and, as noted earlier,
the payment of travel expenses to nearby temporary duty stations is a
matter for agency discretion. As pointed out by SSA, the use of
carpools has recently increased, and where agencies decide to deduct
normal commuting costs or mileage from claims for temporary duty travel,
those agencies should determine through internal regulation how carpools
should be treated.
Mr. Feuer also claims per diem in connection with travel on these
temporary assignment where the period of travel is more than 10 hours
but does not require overnight lodging. Under HEW regulations para.
6-10-20, the approving official may reduce per diem rates to provide the
employee with reimbursement for reasonable expenses and not allow
windfall profits. The SSA regulations further limits reimbursement to
situations where the time in travel status exceeds 10 hours and: (1)
the time spent in travel exceeds the employee's normal commute; or (2)
the round trip distance traveled between the residence and temporary
duty station exceeds the employee's normal round trip commute to his
permanent duty station.
The agency denied Mr. Feuer's claim for per diem since his time spent
in travel did not exceed his normal commuting time (11 hours) or the
distance traveled to the temporary duty station did not exceed the
distance to his permanent duty station. Mr. Feuer questions the
authority of SSA to set a policy different from that of HEW and place a
restriction on an employee's time in travel status of other than 10
hours.
Under the provisions of the Federal Travel Regulations (FTR), para.
1-7.6d, an employee may not be allowed per diem when the travel period
is 10 hours or less during the same calendar day except for certain
situations where the travel begins before 6 a.m. or ends after 8 p.m.
Our Office has held that this provision does not require payment of per
diem for travel of 24 hours or less but merely precludes payment for
travel of 10 hours or less except for certain situations. See Buker and
Sandusky, B-185195, May 28, 1976, and decisions cited therein.
As we held in Buker and Sandusky, supra, it is within the discretion
of the employing agency to authorize or approve per diem of deny it
where the travel involves only short distances outside the duty station
area. In the present case SSA chose to so limit reimbursement or per
diem to certain situations, and since such action falls within the
discretion set forth in the FTR's and HEW's regulations and is
consistent with our decisions, we find no legal objection to this
policy. Accordingly, we conclude that Mr. Feuer's claims for per diem
were properly denied.
B-194770, July 15, 1980, 59 Comp.Gen. 602
Appropriations - Treasury Department - Bureau of Alcohol, Tobacco, and
Firearms - Obligation of Funds for Strip Stamp Services
Regardless of whether Bureau of Alcohol, Tobacco and Firearms (ATF)
places order for strip stamps with Bureau of Engraving pursuant to
either 31 U.S.C. 686 or 26 U.S.C. 6801, it may obligate annual
appropriations at the end of the fiscal year only to the extent stamps
are printed, in process or a contract has been entered into by the
Bureau with a third party to provide the stamps to ATF. 31 U.S.C.
686-1, 34 Comp.Gen. 708(1955). However, we would not object to ATF's
automatically obligating its next fiscal year's appropriation to cover
the remainder of the order based on information provided by the Bureau
on the extent to which it has filled the particular order as of the
close of the fiscal year.
Matter of: Bureau of Alcohol, Tobacco, and Firearms, Obligating
Funds for Strip Stamps, July 15, 1980:
This is in response to a request for an advance decision from Glen A.
McDonald, Certifying Officer, Bureau of Alcohol, Tobacco and Firearms
(ATF), Department of the Treasury, asking whether ATF may obligate
annual appropriations at the end of the fiscal year to the extent that
orders placed with the Bureau of Engraving (Bureau) for strip stamps
prior to the end of the fiscal year are either printed or in process.
Further, he asks whether the unfilled portion of the order (that is, not
printed or in process) can automatically be charged to the next fiscal
year appropriation without an additional order being placed. For the
reasons stated below, our answer is yes to both of these questions.
Strip stamps which come in various colors and sizes evidence the
determination of the Federal excise tax on liquors or indicate
compliance with Federal laws on containers of distilled spirits. The
stamps are attached to the container in such a way that they are broken
(thus avoiding them) upon opening the containers.
The strip stamps are provided free of charge to private parties who
order them through ATF field offices.
These orders are then forwarded to ATF headquarters in Washington for
processing. Requisitions are then placed with the Bureau of Engraving
sufficient to fill the outstanding orders. The Bureau prints the stamps
and ships them to the private individuals initially ordering them.
Within three weeks of the close of the month, the Bureau bills ATF its
costs and is reimbursed by ATF from appropriated funds made available
for this purpose. ATF obligates funds on the last day of the month to
cover all orders placed during the month.
In the absence of any other authority, section 601 of the Economy Act
of 1932, as amended (31 U.S.C. 686), authorizes inter- or intra-agency
orders for work, services, supplies, materials or equipment (work) and
reimbursement to the performing agency of its actual cost in providing
the requisitioned work. However, inter- or intra-agency orders under 31
U.S.C. 686 which are chargeable to the requesting agency's
appropriations available for one fiscal year only or for some other
limited period of time are required by 31 U.S.C. 686-1 to be deobligated
at the expiration of the appropriation's period of availability for
obligation, to the extent that the performing agency has not performed
the work. (This does not apply in those few instances when the
performing agency is not required to do the work in-house. If the
performing agency is authorized to contract for the work on behalf of
the requesting agency, and has actually entered into such a contract,
the funds remain obligated until the work has been completed in order to
pay the contractor.) 55 Comp.Gen. 1497(1976); 39 id. 317(1959); 31 id.
83(1951).
The rule is the same even when inter- or intra-agency orders are
voluntarily placed pursuant to some authority other than 31 U.S.C. 686.
They constitute obligations only to the extent the performing agency has
completed the work or contracts have been awarded to fill the order. 34
Comp.Gen. 705, 708(1955). However, when inter- or intra-agency orders
are required by law or statutory regulation to be placed with a
particular agency, then the order constitutes an obligation when placed,
and there is no requirement to deobligate at the end of the period of
availability for unfilled portions of the order. 35 Comp.Gen. 3,
5(1955).
Mr. McDonald states in its submission that ATF places orders for
strip stamps pursuant to 31 U.S.C. 686. However, he also states that
ATF is required by law to place orders for strip stamps with the Bureau.
We were informally advised by an official of ATF that the provision
thought to require orders be placed with the Bureau is 26 U.S.C. 6801,
which provides:
(b) Preparation and distribution of regulations, forms, stamps and
dies.-- The Secretary shall prepare and distribute all the instructions,
regulations, directions, forms, blanks, and stamps; and shall provide
proper and sufficient adhesive stamps and other stamps or dies for
expressing and denoting the several stamp taxes; except that stamps
required by or prescribed pursuant to the provisions of section 5205 or
section 5235 may be prepared and distributed by persons authorized by
the Secretary, under such controls for the protection of the revenue as
shall be deemed necessary.
Prior to 1976, the language of this section was the same except that
it omitted the "except" clause. The purpose in adding this clause is
set out in the report of the Senate Finance Committee accompanying the
1976 amendment which states:
Present law
* * * Present law (sec. 6801) restricts the preparation and
distribution of the strip stamps to the Treasury Department. The stamps
are now made by the Bureau of Engraving and Printing.
Reasons for change
Recent developments in the technology of bottle and container
closures indicates that it may become simpler for distillers and less
costly to the Federal Government in the future to use devices other than
paper stamps as evidence of payment of the excise tax on distilled
spirits. For example, the evidence of this tax payment might be printed
on a metallic strip used to form the closure on a bottle; this strip
also would be broken and thereby voided when the bottle is opened. The
printed costs to be borne by the parties who are authorized to print
such stamps.
In order to permit the Treasury Department to take advantage of
modern technology, and to reduce its manufacturing and administrative
costs, the committee has approved this bill, which authorizes the the
use of "other devices" as well as tax stamps and which, with safeguards,
authorizes the Treasury to have such devices prepared and distributed by
private parties. S. Rep. No. 94-1319, 2-3 (1976).
Accordingly, since 1976 the Treasury Department has been specifically
authorized to contract for the production and distribution of strip
stamps by private non-Government concerns. We have been informally
advised that Treasury is currently studying the feasibility of having
strip stamps produced and distributed by private concerns, just as other
devices authorized by 26 U.S.C. 6801 are produced and distributed. See
27 C.F.R. 19.663 and 19.664 appearing in 44 Fed.Reg. 71678 (December 11,
1979).
While ATF still procures its strip stamps from the Bureau of
Engraving, it is not legally required to do so. Thus any order placed
pursuant to 26 U.S.C. 6801 may be considered as voluntary for the
purpose of recording obligations. Consequently, whether the orders are
placed pursuant to 31 U.S.C. 686 or 26 U.S.C. 6801, the effect on
obligations would be the same. The annual appropriation used to pay for
strip stamps would have to be deobligated at the end of the fiscal year
to the extent that any order remains unfilled (that is, stamps not
printed or in process) on the last day of the fiscal year.
We have no objection to ATF's automatically obligating its
appropriation to cover the remainder of the order, based on information
provided by the Bureau on the extent to which it has filled the
particular order as of the close of the fiscal year. Since the need for
the strip stamps continues, we see no point in requiring that ATF submit
an additional order for the unfinished portion of work begun in one
fiscal year and completed in another.
B-195651, July 14, 1980, 59 Comp.Gen. 600
Officers and Employees - Transfers - Relocation Expenses - Miscellaneous
Expenses - "Ham" Radio Equipment - Disconnection and Reinstallation
Transferred employee claims miscellaneous expenses for taking down
and reinstalling "ham" radio antenna and hooking up icemaker and
dishwasher. Employee is entitled to be reimbursed these expenses under
para. 2-3.10(1) of the Federal Travel Regulations which specifies
reimbursement of fees for disconnecting and connecting appliances and
equipment. Employee may not be reimbursed for replacing certain
incidental parts needed to reinstall antenna. Modified in part by 60
Comp.Gen. (B-191662, March 2, 1981).
Matter of: Larry A. Clendinen, July 14, 1980:
The question is whether a transferred employee may be reimbursed the
actual costs of disassembling and reinstalling a "ham" operator's
shortwave radio antenna and hooking up a dishwater and icemaker incident
to a permanent change of duty station. As will be explained, the
employee may be reimbursed his actual costs except for certain
incidental replacement parts used in reinstalling the antenna.
The question was submitted for an advance decision by Marie A. Bell,
Authorized Certifying Officer, Department of the Treasury, Bureau of
Alcohol, Tobacco and Firearms, Washington, D.C., and concerns the claim
of Larry A. Clendinen, an employee of the Bureau of Alcohol, Tobacco and
Firearms.
Mr. Clendinen was transferred from San Diego, California, to Dayton,
Ohio, and claimed miscellaneous expenses in connection with the
transfer. The miscellaneous expenses were $135 to take down a ham radio
antenna, $420.28 to reinstall the ham radio antenna, and $47.50 to
install a dishwasher and icemaker.
The agency reviewed the claimed miscellaneous expenses and determined
that the expenses for the antenna were not reimbursable. The agency
based its denial on the Federal Travel Regulations (FTR), paras. 2-3.1b
and 2-3.1c(13) (FPMR 101-7, May 1973). Specifically, the agency ruled
that para. 2-3.1b precluded payment because the expense was not one
"common to living quarters" nor "inherent in relocation of place of
residence" while para. 2-3.1c(13) precluded payment because the cost was
incurred "in connection with structural alteration to accommodate
equipment."
Rather than consider the other claimed expenses, the agency gave the
claimant a $200 allowance for miscellaneous expenses under FTR, para.
2-3.3a(2). This paragraph specifies that employees with immediate
family who are authorized miscellaneous expenses shall be paid $200 or 2
weeks' base pay whichever is less.
The claimant has filed a reclaim voucher seeking the disallowed
$402.78 under FTR, para. 2-3.3b which allows an agency to pay in excess
of the $200 limit in para. 2-3.3a(2) if the employee satisfactorily
explains the costs and provides paid bills or similar evidence.
Basically, the explanation of the employee as to why he should be
reimbursed his costs is that the use of the radio equipment of the type
he has is today so widespread as to be common to households in the
United States and therefore costs associated with disconnecting and
connecting the equipment are expressly allowed under FTR, para.
2-3.1b(1). Also, he states that there was no structural alteration and
therefore the agency's reliance on FTR, para. 2-3.1c(13) was misplaced.
The expenses of taking down and reinstalling the ham radio antenna
are reimbursable. This conclusion is consistent with our decision in
Henry L. Dupray, B-191724, March 29, 1979, wherein we allowed the
expenses of dismantling and installing a transferred employee's swimming
pool under the authority of para. 2-3.1b of the FTR. Mr. Clendinen,
however, may not be reimbursed for certain incidental replacement parts
of the antenna which he purchased because they were not salvageable when
the antenna was taken down (e.g., chimney straps and wire connectors),
FTR, paras. 2-3.3c(5) and (13); see Henry L. Dupray, B-191724, March
29, 1979. Therefore, the claimant is entitled to the $135 for taking
down the antenna and $305.18 ($420.28 less $115.10 for the replacement
parts) for reinstalling it.
In reaching the above conclusion, we are cognizant of the fact that
the agency determined the expenses of the antenna unreimbursable because
they were not common to living quarters nor inherent in relocation of
residence and they involved structural changes. We believe, however,
that the agency standard for assessing commonness to living quarters was
too strict. As discussed, we have held swimming pools to constitute
items of equipment for which miscellaneous expenses may be reimbursed,
and we consider ham radio equipment to be of a similar nature in terms
of its incidence within ordinary households. Furthermore, we have
previously allowed reimbursement of the expenses of hooking up an
antenna (B-174542, February 25, 1972) and modifying a ham radio license
for transferred employees (B-163107, May 18, 1973). Those decisions
tacitly recognized that antenna expenses and ham radio expenses are not
uncommon to living quarters and are inherent in relocation of a
residence in which the resident is a ham operator.
Finally, while the antenna may have been attached to the residences,
taking it down and reinstalling it does not appear to have involved
structural changes to the residences themselves.
Regarding the $47.50 expense for labor involved in hooking up the
dishwasher and icemaker, this is reimbursable. Irwin Kaplan, B-190815,
March 27, 1978 (dishwasher); compare Walter V. Smith, B-186435,
February 23, 1979 (icemaker).
Accordingly, Mr. Clendinen is entitled to receive miscellaneous
expenses of $487.68 less the $200 he has already received.
B-198134, July 11, 1980, 59 Comp.Gen. 597
Disbursing Officers - Liability - Electronic Funds Transfer Program -
Erroneous Payments to Bank, etc. Accounts - Recovery - Limitation on
Bank's, etc. Liability
Treasury Department regulations 31 CFR Part 210 governing recurring
payments made through the electronic funds transfer program directly to
recipients' bank accounts, generally limits liability of financial
organization to Government for payments by disbursing officer after
entitlement ceased because of death or incapacity of recipient to amount
of payments within 45 days after death or incapacity. Government and
disbursing officer are adequately protected inasmuch as agency can
recover remainder of erroneous payment from person who withdrew funds
from the account. Where recovery is unsuccessful, disbursing officer
can seek relief of liability from this Office under 31 U.S.C. 82a-2.
Matter of: Military Disbursing Office Liability for Recurring
Payments After Death or Incapacity of Recipient, July 11, 1980:
The Principal Deputy Assistant Secretary of Defense (Comptroller) as
requested a decision concerning disbursing officer liability under 31
U.S.C. 82b for checks indorsed for a deceased payee under Treasury
Department regulations, "Federal Recurring Payments Through Financial
Organizations by Means Other than by Check," 31 CFR Part 210.
Disbursing officers are liable for the full amount of improper payments
made under the recurring payments system. However, this Office may
grant relief if we find that the officers were not personally negligent
and could not, with reasonable diligence, have determined that the
payments were improper, and the department has diligently pursued
collection action.
The problem may be illustrated with a hypothetical example. A
retired member of the military service is receiving retirement pay in
the form of monthly checks. He wants his monthly retirement pay
deposited directly into a joint checking account that he maintains with
his wife. Hence he completes a Standard Authorization Form, has the
bank execute its part of the form, and forwards it to the Finance
Center. Under this authorization, his future monthly retirement pay is
deposited directly into his joint account. He subsequently dies,
terminating his entitlement to pay, but the bank and the Finance Center
are not notified of the death. Consequently his regular monthly pay
continues to be deposited in the joint account although such payments
are now improper. The wife continues to expend the funds in the account
for two years until the Finance Center learns of the member's death and
terminates the payments.
The bank's liability for such payments is limited by the provisions
of 31 C.F.R. 210.9, which reads as follows:
(a) When, because of the death or legal incapacity of a recipient or
the death of a beneficiary, one or more credit payments should have been
returned to the Government, a financial organization shall be
accountable to the Government for the total amount of any such credit
payments: Provided, however, That if:
(1) Such amount, or any part thereof is not available in the
recipient's account; and
(2) The financial organization did not have, at the time of the
deposit and withdrawal, knowledge of the recipient's death or legal
incapacity, or the beneficiary's death, and
(3) The financial organization has made every practicable
administrative effort to recover the amount which is not available in
the recipient's account;
The financial organization shall be accountable only for:
(i) The amount available in the recipient's account and the amount
recovered by it, plus
(ii) The amount not recovered by it, or an amount equal to the credit
payments received by it within 45 days after the death or legal
incapacity of the recipient or the death of the beneficiary, whichever
is the lesser amount.
(b) A financial organization shall be deemed to have knowledge of the
death or legal incapacity of a recipient or the death of a beneficiary
when such information is brought to the attention of an individual in
the financial organization who handles credit payments, or when such
information would have been brought to such individual's attention if
the financial organization had exercised due diligence. The financial
organization will be considered to have exercised due diligence only if
it maintains procedures for immediately communicating such information
to the appropriate individuals, and complies with such procedures.
Generally, under this regulation (leaving aside amounts which it
recovers or which remain in the account), the bank will be liable for
any payments received within 45 days after the event terminating the
payee's entitlement (or the balance due to the Government, whichever is
less) where the bank had no knowledge of the event and has followed
appropriate procedures in handling the matter. (The bank may be liable
for the full amount if it has not satisfied the loss with funds
available in the recipient's account and, failing that, has not made
"every practicable administrative effort" to recover the improper
payments.)
The Department of Treasury has agreed, in effect, by contract, that a
participating financial organization will be liable for recurring
payments made after the death or legal incapacity of a recipient only
under the conditions cited above. 31 C.F.R. 210.7(a). It is doubtful
that these organizations would elect to participate in the fund transfer
program, inasmuch as participation is voluntary, without at least some
limitation on their liability.
The limitation of the financial organizations liability does not
affect the liability of a disbursing officer for the entire amount of
the improper payment. The limitation means that the agency may seek
recovery from the financial organization only for the portion of the
amount improperly paid for which it is liable under the provisions of
the above-quoted regulation. The remainder of the amount improperly
paid must be recovered from whomever ultimately received the improper
payment, by withdrawing funds from the account after improper payments
were made. If the financial organization cannot recover the full amount
and the agency has exhausted collection procedures and has been unable
to eliminate the deficiency, the disbursing officer may be relieved of
liability for the deficiency pursuant to 31 U.S.C. 82a-2. The
disbursing officer must show, and this Office must agree, that the
improper payments were not the result of bad faith or lack of due care
on his part (and a diligent effort must have been made by the agency to
recoup the erroneous payments). Specifically, the disbursing officer
would have to show, in the case of payments after a retired member's
death, that he did not know and in the exercise of reasonable care could
not have known that the member was dead.
Upon such showings, this Office may grant relief. See for example our
report: New Methods Needed for Checking Payments Made by Computers,
FGMSD 76-82, November 7, 1977.
In sum, the Treasury regulations are a reasonable exercise of
discretion. Although they limit the financial organization's liability,
they do not limit the Government's ability to collect from whomever
ultimately received the improper payments. Moreover, the regulations do
not affect the disbursing officer's liability or his right to relief.
B-194948, July 9, 1980, 59 Comp.Gen. 595
Pay - After Expiration of Enlistment - Confinement, etc., Periods -
Release - Prior to Setting Aside of Conviction - Rate Payable for Unused
Leave Lump Payment
A service member's enlistment expired after he was confined as a
result of a court-martial conviction. Thereafter, he was placed in a
parole status in lieu of remaining confinement time, which status was
terminated on date confinement would have ended. He was then placed in
an excess leave status pending appellate review of his conviction. Upon
review the conviction and sentence were set aside and all rights
restored including leave accrual. He is entitled to leave accrual
through the last day of parole, not to exceed 60 days. While pay and
allowances accrued only through last day of parole (59 Comp.Gen. 12)
payment of lump-sum leave is to be based on rates of basic pay in effect
on the date of the member's discharges, even though he was not returned
to a duty status. 59 Comp.Gen. 12, modified (amplified).
Matter of: Mr. David G. Saulter, July 9, 1980:
This action is in response to a letter dated December 7, 1979, from
the Assistant Secretary of Defense (Comptroller) seeking resolution of
an additional question in connection with our decision B-194948, October
4, 1979 (59 Comp.Gen. 12), rendered in the case of Mr. David G. Saulter,
a former member of the United States Marine Corps. The question
involves the proper rate of basic pay to be used for the purpose of
computing a lump-sum payment to Mr. Saulter and has been assigned
Committee Action No. 548 by the Department of Defense Military Pay and
Allowance Committee.
The facts in Mr. Sulter's case are as follows. The member was tried
by General court-martial, and on August 22, 1975, was sentenced to
forfeit all unpaid pay and allowances, be reduced in grade to E-1, be
confined at hard labor for 2 years and receive a bad conduct discharge
upon completion of the 2-year confinement period. While serving in
confinement the member's enlistment expired. Additionally, he applied
for and was granted parole from confinement on December 10, 1976,
pending completion of appellate review of his case. The parole period
was terminated on August 20, 1977, the date his period of confinement
would have ended had he remained in prison. Since appellate review of
his case was not yet completed, he was immediately placed in an
indefinite excess leave status.
In September 1978, his conviction and sentence were set aside and all
rights, privileges and property of which he had been deprived were
restored to him. In December 1978, he was honorably discharged from the
service without having been returned to a duty status.
The basic questions asked in the original submission involved the
extent of the period for which pay and allowances would accrue. In the
October 4, 1979 decision, we concluded that Mr. Saulter was entitled to
pay and allowances until August 20, 1977, and leave accrued through the
same date, not to exceed 60 days.
The Committee Action indicates that because of the wording of that
conclusion, there is some uncertainty as to the rate of basic pay which
should be used to compute the lump-sum leave payment due in the case.
Apparently, our response is viewed as suggesting that the rate of basic
pay to be used in computing that payment would be the rate in effect on
August 20, 1977. The Committee Action expresses doubt as to the
propriety of such a conclusion and takes the position that under the
provisions of 37 U.S.C. 501(b)(1), since no payment would be due until
the member's date of discharge, that payment should be computed on the
rates in effect on that date. For the reasons stated below we concur in
the view of the Committee. The decision of October 7, 1979, should not
be read as requiring computation of the lump-sum leave payment or rates
other than those in effect on the date of discharge.
Section 501 of title 37, United States Code, provides in part in
subsection (b)(1):
(b)(1) A member of the * * * Marine Corps * * * who has accrued leave
to his credit at the time of his discharge, is entitled on the date of
discharge.
Similar language was contained in section 4 of Armed Forces Leave Act
of 1946, 60 Stat. 964, as amended by the act of August 4, 1947, 61 Stat.
748, the predecessor of 37 U.S.C. 501.
In 35 Comp.Gen. 666(1956), we considered a case involving an enlisted
Navy member on active duty who was convicted by special court-martial
confined for 4 months and whose obligated active service period expired
before he was confined. Upon release from confinement, he was
immediately placed in an inactive duty status in the United States Naval
Reserve. At that time he still had unused leave to his credit which was
not forfeited under his court-martial sentence. After he was released
to an inactive duty status, he had no rate of pay upon which payment for
leave could be computed. After analyzing the then current provisions of
law, we stated:
* * * The term "discharge," as used in such provisions includes
release from active duty, and unquestionably there is a rate of pay
applicable to the grade held by an enlisted reservist even though the
reservist may be in a nonpay status.
Thus, even though this reservist was not retained (on active duty) after
the expiration of his ordered tour of active duty for the performance of
duty * * * he is entitled to be compensated for his unused leave * * * .
In 44 Comp.Gen. 403(1965), we considered a situation involving a
member on active duty who was placed in a furlough status. That
furlough status carried with it entitlement to half pay. His discharge
was effected while he was in a furlough status without having been
returned to active duty. On the question as to the rate to be used for
his lump-sum leave payment, we ruled that the payment was to be based on
the full pay in effect on the date of his discharge. See also 37
Comp.Gen. 228(1957).
It is evident from these situations that payment for any unused leave
still to the credit of a member on the date of separation or discharge
is to be computed on the basis of the rate of pay applicable on that
date. Compare Bell v. United States, 366 U.S. 393(1961).
In summary of Mr. Saulter's case, we have previously said that an
individual whose conviction by court-martial is set aside or overturned
on appeal is entitled to pay, even after the expiration of his
enlistment, until the day he is discharged. Those cases, however,
involved individuals who were in confinement or serving actively until
the date of discharge. Here Mr. Saulter had not only passed the date on
which his enlistment expired, but he had also served his period of
confinement (including parole) and had been placed on excess leave. The
only reason he was not separated at the end of his parole time was
because he could not be given the adjudged Bad Conduct Discharge until
his appeal to the Military Court of Appeals had been decided. During
this period (from the last day of parole to discharge) he was without
military obligation and in an agreed-upon non-pay status. In the
circumstances, as concluded in the prior decision, he was not entitled
to pay and allowances to the date of discharge but only to the date he
was released from parole.
However, under the decisions cited herein, his lump-sum leave payment
became due at the time of his discharge based upon the rates of pay for
his grade then in effect. The decision of October 7, 1979, 59 Comp.Gen.
12, is amplified accordingly.
B-193261, July 9, 1980, 59 Comp.Gen. 588
Contracts - Negotiation - Two-Step Procurement - First Step - Concept of
Responsiveness Not Applicable - Proposals Within Competitive Range
Where protester in step one of two-step procurement does not respond
timely to amendment having little impact on overall technical
acceptability of proposal, but later states its compliance with
amendment requirement when negotiations are reopened by subsequent
amendment, agency's determination to exclude protester's step-two bid
from consideration is unreasonable. Agency relied inappropriately on
concept of responsiveness in determination which is inapposite to nature
of step one-- the qualification of as many proposals as possible under
negotiation. B-190051, Jan. 5, 1978, modified in part.
Matter of: Angstrom, Inc., July 9, 1980:
Angstrom, Inc., (Angstrom) protests the Department of the Army's
(Army) decision that Angstrom's proposal under step one of a two-step
procurement is nonresponsive because Angstrom failed to timely respond
to an amendment effecting changes in the technical specifications.
We sustain Angstrom's protest.
On October 11, 1977, request for technical proposals (RFTP) No.
DAAA22-78-B-0400, step one, was issued by the Army for a direct reading
vacuum spectrometer to be used to analyze various materials used in the
fabrication, processing and production of weapons to determine certain
elements present and their concentrations. Several proposals were
evaluated and the Army issued a step-two invitation for bids (IFB).
Bids were received from Baird Corporation (Baird), Angstrom, Jarrell-Ash
Division of Fisher Scientific Company (Jarrell-ash), and one other party
not involved in the present protest.
Baird filed a protest with our Office alleging that, with respect to
Jarrell-Ash's technical proposal, the Army waived certain requirements
of the RFTP. Baird also contended that Angstrom's technical proposal
was nonresponsive since it proposed a spectrometer with 50
photomultiplier tubes and exit slits where, according to Baird's
calculations, the expansion requirement in the RFTP would call for 59
phototubes.
We concluded that, because the Army intended to satisfy the
Government's minimum needs by waiving certain requirements in the RFTP
regarding an auxiliary readout device, step-one negotiations should be
reopened. We also recommended that any uncertainties regarding the
number of phototubes and slits to perform the basic analytical program
as well as the number required to meet the Army's future expansion needs
should be resolved by the Army during the reopened step-one
negotiations. Baird Corporation, B-193261, June 19, 1979, 79-1 CPD 435.
Step one was reopened via amendment 0001 to the RFTP. The initial
solicitation required in paragraph 3.2.2 that "the instrument shall have
a capacity of not less than forty (40) exit slits and forty (40)
photomultiplier tubes." Our decision had concluded that Angstrom's
standard spectrometer complied with this requirement. Amendment 0001
deleted references to projected future expansion and required a
"capacity of not less than fifty-five (55) exit slits and fifty-five
(55) photomultiplier tubes."
Angstrom timely responded before the August 31, 1979, amended
deadline with its notification of compliance. Baird acknowledged
receipt of amendment 0001, but requested a clarification as to whether
any of the 55 tubes not necessary to perform the basic analytical
function needed to be supplied with the instrument.
Jarrell-Ash acknowledged receipt of amendment 0001, but requested a
clarification regarding the auxiliary readout device. The Army did not
issue clarifications to these inquiries before the response date for the
amendment. Rather, it is issued amendment 0002 on August 31 which
responded to the questions raised by Baird and Jarrell-Ash. Regarding
the number of tube/slit pairs, amendment 0002 required that the 15
tube/slit pairs not required to perform the basic analytical function be
provided with the system, as follows:
The instrument shall have a capacity of not less than fifty-five (55)
exit slits and fifty-five (55) photomultiplier tubes. At least forty
(40) of the slits and phototubes shall be used to perform the basic
analytical program specified in 3.2.1 and will 0e appropriately mounted
and aligned as specified. Those slits and phototubes not required to
perform the basic program will be provided with the system along with
any required mounting fixtures, electrical connectors and wiring
required for installation. * * *
The deadline for receipt of revised proposals in response to this
amendment was September 14, 1979. Amendment 0002 stated that late
proposals would be processed in accordance with the initial RFTP's late
technical proposal clause.
Baird and Jarrell-Ash acknowledged amendment 0002 in a timely manner.
Angstrom's compliance response dated September 7 was not mailed until
September 10. The Army did not receive the response until September 17.
Angstrom was notified by the Army that its late response would not be
considered.
Technical evaluators determined that Angstrom's equipment met the
technical requirements of the RFTP without considering the late response
to amendment 0002. Amendment 0003 was issued and effected changes in
the RFTP unrelated to the number of tube/slit pairs. All three offerors
acknowledged amendment 0003 in a timely manner. Angstrom's response
included a copy of its late response to amendment 0002. The three
parties were invited to submit bids under step two and bid as follows:
Angstrom $144,209, Baird $197,368 and Jarrell-Ash $205,275. Angstrom's
price was lower than its bid in the prior step-two IFB.
Baird filed a protest with the Army claiming Angstrom's proposal was
nonresponsive to paragraph 3.2.2 because its standard vacuum
spectrometer had a maximum capacity of only 50 phototubes and exit
slits.
Spurred by Baird's protest the contracting officer had the technical
evaluators again review Angstrom's proposal for technical acceptability.
The reevaluation concluded that Angstrom's original proposal included
4o tube/slit pairs and complied with amendment 0001 in proposing an
instrument with a 55-tube/slit pair capacity. But because the late
response to amendment 0002 could not be considered, it could not be
determined whether Angstrom would comply with the requirement of that
amendment. The contracting officer concluded that amendment 0002
effected a significant change in the specifications requiring a timely
statement of compliance by Angstrom for technical acceptability and;
lacking such a statement "which was necessary for a determination of
responsiveness," Angstrom's proposal should not have been considered for
award under step two.
Although Angstrom contends that its late response to amendment 0002
should have been considered in determining whether Angstrom was eligible
to proceed to step two of the procurement for various reasons, it is
clear that the late proposal clause precluded any such consideration. A
late response to an amendment, or to one of a series of amendments, will
not be accepted as timely even though the negotiations have not been
concluded. See Techniarts, B-189246, August 31, 1977, 77-2 CPD 167.
Angstrom contends that the statement of compliance with amendment
0002 sent with its response to amendment 0003 should have been
considered in the step-one evaluations since the Army had the response
before step-one negotiations ended on the closing date for amendment
0003 and before a determination of technical acceptability had been
made.
Angstrom relies on the spirit and purpose of the two-step formal
advertising procedures as stated in Baird Corporation, B-193261, supra:
We have recognized that the two-step formal advertising procedure
combines the benefits of competitive advertising with the flexibility of
negotiation. See 50 Comp.Gen. 346(1970). The first-step procedure is
similar to a negotiated procurement in that technical proposals are
evaluated, discussions may be held and revised proposals may be
submitted. * * *
The Army and Baird contend that Angstrom's late response to amendment
0002, included with the response to amendment 0003, cannot be considered
under any circumstances; 52 Comp.Gen. 726(1973) is cited for the
proposition that late proposals under step one should be treated in
strict accordance with the terms of the solicitation. It is further
contended that, since amendment 0002 effected a substantial change in
the RFTP requirements, Angstrom's failure to timely submit a statement
of compliance rendered the entire proposal "nonresponsive" and, thus,
Angstrom's proposal was erroneously included for step-two participation.
Our Office has held that the first step of two-step formal
advertising, in furtherance of the goal of maximized competition,
contemplates the qualification of as many technical proposals as
possible under negotiation procedures whereby, through discussion and
changes, a technical proposal is found to be acceptable. 50 Comp.Gen.
346(1970). In this light, the reliance of 52 Comp.Gen. 726 is
misplaced. The primary focus of that decision involved the late receipt
of initial technical proposals. The negotiation process cannot cure
this type of defect since an agency has no viable proposal on which to
negotiate. Once a proposal has been timely submitted, the failure to
timely acknowledge an amendment is another matter.
The real issue here is whether Angstrom's failure to acknowledge the
amendment was a proper basis to exclude that firm from the competition
and the ongoing negotiations during step one. As we indicated in
Techniarts, supra, the late response to an amendment did not necessarily
exclude an offeror from the competition. We held that, since the agency
contemplated further negotiations with the other offerors, the agency
should conduct further negotiations with the late responding offeror if,
without considering the late response, the proposal was within the
competitive range.
The Army and Baird rely on our decisions in Wapora, Inc., B-190045,
February 1, 1978, 78-1 CPD 94, and La Barge, Inc., B-190051, January 5,
1978, 78-1 CPD 7, for the proposition that Angstrom's failure to timely
respond to a substantive amendment to the RFTP, in accordance with the
late proposal clause in the solicitation, is cause to reject the entire
proposal.
In Wapora, the protester failed to respond to an amendment changing
the terms and conditions of the contract. But unlike the present
protest, this change was effected through a final amendment issued after
the submission of best and final offers. No further negotiations were
to be conducted after the closing date for this final amendment. In the
present protest, further negotiations were in fact conducted via
amendment 0003, thereby giving the offerors a chance to modify their
proposals further.
In La Barge, a late response to an amendment adding a line item, a
digital data converter, rendered the entire proposal late and
unacceptable because no timely proposal had ever been submitted for the
totality of the line items for which a single contract would be awarded.
Because the amendment added a line item, the untimely response was
regarded as an untimely submission of an initial proposal. While, as a
general principle this holding is sound, the decision is modified to the
extent it is inconsistent with what follows.
The qualifying nature of the two-step procedure requires that
technical proposals comply with the basic or essential requirements of
the specifications but does not require compliance with all details of
the specifications. 53 Comp.Gen. 47(1973); Baird Corporation, supra.
Admittedly, the failure to acknowledge amendment 0002 resulted in a
proposal deviating from the amended specifications, but the requirement
of amendment 0002 that the 15 tube/slit pairs be furnished does not go
to the very heart of the technical proposal. See Paragon Mechanical
Company; Arnold M. Diamond, B-188816, November 23, 1977, 77-2 CPD 396.
The requirement does not impose on Angstrom's equipment anything new in
the way of design or technical requirements, nor does it basically
change the proposal as submitted. Rather, it merely clarified one part
of a long list of detailed specifications for the item solicited, an
initial proposal and amendment acknowledgment for which had been timely
submitted by Angstrom.
As Angstrom characterizes the net result of the amendment 0002 change,
the Army "could receive a large bag of spare parts which may or may not
be used at some point in the future."
Because the negotiations were reopened by the issuance of amendment
0003, to comport with the mandate for broadening competition during step
one, Angstrom should have been allowed specifically to amend its initial
proposal in order to cure the lack of amendment 0002 acknowledgment. We
note that the Army notified Angstrom of its deficiency and that Angstrom
did submit a statement that it would comply with the requirements of
amendment 0002, but this was ignored by the Army. Instead, the Army
determined that Angstrom's proposal was unacceptable under Defense
Acquisition Regulation (DAR) section 2-503.1(e) (1976 ed.).
In our opinion, the Army failed to recognize the negotiation nature
of step one and has relied on inappropriate concepts of responsiveness
in this case, which are inconsistent with the regulations as reflected
in the RFTP, as amended. DAR Sec. 2-503.1(e) provides, in part:
(e) Technical evaluation of the proposals shall be based upon the
criteria contained in the request for technical proposals * * * . The
proposals, as submitted, shall be categorized as:
(i) acceptable;
(ii) reasonably susceptible of being made accepta0le by additional
information clarifying or supplementing, but not basically changing the
proposal as submitted; or
(iii) in all other cases, unacceptable.
Any proposal which modifies, or fails to conform to the essential
requirements or specifications of, the request for technical proposals
shall be considered nonresponsive and categorized as unacceptable. If
the contracting officer determines that there are sufficient proposals
in category (i) above to assure adequate price competition under step
two and that further time, effort and delay to make additional proposals
acceptable and thereby increase competition would not be in the best
interest of the Government, he may proceed directly with step two.
Otherwise, the contracting officer shall request bidders under proposals
in category (ii) above to submit additional information, setting forth
to the extent practicable the nature of the deficiencies in the proposal
as submitted or the nature of the additional information required. The
contracting officer may also arrange discussions for this purpose. * *
*
The regulation clearly indicates that discussion making proposals
acceptable is not precluded by the existence of other already acceptable
proposals. Also, in order to proceed to step two without further
negotiation, the contracting officer must determine that it would not be
worthwhile to attempt to make a deficient proposal acceptable. In
addition, the RFTP and regulations (DAR Sec. 2-503.1(a)(vii)) provide
that step two bids will be solicited on technical proposals determined
to be acceptable, "either initially or as a result of discussion."
This Office has held that an agency should make reasonable efforts to
bring step one proposals to acceptable status. Mainline Carpet
Specialists, Inc., B-192534, May 8, 1979, 79-1 CPD 315; Costal Mobile
and Modular Corporation, B-183664, July 15, 1975, 75-2 CPD 39.
We recognize that an agency has great discretion in classifying a
PROPOSAL AS TECHNICAL UNACCEPTABLE, AND THIS OFFICE WILL NOT OVERTURN
such a decision unless clearly unreasonable. METIS Corporation, 54
Comp.Gen. 612(1975), 75-1 CPD 44. However, we are constrained to find
that the Army's classification of Angstrom's proposal as unacceptable
because of nonresponsiveness, and thus not for step-two consideration,
were clearly unreasonable.
Keeping in mind that step one is similar to negotiation, it is
fundamental that the rigid rules of bid responsiveness do not apply. TM
Systems, Inc., 56 Comp.Gen. 300(1977), 77-1 CPD 61. "Responsiveness" is
ordinarily considered to be a subject for negotiation, DPF Inc.,
B-180292, June 5, 1974, 74-1 CPD 303, rather than a conclusion
precluding negotiation. In this vein, we see no difference between a
timely nonresponsive initial proposal and a proposal nonresponsive due
to failure to acknowledge an amendment. We view the regulation
reference to responsiveness to clearly refer to technically unacceptable
proposals. As mentioned above the real issue is whether a proposal
should be included in the competitive range or competition.
Self-Powered Lighting, Ltd., 59 Comp.Gen. 298(1980), 80-1 CPD 195.
In cases involving regular negotiated procurements and the similar
first step of a two-step procurement, we have held that major proposal
defects or failure to comply with a material requirement which could
easily be cured through discussion or which do not call for extensive
revision do not preclude further participation in the competition. See
Self-Powered Lighting, Ltd., supra; Guardian Electric Manufacturing
Company, 58 Comp.Gen. 119(1978), 78-2 CPD 376. Recently, we questioned
the wisdom of not conducting discussions with an offeror which submitted
a competitive initial proposal but failed to acknowledge a material
amendment. Galaxy Aircraft Company, Inc., B-194356, May 28, 1980, 80-1
CPD 364.
The Army's sole basis for excluding Angstrom from step two was the
protester's failure to state that the 15 tube/slit pairs for future
expansion would be provided with the system. We hold that this defect
had little impact on the overall technical acceptability of the proposal
and could easily have been cured through negotiation. The Army, relying
on the inapposite concept of responsiveness, has made no affirmative
showing that attempts to cure the deficiency would not have been in the
best interests of the Government. See DAR Sec. 2-503.1. Rather, we
hold that the Army's failure to conduct negotiations affirmatively in
this case was not in the Governments best interest. The effort and
delay to have made Angstrom's proposal acceptable would have been
negligible at most. Indeed, the Army implicitly recognizes this. All
it required in response to amendment 0002 was the simple phrase "Para.
3.2.2.-- We comply." Additionally, the equipment was not urgently needed
since no award has yet been made in this several-year-old procurement,
and qualifying Angstrom's proposal would have increased the number of
competitors.
Since Angstrom on its own initiative accomplished what the agency
should have by eventually acknowledging amendment 0002 and did submit a
bid before its exclusion from step two, we recommend that the Army award
the contract to Angstrom.
By letter of today, we are advising the Secretary of the Army of our
recommendation.
The protest is sustained.
B-196569, July 8, 1980, 59 Comp.Gen. 586
Pay - Retired - Survivor Benefit Plan - Spouse - Social Security Offset
Service members, upon whose death Survivor Benefit Plan (SBP)
annuities became payable to surviving spouses, in some cases are fully
insured for Social Security coverage based on lifetime employment, but
do not achieve that status based solely on military service. For the
purpose of the reduction in the SBP annuity required by 10 U.S.C.
1451(a), it is unnecessary that the member acquired a fully insured
Social Security status based solely on military service. The setoff is
to be based on that portion of the total Social Security payment
attributable to the deceased member's military service. See 58
Comp.Gen. 795(1979). Pay - Retired - Survivor Benefit Plan - Spouse -
Social Security Offset - Free Wage Credit Inclusion
Service members upon whose death SBP annuities became payable to
surviving spouses, receive free wage credits under 42 U.S.C. 429 for
military service after 1956 for the purpose of computing total Social
Security payments. Therefore, for the purpose of computing the setoff
required by 10 U.S.C. 1451(a), since generally those credits tend to
increase Social Security payments, they must be included in the
computation.
Matter of: Survivor Benefit Plan - Social Security Offset, July 8,
1980:
This action is in response to a request for advance decision from the
Department of Defense Joint RSFPP/SBP Board (Item No. 79-1) on questions
relating to the Social Security offset requirement of the Survivor
Benefit Plan (SBP).
The first question is:
Is a Social Security offset required when the SBP annuitant is a
widow(er) aged 62 if there is no entitlement to a Social Security
benefit based solely on the retiree's military earnings, but such
entitlement exists based on lifetime earnings?
The material accompanying the submission states that the meaning of
the provisions of law governing the setoff from annuities because of
Social Security payments (10 U.S.C. 1451(a)), seems reasonably clear.
However, it is stated that when the legislative history of the provision
is considered, the word "entitled" as used therein suggests a different
connotation. It is theorized that the word "entitled" could imply that
in order for the Social Security setoff to be operable, the person upon
whose death the annuity became payable had to be fully insured for
Social Security coverage purposes based solely on military service. In
the absence of such full coverage, 10 U.S.C. 1451(a) could be construed
to provide that a setoff would not be required.
For the reasons stated below, we disagree with that construction of
the law, and therefore, the first question is answered yes.
Section 1451 of title 10, United States Code, provides in part:
(a) * * * When the widow or widower reaches age 62 * * * the monthly
annuity shall be reduced by an amount equal to the amount * * * to which
the widow or widower would be entitled under subchapter II of chapter 7
of title 42 based solely upon (military) service by the person concerned
* * * and calculated assuming that the person concerned lived to age 65.
* * *
Decision B-192117, September 24, 1979, 58 Comp.Gen. 795, involved a
claim for an increase in an SBP annuity in a situation similar to that
suggested by the question. After analyzing the legislative history of
10 U.S.C. 1451(a) we ruled that for the purpose of effecting the
required setoff, it was not necessary that the deceased member acquire a
fully insured Social Security status based solely on his military
service.
Since the qualification for and the computation of Social Security
payments are based on an individual's lifetime coverage, where a
deceased member had nonmilitary Social Security coverage, for 10 U.S.C.
1451(a) purposes the setoff is to be based on that portion of the total
Social Security payment receivable by the surviving spouse which would
be attributable to the deceased member's military service. For the
method of computing the amount of setoff, see 53 Comp.Gen. 733(1974).
The second question is:
Should there be any changes made in the setoff procedures set forth
in Department of Defense Directive 1332.27? If so, should they be
prospective or retroactive?
The material with the submission points out that the Department of
Defense Directive 1332.27 requires that the free wage credits authorized
by 42 U.S.C. 429 be included in the computation of the setoff. It is
stated that those credits are added to the setoff computation without
regard to any civilian wages earned during the period and tend to
artificially inflate the amount of the setoff. As a result, it is
indicated that there would be a basis for holding that the free wage
credits should not be included in the computation.
For the reasons stated below, the second question is answered no.
Under 42 U.S.C. 429 (Supp. I, 1977), individuals who earn Social
Security credits as a result of military service after 1956 received
additional quarterly monetary credits for Social Security payment
computation purposes, without cost to them. Such additional wage
credits would generally provide an additional benefit to an individual's
actual Social Security payment entitlement, tending to increase that
total payment. It is our view that for the purpose of computing the
setoff under 10 U.S.C. 1451(a), the free wage credits generated by a
deceased member's military service are an integral part of the Social
Security benefit and are to be included in the computation.
B-194401, July 3, 1980, 59 Comp.Gen. 583
Compensation - Wage Board Employees - Prevailing Rate Employees -
Overtime - Rate - Double Basic Hourly Rate
In 1967, Corps of Engineers, North Pacific Division, and Columbia
Power Trades Council, representing wage board employees at
hydro-electric power plants negotiated a double overtime provision in
their agreement. Double overtime was stopped by agency following our
decision in 57 Comp.Gen. 259, February 3, 1978. In light of section 704
of Civil Service Reform Act which overruled our decision, and although
wages are not negotiated, provision for double overtime is preserved by
section 9(b) of Public Law 92-392. This decision is modified (extended)
by 60 Comp.Gen. 58.
Matter of: Corps of Engineers, North Pacific Division - Overtime for
Power Plant Employees, July 3, 1980:
Is double overtime pay authorized for wage board employees of the
U.S. Army Corps of Engineers who are covered by the special Pacific
Northwest Regional Power Rate Schedule? This question is presented by
Mr. R. Loschialpo, Chief, Office of Personnel, Office of the Chief of
Engineers, Department of the Army.
For the reasons stated below, we conclude that double overtime is
authorized for the wage board employees of the Army Corps of Engineers
who are covered by the special Pacific Northwest Regional Power Rate
Schedule.
The letter requesting a decision from the Corps of Engineers provides
us with the following background information. On January 30, 1956, the
Army-Air Force Wage Board (now the Department of Defense Wage Fixing
Authority) authorized all wage board employees at hydro-electric power
plants operated by the Corps of Engineers, North Pacific Division, to be
paid in accordance with the provisions of the special Pacific Northwest
Regional Power Rate Schedule. The schedule was based on the wage rates
and pay practices of the electric power industry in the area. Among
other things, the schedule provided for an overtime rate of double time
(twice the base hourly rate) for hours worked in excess of 40 hours per
week and on holidays. When the first contract with the Columbia Power
Trades Council, the union representing the employees, was approved on
February 10, 1967, it included a provision stating that overtime would
be paid at twice the applicable rate of compensation.
On August 19, 1972, Public Law 92-392, 86 Stat. 564, amended
subchapter IV of chapter 53 of title 5, United States Code, to establish
a statutory system for fixing and adjusting the rates of pay for
prevailing rate employees. Section 9(b) of that law, 5 U.S.C. 5343
note, provides in substance that the amendments shall not be construed
to affect the provisions of contracts in effect on the date of enactment
pertaining to wages and other employment benefits for prevailing rate
employees and resulting from negotiations between agencies and employee
organizations. Section 9(b) also preserves the right to negotiate for
the renewal, extension or modification of such contract provisions.
On February 3, 1978, in Department of the Interior, 57 Comp.Gen. 259,
we held that payment of overtime to employees covered by section 9(b) in
excess of one and a half times their basic rates was precluded by 5
U.S.C. 5544, notwithstanding the fact that their negotiated contracts
contained provisions for double overtime. In view of this decision, the
DOD Wage Fixing Authority on April 13, 1978, directed that the payment
of double overtime previously authorized for Corps of Engineers
employees be terminated.
However, because this decision overturned practices of long standing
and to cushion its impact, we issued another decision on June 23, 1978,
57 Comp.Gen. 575, which stayed the implementation of the holding in 57
Comp.Gen. 259 until the end of the second session of the 96th Congress
to give interested parties an opportunity to obtain statutory authority
to negotiate double overtime.
On October 13, 1978, statutory authority to negotiate double overtime
for section 9(b) employees was enacted in section 704(b) of the Civil
Service Reform Act of 1978, Public Law 95-454, 92 Stat. 1218, which
provided that overtime could continue to be negotiated for such
employees without regard to 5 U.S.C. 5544.
In enacting section 704, the Congress made it clear that it was
overruling our Department of the Interior decision and that it was
providing "specific statutory authorization for the negotiation of
wages, terms and conditions of employment and other employment benefits
traditionally negotiated by these employees in accordance with
prevailing practices in the private sector of the economy." Conference
Report (to accompany S.2640), House Report No. 95-1717, October 5, 1978,
p. 159.
In light of the enactment of section 704, we reconsidered our
February 3, 1978 decision regarding overtime pay in Department of the
Interior, B-189782, January 5, 1979, 58 Comp.Gen. 198. Since section
704(b)(B) specifically provides that the pay and pay practices of
employees covered by section 9(b) of Public Law No. 92-392 shall be
negotiated without regard to subchapter V of chapter 55, title 5, United
States Code (which contains section 5544 pertaining to overtime pay for
prevailing rate employees), we overruled our decision of February 3,
1978, insofar as it had invalidated overtime contract provisions of
Interior's prevailing rate employees.
The DOD Wage Fixing Authority, however, has not rescinded its order
prohibiting double overtime and, as a consequence, these Corps of
Engineers employees are the only employees working in the Pacific
Northwest Region at hydro-electric power plants who are not being paid
double overtime.
The Corps of Engineers believes that section 704 of the Civil Service
Reform Act was intended to include employees covered by the Pacific
Northwest Power Rate Schedule in order to keep uniformity in the region
and to continue a practice of 22 years which accords with practices of
the electric power industry. Accordingly, the Corps of Engineers urges
us to rule that double overtime is authorized for these employees.
Section 9(b) provided essentially for the preservation of the wage
and benefit provisions contained in negotiated employment contracts
covering Government prevailing rate employees. Prevailing rate
employees of both the Department of the Interior and the Corps of
Engineers were then covered by contracts calling for the payment of
double overtime.
The Department of the Interior's double overtime provisions were
negotiated; the Corps of Engineers' contracts provided for double
overtime on the basis of administrative wage determinations using
prevailing practice as a guide.
In our earlier decisions we concluded that despite the double
overtime contract provisions and the provisions of section 9(b),
Department of the Interior employees and Corps employees by extension
were not entitled to be paid double overtime. Those decisions were
premised upon the lack of authority to have negotiated double overtime
contract provisions in the first instance. The Congress, in enacting
section 704 of the Civil Service Reform Act of 1978, overrode that
interpretation.
In light of the Congressional action making clear that prevailing
rate employee wage and benefit contract provisions were to be preserved
without regard to any question as to the authority underlying those
provisions, it is our view that there is no proper basis for
distinguishing Corps of Engineers' prevailing rate employees from those
of the Department of the Interior so far as the issue of double overtime
is concerned.
Therefore, we conclude that the wage board employees of the Corps of
Engineers who are covered by the special Pacific Northwest Regional
Power Rate Schedule are entitled to be paid double overtime.
A further question arises as to whether retroactive payments may be
made to the Corps of Engineers employees affected by this decision since
they have been paid time and a half for overtime since the
implementation of the Department of Defense Wage Fixing Authority
directive. In decision 57 Comp.Gen. 259(1978), modified by 57 id.
575(1978), we held that implementation by the Department of the Interior
of our decision prohibiting double overtime should be delayed until
Congress had time to act on the matter. There is no reason why the stay
of implementation should apply to Department of the Interior employees
and not to Department of Defense employees. As noted above, Congress by
enacting section 704 has permitted the continued payment of double
overtime under section 9(b). Therefore, we conclude that corrective
payments shall be made to Corps of Engineers employees whose overtime
pay was reduced pursuant to the DOD Wage Fixing Authority's directive of
April 13, 1978.
B-198171, July 2, 1980, 59 Comp.Gen. 581
Military Personnel - Dependents - Education - Procedure to Obtain
Employee of Department of Army stationed in Korea who entered into a
private arrangement with a private school for education of his daughter
may not be reimbursed for the costs he incurred prior to Department of
Defense's (DOD) contractual arrangement with the school. Authority for
DOD providing for the schooling of dependents of employees stationed
overseas, provisions in annual DOD appropriation acts, expressly
provides that appropriations therefor are for expenditure in accordance
with 10 U.S.C. 7204. That provision contemplates that needed
arrangements for schooling are to be made by the Department concerned
and that a parent has no authority to obligate the Government by a
private agreement.
Matter of: Otis F. Savage - Claim for Education Expenses, July 2,
1980:
This action is in response to an appeal by Mr. Otis F. Savage, an
employee of the Department of the Army, of the disallowance by the
Claims Division of his claim for reimbursement for the expenses he
incurred for the education of his daughter during the period February
14, 1977, to November 29, 1977. These expenses were incurred while his
daughter resided with him at his overseas post of duty in the Republic
of Korea (Korea). Upon review, we sustain the disallowance of his
claim.
The record shows that on February 10, 1977, Mr. Savage's wife and
daughter arrived at his overseas duty station in Korea pursuant to
travel orders issued on January 10, 1977.
On February 14, 1977, Mr. Savage enrolled his daughter in the second
grade at the Korea Christian Academy (Academy) which was apparently the
only English speaking school in the area where he was stationed. He
incurred total expenses in the amount of $1,312.50 for the fees and
tuitions for his daughter's education at the Academy for the period
February 14, 1977, to June 15, 1977, and from August 29, 1977, through
November 29, 1977.
On September 29, 1977, Mr. Savage wrote to the Supervising Principal,
Korea, Department of Defense (DOD) Schools, to request financial
assistance in providing his daughter's education. He advised the
supervising principal that the nearest American dependent school was
approximately 100 miles from his post of duty and that the only English
speaking school available was the Academy. On October 26, 1977, the
Executive Assistant, DOD Dependent Schools-Pacific, District I Office,
advised the Supervising Principal, Korea, that Mr. Savage's request was
approved. Accordingly, the Department of Defense contracted with the
Academy to pay his dependent daughter's tuition in return for the
educational services to be provided. The contract covered the period
from November 30, 1977, through the end of the school year,
approximately June 15, 1978.
Mr. Savage claims reimbursement in the amount of $1,312.50 for the
registration fee and tuition charges he paid for his daughter's
schooling at the Academy for the period prior to the effective date of
the DOD's contractual agreement with the Academy.
By Certificate of Settlement dated November 6, 1979, the Claims
Division disallowed the claim on the basis that there is no authority
for a parent to obligate the Government to pay tuition through a
personal agreement or arrangement with a private school.
We note that 5 U.S.C. 5924 provides, in pertinent part, that
cost-of-living allowances may be granted to an employee in a foreign
area including an education allowance not to exceed the cost of
obtaining such kindergarten, elementary and secondary educational
services as are ordinarily provided without charge by public schools in
the United States. However, Department of Defense Instruction No.
1418.1 para. III F provides that such education allowance which is
governed by Section 270 of the Department of State Standardized
Regulations (Government Civilians, Foreign Areas) will not be paid
within the Department of Defense. See also para. III F of Appendix B to
Chapter 592 of the Department of the Army's Civilian Personnel
Regulations. Accordingly, as an employee of DOD, Mr. Savage would not
be entitled to the payment of an education allowance under 5 U.S.C.
5924.
The authority for providing the schooling for dependents of military
and civilian personnel of the Department of Defense is contained in the
annual appropriation acts for the Department of Defense. Section 707 of
the Department of Defense Appropriation Act, 1977, Public Law 94-419, 90
Stat. 1279, 1291(1976), provided in pertinent part as follows:
Appropriations for the Department of Defense for the current fiscal
year shall be available * * * for primary and secondary schooling for
minor dependents of military and civilian personnel of the Department of
Defense residing on military or naval installations or stationed in
foreign countries, as authorized for the Navy by section 7204 of title
10, United States Code, in an amount not exceeding $248,000,000, when
the Secretary of the Department concerned finds that schools, if any,
available in the locality, are unable to provide adequately for the
education of such dependents.
For the 1978 fiscal year, a similar provision for the schooling of
dependents of DOD personnel was set forth at section 807 of the DOD
Appropriation Act, 1978, Public Law 95-111, 91 Stat. 886, 899-900(1977).
Section 13 of the act of August 2, 1946, Public Law 604, 60 Stat. 854
which, as amended, is now set forth at 10 U.S.C. 7204 and provides in
pertinent part that the Secretary of the Navy may contribute, out of
funds specifically appropriated for the purpose, to support of schools
in any locality where a naval activity is located if he finds the
schools available in the locality are inadequate for the welfare of
dependents of civilian officers and employees of the Navy.
Department of Defense Instruction (DODI) No. 1342.4, November 14,
1957, provides in pertinent part that tuition may be paid for the
education of dependents of Department of Defense personnel at schools
which charge tuition or fees in foreign areas when daily commuting
distance to a Service-operated school is unreasonable or traffic hazards
or other conditions would involve undue hardships for the children
concerned if they were required to attend a Service-operated school.
As set forth above, the appropriations available for the education of
dependents of DOD personnel stationed in foreign countries are for
expenditure under the procedures required by 10 U.S.C. 7204. Our Office
has held that section 13 of the Act of August 2, 1946, which, as
amended, is now set forth at 10 U.S.C. 7204, contemplates that the
arrangements for any additional school facilities needed for dependents
of Navy personnel stationed overseas are to be made by the Department
after an appropriate administrative determination has been made of the
need thereof. 33 Comp.Gen. 399(1954). Under appropriation act language
similar arrangements are to be made for personnel of the other Military
Departments. That decision holds that a parent has no authority by
private agreement with a school to obligate the Government to pay his
child's tuition notwithstanding subsequent administrative approval of
the private transaction.
In this regard Army Regulation (AR) 37-107, section 9-27b, provides,
in part, as follows:
No payments will be made to service members in localities without
adequate schools who * * * personally incur tuition charges for their
dependents in private schools.
Thus, there is no authority for the Government to reimburse Mr.
Savage for the cost of the schooling his daughter received as the result
of his personal arrangement with the Academy in view of the law's
requirement that such arrangements be made by the appropriate agency
officials.
Accordingly, the disallowance of his claim by our Claims Division is
sustained.
B-197037, July 1, 1980, 59 Comp.Gen. 578
Compensation - Overtime - Fractional Hours - Rounding Off Authority -
Irregular, Unscheduled Overtime
General Accounting Office has no legal objection to proposal of
Director, Office of Personnel Management, to provide for regulation,
under its authority in sections 5504, 5548, and 6101 of title 5, United
States Code, that an agency may institute the practice of "rounding up"
and "rounding down" to nearest quarter hour (or fractions less than a
quarter of hour) for crediting irregular, unscheduled overtime work
under sections 5542, 5544, and 5550 of title 5, United States Code.
Matter of: "Rounding up" and "rounding down" odd minutes of
irregular unscheduled overtime, July 1, 1980:
The Director of the Office of Personnel Management, by letter dated
November 29, 1979, has requested an opinion of this Office in regard to
the following proposed action on the part of the Office of Personnel
Management (OPM):
* * * we are considering providing by regulation, under our authority
in sections 5504, 5548, and 6101 of title 5, United States Code, that an
agency may institute the practice of "rounding up" and "rounding down"
to the nearest quarter hour (or fractions less than a quarter of an
hour, i.e., 10 minutes, 6 minutes, etc.) for crediting irregular,
unscheduled overtime work under sections 5542, 5544, and 5550 of title
5, United States Code. * * *
More specifically, the Director's request is framed against the
following interpretive reasoning and background information:
In administering the overtime provisions of the Fair Labor Standards
Act (FLSA), we have encountered a problem regarding the crediting of
fractional hours of overtime work. Many agencies have asked us to
explore the possibility, under our regulatory authority under sections
5504, 5548, and 6101 of title 5, United States Code, to provide for
"rounding up" or "rounding down" fractional hours of irregular,
unscheduled overtime work to the full fraction being used to account for
the overtime work.
While this practice is permissible under the FLSA, it may be interpreted
to be inconsistent with the long-standing principle under title 5,
United States Code, that overtime work must actually be performed to be
compensable. See 55 Comp.Gen. 629; 46 Comp.Gen. 217; 45 Comp.Gen.
710; 42 Comp.Gen. 195.
As indicated in the Director's letter, decisions of this Office
addressing compensable hours of work for purposes of an overtime
entitlement under 5 U.S.C. 5542 have generally required the performance
of actual work. The general rule applicable to both classified and wage
board employees is that since the authority for payment of overtime
compensation contemplates the actual performance of duty, an employee
may not be compensated for overtime work when he does not actually
perform work during the overtime period. 42 Comp.Gen. 195(1962); 45
id. 710(1966); 46 id. 217(1966); and 55 id. 629(1976).
While we believe the continued general validity and applicability of
this rule is necessary for the determination of the overtime entitlement
under 5 U.S.C. 5542, we do not believe that this rule requires the
rejection of the "rounding up" odd minutes of irregular unscheduled
overtime concept proposed here by OPM. We have recognized that there
are instances and authorities which permit the payment of overtime
compensation where no actual work was performed. An example of this is
where an employee has been denied overtime work in violation of a
mandatory provision in a negotiated labor-management agreement. In this
type of case we have held that the employee may receive backpay for the
overtime work not performed. 54 Comp.Gen. 1071(1975); 55 id.
405(1975); and 55 id. 629(1976). Thus, we believe that the "founding
up" odd minutes of irregular unscheduled overtime proposal under
consideration here-- while it may involve small payments for overtime
which has not been performed-- is not legally inconsistent or OTHERWISE
INVALID ON THAT BASIS ALONE.
We turn now to practical considerations touching the desirability of
the OPM proposal. The Director's letter states the following:
In the private sector, the practice of "rounding up" or "rounding
down" odd minutes of irregular, unscheduled overtime work is a common
one. This practice has been permitted under the FLSA by the Department
of Labor (DOL). As stated in a DOL Interpreative Bulletin at 29 C.F.R.
785.48(b):
"It has been found that in some industries, particularly where time
clocks are used, there has been the practice for many years of recording
the employee's starting time and stopping time to the nearest 5 minutes,
or to the nearest one-tenth or quarter of an hour. Presumably, this
arrangement averages out so that the employees are fully compensated for
all the time they actually work. For enforcement purposes this practice
of computing working time will be accepted, provided that it is used in
such a manner that it will not result, over a period of time, in failure
to compensate the employees properly for all the time they have actually
worked."
The Congress mandated that the FLSA be administered in the Federal
sector "in such a manner as to assure consistency with the meaning,
scope, and application established by the rulings, regulations,
interpretations, and opinions of the Secretary of Labor which are
applicable in other sections of the economy." (See H. Rept. 93-973,
March 15, 1974, p. 28.) Given this mandate, we believe it would be
reasonable to allow agencies the use of this accounting method under the
FLSA.
This would simplify administration and would also help to insure that
employees are protected from abuse of the de minimis concept. (Under
this concept, agencies may disregard insignificant amounts of irregular,
unscheduled overtime as de minimis, if the total time disregarded in a
workweek does not exceed the fraction being used for crediting overtime
work. The de minimis concept does not apply to regularly scheduled
overtime work. See attachment 2 to FPM Letter 551-6.) Under the
"rounding" system, the odd minutes of irregular, unscheduled overtime
work disregarded by "rounding down" under the de minimis concept would,
over a period of time, presumably be balanced by the odd minutes gained
from "rounding up" whenever more than half of the fractional unit is
worked. Therefore, we believe it to be in the best interest of agencies
and employees to allow the agencies to use this method of crediting
irregular, unscheduled overtime work when appropriate. (Of course,
agencies would still have the option of using the other methods provided
in FPM Letter 551-6.)
However, there would be no point in allowing the use of this method
under the FLSA, if it is not also permissible for overtime computations
under title 5, United States Code. Obviously, a situation in which
overtime would be credited differently under each law would create an
administrative burden which would be far in excess of any value derived
from the method.
We have in the past experienced varying degrees of difficulty in
formulating and applying the de minimis rule to diverse factual
circumstances. Generally our recent decisions reflect the position of
this Office that preshift and postshift activities that might be
regarded as work, but which do not involve a substantial measure of time
and effort, are de minimis, and may not serve as a basis for the payment
of regular overtime compensation. William C. Hughes, Jr., B-192831,
April 17, 1979. Thus in Arthur L. Butler, B-190803, February 9, 1978,
we denied overtime compensation for preshift and postshift duties of 2
minutes daily. In that case we noted that the rule expressed by the
Court of Claims in Baylor v. United States, 198 Ct.Cl. 331(1972) was
that the net daily overtime must be 10 minutes or more in order to
qualify as compensable working time, and such a requirement has been
uniformly applied in decisions of this Office. See also 53 Comp.Gen.
489(1974).
The de minimis concept was adopted by the Court of Claims and this
Office as a means of simplifying the administrative burden of computing
small amounts of irregular overtime. At that time there were no
administrative regulations on the subject. The Office of Personnel
Management has the authority to prescribe regulations necessary for the
administration of the overtime statutes. 5 U.S.C. 5504, 5548,
6101(1976). We believe that its authority includes the authority to
regulate the computation of small amounts of irregular unscheduled
overtime, even if that means departing from the de minimis concept
heretofore adopted by the Court of Claims and this Office.
In view of the above, we have no objection to the Office of Personnel
Management's proposal to provide by regulation, that an agency may
institute the practice of "rounding up" and "rounding down" to the
nearest quarter hour (or fractions less than a quarter of an hour) for
crediting irregular, unscheduled overtime work under sections 5542,
5544, and 5550 of title 5, United States Code.
B-197016, July 1, 1980, 59 Comp.Gen. 573
Bids - Discarding All Bids - Reinstatement - Cancellation of Invitation
Unjustified
When agency determines that it has "misinterpreted" order canceling
all solicitations pending market analysis and survey of needs,
solicitation should be reinstated. Bids - Discarding All Bids -
Acceptance After Rejection
Rule that offer, once rejected, cannot subsequently be accepted does
not apply when low bidder resubmits bid and extends acceptance period at
Government's request. Bids - Invitation For Bids - Cancellation -
Erroneous - Revival of Expired Bids - Original Bids Returned to Bidders
Bids which have expired because solicitation was canceled generally
may be revived upon reinstatement. However, when original bids have
been returned to bidders, propriety of revival depends on whether, under
facts of particular case, integrity of competitive system has been
compromised.
Matter of: Baker Manufacturing Company, Inc.; Joerns Furniture
Company; Carsons of High Point, North Carolina, July 1, 1980:
Three furniture manufacturers, Baker Manufacturing Company, Joerns
Furniture Co., and Carsons of High Point, North Carolina, protest the
award of indefinite quantity, Federal Supply Schedule contracts for
household furniture by the General Services Administration (GSA). Since
each firm alleges that the same action by GSA-- reviving and accepting
bids after returning them to bidders during a moratorium on furniture
purchases-- comprised the integrity of the competitive bidding system,
we are issuing a single decision on the matter.
We find that the record supports GSA's determination that, in this
particular case, the abstract of bids, together with the resubmitted
original bids, provided an adequate basis for award. We therefore are
denying the protests; a detailed analysis follows.
The solicitation in question No. FCFH-P2-5198-A, was issued August
22, 1979, with an amended closing date of September 28, 1979. The items
sought (beds, dressers, mirrors, desks, bookcases, tables and chairs,
sofas, and wardrobes) were divided into five groups, with awards to be
made in the aggregate by group for each of three geographic areas.
On October 9, 1979-- after opening but before award-- the
Administrator of General Services ordered that all current solicitations
for all classes of furniture be canceled, stating that proper inventory
management required that GSA analyze the market to determine both agency
needs and the alternatives available to meet those needs. He directed
the Federal Supply Service to go back to all customer agencies and
require them to revalidate their needs "in the context of what is
available nationwide through the Government's excess channels."
Responding to this order, on October 25, 1979, GSA informed all
offerors that no awards would be made under the solicitation in question
pending a market analysis and a review of current and future needs.
GSA's letter stated:
* * * We cannot predict the effect of these actions on the
Government's requirements. However, you will be afforded an opportunity
to resubmit your offer should the procurement be deemed essential to the
Government. Accordingly, your offer is rejected pursuant to Federal
Procurement Regulations (FPR) Sec. 1-2.404-1(a) and is being returned.
Subsequent to this, GSA determined that it had "misinterpreted" the
order of October 9, 1979. In a series of internal memorandums, it
reinterpreted the order as not preventing processing of advertised
schedule solicitations such as this one. GSA's rationale was that since
procuring agencies placed orders directly with schedule contractors and
paid directly for items ordered, agency heads would, in effect, be
revalidating their underlying needs before doing so.
GSA therefore reinstated the canceled solicitation and, on November
30, 1979, asked nine bidders who were in line for awards to resubmit the
originals and duplicates of their bids. Eight firms, including Baker
and Joerns, returned their bids and agreed to extend acceptance periods.
At the same time, Baker, which had bid on two groups of furniture,
sought to reduce its prices for several items in the group on which it
was not the apparent low bidder. Joerns, the incumbent contractor for
one group, offered to reduce bid prices by 6 percent across the board.
Both firms appear to have protested to our Office when it became
clear that GSA would not accept any modifications of original bid prices
under the reinstated solicitation. (Baker also sought to increase its
prices on a different reinstated solicitation, not at issue here.)
In February 1980, Baker sought but was denied a temporary restraining
order by the U.S. District Court for the District of Columbia in Civil
Action No. 80-0403. This would have prevented GSA from authorizing work
or expending funds under the protested contracts, which had been awarded
on February 11, 1980. Before the time set for a hearing on its motion
for a preliminary injunction, however, Baker withdrew and requested our
opinion.
The main thrust of Baker's protest is that GSA has compromised the
integrity of the competitive system. Joerns and Carsons (not an
apparent low bidder but one which argues that it may have been eligible
for award due to "qualification problems" with other bidders) have
stated essentially the same grounds for protest. Since Baker's
submission is most detailed, we will respond to it; our decision also
applies to the protests of Joerns and Carsons.
Baker argues that because GSA's original cancellation was proper, the
solicitation could not have been reinstated. Such action, Baker
maintains, is possible only when (1) the original cancellation was
improper, and (2) the contracting officer abused his or her discretion.
In addition, Baker argues, GSA is required to show that reinstatement of
the canceled solicitation would promote the integrity of the competitive
system and would not prejudice other bidders. None of the above
criteria is met. Baker concludes, and the possibility of tampering is
so great that GSA should be directed to terminate the contracts and
either readvertise or negotiate with all original bidders.
Baker further argues that GSA's return of the bids effectively
nullified them, and that the request for resubmission was a negotiation,
in which all qualified bidders were entitled to participate.
Restricting submissions to those "thought to be low on the basis of
second-hand evidence," Baker maintains, was illegal and unfair.
In this regard, Baker alleges that bids were not read aloud at
opening, that the originals were not available for inspection at that
time, and that copies were left in the bid room with "access to all."
Baker also alleges that prices were recorded "some days" after opening,
under conditions which made it impossible to establish their accuracy,
and that for 30 days thereafter, the original bids were in the
possession of bidders, each of whom was in a position "to make any
self-serving adjustments he chose and to see that such adjustments
appeared on both copies."
For these reasons, Baker concludes, GSA's abstract of bids was not an
adequate basis for award. Moreover, according to Baker, the abstract
did not reflect volume discounts which several bidders offered, may have
contained errors in prices, and did not indicate whether the original
bid was signed or whether an amendment was acknowledged, both elements
of responsiveness.
GSA, on the other hand, argues that revival of the bids was proper,
and that conditions for resubmission were carefully controlled. In
addition, GSA states, the abstract of bids was prepared according to
regulations, contained all information necessary to determine the low,
eligible bidders, and remained in the custody and control of the agency
from the time original bids were returned to bidders until they were
RESUBMITTED. THUS, GSA CONCLUDES, THE ABSTRACT PROVIDED AN ADEQUATE
basis for evaluation and award under the original solicitation.
The initial question for our Office is whether the canceled
solicitation can be reinstated. In Spickard Enterprises, Inc., 54
Comp.Gen. 145(1974), 74-2 CPD 121, we reviewed an "erroneous, albeit
honest" decision to cancel which had been made because none of the
bidders eligible for award had submitted bids within the funding
limitations for the project. At the time of the cancellation, the
contracting officer was not aware that the head of the agency could
obtain additional funds by requesting their transfer from other
projects.
We recommended reinstatement when the agency, after readvertising,
determined that enough money could be transferred under existing
authority to permit award to the original low, eligible bidder.
We stated in Spickard that rejection of all bids after they had been
opened tended to discourage competition, and that cancellation was
inappropriate when an otherwise proper award under the original
solicitation would serve the actual needs of the Government. It was our
view that no "cogent and compelling reason" existed after the additional
funds became available "to allow the cancellation to stand." See also
Berlitz School of Languages, B-184296, November 28, 1975, 75-2 CPD 350.
We believe that the instant case is analogous, since the cancellation
was based on a "misinterpretation" of the GSA Administrator's order,
i.e., it was an "erroneous, albeit honest" decision at the time the
cancellation was made. Thus, we believe reinstatement was appropriate.
Baker also argues that an offer, once rejected, cannot subsequently
be accepted, citing Minneapolis & St. Louis Railway Company v. Columbus
Rolling Mill, 119 U.S. 149(1886). We believe Minneapolis is inapposite.
In that case, the party rejecting the bid thereafter sought to accept
the rejected offer without the consent of the offeror. Here the low
bidders have consented to the revival of the original bids, and in our
view they may be accepted. See 19 Comp.Gen. 356(1939). Thus, as a
general rule, bids which have expired because a solicitation was
canceled may properly be revived and accepted upon the solicitation's
reinstatement. Suburban Industrial Maintenance Company, B-188179, June
28, 1977, 77-1 CPD 459, modified on other grounds, November 29, 1977,
77-2 CPD 418.
Whether bids which have been returned to the original bidders can be
revived, however, is a different question, and one of first impression
with our Office. There are no applicable statutes or regulations, and
we are not aware of any case law on this subject. Its resolution, we
believe, depends upon whether, as Baker asserts, the integrity of the
competitive bidding system has been compromised.
For the most part, Baker's allegations provide no basis to challenge
award to the low bidders under the original solicitation. The Federal
Procurement Regulations (FPR) Sec. 1-2.402(a)(1964 ed.) provides that
all bids shall be:
* * * publicly opened and, when practicable, read aloud to the
persons present, and be recorded. If it is impracticable to read the
entire bid, as where many items are involved, the total amount bid shall
be read, if feasible. * * *
In a procurement such as this one, with five groups under which
different items were to be delivered to different areas, reading all
bids aloud may very well have been impracticable.
FPR Sec. 1-2.402(c) further provides that if duplicate copies are not
available for public inspection, original bids may be examined, but only
under the immediate supervision of a Government official. Thus, the
unavailability of originals for inspection, and the leaving of
duplicates in the bid room for this purpose, appear to have been in
accord with, rather than contrary to, regulation.
We have no reason to believe that the abstract did not accurately
reflect prices bid. The GSA procurement agent who prepared it has
submitted an affidavit stating that the abstract of bids was retained by
GSA and not released to the public at any time, and concludes:
When bids were returned, I compared the original copies to the
original abstract. With respect to any group for which any returned bid
was apparent-low, no changes whatsoever had been made or proposed.
The abstract does show volume discounts; however, the solicitation
specifically states that these were not to be evaluated for purposes of
award. Baker has not pointed out any errors in recording of prices or
any discrepancies between an abstract prepared by a commercial recording
company at bid opening, which Baker offered in evidence to the court and
our Office, and the official one, prepared by GSA after opening.
With regard to the question of responsiveness, it is true, as Baker
alleges, that the abstract of bids does not reflect such essential
information as whether a bid was signed. This is a question of fact,
and after the original bids were returned to bidders, the only means of
proving it would have been for Baker to continue its court suit and to
question bidders under oath. Since the complaint was withdrawn,
however, we are forced to decide the issue without benefit of such
testimony. We therefore view the bid abstract as the best evidence
available at this time upon which to base a judgment as to the
responsiveness of the low bidders.
We note that the abstract of bids includes exceptions and conditions
imposed by bidders. Joerns, for example, submitted bid prices for three
zones in Group I, but stated that it would not accept award of Zone 2 or
3 alone. Carsons, bidding on Group III, stated that if it was not low
in the aggregate for Zone I, its prices for certain items in that zone
should be reduced by $2 each, and if it was not low in the aggregate
following this first reduction, the same items should be reduced by an
additional $2. Baker offered similar reductions for aggregate Group IV
which were clearly noted on the abstract.
In our opinion, it is unlikely that the contracting officer,
preparing the abstract noting how bidders had qualified their bids,
would have overlooked material omissions such as an unsigned bid. We
also emphasize that under the provisions of FPR Sec. 1-2.402(c), supra,
copies of the bids were available for public inspection after bid
opening, and no contemporaneous allegations of the nonresponsiveness of
any of the bids were made either to this Office or the agency.
Thus, while the possibility exists that one or more of the low bidders
may have omitted material requirements from their bids, we consider the
probability of that having occurred under the circumstances as being
very remote. Compare L.V. Anderson and Sons, Inc., B-189835, September
30, 1977, 77-2 CPD 249, in which we held that a hand-delivered bid,
received late due to Government mishandling, could not be accepted after
having been opened, then returned to the protester, because no record of
the contents of the bid had been made prior to its return.
Finally, failure to acknowledge the single amendment to the
solicitation, which Baker also argues was not shown by the abstract,
could be waived, since it (1) extended the opening date, (2) set aside a
second group of furniture for award to small businesses, and (3)
corrected one obvious typographical error; awareness of these changes
would have been apparent from the bids themselves. See Arrowhead Linen
Service, B-194496, January 17, 1980, 80-1 CPD 54; Che II Commercial
Company B-195017, October 15, 1979, 79-2 CPD 254.
We therefore conclude that under the specific facts of this case, no
adequate basis exists to disturb the awards.
The protests are denied.
B-196539, July 1, 1980, 59 Comp.Gen. 569
Pay - Retired - Survivor Benefit Plan - Coverage Charges - Coverage
Termination on First Day of Month - Proration Authority
Where a retired member is participating in the Survivor Benefit Plan
(SBP) and his elected spouse coverage is to be terminated because the
eligible spouse beneficiary died on the first day of the month, so long
as the eligible spouse beneficiary was in being at the first moment of
the first day of the month full reduction of retired pay or retainer pay
for spouse coverage is required for that month. Charges for that month
may be made on a pro rata basis only if regulations providing for such a
change are issued under 10 U.S.C. 1455. 57 Comp.Gen. 847(1978),
modified. Pay - Retired - Survivor Benefit Plan - Coverage Charges -
Commencement Date - Retirement on Day Other Than First of Month
Active duty service members are usually retired effective the first
day of a month. If they participate in the SBP, the computed costs of
coverage are assessed at the monthly rate for the whole retirement
month. If an active duty member is placed in a retired or retainer pay
status effective on a day other than the first of the month and
participates in the SBP, charge for coverage begins the first day of the
month beginning after retirement unless a regulation is issued pursuant
to 10 U.S.C. 1455 providing for pro rata charge for part of a monthly
coverage. 57 Comp.Gen. 847, modified.
Matter of: Staff Sergeant Robert E. Wix, FMCR, and Master Sergeant
Richard V. Johnson, FMCR, July 1, 1980:
This decision involves several questions concerning the proper method
of effecting reduction in retainer pay for Survivor Benefit Plan (SBP)
participation by Staff Sergeant Robert E. Wix, FMCR, 000-00-6487, and
Master Sergeant Richard V. Johnson, FMCR, 000-00-8348, in response to a
request from the Disbursing Officer, Marine Corps Finance Center. The
matter has been assigned Control Number DO-MC-1333 by the Department of
Defense Military Pay and Allowance Committee.
In summary we hold that charges for SBP must be for a full month
unless a regulation providing for pro rata monthly charges based in days
of coverage is issued pursuant to 10 U.S.C. 1455. Further, in the
absence of a regulation when a member's last day of duty before
retirement is other than the last day of the month no charge is made for
the partial month in retired status.
Sergeant Wix was transferred to the Fleet Marine Corps Reserve on
October 31, 1974, and enrolled in the SBP, providing an annuity for his
wife, Peggy, and a dependent child, based on the full amount of his
monthly retainer pay. Reduction of that pay for coverage charges was
initiated effective November 1, 1974.
On August 3, 1979, Sergeant Wix informed the Finance Center that his
wife had died on March 1, 1978, at approximately 5 p.m.
It is stated that pursuant to the amendment to the Survivor Benefit
Plan as contained in the act of October 14, 1976, Public Law 94-496, and
our decision 57 Comp.Gen. 847(1978), the monthly charges for spouse
coverage from April 1, 1978, forward were refunded to Sergeant Wix.
Also, the cost of child coverage was recomputed on the basis of child
only coverage beginning April 1, 1978, with the increased cost of that
coverage deducted retroactively to the same date.
The disbursing officer expresses doubt as to the correctness of that
action, indicating that Sergeant Wix may be entitled to a refund for
spouse coverage for March 1978. This is based upon certain language
contained in decision 57 Comp.Gen. 847, which apparently has been viewed
as establishing the first day of the month as the date for determining
the eligibility of a potential beneficiary. While the disbursing
officer recognizes that Mrs. Wix was an eligible spouse beneficiary
until the moment of her death, he suggests that since she did not live
for the whole day, she should not be considered an eligible spouse
beneficiary for cost charge purposes for March 1978.
The facts of the Wix case appear to be similar to those involved in
the situation described regarding question a., of 57 Comp.Gen. 847. In
that case we construed the language of 10 U.S.C. 1452(a) which states
that the reduction in retired or retainer pay shall not be applicable
"during any month in which there is no eligible spouse beneficiary." As
to that part of that decision which relates to assessment of coverage
charges on the event of loss of a previously elected and otherwise
eligible spouse beneficiary, we said, in part, at page 850, that:
Charges for SBP coverage are assessed on a monthly basis and for the
whole month, there being no legal authority for subdividing a month. It
is our view that the existence of an elected beneficiary on the first
day of that month governs the coverage costs to be charged for the whole
month. Thus, if a member had initially elected spouse coverage, so long
as he had an eligible spouse beneficiary on the first day of a month,
then for SBP coverage charge purposes, the full reduction in retired pay
for that coverage would be required for that month.
The fact that an eligible spouse beneficiary dies on the first day of
a month would not alter the basic conclusion in that decision. The
eligible spouse beneficiary was in existence in that month and charges
for coverage should be assessed. Therefore, in answer to the questions
presented in the Wix case, so long as the spouse is an "eligible spouse
beneficiary" in being at the first moment of the first day of any month,
spouse coverage costs will be charged for that entire month.
We would like to take this opportunity to clarify the meaning of the
decision in 57 Comp.Gen. 847 as it relates to charges for full months.
That decision was necessarily predicated on the wording of the statutory
provisions involved since no regulations had been issued under the
authority of 10 U.S.C. 1455 establishing a means of computing charges
for coverage for only part of a month. The language in that decision,
however, should not be viewed as precluding the issuance of regulations
under the authority of section 1455 which would make specific provision
for a pro rata charge when the eligible spouse beneficiary becomes
ineligible by death or divorce other than on the last day of a month.
57 Comp.Gen. 847 is modified accordingly.
Sergeant Johnson was transferred to the Fleet Marine Corps Reserve on
August 10, 1979, effective the next day. His election into the SBP was
on a reduced base amount of $300 for his spouse, Setsuko, and a
dependent child. The SBP cost reduction from his monthly retainer pay
was initiated effective August 11, 1979, on a pro rata basis for the
days remaining in August 1979, and then monthly thereafter at the
appropriate monthly rate.
Doubt as to the correctness of that method of charging is expressed,
also due to certain of the language in 57 Comp.Gen. 847, which states
that SBP coverage costs are to be assessed on a monthly basis.
If the charge for SBP may not be prorated for part of a month, the
Marine Corps asks whether full charge or no charge should be made for
the month of retirement when members retired on other than the last day
of the month. The Marine Corps also asks whether the response to the
above would be the same if Master Sergeant Johnson died on an
intermittent day of the month in which he retired. Finally, if pro rata
charge is not authorized, the Marine Corps wants to know if they must
collect additional charges or refund excess charges retroactively for
the first month in which a member was retired or transferred to the
Marine Corps Reserve if such retirement or transfer occurred on other
than the first day of a month.
As it relates to reduction in retainer pay in the case of Sergeant
Johnson, 10 U.S.C. 1452(a) provides in part:
(a) * * * retainer pay of a person to whom section 1448 of this title
applies * * * who has a spouse and a dependent child * * * shall be
reduced each month * * * by an amount equal to 2 1/2 percent of the
first $300 of the base amount plus 10 percent of the remainder of the
base amount. As long as there is an eligible spouse and a dependent
child, that amount shall be increased by an amount prescribed under
regulations of the Secretary of Defense.
In the Wix case above, we held that charges when coverage is
terminating should be on a monthly basis, unless regulations issued
under 10 U.S.C. 1455 provide for a pro rata charge. Language relating
to charges for coverage under SBP generally is also in terms of a
monthly charge. Based on the terms of the statute, we see no reason to
apply a different rule with respect to charging for SBP coverage which
begins in the middle of a month, and hold that such charges should be on
a monthly basis unless otherwise specified in a controlling regulation.
As to whether full charge or no charge should be made for that part
of a month, it is observed that subsection (a) of 10 U.S.C. 1448
provides, in part, that SBP coverage commences when members become
eligible to receive retired or retainer pay. However, subsection (d) of
the same section provides that if a member dies while serving on active
duty, SBP benefits will be paid to his qualified surviving spouse if he
was eligible to receive retired or retainer pay at that time. Compare
55 Comp.Gen. 854(1976). Further, it is to be noted such coverage is
cost free. See 54 Comp.Gen. 709(1975). Thus, charging the full monthly
charge for the first month would result in payment for a period already
covered by SBP without charge.
It is also noted that not charging for the part of a month when
coverage begins would be balanced to some extent by the full monthly
charge which is assessed when an eligible spouse beneficiary becomes
ineligible through divorce or death.
Finally, rule 2, Table 9-4-2 of the Department of Defense, Military
Retired Pay Manual, DOD Manual 1340.12-M, September 5, 1979, indicates
that when a member retires and has a spouse and children or children
only the effective date of the charge against retired pay will be the
first day of the month following the date of retirement. Although this
Manual was not published at the time Sergeant Johnson retired and
although it is not clear whether this provision of the Manual is
intended to be an implementing regulation, that provision does show the
interpretation placed on existing law by the Department of Defense.
Accordingly, we hold that, in the absence of a regulation issued
under 10 U.S.C. 1455 authorizing pro rata charge when a member's last
day of duty prior to retirement is on a day other than the last day of a
month, no SBP deduction should be made from the retired or retainer pay
the member receives for the partial month. The answer would, of course,
be the same if Sergeant Johnson had died during the month in which he
retired.
The third question is whether the Marine Corps must refund to members
who have been charged on a pro rata basis for the first partial month of
retirement. Although the proper basis for charging for SBP for part of
a month has not been entirely clear and although no controlling
regulation has been issued, we have held that charges should be on a
whole month basis in the absence of a regulation to the contrary.
Therefore, any claim for refund of a pro rata charge for the initial
part month coverage should be allowed.
B-196404, June 26, 1980, 59 Comp.Gen. 563
Appropriations - Defense Department - Military Interdepartmental
Procurement Requests (MIPRs) - Economy Act Applicability
It remains the opinion of this Office that a Military
Interdepartmental Procurement Request (MIPRs) is placed pursuant to
section 601 of the Economy Act of 1932, as amended, 31 U.S.C. 686.
Consequently, to the extent the Corps of Engineers (Corps) is otherwise
authorized to recover supervision and administrative expenses incurred
in performing MIPR for Air Force, the Corps should be reimbursed from
appropriations current when the costs were incurred or when the Corps
entered into a contract with a third party to execute the MIPR. See 31
U.S.C. 686-1; 34 Comp.Gen. 418(1955). Appropriations - Obligation -
Interdepartmental Services - Military Interdepartmental Procurement
Requests (MIPRs)
Even if MIPR is deemed authorized by 10 U.S.C. 2308 and 2309(1976),
rather than section 601 of the Economy Act of 1932, as amended, 31
U.S.C. 686, the allotment of funds by Air Force to Corps of Engineers
(Corps) for use in executing MIPR does not constitute an obligation
until the Corps either enters into contract with a third party to
execute the MIPR or incurs costs in administering the contract. See
Defense Acquisition Regulation (DAR) 5-1108.2, .3. Appropriations -
Reimbursement - Interdepartmental Services - Military Interdepartmental
Procurement Requests (MIPRs) - Administrative and Supervision Cost
Recovery
In view of regulation providing that a procuring department should
bear, without reimbursement therefor, the administrative costs incident
to its procurement of supplies for another Department, the Air Force
(AF) and the Corps of Engineers should consider whether any
reimbursement is due the Corps for administrative and supervision
expenses incurred in performing MIPR placed by AF. See DAR 5-1113.
Matter of: Obligation of Funds Under Military Interdepartmental
Procurement Requests, June 26, 1980:
This decision is in response to an inquiry from R. T. Geiger,
Disbursing Officer for the Fort Worth District, Army Corps of Engineers
(Corps) as to whether he may certify a voucher for payment. He asks in
effect whether current supervision and administration (S&A) expenses,
associated with a Military Interdepartmental Procurement Request (MIPR)
from Tinker Air Force Base, should be reimbursed from appropriations
current when the costs were incurred or from the appropriation obligated
when the Corps entered into a contract with a third party to execute the
MIPR. Mr. Geiger's letter states:
The Fort Worth District is in receipt of a MIPR from Tinker Air Force
Base. Corps S&A costs are initially charged to the Corps Revolving
Fund, 96X4902, and then sold to the customer on a Corps-wide
predetermined standard rate. Other related labor costs and costs such
as reproduction are also initially charged to 96X4902 and then sold to
the customer on the basis of the actual expense. The customer
identifies within the MIPR those funds which will be cited for his
request and which will ultimately receive the S&A expense. The Air
Force has directed that 5763080 funds be cited for FY 79 S&A expense,
Inclosure 2. Air Force rationale is furnished within Inclosure 3.
The 5763080 funds are available for obligation by the Air Force for
three years and for obligational adjustments for an additional two
years. The Air Force direction could prolong the use of such funds
beyond normal periods of availability and result in MIPRs receiving
treatment similar to project orders. However, 34 Comptroller General
418 states that MIPRs should be treated as Economy Act Orders.
Obligation adjustments continue to be processed against original
contract funds and these adjustments are not in question. What is in
question is the S&A costs which represent inhouse charges which are
properly charged against current appropriations.
We have been informally advised that when a MIPR is accepted by the
Corps, the Corps enters into contracts with third parties to fulfill the
requesting agency's needs. The role of the Corps is to supervise the
particular procurement involved and the S&A costs are those associated
with the Corps' supervision of the contract. In the present case, the
MIPR from the Air Force was accepted on February 25, 1976, and the Corps
entered into the contract for its execution on the same day.
As Mr. Geiger's letter points out, this Office has previously held
that in the absence of any other controlling statute, MIPRs will be
considered as being issued under authority of section 601 of the Economy
Act of 1932, as amended, 31 U.S.C. 686(1976). 34 Comp.Gen. 418(1955).
When a transaction governed solely by the Economy Act is recorded as an
obligation against appropriations whose period of availability expires
at a fixed time, then 31 U.S.C. 686-1 requires the deobligation of those
appropriations when their period of availability for obligation expires,
to the extent that the performing agency has not incurred valid
obligations under the agreement (for example where the performing agency
is providing the work or service itself, to the extent it has not
performed the work or rendered the service). 31 Comp.Gen. 83(1951).
However, if the MIPR transaction is governed by some provision of law
other than the Economy Act, then the requirement of 31 U.S.C. 686-1 to
deobligate would not apply. B-193005, October 2, 1978. The Air Force
believes that the authority to issue MIPRs is not the Economy Act, but
10 U.S.C. 2308 and 2309(1986) (formerly section 10 of the Armed Services
Procurement Act of 1947) and, therefore, that they are not subject to
the deobligation requirement of 31 U.S.C. 686-1.
In 34 Comp.Gen. 418 at 422-423(1955) we stated:
Military interdepartmental orders. It is further contended by
representatives of your Department that military interdepartmental
procurement orders (hereinafter referred to as MIPR's) are issued under
provisions of law peculiar to the Department of Defense rather than
under the provisions of section 601 of the Economy Act. Reference is
made to the National Security Act of 1947, as amended, section 10 of the
Armed Services Procurement Act (41 U.S.C. 159) and section 638 of the
Department of Defense Appropriation Act, 1953 (41 U.S.C. 162).
While the term "including government agencies" was inserted in the
proposed section 1311(a)(1) (31 U.S.C. 200(a)(1)(1976)) to permit
MIPR's, among other interagency agreements, to be recorded as
obligations, it was not intended thereby to permit such funds to remain
available indefinitely to the procuring agency for the execution of
procurement contracts. To the contrary, it was intended to remove any
doubt that such orders, as other orders issued under section 601 of the
Economy Act, could be recorded as obligations but the procuring agency
was to have no longer period to execute the procurement contracts than
the agency issuing the orders would have had if it had done the
procuring.
The provisions of law relied upon by your Department, which are cited
above, are viewed as having been enacted merely to require the military
departments to exercise authority they already had to consolidate
procurement requirements. This could have been accomplished by the
military departments under section 601 of the Economy Act prior to the
enactment of those provisions of law. Such provisions of law extended
the existing authority of the military departments to the Secretary of
Defense and directed that procurement requirements be consolidated to
the extent deemed feasible. We thus feel that we are constrained to
hold that MIPR's are issued under section 601 of the Economy Act, as
amended, and, therefore, are subject to the provisions of section 1210
of the General Appropriation Act, 1951 (31 U.S.C. 686-1, supra).
Thus we specifically rejected the argument now made by the Air Force
that a MIPR is placed pursuant to 10 U.S.C. 2308 and 2309.
In any event, even if this transaction were governed by sections 2308
and 2309, the allotment of funds under those sections from one agency to
another is not alone a basis for obligating the funds and, in
circumstances like these, prior year funds would not remain available
for obligation under those statutes any more than they would under the
Economy Act.
Section 10 of the Armed Services Procurement Act of 1947 (1947 Act)
(approved February 19, 1948, ch. 65, 62 Stat. 25), the source of the
provisions now codified as 10 U.S.C. 2308 and 2309, provided that--
In order to facilitate the procurement of supplies and services by
each agency for others and the joint procurement of supplies and
services required by such agencies, subject to the limitations contained
in section 7 of this Act, each agency head may make such assignments and
delegations of procurement responsibilities within his agency as he may
deem necessary or desirable, and the agency heads or any of them by
mutual agreement may make such assignments and delegations of
procurement responsibilities from one agency to any other or to officers
or civilian employees of any such agency, and may create such joint or
combined offices to exercise such procurement responsibilities, as they
may deem necessary or desirable. Appropriations available to any such
agency shall be available for obligation for procurement as provided for
in such appropriations by any other agency through administrative
allotments in such amount as may be authorized by the head of the
allotting agency without transfer of funds on the books of the Treasury
Department. Disbursing officers of the allotting agency may make
disbursements chargeable to such allotments upon vouchers certified by
officers or civilian employees of the procuring agency.
This provision originated as an amendment by the Senate Armed
Services Committee to section 10 of H.R. 1366, 80th Congress. In
explaining it, the Committee report states:
This paragraph insures in detail the facilitating of joint and cross
procurement between the services. In order effectively to permit one
agency to procure for another, or to permit both agencies to procure
jointly, it permits the delegation of authority and assignment between
agencies of procurement responsibilities. This paragraph accomplishes
this objective and further permits a contracting officer in one
department to make actual obligations against allotments of funds made
administratively by other departments for whom purchases are being made.
The decisions and determinations required by section 7 of the bill will
normally be made by the head of the agency actually doing the buying.
It is expected that joint procurement may require an agency head doing
the buying to make such determinations and decisions, based on
information submitted by the agency for which the materials are
purchased.
S. Rep. No. 571, 80th Cong. 1st Sess., 1948 U.S.CodeCong.Serv. 1069.
In discussing the effect of this amendment in the House,
Representative Anderson, floor leader on H.R. 1366 explained:
Seventh. A very important change which should have far-reaching
effects in facilitating the efficient procurement of supplies for all of
the armed services is contained in section 10 of the bill. Originally
this section, as it appeared in the bill when it passed the House,
provided merely that the provisions of H.R. 1366 would apply to
purchases made by an agency for its own use or otherwise. The intent of
the language "or otherwise" was to permit cross procurement and joint
procurement. The Senate has expanded this section in such a manner as
to spell out in detail effective means by which these objectives may be
achieved in actual practice. Section 10 now permits agency heads to
enter into mutual agreements whereby, to take a specific example, the
Secretary of the Army can assign or delegate the procurement
responsibility of his agency to a procurement officer of the Navy
charged with the procurement of a particular item which the Army desires
to obtain. In such a case the appropriations available to the Army for
the purchase of that particular item can be made available for
obligation by the Navy procurement officer. This may be accomplished
under section 10 by means of administrative allotments between the
agencies, in such amounts as may be authorized by the head of the
allotting agency, without transfer of funds on the books of the Treasury
Department. In actual practice, in the hypothetical example which we
assumed a moment ago, the Army then will requisition of the Navy the
item which they desire. The Army's bookkeepers then set up an
administrative allotment to the Navy of the necessary funds to cover the
purchases in question. There will be no necessity for a transfer for
funds between the departments. Payment will be made by an Army
disbursing officer who is authorized under this section to make
disbursements chargeable to such administrative allotments upon vouchers
certified by the Navy procuring officer. 95 Cong.Rec. 1155-1156(1948).
When the Congress codified the laws relating to the Armed Services,
section 10 of the 1947 Act was codified into 10 U.S.C. 2308 and 2309
which provide:
2308. Assignment and delegation of procurement functions and
responsibilities
Subject to section 2311 of this title, to facilitate the procurement
of property and services covered by this chapter by each agency named in
section 2303 of this title for any other agency, and to facilitate joint
procurement by those agencies--
(1) the head of an agency may, within his agency, delegate functions
and assign responsibilities relating to procurement;
(2) the heads of two or more agencies may by agreement delegate
procurement functions and assign procurement responsibilities from one
agency to another of those agencies or to an officer or civilian
employee of another of those agencies; and
(3) the heads of two or more agencies may create joint or combined
offices to exercise procurement functions and responsibilities.
2309. Allocation of appropriations
(a) Appropriations available for procurement by an agency named in
section 2303 of this title may, through administrative allotment, be
made available for obligation for procurement by any other agency in
amounts authorized by the head of the allotting agency and without
transfer of funds on the books of the Department of the Treasury.
(b) A disbursing officer of the allotting agency may make any
disbursement chargeable to an allotment under subsection (a) upon a
voucher certified by an officer or civilian employee of the procuring
agency.
No substantive changes to section 10 of the 1947 Act were intended by
this rewording. See section 49(a) of the Act of June 3, 1956, ch. 1041,
70A Stat. 640 and S. Rep. No. 2561, 84th Cong., 2d Sess., 19-21,
147(1956).
Thus, by enactment of section 10 of the 1947 Act, the Congress
authorized centralized procurement within an agency and joint
procurement by agencies. To accomplish joint procurements, it
authorized the allotment of funds by the requesting agency to the
procuring agency for obligation by the procuring agency. The procuring
agency acts only as a delegate, or agent, of the requesting agency so
that, as between the two, there is no basis for the obligation of the
funds when the agencies agree to this arrangement nor when the funds are
allotted.
Under section 10, obligation of the requesting agency's
appropriations should occur when the procuring agency takes some action
causing the funds to become obligated. Specifically, obligation of the
allotted funds does not take place until the procuring agency either
enters into a contract with a third party for the supplies requested or
incurs costs in administering the contract. (See, in this connection
DAR 5-1108.2, 3, making it clear that acceptance of a MIPR by the
procuring agency does not obligate the funds and that fiscal year funds
cited ;n a MIPR will lapse if the procuring agency has not executed a
contract or otherwise obligated them before the end of the fiscal year.)
To the extent costs are not incurred by the procuring agency or
contracts are not entered into during the period of availability for
obligation of the allotted funds, the funds would revert to the
appropriation's successor account. Beyond this, sections 2308 and 2309
of title 10 do not provide an independent basis for agencies to enter
into reimbursable agreements.
In sum, we are aware of nothing that would cause us to overrule our
decision in 34 Comp.Gen. 418(1955) that MIPRs are placed pursuant to the
Economy Act. Even if MIPRs were placed pursuant to 10 U.S.C. 2308 and
2309 (and the requirements of these provisions complied with) the result
in these circumstances would be the same as if they were placed pursuant
to the Economy Act. Accordingly, the Corps S&A expenses should be paid
from appropriations current at the time they arise.
Finally, the regulations governing MIPrs provide that "(t)he
Procuring Department shall bear, without reimbursement therefor, the
administrative costs incidental to its procurement of supplies for
another Department." DAR 5-1113. In view of this, we question why the
Air Force should be reimbursing the Corps at all in this case. While
what we said above is true generally should consider whether, under the
regulations, any payment for S&A expenses is here due the Corps.
B-195366, June 26, 1980, 59 Comp.Gen. 560
Travel Expenses - Actual Expenses - High Cost Areas - Undesignated -
Retroactive Reimbursement
The Per Diem, Travel and Transportation Allowance Committee (for
uniformed service personnel) and the General Services Administration
(for civilian employees) may issue regulations permitting reimbursement
to travelers on an actual expense basis based on unusual circumstances
when due to the infrequency of travel to a given location consideration
was not given to designating that locality as within a high cost
geographical area. Authorization or approval of actual expense
reimbursement should be predicated upon advice from the Committee or the
Administration, as appropriate, that the locality was not considered for
inclusion in the list due to lack of information with respect thereto
and will be applicable only to the specific travel under consideration.
Travel Expenses - Actual Expenses - Reimbursement Basis - Criteria -
Unusual Circumstances - Undesignated High Cost Areas
Where travel is to an area that is not designated as a high cost
geographical area but where the choice of accommodations is limited or
the costs of accommodations are inflated because of conventions, sports
events, natural disasters, or other causes which reduce the number of
units available, such events may be considered as unusual circumstances
of the travel assignment which would permit payment of expenses to an
employee or member on an actual expense basis depending upon the
circumstances of each case and the necessity and nature of the travel.
Travel Expenses - Actual Expenses - Predetermined Rates in High Cost
Areas - Retroactive Area Designation - Prohibition - Unusual
Circumstances Notwithstanding
General designation of a high rate geographical area may not be made
retroactively even though the existence of normal high costs sufficient
to warrant such a designation was unknown to the Per Diem, Travel and
Transportation Allowance Committee prior to the performance of travel in
any individual case and such facts are thereafter made known. 32
Comp.Gen. 315(1953).
Matter of: Unusual circumstances of travel - Payment of actual
expenses, June 26, 1980:
The Assistant Secretary of the Navy (Manpower, Reserve Affairs and
Logistics) has requested a decision on payment of military and civilian
travel allowances on an actual expense basis under unusual duty
assignments.
Specifically, we have been asked the following questions:
(1) Where travel on temporary duty is to a place not designated as a
high cost geographical area and the prescribed per diem on the lodging
plus basis is inadequate due to the lack of availability of lower priced
accommodations in the immediate area of the TDY, may such circumstances
be considered to be unusual thereby warranting authorizing payment of
actual expenses for unusual circumstances of the travel assignment?
(2) Where travel is to an area that is not designated as a high cost
geographical area but where the choice of accommodations is limited or
the costs of accommodations are inflated because of conventions, sports
events, natural disasters, or other causes which reduce the number of
units available below the normal levels, may such events be considered
as unusual circumstances of the travel assignment which would permit
payment of expenses to an employee on an actual expense basis?
(3) May the designation of a high rate geographical area be made
retroactively when the existence of normal high costs sufficient to
warrant such a designation was unknown to the Per Diem, Travel and
Transportation Allowance Committee prior to the performance of travel in
any individual case and such facts are thereafter made known?
In answer to question (1), applicable regulations may be changed to
permit use of the authority to pay actual expenses in unusual
circumstances so as to permit payment on that basis when travel is
performed to localities which have not been designated as high cost
geographical areas because of the infrequency of travel to those areas.
Question (2) is answered affirmatively since, under established criteria
unusual circumstances at the location of temporary duty have been
demonstrated. The answer to question (3) is in the negative under the
general rule that regulations may not be altered retroactively.
The Assistant Secretary points out that although more than 90
locations have been designated as high cost geographical areas, cases
continue to arise in which travel is required to an area which could be
designated as a high cost area but because of a lack of experience in
travel to that place such a designation has not been made.
The issues presented in questions (1) and (2) were in essence
addressed in 55 Comp.Gen. 609(1976). While that decision only dealt
with civilian employees' entitlements under 5 U.S.C. 5702(c), as amended
by Public Law 94-22, 89 Stat. 84, the reasoning therein is equally
applicable to members of the uniformed services whose travel
entitlements in this regard are governed by 37 U.S.C. 404(d).
Public Law 94-296 amended 37 U.S.C. 404(d) relating to travel to a
high cost area to the same extent that Public Law 94-22 amended 5 U.S.C.
5702(c). Further, authority for travel involving "unusual
circumstances," was contained in the 1975 amendments enacted in Public
Law No. 94-22 and Public Law No. 94-296. Under both laws the regulating
authority (the General Services Administration, in case of civilians,
and the Secretaries concerned, in case of the uniformed services) may
prescribe the conditions for reimbursing actual expenses when the per
diem allowances are inadequate due to unusual circumstances of the
travel assignment. We stated in 55 Comp.Gen. 609, supra, in this
connection:
* * * nothing in the law or its legislative history would preclude
the General Services Administration from appropriately modifying the
travel regulations by changing the criteria for or citing additional
examples of unusual circumstances, either on its own initiative or at
the request of an agency.
Because of the similarity of the laws and regulations, the quoted
statement is applicable to regulations issued by the Secretaries
concerned in the case of the uniformed services.
In 42 Comp.Gen. 440 we held that a system similar to the high cost
geographical area system which is now authorized by law could not be
implemented by regulation under the authority to pay actual expenses in
unusual circumstances. We said that general inflation in costs could
not be the basis for holding that travel was performed under unusual
conditions. In other words, Congress has fixed a limit on per diem and
that limit may not be exceeded because inflation has made per diem
inadequate to cover costs of travel in certain areas. It is the
prerogative of Congress to establish such a limit and once established
it must be enforced.
Since that time Congress enacted the high cost geographical area
authority thus permitting the executive to fix reimbursement at higher
rates for employees who are required to travel to areas when, because of
inflation or otherwise, the costs have risen above that which may
ordinarily be covered by the maximum per diem authorized.
When this new authority is viewed in light of the authority which the
regulatory authorities have-- as stated in 55 Comp.Gen. 609-- it appears
that authorization of actual expenses reimbursement under the unusual
circumstances authority would be proper-- under appropriate
regulations-- when for some reason a high cost geographical area has not
been included on the list contained in the regulations or when, due to
the absence of current information, the maximum actual expense
reimbursement for a certain location is substantially below that
required to cover costs necessarily incurred.
The Congress has provided for covering the costs of employees traveling
to high cost areas and it must be presumed that the regulatory agencies
can properly implement this authority. When circumstances are such that
a high cost geographical area cannot be timely identified, the situation
may be viewed as unusual and the authority relating to unusual
circumstances may be applied.
If regulations are issued they should require the General Services
Administration for civilian travel and the Per Diem, Travel and
Transportation Allowance Committee for travel by members of the
uniformed services to verify in each case that the locality involved had
not been considered for inclusion in the list of high cost geographical
areas. If facts were not available to the order-writing official prior
to travel to permit a request for authorization the Administration or
Committee as appropriate could approve reimbursement on a retroactive
basis as is currently authorized in the regulations covering the payment
of actual expenses in unusual circumstances.
The regulations may be amended to cover the unusual circumstances
such as travel to an area where a natural disaster or other cause
reduces the number of available units or where costs of food or
accommodations are inflated due to a special occurrence at the TDY site
and such rates would not be so inflated during normal times. Such
unusual circumstances should be considered on a case-by-case basis and
judged against the necessity and nature of the travel at the particular
time.
Questions one and two are answered accordingly.
We have long and consistently adhered to the rule that when
regulations are properly issued, rights thereunder become fixed and,
although such regulations may be amended prospectively to increase or
decrease rights given thereby, they may not be amended retroactively
except to correct obvious errors. 32 Comp.Gen. 315(1953); 32 id.
527(1953); 33 id. 174(1954); 40 id. 242(1060); and 47 id. 127(1967).
Compare 33 Comp.Gen. 505(1954), and Friedlander v. United States, 120
Ct.Cl. 4(1951). Therefore, question number three is answered in the
negative.
B-196254, June 24, 1980, 59 Comp.Gen. 548
Contracts - Negotiation - Competition - Discussion With All Offerors
Requirement - Deficiencies in Proposals
Where proposal is competitive range was found informationally
inadequate, so that contracting agency could not determine extent of
offeror's compliance with requirements, contracting agency should have
discussed inadequacies with offeror, especially since solicitation did
not specifically call for missing information but merely contained
general request for information. Contracts - Negotiation - Competition
- Discussion With All Offerors Requirement - Right to Discussion -
Deficiencies v. Weaknesses
Contracting agency may not avoid duty to conduct meaningful
discussions by labelling informational inadequacies in offeror's
proposal as weaknesses and thus not for discussion under its regulation.
Contracts - Negotiation - Competition - Discussion With All Offerors
Requirement - Technical Transfusion or Leveling
Contracting agency may not avoid duty to conduct meaningful
discussions, by pointing out informational inadequacies in offeror's
proposal, on basis that to do so would constitute technical leveling.
Technical leveling is not involved where sole purpose of discussion is
to ascertain what offeror proposes to furnish. Contracts - Negotiation
- Competition - Discussion With All Offerors Requirement - What
Constitutes Discussion
Contracting agency does not fulfill duty to point out informational
inadequacies in offeror's personnel and facilities areas merely by
requesting offeror to furnish cost information pertaining to these
areas. Offeror could not reasonably relate agency's request for cost
detail to the specific informational inadequacies. Contracts -
Negotiation - Evaluation Factors - Evaluators - Allegations of Bias,
Unfairness, etc. - Not Supported by Record
Grounds of protest concerning failure of all initial proposal
evaluators to evaluate final proposals, procuring agency's refusal to
release documents bearing on evaluation of proposals, and procuring
agency's alleged bias against small concerns are without merit since:
(1) final proposal evaluation did not contradict solicitation; (2)
procuring agency, not General Accounting Office, determines
releasability of documents; and (3) procuring agency's position that
bias in evaluation did not exist is supported by record. Contracts -
Negotiation - Prices - "Best Buy Analysis"
Given closeness of scoring and inadequate negotiating approach,
offeror having "best buy" for three phases of decontamination and
cleanup contract is in doubt.
Matter of: Logistic Systems Incorporated, June 24, 1980:
Logistic Systems Incorporated (LSI) protests the award of a contract
to Rockwell International Corporation (Rockwell) under request for
quotations (RFQ) DAAK11-79-Q-0095 issued by the Chemical/Ballistics
Procurement Division, United States Army Armament Research and
Development Command, Aberdeen Proving Ground, Maryland. The
solicitation was for the decontamination and cleanup of Frankford
Arsenal, Philadelphia, Pennsylvania, so that the area could be turned
over to the public for recreational or industrial use.
LSI primarily challenges the adequacy of discussions leading to the
contract which was awarded under a "best buy" analysis at an estimated
cost ($6,302,187) nearly 50 percent higher than LSI's proposed cost for
the work. We conclude the discussions in question should have been more
extensive.
In 1976 Frankford Arsenal, a 110-acre facility located within the
city limits of Philadelphia, was determined to be excess of the Army's
needs. During the 160-year period that the facility had been in
existence, a wide range of explosive, pyrotechnic, radiological and
industrial chemicals were utilized in carrying out the facility's
research, design and manufacturing mission. A sampling and analysis
program was then undertaken to determine the extent of radiological
contamination and explosive residues present at the arsenal.
The RFQ, which was issued on May 8, 1979, divided the cleanup and
decontamination of Frankford Arsenal into three phases. The first phase
would consist of verifying detailed decontamination and cleanup methods
and procedures for the contaminants present at the arsenal. Based on
the information generated in phase I, detailed plans and standard
operating procedures to conduct the cleanup would then be prepared under
phase II. Under the terms of the solicitation, these plans and
procedures would have to be submitted to the Government for approval
prior to starting operations. Upon approval by the Government, the
contractor would conduct the actual decontamination and cleanup
operations under phase III.
The RFQ also informed offerors that proposals would be evaluated on
the basis of the following criteria listed in descending order of
importance:
(1) Technical approach
(2) Management, Personnel and Facilities
(3) Cost Realism
(4) Proposal quality and Responsiveness
Moreover, listed in the RFQ were the mathematical formulas which were
to be used to determine the "best buy" for the work. Under these
formulas, "technical merit," which included all four evaluation factors,
carried three times the weight of cost quantum.
On the closing date for receipt of proposals, June 14, 1979, the Army
received five proposals. These proposals were then submitted to the
Army's Toxic and Hazardous Materials Agency for technical evaluation.
Teledyne Isotopes, Inc., Rockwell, and LSI were found to be qualified
and thus placed within the zone of consideration. On July 30, 1979, the
contracting officer sent letters to the three qualified firms requesting
certain price data and the submission of best and final offers. Best
and final offers were received on August 6, 1979.
The Toxic and Hazardous Materials Agency was then requested on August
7, 1979, to review the best and final offers to determine whether any
changes in technical scoring were necessary. The Agency stated on
August 8, 1979, that there should be no change in the previously
assigned technical ratings. Between August 9 and September 20, 1979,
the Army conducted a "best buy" analysis in accordance with the terms of
the solicitation and the analysis was reviewed by its Board of Award.
Because of this analysis, a cost-plus-fixed-fee contract was awarded to
Rockwell on September 21, 1979. By letter dated September 25, 1979, LSI
submitted its protest against the award to Rockwell.
There is no dispute as to the essential facts pertinent to the
"discussions" issue. Both LSI and the Army agree that the questions
posed in the contracting officer's July 30 letter constitute the only
discussions that were held concerning the LSI proposal. Issue is taken,
however, as to whether these discussions constituted "meaningful"
discussions as contemplated by 10 U.S.C. 2304(g)(1976) and the decisions
of our Office. See, for example, B-173677, March 31, 1972, as
summarized in 51 Comp.Gen. 621(1972).
The contracting officer's July 30, 1979, letter to LSI asked that the
company give consideration to the following:
a. In order to adequately judge analytical costs for each phase of
the contract, you should provide the Government with the number of
samples taken and the analyses performed in each of the areas addressed,
i.e., cleanup of 400 area, cleanup of radiological material, cleanup of
heavy metals and cleanup of explosives.
In addition, the associated manhours and costs for both prime contractor
and subcontractors should also be provided.
b. Your total Phase I manhours would appear excessive. What is your
rationale for these projected manhours?
c. Your estimated 4,500 manhours to prepare detailed SOP's would
appear inadequate. What is your rationale for these projected manhours?
d. You present analytical manhours during Phase II which deals with
preparation of operational SOPs. Do the analytical manhours represent
actual analytical effort or time spent by analytical personnel preparing
SOP's?
e. Your estimate (3.9 million square feet) of the area to be painted
is considerably less than that contemplated by the Government. How was
your estimate computed?
f. Backup data relating to your estimate of $20,600 disposal cost
for radiological material during Phase III should be provided. Your
allocation for disposal in this area is considered inadequate. What is
the rationale for your estimate?
g. What is the rationale for the analytical costs required during
Phase III for cleanup of the 400 area?
h. What is the rationale for the analytical manhours required during
Phase III for painting and cleanup of heavy metals? The total manhours
would appear excessive.
The contracting officer argues that a detailed review of these
questions would have necessarily led LSI to a discovery of proposal
areas judged "weak," rather than "deficient," by the Army. These areas
and the paragraphs of the July 30 letter which purportedly relate to the
weaknesses, in the contracting officer's view, are as follows:
1. Sampling and analyses for heavy metals and explosives treated too
lightly (paragraphs a, g and h).
2. Insufficient information on laboratory facilities and
capabilities (paragraphs a, g and h).
3. Underestimated laboratory requirements (paragraphs a, g and h).
4. Underestimated analytical and painting requirements (paragraphs
a, g and h).
5. Details on proposed procedures for heavy metals and explosives
cleanup lacking (paragraph b).
6. Treatment of waste water contaminated with heavy metal waste not
addressed (paragraph b).
7. Little original ideas or specific details provided for Phase I so
that proposal repeated what was in the RFQ (paragraph b).
8. Subcontracting not fully defined (paragraph e).
9. Allocation for radiological waste disposal low (paragraph f).
Under the "best buy" formula, these weak areas sufficiently offset,
in part, LSI's $2 million cost advantage, therefore dictating award to
Rockwell. Apart from this list of weaknesses, the record also shows
that the Army considered LSI's proposal to contain an additional
weakness regarding alleged inadequate information about proposed
personnel.
As to the weaknesses concerning laboratory facilities and personnel,
the contracting officer has emphasized the importance of the areas and
why he though explicit discussion of the weaknesses would have been
inappropriate, as follows:
With respect to the factor management, personnel and facilities,
there was some significant difference between the score assigned LSI and
that assigned the other two firms. However, each of the competing firms
had equal opportunity to establish a proposed management plan, to engage
qualified personnel, to arrange for facilities, and to communicate their
background and experience. In this particular case, the difference
sprang not merely from any weakness of the LSI proposal, but the
superiority of the resources available, in terms of personnel and
facilities, to the other two competing offerors. To negotiate these
factors with LSI toward upgrading its proposal and to giving LSI further
opportunity to seek other personnel and facilities would have
constituted leveling rather than any meaningful negotiation.
Additionally, the contracting officer's legal counsel was offered a
defense of the negotiating approach which he believes is expressly
consistent with Defense Acquisition Regulation Sec. 3-805.3 (DAC #76-7,
April 29, 1977). The argument is as follows:
DAR 3-805.3(a) requires that when discussions are held that the
offeror be advised of deficiencies * * * . Deficiencies are defined as
parts of a proposal which do not satisfy the Government's requirements.
The contracting officer has indicated * * * that LSI had numerous
weaknesses and overall its proposal was inferior to that of (the other
offerors) * * * . (But there) were no areas where LSI failed * * * to
address the RFQ requirements.
* * * the contracting officer does not have to advise an offeror of
its weaknesses * * * . (But as) a practical matter, the contracting
officer will normally inform an offeror of its weakness * * * . This is
exactly what the contracting officer did in this case.
In reply, LSI challenges the Army's position that by questioning
manhours and costs, an implied notification is being made concerning
specific weaknesses in technical approach. LSI alleges that it was not
alerted to any weaknesses in technical approach by the contracting
officer's July 30, 1979, letter which merely required LSI to "adequately
judge analytical costs for each phase of the contract." The remaining
paragraphs of the letter indicated only that either manhours or costs in
various areas appeared excessive or inadequate and requested a rationale
from LSI. In addition, LSI points out that prior to the July 30, 1979,
letter the contracting officer on July 10, 1979, issued a communication
to all competing offerors asking that manhours and costs be resupplied
on a predetermined evaluation format by July 11, 1979. LSI asserts that
it assumed the request for additional information on July 30, 1979,
regarding the same cost and manhours categories meant only that further
comparisons were being made between the competing offerors and that the
contracting officer was attempting to insure that he was evaluating all
offerors on the same basis.
Most importantly, LSI alleges that the contracting officer's July 30,
1979, letter did not specifically apprise the company of any
"weaknesses" at all in its proposal. Finally, LSI contends that the
contracting officer abused his discretion in failing to conduct more
comprehensive discussions in view of the approximately $2.1 million
difference between the proposals.
When an agency conducts competitive range discussions, it must make
those discussions meaningful. Raytheon Company, 54 Comp.Gen. 169(1974),
74-2 CPD 137. At the same time, we have also recognized that the
requirement for meaningful discussions should not be interpreted in a
manner which discriminates against or gives preferential treatment to
any competitor. Union Carbide Corporation, 55 Comp.Gen. 802(1976), 76-1
CPD 134. Since disclosure to other proposers of one proposer's
innovative or ingenious solution to a problem is clearly unfair, such
"transfusion" should be avoided. 51 Comp.Gen. 621, supra. It is also
unfair to point out deficiencies or weaknesses when to do so would
result in technical leveling by helping one proposer to bring his
original inadequate proposal up to the level of other adequate proposals
where these deficiencies or weaknesses were the result of the proposer's
own lack of diligence, competence, or inventiveness in preparing his
proposal. 52 Comp.Gen. 870(1973).
The record shows that LSI scored lower than the other firms in the
zone of consideration under each of the above-described evaluation
criteria with the widest disparity existing in technical approach, the
most heavily weighted of the evaluation criteria. Even if we were to
conclude that LSI could directly infer the evaluation inadequacies
conveyed by some of the questions, this conclusion would not apply to
the informational inadequacies in proposed personnel and "laboratory
facilities and related capabilities." In our view, LSI could not have
reasonably related the Army's request for cost details to the specific
inadequacies found in these areas. While LSI might have inferred from
paragraphs (a), (g) and (h) of the Army's July 30 letter that the
company had generally underestimated work requirements, we do not think
that it would have also inferred the presence of specific informational
inadequacies in these areas.
Where, as here, a proposal in the competitive range is
informationally inadequate so that the agency evaluators cannot
determine the extent of the offeror's compliance with its requirements,
the agency should use the discussion process to attempt to ascertain
exactly what the offeror is proposing. In this connection, we have
recognized that where a solicitation specifically calls for certain
information, the agency should not be required to remind the offeror to
furnish the necessary information with its final proposal. Value
Engineering Company, B-182421, July 3, 1975, 75-2 CPD 10.
But here the solicitation was not so specific in calling for information
on the offeror's personnel and laboratory facilities.
As to personnel, the RFQ required offerors to provide:
Management Flow Chart
Project organization chart showing personnel by name in each job
category
Resumes for Program Manager, key engineering, and support personnel
Experience, educational background and record of past accomplishment
of key personnel * * * .
The Army found LSI's project chart to be deficient because it
included names of personnel in only 11 of 20 organizational blocks found
on the chart. Specifically, the contracting officer states that LSI's
proposal was "weak" because it omitted the name and qualifications of
LSI's "explosives and heavy metals team leader." In reply LSI argues
that it "did identify * * * all the key technical personnel involved in
the decision making process who would be directly assigned to this job."
Contrary to the contracting officer's statement, LSI's project chart
does not identify a position entitled "explosives and heavy metals team
leader;" rather the organizational block is entitled "Explosives and
Heavy Metals Team" which is shown as operating directly under LSI's
named manager for "Explosives and Heavy Metals Decontamination."
Moreover, we infer from the contracting officer's statement that LSI's
proposal would not have been considered informationally deficient in
this particular organizational block had the putative "team leader" been
identified even if the rest of the team members not been identified.
This inference runs counter to a literal interpretation of the phrase
"in each job category" if one assumes that the phrase was intended to
denote each organizational block shown on an offeror's project chart.
Consequently, we do not consider the RFQ's personnel requirements to
have been so specific that the Army can be held to have been excused
from discussing LSI's perceived informational deficiencies relating to
personnel whom LSI evidently did not consider to be "key." At a minimum,
the present record suggests possible misinterpretation of the phrase "in
each job category" by both the Army and LSI. This misinterpretation, in
itself, would have justified explicit negotiation in order to assure an
appropriate informational exchange between the parties on personnel
requirements.
As to laboratory facilities, the RFQ merely asked offerors to show
how their "laboratory * * * equipment/techniques were adequate for the
requirements of the work." In our view, this RFQ requirement can only be
read as a general call for information. Since the requirement was
stated in general terms, it is our view that the Army was obligated to
have explicit discussions with LSI if there were specific informational
inadequacies relating to laboratory facilities.
The comments of some of the Army evaluators regarding LSI's proposed
laboratory facilities were:
(1) Radiation only-- instrumentation not provided for heavy metal
analytical procedures;
(2) Radiation excellent-- others?;
(3) No details in equipment and techniques other than some radiation;
(4) Subcontract-- Lab Facilities except PMC suspect.
In reply to the Army's criticism that its proposal in these areas was
informationally inadequate, LSI contends that the "alleged weakness
could have been clarified very simply if any meaningful negotiations had
been conducted."
From our review of the record, it appears that the evaluators were
uncertain as to the adequacy of LSI's laboratory facilities in areas
other than radiation. In view of the evaluator's uncertainties further
exploration would have been worthwhile during the course of the
competitive range discussions. This conclusion is particularly
appropriate given the closeness of the revised numerical rankings of
offerors (the awardee was only .01178 ahead of LSI on a revised "Best
Buy Index" evaluation) and the potential cost savings theoretically
available under an award to LSI. Moreover, by our calculations, a
slight increase in LSI's "technical" score (perhaps as little as one
point) might have displaced Rockwell under the "best buy" provision of
the RFQ.
Thus, we believe that the informational inadequacies relating to
laboratory facilities and personnel should have been pointed out to LSI
during the discussion process. We are mindful of the Army's argument
that such discussions were not required under DAR Sec. 3-805.3, above.
Neither, however, does the regulation sanction the Army's failure to
point out informational inadequacies which prevent the contracting
agency from ascertaining exactly what the offeror is proposing to
furnish and whether it will meet the Government's requirements. In
short, a contracting agency may not avoid its duty to conduct meaningful
discussions by labelling informational inadequacies in a proposal as
"weaknesses" rather than "deficiencies." Indeed the Army states that as
a practical matter "the contracting officer will normally inform an
offeror of its weakness."
Finally, on this point, we do not accept the contracting officer's
position that discussion of LSI's informational inadequacies would have
constituted improper leveling. In our opinion leveling is not involved
where the sole purpose of the discussions is to ascertain what the
offeror is proposing to furnish.
We think this result is consistent with 52 Comp.Gen. 466(1973) where
we held:
* * * we believe it is incumbent upon Government negotiators to be as
specific as practical considerations will permit * * * . In view of the
substantial difference between the evaluated amounts of (the
protester's) offer and the award price ($388,073 v. $635,600), we do not
find the record persuasive that savings could not have been effected * *
* had those offerors in the competitive range been called in for
detailed discussions * * *
This situation is distinguishable, therefore, from the facts in
Systems Engineering Associates Corporation, B-187601, February 24, 1977,
77-1 CPD 137, cited by the Army, where we upheld the procuring agency's
decision not to conduct technical discussions. In that case, unlike
here, the protester did not show prejudice resulting from the lack of
discussions; moreover, the potential savings that might have been
obtained through negotiations were not nearly as significant as here.
LSI has also raised other issues about the propriety of the Rockwell
award. Specifically, LSI asserts:
(1) all proposal evaluators did not evaluate final proposals to LSI's
prejudice;
(2) the Army improperly refused to release information about the
evaluation of proposals;
(3) the Army's actions show bias against small business concerns;
(4) mistakes were made in evaluating LSI's proposal.
As to LSI's argument that some proposal evaluators did not evaluate
final proposals, the Army replies that one member of the evaluation
panel "did not feel that his input (in reviewing final offers), even if
he had been contacted (for the review), would have had any significant
impact (on the evaluation of final proposals)." In any event, the Army
argues that LSI was not prejudiced by this circumstance since:
(1) "all final offers were treated equally and received full and
adequate consideration;"
(2) the "RFQ did not define the number of individuals on the
evaluation team;"
(3) there is "no requirement that a minimum number (of evaluators) be
on the team, nor that number be constant."
In reply, LSI argues that at least "three, not one, evaluation
committee members did not consider the final offers" and that this lends
evidence to LSI's contention that the award was "predetermined."
Our Office has recognized that all of the original evaluators need
not rescore revised proposals.
As we stated in Ray F. Weston, Inc., B-197866, B-197949, May 14, 1980:
Weston challenges the manner in which the revised proposals were
evaluated since only two members of the TEP conducted the reevaluation
rather than reconvening the entire TEP as required by the RFP.
However, the REP stated that "the revised proposal will be
reevaluated and scored in accordance with the solicitation evaluation
criteria." This does not require the entire TEP to reevaluate the
revised proposals and our Office has recognized that all of the original
evaluators need not rescore the revised proposals. Cheechi and Company,
B-187982, April 4, 1977, 77-1 CPD 232, and Columbia Research
Corporation. B-193154, May 15, 1979, 79-1 CPD 353.
Here, the RFQ stated that initial quotations would be evaluated by a
"team of government personnel" and that the "initial evaluation of
proposals may be revised in light of * * * (final offers)." We do not
consider that these RFQ statements were breached in the final evaluation
of proposals. In any event, we find no evidence in the record to
support LSI's allegation that the selection of Rockwell was
"predetermined."
LSI takes exception to the Army's decision not to release many
procurement documents bearing on the evaluation of proposals. LSI
suggests it would be appropriate for GAO to release these documents
directly to LSI.
We have consistently held that our Office is without authority to
determine what records must be released by other Government agencies;
therefore, we cannot honor LSI's request. Security Assistance Forces
and Equipment International, Inc., B-196008, March 14, 1980, 80-1 CPD
198.
LSI argues that the circumstances of this procurement show bias
against LSI's status as a small business concern. The Army insists that
there is no evidence to support the allegation and that, as the
procurement was not set aside for small business, "no mechanism existed
wherein LSI could have been given preferential treatment." Based on our
review of the record, we cannot question the Army's position.
Related to the discussion issue, LSI also argues that the Army
erroneously interpreted parts of its proposal (for example, in
considering LSI's subcontracting plans not to be "fully defined") and
that our Office should therefore independently evaluate the points
assigned proposals to determine if the award was proper.
It is not our function, however, to independently evaluate proposals
in the manner suggested by LSI. See, for example, Ads Audio Visual
Productions, Inc., B-190760, March 15, 1978, 78-1 CPD 206. However,
given the closeness of the scoring situation and the inadequate
negotiating approach, the offeror having the "best buy" is in doubt.
Consequently, in sustaining, in part, LSI's protest, the most that we
could recommend is a reopening of negotiations with LSI and another
evaluation of its proposal, rather than an immediate termination of the
contract and award to LSI as originally requested by the company. See
Union Carbide Corporation, 55 Comp.Gen. 802(1976), 76-1 CPD 134.
In deciding whether to recommend action which may lead to a possible
termination of a contract, we consider the good faith of the parties,
the extent of performance, the cost to the Government, the urgency of
the procurement, and other appropriate noncost effects to the
Government, apart from the procurement deficiency involved and its
effect on the integrity of the procurement system. See System
Development Corporation, B-191195, August 31, 1978, 78-2 CPD 159, and
cases cited in text at page 12.
On May 23, 1980, the Army informed us that phases I and II of the
contract were 100 percent complete as compared with 80 percent
completion rates for these phases reported by the Army to us on April 8;
moreover, as of May 23, Rockwell had supplied the Army with 100 percent
of the data to be developed under these phases. Phase III, which calls
for the conduct of the actual cleanup and decontamination of Frankford
Arsenal, was almost 20 percent complete. Further, out of a total
projected contract cost of $6.3 million, approximately $2 million has
been expended. Based on these facts, the Army estimates that
termination costs would be in the area of $500,000.
Given the status of the work, moreover, the Army insists that a
recompetition for remaining Phase III work under a revised solicitation
would be the only practical remedy now rather than the reopening of
negotiations solely with LSI under its proposal for all three phases of
the work. On this point, the Army insists that a "period of 8 months
would be required to prepare a revised scope of work, issue, evaluate
and award a new contract (for remaining Phase III work)." The Army has
also informed us that, should Rockwell's contract be terminated as a
result of the recompetition and a new contract awarded, the new
contractor would require 3 additional months to "assimilate * * *
information from (Phases I and II), assemble a team of personnel and
equipment, and let subcontracts to initiate further personnel and
equipment, and let subcontracts to initiate further progress on the
resulting contract."
These delays, the Army contended, would also cause adverse side
effects to the economy of the city of Philadelphia and the operations of
the United States Treasury Department.
Further, the Army stated it would incur an additional "caretaker" cost
of $200,000 for each month of the delay.
In reply LSI argues:
(1) It would take 3 months, rather than 8 months, to reprocure under
a revised solicitation for phase III involving a "firm, fixed-price
effort" under which "LSI would be willing to bid;"
(2) Contrary to the Army's view that it would take 3 months for a new
contractor to become operational, LSI could be ready within "two to
three weeks;"
(3) Based on information obtained by LSI the reported adverse side
effects are either speculative or nonexistent;
(4) Since the Army has already awarded a contract for "caretaker"
services at approximately $47,000 per month, it is not appropriate to
consider the cost of that service as a reason for denying a
recompetition of phase III.
Applying the above criteria for deciding whether to recommend a
recompetition of the remaining phase III work, we conclude that, on
balance, the recommendation would not be appropriate.
First, there is no indication, in our view, that the discussion
shortcoming here was made other than in good faith under the negotiation
regulation in question.
Second, there is no question that substantial performance has been
accomplished under the contract and that substantial costs would be
involved in any partial termination of the contract. Apart from the
$500,000 in termination costs, there would be several additional months
of caretaker costs at approximately $47,000 per month to be incurred
(assuming LSI's monthly cost figure for the service is correct) in the
event Rockwell's contract is ended; on this score, LSI apparently
assumes that the Army is not intending to terminate the current
caretaker contract as soon as possible after phase III is complete-- an
assumption which does not square with the position implicit in the
Army's April 8 and May 23 statements. Moreover, we are unable to assume
that LSI's proposed price under a revised solicitation would contain the
same pricing advantage over competitors that the company possessed under
the original solicitation given the differences in the solicitations.
Thus, even if we accept LSI's argument that the reported adverse side
effects to the economy of Philadelphia and the operations of the
Treasury are not accurate, we consider the above analysis precludes our
recommending the requested recompetition.
However, by letter of today we are advising the Secretary of the Army
of our concern with the Army's failure to point out deficiencies in the
protester's proposal in view of the closeness of the revised numerical
rankings of the offerors and the potential 2.1 million dollar cost
saving theoretically available under any award to the protester. We are
also requesting that the Secretary advise us of the action taken to
prevent a recurrence of the above situation.
B-195431, June 23, 1980, 59 Comp.Gen. 533
Contracts - Awards - Small Business Concerns - Set-Asides - Criteria for
Set-Aside Determination - Military Procurement
Contracting officer need not make determinations tantamount to
affirmative determinations of responsibility on expected small business
bidders before determining to set aside procurement for exclusive small
business participation. Under Defense Acquisition Regulation
1-706.5(a)(1), contracting officer has broad discretion and is only
obligated to make informed business judgment that there is "reasonable
expectation" of sufficient number of responsible small business bidders
so that awards may be made at reasonable prices taking into account
circumstances which exist at time determination to set aside is made.
Contracts - Protests - Allegations - Not Supported by Record
Protest alleges unwritten Department of Defense/Department of Army
policy to set aside procurements for exclusive small business
participation whenever two or more small businesses are expected to
compete without considering responsibility of anticipated small business
bidders. Protest is denied because record does not support allegation.
Contracts - Awards - Small Business Concerns - Fair Proportion Criterion
Statutory provisions that "fair proportion" of Government contracts
be awarded to small business concerns refer to proportion of total
Government awards for all goods and services. Therefore, Department of
Army may properly set aside significant proportion of Government
contracts for particular category of items (or even make class set-aside
of all contracts for particular items) without violating statutory
provisions. Contractors - Responsibility - Contracting Officer's
Affirmative Determination Accepted - Exceptions - Not Supported by
Record
Ordinarily General Accounting Office (GAO) does not review protests
against affirmative determinations of responsibility unless fraud is
alleged on part of procuring officials or solicitation contains
definitive responsibility criteria which have not been met. Standard is
much the same as that followed by courts which view responsibility as
discretionary matter not subject to judicial review absent fraud or bad
faith. Since protester does not allege fraud or failure to apply
definitive responsibility criteria, protester has failed to meet
standard for review by GAO or courts. Bids - "Buying In" - Not Basis
For Precluding Award
Allegation of buy-in does not provide basis upon which award may be
challenged. Contracts - Awards - Small Business Concerns - Set-Asides -
Partial v. Total - Administrative Determination
Decision to make 100-percent small business set-aside is not
objectionable where contracting officer reasonably determined that
procurement was within capability of small business concerns and that
there was reasonable expectation of receiving adequate competition.
Contracts - Awards - Approval - Protest Pending
Awards made pending resolution of protests before GAO were properly
made where awards were approved at appropriate level above contracting
officer and GAO was notified of intention to make awards.
Matter of: Fermont Division, Dynamics Corporation of America; Onan
Corporation, June 23, 1980:
Fermont Division, Dynamics Corporation of America (Fermont), and Onan
Corporation (Onan) have protested under invitation for bids No.
DAAJ09-79-B-5034, issued by the United States Army Troop Support and
Aviation Materiel Readiness Command (TSARCOM) for large quantities of 5
and 10 kilowatt, diesel engine, generator sets, and a small quantity of
related generators. The protests relate to the contracting officer's
decision to set aside the procurement for exclusive participation by
small businesses.
We find no merit to the protests.
In 1978, during the preliminary planning stages for this procurement,
the contracting activity received an inquiry from the John R.
Hollingsworth Company (Hollingsworth) concerning the possibility of
setting aside a portion of the proposed procurement for exclusive small
business participation. TSARCOM also received copies of correspondence
Hollingsworth had sent to a United States Senator and a Small Business
Administration (SBA) representative, dated September 5, 1978, pointing
out that the proposed quantities for the impending procurement would be
sufficiently large as to make a partial set-aside for exclusive small
business participation appropriate. Shortly thereafter, the SBA
representative issued to TSARCOM a preliminary request that the
procurement be made a 50-percent set-aside for small businesses.
In response, TSARCOM prepared a letter to the Senator which explained
that the only known previous supplier of 5 and 10 kilowatt generator
sets was Onan, a large business, and indicated that the production run.
Therefore, TSARCOM did not believe that any part of the requirement for
10 kilowatt sets could be set aside at that time. This letter also
showed that a careful review of the 5 and 10 kilowatt generator program
would be undertaken. The contracting officer acknowledged the SBA's
preliminary request by letter of September 20, 1978, and stated that
TSARCOM proposed course of action regarding possible set-asides would be
coordinated with the SBA representative when program quantities and
funds were better defined.
Approximately 7 months later, on April 16, 1979, the contracting
officer issued a determination and findings that the procurement of 5
and 10 kilowatt generator sets should be procured under a 100-percent
small business set-aside since he had determined that a sufficient
number of responsible small business concerns would bid so that award
could be made at reasonable prices in accord with Defense Acquisition
Regulation (DAR) Sec. 1-706.5(a)(1) (1976 ed.). In support of the total
set-aside determination the contracting officer stated in pertinent
part:
* * * In the previous procurement of the 5 & 10 KW Generator Sets,
competition was unrestricted with Bogue Electric a Small Business
Concern receiving the award. John R. Hollingsworth a small business and
Onan a large business were close behind in fierce competition. Another
small business Libby Welding is a keen competitor of the above
companies. All of these companies have produced Generator Sets of a
comparable size to the 5 & 10 KW Sets. The small quantity of the first
program year (FY 79) of the 10 KW Set does not lend itself to a 50%
Small Business Set-Aside.
On April 17, 1979, the contracting officer, with the concurrence of
the SBA representative, recommended that the proposed procurement of 5
and 10 kilowatt generator sets be set aside 100-percent for small
business participation.
The Director of Procurement and Production, TSARCOM, forwarded a
procurement plan to the Assistant Secretary of the Army for approval on
April 20, 1979, which showed that TSARCOM had decided to set aside the
procurement for exclusive participation by small businesses. The
project manager responded to the procurement plan on April 30, 1979, and
objected to the recommendation to make a total small business set-aside
out of the procurement. The project manager recommended that both large
and small businesses be allowed to bid in unrestricted competition. He
indicated that small businesses which were likely to bid included
Hollingsworth, Libby Welding Company (Libby), and Bogue Electric
Manufacturing Company (Bogue). The project manager pointed out that
Bogue had not performed well on the previous contract and that he
believed Bogue to be in a weak financial position. He concluded that
only Libby and Hollingsworth would be able to compete if the procurement
were set aside for small businesses. In light of the large quantity of
generator sets being procured and the high estimated cost of such
equipment, the project manager did not believe that the Government would
be guaranteed adequate competition.
During this period, Onan representatives had apparently contacted
Department of Defense officials to express their concern about the
exclusion of large businesses from competition and the "shrinking
industrial base." In response to inquiries from Department of Defense
personnel and the objections voiced by the project manager, the
contracting officer held a meeting on May 1, 1979, to discuss the
possibility of reversing his decision. The fact that Onan, a large
business, had developed the generators used in these generator sets, and
the fact, that Bogue, a small business, was not performing
satisfactorily on the previous contract, were among the arguments made
in favor of reversing the set-aside decision. The SBA representative at
that meeting indicated that he would not agree to any change in the
set-aside status.
After review of the above arguments, the Director, Procurement and
Production, TSARCOM, by memorandum of May 11, 1979, affirmed the
contracting officer's determination and the procurement plan's
recommendation to set aside this procurement for exclusive small
business participation. The Director acknowledged that an unrestricted
procurement had originally been considered but rejected in view of the
SBA representative's insistence on at least a partial set-aside.
TSARCOM procurement personnel had concluded that the applicable
provisions of the DAR supported the SBA representative's view. TSARCOM
procurement officials also determined that a partial set-aside would not
be in the Government's best interest because it would result in
duplication of procurement and contract administration costs.
This memorandum stated that at least two small businesses, Libby and
Hollingsworth, were expected to compete, that these firms have been very
competitive in the past, and that these firms have the capability to
successfully produce the items in accord with the delivery schedule.
Moreover, TSARCOM took into account that, since the engines used in
these generator sets are source-controlled items which must be purchased
from Onan, a large business would benefit from about one-third of the
program dollars spent.
Solicitation DAAJ09-79-B-5034 was issued on July 5, 1979, as a
set-aside for exclusive small business participation, and called for
bids on either a single-year or multi-year basis (or both) with options.
Fermont filed its initial protest against TSARCOM's determination to
set aside the procurement for small business participation only in our
Office on August 10, 1979, prior to the August 23, 1979, bid opening.
Bids were received from four small businesses: Hollingsworth, Libby,
Seaboard International Equipment Company, and Precision Products.
(Precision Products withdrew its bid by letter of September 20, 1979).
On September 12, 1979, Onan filed a Complaint in the United States
District Court for the District of Minnesota, Fourth Division (Civil No.
4-79-423), seeking, among other things, a declaratory judgment and
injunctive relief on matters related to TSARCOM's determination to set
aside this procurement exclusively for small business participation.
The Court, in its Memorandum and Order dated September 24, 1979, granted
Onan's motion for limited discovery and denied Onan's motion for a
temporary restraining order. Pending resolution of Fermont's protest
before our Office and Onan's litigation before the United States
District Court, TSARCOM proceeded on September 28, 1979, to make split
awards to Hollingsworth for a multi-year contract for 5 kilowatt
generator sets and stator generators and to Libby for a single-year
contract for supply of 10 kilowatt generator sets. On October 15, 1979,
a hearing was held before the District Court, and by Memorandum and
Order of October 23, 1979, the Court indicated its interest in our
resolution of the issues raised in Onan's September 12, 1979, Complaint.
Counsel for Onan then filed its protest in our Office on November 1,
1979, but indicated that negotiations were being conducted with the
Department of Defense and the Department of Justice with regard to
limiting the issues to be resolved by our Office. By letter of December
12, 1979, the Court wrote us and indicated that it desired our decision
on the three counts of Onan's September 12, 1979, Complaint, and that
our Office should fully develop the protest in accord with our Bid
Protest Procedures (4 C.F.R.part 20(1980)).
In accordance with the court's request of December 12, 1979, we have
limited our consideration of Onan's protest to those issues which were
originally raised in Onan's September 12, 1979, Complaint.
In Counts I and II of its September 12, 1979, Complaint, Onan
concedes that it is the policy of Congress, as expressed in the Armed
Services Procurement Act of 1947 (10 U.S.C. 2301(1976)) and the Small
Business Act (15 U.S.C. 631(1976)), that a "fair proportion" of all
Government contracts be placed with small business concerns. Onan
points out that this policy has been implemented by the Department of
Defense in section 1, part 7, of the DAR. However, Onan also points out
that DAR Sec. 1-706.5(a)(1) required the contracting officer to make a
determination that a reasonable expectation existed that bids would be
obtained from a sufficient number of responsible small business concerns
so that awards would be made at reasonable prices. Onan protests that
it is a general policy of the Department of Defense and the Department
of the Army to totally set aside procurements for small businesses
whenever there are two small business concerns which are expected to bid
on the procurements without considering the matter of the responsibility
of the expected small business bidders. Onan alleges that this illegal
policy directive was followed by the contracting officer and other
TSARCOM procurement officials in contravention of the specific
requirements of DAR Sec. 1-706.5(a)(1).
At the time the determination to set aside this procurement was made,
DAR Sec. 1-706.5(a)(1) stated, in pertinent part:
* * * the entire amount of an individual procurement or a class of
procurements, including but not limited to contracts for maintenance,
repair, and construction, shall be set aside for exclusive small
business participation (see 1-701.1) if the contracting officer
determines that there is reasonable expectation that offers will be
obtained from a sufficient number of responsible small business concerns
so that awards will be made at reasonable prices. * * *
Onan argues that this provision requires a contracting officer to
consider the responsibility of some or all of the potential small
business offerors prior to making a determination to set aside a
particular procurement. While Onan concedes that the contracting
officer need not make a complete or final responsibility determination
on any of the prospective offerors, it is clear that Onan interprets the
DAR as requiring something very close to affirmative responsibility
determinations before a set-aside can be made. Onan appears to
interpret the phrase "reasonable expectation" as calling for a strict
standard approaching virtual certainty. We do not agree with this
interpretation, and we find that DAR Sec. 1-706.5(a)(1) does not require
such an interpretation.
The responsibility of a prospective contractor is to be determined
after bid opening on evidence available up to the date of award. See,
for example, Eastern Microwave Corporation, B-181380, May 27, 1975, 75-1
CPD 312. A contracting officer's determination not to set aside a
procurement under DAR Sec. 1-706.5(a)(1) need not be referred to the SBA
for a responsibility determination under the certificate of competency
procedures. Cosmos Engineers, Inc., B-193203, December 15, 1978, 78-2
CPD 419. We believe that allowing contracting officers to make
determinations concerning prospective offerors' responsibility prior to
deciding whether to set aside procurements would amount to a system
whereby small businesses would have to be prequalified before they could
compete under exclusive small business set-asides. Such a procedure
would unduly restrict competition. While we have allowed
prequalification of prospective offerors in limited circumstances where
the usual preaward methods of determining responsibility were found
inadequate because the urgency of the requirements restricted the extent
of the responsibility investigations which could be performed, there are
no such compelling circumstances in the present case. See, for example,
53 Comp.Gen. 209(1973). Accordingly, it is clear that responsibility
determinations as that term impacts on eligibility for award cannot
properly be made prior to bid opening.
Moreover, relevant DAR provisions require that responsibility
determinations for award purposes be made after bid opening. Section
1-705.4(c)(i) states that under no circumstances should the matter of
the responsibility of a small business bidder be referred to the SBA
before the contracting officer makes a determination that the small
business bid is responsive; section 1-905.1(d) indicates that
information necessary to make responsibility determinations shall be
obtained only concerning contractors within range for contract award;
section 1-905.2 indicates that information regarding the responsibility
of a prospective contractor shall be obtained "after bid opening" and
should be on "as current basis as feasible with relation to the date of
contract award." We think these provisions give no support to the
argument that responsibility determinations or anything close to such
determinations are to be made prior to determining that a particular
procurement be totally set aside for small business participation under
DAR Sec. 1-706.5(a)(1).
We also believe that it would be impractical to require contracting
officers to make responsibility determinations or anything close thereto
prior to setting aside procurements.
The present procurement illustrates this point. The solicitation was
sent to 47 small businesses. Every one of those firms could potentially
have been in line for award if all had bid. To require responsibility
evaluations on all 47 prospective contractors or even those which were
considered most likely to receive award would be an unnecessary,
extremely time consuming, and expensive task, which would require the
contracting officer to speculate as to which firms would bid, whether
their bids would be responsive, and whether the bids would be low enough
to be in line for award.
While we are holding that contracting officers are not required to
make responsibility determinations on prospective small business bidders
before determining to set aside procurements for exclusive small
business participation, we do not think that our holding reads out of
DAR Sec. 1-706.5(a)(1) the word "responsible." We believe that DAR Sec.
1-706.5(a)(1) clearly imposes an obligation on a contracting officer to
make an informed business judgment that there is a "reasonable
expectation" of offers from a sufficient number of responsible small
businesses so that award can be made at reasonable prices. The
standards of responsibility enunciated in DAR Sec. 1-903 are certainly
relevant to deciding whether such a "reasonable expectation" exists.
However, the contracting officer may exercise broad discretion in making
this determination.
The extent of this discretion is evidenced by a review of our
decisions in the area. There is no requirement that the contracting
activity perform an in-depth survey prior to initiating a small business
set-aside. See U.S. Divers Company, B-192867, February 26, 1979, 79-1
CPD 132. The past procurement history of the item or similar items is
always an important factor. DAR Sec. 1-706.5(a)(1); Tufco Industries,
Inc., B-189323, July 13, 1977, 77-2 CPD 21. In this regard, we have
upheld a set-aside determination where the basis was the fact that
competitive bids were received from two small businesses on the previous
procurement. See, for example, KDI Electro-Tec Corporation, B-185714,
June 8, 1976, 76-1 CPD 364. We have approved a contracting officer's
decision to set-aside a procurement where the contracting officer relied
solely upon a commodity source list to determine that there were a
sufficient number of responsible small businesses which could be
expected to bid so that award could be made at a reasonable price. Wyle
Laboratories, B-186526, September 7, 1976, 76-2 CPD 223. We have even
upheld a contracting officer's determination in this regard where only
one bid from a small business concern was received in response to the
solicitation. See U.S. Divers Company, supra. Since the circumstances
of each procurement are unique, there can be no simple formula for
making such business judgments.
In any event, if after receipt of bids a contracting officer determines
that there is not sufficient small business participation or that awards
cannot be made at reasonable prices, a contracting officer may properly
withdraw the set-aside in accord with DAR Sec. 1-706.3(a). See
Hein-Werner Corporation, B-195747, May 2, 1980, 80-1 CPD 317, where we
indicated that doubt as to the number of responsible small businesses
expected to compete could be resolved by opening bids to determine the
propriety of the set-aside.
Onan alleges that it is an unwritten Department of Defense/Department
of the Army policy to issue total small business set-asides whenever two
or more small business concerns are expected to bid without considering
whether such small businesses ultimately will be found responsible.
Onan has supplied numerous depositions and Army correspondence in
support of this allegation. We have examined these documents and cannot
conclude that any such policy exists. It appears to us that Onan has
taken quotations out of context from these documents. Onan has made
much out of the fact that, on several occasions, the word "responsible"
was not used when a procurement official was describing the process of
making a set-aside determination. We think the failure to use the word
"responsible" when describing potential bidders was mere oversight on
the part of the procurement officials involved. Certainly, these
out-of-context statements do not amount to a policy which overrides the
policies stated in the DAR, and we find no evidence that the present
procurement was set aside because of any alleged unwritten policy.
Therefore, the protests are denied on this issue. The propriety of
this particular determination will be discussed under Issue 3, below.
Both Fermont and Onan (in Count II of its September 12, 1979,
Complaint) contend that the Department of Defense and the Department of
the Army policies go beyond the congressional policy of awarding a "fair
proportion" of all Government contracts to small businesses.
Essentially, the protesters believe that small business set-asides in
the generator field are being made more and more frequently and that
large businesses are being driven out of the generator field. Both
protesters cite the "shrinking industrial base" in the generator field
as being directly attributable to set-aside policies of the Department
of Defense and the Department of the Army in giving small businesses
more than a "fair proportion" of generator contracts. Fermont contends
that frequent set-asides erode the industrial base and violate
congressional policy of maintaining the defense capabilities of our
nation.
The protesters also point out that once an item has been successfully
produced under a small business set-aside, that item will always be
procured through the use of set-asides under DAR Sec. 1-706.1(f), as
amended by Defense Acquisition Circular No. 76-19, July 27, 1979.
As previously shown, it is a congressional policy that small
businesses be awarded a "fair proportion" of all Government contracts.
However, we know of no precise definition for the phrase "fair
proportion." What Congress intended by this Phrase is not evident from
either the statutory language or the legislative history. We have held
that the broadly worded statutory language refers to the totality of
Government procurement. That is, small businesses are to be awarded a
fair proportion of the Government's total procurements. The fact that
small businesses may receive a significant proportion of Government
contracts in a particular industry does not necessarily mean that more
than a fair proportion of the Government's total contracts have been
awarded to small businesses. See J. H. Rutter Rex Manufacturing Co.,
Inc. B-190905, July 11, 1978, 78-2 CPD 29. Section 1-706.5(a)(1)
specifically provides that classes of procurements may be set aside so
long as the relevant determinations are made by the contracting officer.
Thus, it is clear that, under appropriate circumstances, entire classes
of procurements can properly be set-aside without violating the "fair
proportion" policy. See, for example, Allied Maintenance Corporation,
B-188522, October 4, 1977, 77-2 CPD 259. We are not here conceding that
large businesses have been systematically precluded from competing for
generator contracts. In fact, the evidence shows that large businesses
have been fairly successful in obtaining contracts for the supply of
similar generators in the past.
The argument that repeated issuance of set-aside solicitations will
erode the industrial base and have an adverse impact on our nation's
industrial preparedness is not a matter for our Office to consider.
Even if true, this contention does not affect the validity of the
contracting officer's determination to set aside this procurement for
small business concerns since it is irrelevant to the determinations
which must be made under DAR Sec. 706.5(a)(1). See U.S. Divers Company,
supra. Moreover, the DAR amendment dealing with repetitive set-asides
(now DAR Sec. 1-706.1(f)) is irrelevant to the contracting officer's
determination to set aside the present procurement since the amendment
was issued on July 27, 1979, or more than 3 months after the contracting
officer decided to set aside the present procurement. We note, however,
that the provision now provides that once an item has been successfully
acquired through a small business set-aside, all future requirements of
the contracting office are to be set aside, unless the contracting
officer determines there is not a reasonable expectation that offers
from two responsible small businesses will be received and award will be
made at a reasonable price.
In other words, the contracting officer will have to examine potential
competition in much the same manner as is now required under DAR Sec.
1-706.5(a)(1) to set aside the procurement initially. Therefore, this
new provision appears to be consistent with the present set-aside policy
as set forth in the DAR.
Accordingly, this portion of the protest is denied.
Fermont and Onan (in Count III of its September 12, 1979, Complaint)
contend that, if the contracting officer made the determinations
required by DAR Sec. 1-706.5(a)(1) before deciding to set aside this
procurement for exclusive small business participation, then the
contracting officer's determinations were arbitrary and capricious.
Fermont believes that the contracts awarded are too big for small
businesses to successfully produce the generator sets in accord with
required delivery schedules at reasonable prices without financial
assistance from the Government. Fermont expresses fear that the small
business awardees may have to be defaulted by the Department of the Army
or that they may be driven into bankruptcy in attempts to expand their
production capabilities for these contracts. Onan argues that the
contracting officer must have made the DAR Sec. 1-706.5(a)(1)
determination without having taken into account the prior procurement
history of these generators. Such history allegedly shows a pattern of
"buy-ins" by small businesses and financial assistance by the Government
in the form of contract modifications after award; more specifically, a
contract awarded to Bogue, the last small business contractor for these
generator sets, is referred to where the Government had to delete a
large portion of the requirment in order to prevent Bogue from being
defaulted. Onan also argues that Libby and Hollingsworth will be unable
to successfully perform this large requirement because of inadequate
production capabilities and inadequate financial resources. Onan also
alleges that no small business bidders could possibly have been expected
to meet the standards for responsibility set forth in DAR Sec. 1-903,
especially with regard to financial capability and ability to comply
with proposed delivery schedules.
Onan has placed heavy reliance on the case of J. H. Rutter Rex
Manufacturing Co. v. United States, Civil Action No. 77-3018, United
States District Court for the Eastern District of Louisiana, decided
March 10, 1978, as support for its contention that the contracting
officer's determination was arbitrary, and, therefore, should be
overruled by our Office.
Onan also cites statements made in the Department of the Army's
supplemental report dated March 5, 1980, which allegedly show that the
contracting officer's decision to make a total set-aside rather than a
partial set-aside was arbitrary. Onan contends that these statements,
to the effect that if the contracting officer deemed portions of the
instant requirement to be within the potential capabilities of Libby and
Hollingsworth he could properly have determined to make a total
set-aside, clearly show the contracting officer's determination to have
been deficient. Onan argues that only if the potential offerors were
believed to have the capabilities to perform the entire minimum
requirement set forth in the solicitation could the DAR Sec.
1-706.5(a)(1) determination properly have been made. Otherwise Onan
argues that, if small businesses were to be given any preference, it
should have been in the form of, at most, a partial set-aside.
As mentioned above, determinations regarding the reasonable
expectation of bids from a sufficient number of responsible small
business concerns are necessarily within broad administrative
discretion, and this Office will not substitute its judgment for that of
the contracting officer in the absence of a clear showing of abuse of
that discretion. Allied Maintenance Corporation, supra. Both
protesters have charged that the contracting officer's determinations
are arbitrary and capricious. We do not agree.
Prior to making awards, TSARCOM made an affirmative determination
that the awardees were responsible. The charge that the awardees will
not be able to adequately perform is essentially a challenge to the
contracting activity's affirmative determinations of responsibility,
unless fraud is alleged on the part of the contracting officer or the
solicitation contains definitive responsibility criteria which allegedly
have not been applied. Louisville Billiard Supply Company, B-190413,
October 31, 1977, 77-2 CPD 336. Our standard is much the same as that
followed by the courts, which have taken the view that responsibility is
a matter of discretion not subject to judicial review absent fraud or
bad faith. See Bell Helicopter Textron, 59 Comp.Gen. 158(1979), 79-2
CPD 431 (at p. 31) and cases cited. Since neither fraud nor failure to
apply definitive responsibility criteria have been charged, the
protesters have failed to meet the standard for review by our Office or
the courts. Accordingly, notwithstanding the Court's involvement in
this case, we find it unnecessary to engage in any further consideration
of the responsibility matter because of the limited judicial standard of
review.
Generally, protests against acceptance of allegedly unreasonable,
below-cost proposals for fixed-price contracts imply that the allegedly
too-low bidder is attempting to "buy-in" to a contract with the
expectation of either (1) increasing the contract price or estimated
cost during the performance period through change orders or other means
or (2) receiving future follow-on contracts at prices high enough to
recover any losses on the original "buy-in" contract. Acceptance of
unreasonably low or even below-cost offers by the Government is not
illegal and, therefore, the possibility of a "buy-in" does not provide a
basis upon which an award may be challenged if the procuring activity
has not made a determination of nonresponsibility. It is, however, the
contracting officer's duty to see that amounts excluded in the
development of the original contract price are not recovered in the
pricing of change orders or of follow-on contracts. KET, Inc.,
B-190983, December 21, 1979, 79-2 CPD 429. There is no evidence that
either Libby or Hollingsworth have offered below-cost bids on these
contracts.
Moreover, nothing in Rutter Rex v. United States, cited by Onan,
indicates that the instant set-aside is contrary to law. There, the
contracting officer decided not to set aside a procurement for small
business because of the absence of sufficient competition from small
business to assure reasonable prices. This determination, however, was
reversed by the contracting officer's superior within the agency. The
court found that the superior's action was taken to enable the agency to
meet an interim goal for awards to small business, which the court
identified as "an arbitrary statistical goal." The court held that the
agency abused its discretion by disregarding the criteria for set-asides
contained in the Armed Services Procurement Regulation (now called the
DAR). Since we find, infra, that the criteria of DAR Sec. 1-706.5(a)(1)
were followed, the holding of Rutter Rex v. United States is
distinguishable. See J. H. Rutter Rex Manufacturing Co., Inc., supra.
We believe the contracting officer reasonably determined within his
discretion that bids from a sufficient number of responsible small
business concerns would be received so that awards could be made at
reasonable prices. The contracting officer and other TSARCOM officials
examined the prior procurement history for similar generator sets. The
previous procurement for generator sets was an unrestricted competition
which was awarded to Bogue, a small business. The April 16, 1979,
determinations and finding made by the contracting officer cited this
fact and the fact that Hollingsworth, another small business, was close
behind in the bidding for that contract. The contracting officer also
expected Libby, a small business, to bid. Since all three of these
small businesses had previously produced generator sets comparable in
size to the 5 and 10 kilowatt sets required under the present
procurement, the contracting officer believed that at least these small
businesses would be able to perform successfully under the present
contract if they received the award.
Onan's allegations regarding Libby and Hollingsworth are mere
speculation on Onan's part. In fact, the matters raised by Onan and
Fermont were investigated by the Army during the preaward survey, and
both firms were found to have adequate financial resources and any
necessary capability to expand to meet new production demands.
Regarding the problems which arose with Bogue under the prior contract,
we note that these problems were partially caused by Onan's demand for
$500,000 in escrow or an irrevocable letter of credit in that amount
before Onan would supply Bogue with engines. Bogue was unable to meet
this demand. Therefore, the Army deleted the engines from the contract,
and the Army purchased the engines directly from Onan to be assembled as
part of the generator sets.
The possibility of Onan demanding "up-front" financing from Libby or
Hollingsworth was raised by the project manager after the contracting
officer had decided to set aside this procurement. Contracting
officials at TSARCOM considered this issue and determined that either
Libby or Hollingsworth would be able to comply with such a demand if
made by Onan. Furthermore, TSARCOM believed that it was unlikely that a
demand for financial guarantees would be made by Onan on either of these
companies because of their sound financial conditions. The record shows
that TSARCOM felt that the price of the generator sets would be
reasonable even if Libby and Hollingsworth were the only two bidders
since past experiences had shown these two firms to be very competitive.
Moreover, TSARCOM procurement officials believed that small businesses
would be able to meet the production schedules since those schedules had
been drawn up with a total small business set-aside in mind. Since the
small businesses in the generator field are generally packagers or
assemblers of parts supplied to them by other firms, TSARCOM believed
that small businesses would be able to meet production schedules without
any significant problems. Moreover, due to the fact that small business
packagers generally do not have a large capital investment in
engineering and plant expansion and because these firms often operate at
a lower profit margin, the project manager indicated that small
businesses are able to offer the end-products at competitive prices.
Due to the project manager's objection that adequate competition might
not be obtained if only small businesses were allowed to compete, the
SBA representative was consulted and a meeting was held on May 1, 1979,
to reconsider the matter.
After reconsideration by TSARCOM, the determination to set aside was
affirmed.
Regarding Onan's charge that this procurement should have been, at
most, a partial set-aside, the contemporaneous records show that the
ability of potential small businesses to produce the minimum requirement
of the contract was carefully considered. Even though the Army
indicated in its supplemental report that a potential bidder might be
considered even if capable of producing less than the entire contract
minimum, there is no contemporaneous evidence that the contracting
officer considered the capabilities of potential small business bidders
to perform less than the entire minimum requirement. In fact, the
record shows that the contracting officer considered but rejected the
possibility of making only a partial set-aside, on the bases of (1)
duplicative solicitation and contract administration expenses, (2) the
SBA representative's steadfast refusal to agree to a partial set aside,
and (3) the small quantity of the 10 kilowatt generator sets required.
Regarding the small quantity of 10 kilowatt generator sets required, we
note that DAR Sec. 1-706.6(a)(ii) provides that the requirement must be
severable into two or more economic production runs before the
procurement may be partially set-aside.
In sum, the solicitation was sent to 47 small business concerns and
three bids were received (excluding the withdrawn bid). Two of these
firms were selected for award and were subjected to careful scrutiny by
the Army to determine if they were responsible. The responsibility
factors enumerated in DAR Sec. 1-903 were carefully considered and an
affirmative determination was reached on each firm. This determination
was based on the ability to successfully produce the entire minimum
requirement, and not on the ability of the awardees to produce only a
part of the requirement as alleged by Onan. Thus, not only did the
contracting officer's decision to set aside appear to be reasonable at
the time it was made but the reasonableness of this decision was
confirmed by the detailed preaward surveys which were available to the
contracting officer before the award was made. In view of the above, we
cannot find the decision to set aside to have been unreasonable.
Therefore, this protest issue is dismissed in part and denied in
part.
Fermont protests that the Department of the Army failed to notify our
Office in a timely manner that awards were being made pending resolution
of the protests, as required under DAR Sec. 2-407.8(b)(2), and,
therefore, the awards were improperly made and a new solicitation is
required.
The last issue, raised by Fermont, is a procedural one. Section
2-407.8(b)(2) of the DAR provides that when a protest has been filed in
our Office prior to award of the contract, an award may properly be made
if it is approved at an appropriate level above the contracting officer
and notice of intent to make award is furnished to our Office. See
Price Waterhouse & Co., B-186779, November 15, 1976, 76-2 CPD 412. The
present awards were approved by the Office of the Assistant Secretary,
Department of the Army, on September 28, 1979. Our Office was notified
by telephone on that same day that awards were being made. We received
written notification of the awards to Libby and Hollingsworth on October
24, 1979.
Accordingly, this protest issue is denied.
B-189782, June 18, 1980, 59 Comp.Gen. 527
Compensation - Prevailing Rate Employees - Negotiated Agreements -
Boulder Canyon Project Adjustment Act - Savings' Clauses in Later
Legislation
Section 15 of the Boulder Canyon Project Adjustment Act, 43 U.S.C.
618n, which is specific legislation dealing with how the wages and
compensation of Boulder Canyon Project employees may be set, has not
been superseded by section 9(b) of Pub. L. No. 92-392. The two laws are
complementary, the former describing how employee compensation is to be
set and the latter guaranteeing continuance of certain negotiated
labor-management contract provisions, regardless of restrictions in the
compensation laws otherwise applicable to prevailing rate employees.
Compensation - Prevailing Rate Employees - Negotiated Agreements -
Boulder Canyon Project Employees' Entitlements - Fringe Benefits, etc.
Status
The term "wages or compensation" under section 15 of the Boulder
Canyon Adjustment Act, 43 U.S.C. 618n, does not include commuting travel
expenses, housing allowances, or similar fringe benefits. Such benefits
neither come within the definition of wages or compensation nor are
specifically provided for by Congress, as other expenses are, and
therefore there is no legal basis for Boulder Canyon Project employees
to be paid them. Compensation - Prevailing Rate Employees - Negotiated
Agreements - Boulder Canyon Project Adjustment Act - Applicability to
Employees of Defunct Parker-Davis Project
Unless employees of the now defunct Parker-Davis Project are engaged
in activities associated with the Hoover Dam, they are not covered by
section 15 of the Boulder Canyon Project Adjustment Act, 43 U.S.C. 618n.
Matter of: Boulder Canyon Project Employees - Wages and
Compensation, June 18, 1980:
Mr. Larry E. Meierotto, Assistant Secretary-- Policy, Budget and
Administration, Department of the Interior, has requested our decision
on a series of questions relating to employees entitled to be paid wages
and compensation under section 15 of the Boulder Canyon Project
Adjustment Act, 43 U.S.C. 618n(1976). Mr. Meierotto refers to our
decision B-189782, March 1, 1978, which was issued in response to a
request from the Secretary of the Interior. The Secretary had asked
whether certain overtime pay, penalty pay and various other pay
provisions negotiated on behalf of employees covered by both section 15
of the Boulder Canyon Project Adjustment Act and section 9(b) of Pub. L.
No. 92-392, August 19, 1972, 5 U.S.C. 5343 note, were legal, in view of
our decisions 57 Comp.Gen. 259(1978) and 57 id. 575(1978), which had
rendered similar payments illegal.
Mr. Meierotto states in his submission that certain issues left
unresolved in our decision to the Secretary of the Interior still need
to be addressed.
* * * Your decision No. B-189782, dated March 1, 1979, ruled that it
was unnecessary to rule on the questions posed other than our ability to
agree to overtime rates in excess of one and one-half time. Since such
authority emanated from other sources, you found it was not relevant
whether Section 15 independently authorized such payments.
Because the overtime issue is only one of an infinite number of
variations of the question "what constitutes compensation within the
meaning of Section 15?" which continually arise in collective
bargaining, your March 1, 1979, decision does not assist us in
determining our legal authority to meet such requests. Although Section
704 of the Civil Service Reform Act was passed and became effective
since our question was first posed, it does not clarify the nature of
our obligations. Section 704 preserves rights that existed on August
19, 1972. Our question is what rights existed prior to that time. In
effect, the real question is whether employees covered by Section 15
have any greater rights than other hourly employees covered by Section
9(b) of P.L. 92-392 and whether there is a different procedure for
determining such rights. Therefore, we are resubmitting our questions,
hopefully clarified, but nevertheless broadly stated. Our hope is to
know our basic rights and obligations so that there does not have to be
a dispute every time a variation of the same question arises.
Admittedly, a full response will not dispose of every question that
could exist. However, a full response can greatly diminish the number
of questions and remove their far reaching implications. Consequently,
such limited questions may be able to be resolved through the normal
labor relations processes or through the mechanism of Section 15 itself,
if that is still valid.
The Department of the Interior has served a copy of its request on
each of the labor unions involved, but they chose not to furnish
comments on the matter.
In decision B-189782, January 5, 1979, 58 Comp.Gen. 198, we stated:
The Comptroller General's authority to render advance decisions to
heads of agencies and to certifying and disbursing officers on matters
involving appropriated funds is found in 31 U.S.C. 74 and 82d. It is
clear that under Title VII of the Civil Service Reform Act, the
Comptroller General may not overrule a specific arbitration award or a
decision of the Federal Labor Relations Authority made thereon.
However, with those exceptions, the Comptroller General retains the
authority to render decisions on the legality of expenditures of
appropriated funds.
From the record before us, we find nothing to indicate that our
decision on this case would violate the restrictions on our jurisdiction
stated above.
Section 15 of the Boulder Canyon Project Adjustment Act, 43 U.S.C.
618n, states:
All laborers and mechanics employed in the construction of any part
of the project, or in the operation, maintenance, or replacement of any
part of the Hoover Dam, shall be paid not less than the prevailing rate
of wages or compensation for work of a similar nature prevailing in the
locality of the project. In the event any dispute arises as to what are
the prevailing rates, the determination thereof shall be made by the
Secretary of the Interior, and his decision, subject to the concurrence
of the Secretary of Labor, shall be final.
In our decision B-189782, March 1, 1979, to the Secretary of the
Interior, we stated that section 704 of the Civil Service Reform Act of
1978, Pub. L. No. 95-454, October 13, 1978, 92 Stat. 1218, overruled
decisions 57 Comp.Gen. 259 and 57 id. 575 insofar as those decisions
invalidated labor-management contract provisions concerning various
overtime pay provisions (double time, penalty pay) for employees whose
contract are covered by section 9(b) of Pub. L. No. 92-392.
Accordingly, we held it was not necessary that we deal with whether
there was independent statutory authority in section 15 of the Boulder
Canyon Project Adjustment Act for such payments. The Boulder Canyon
Project employees could negotiate such overtime contract provisions by
virtue of section 704 of the Civil Service Reform Act.
For reasons given above, however, Mr. Meierotto asks the following
questions (our answers are set out after each question):
1. Has Section 43 U.S.C. 618n been superseded by any other law? If
so, what law and with what result?
Examples:
A. This provision was enacted in 1940 before collective bargaining of
wages became a common phenomenon in the Department of the Interior or
the Federal government. The first legislation, of which we are aware,
which specifically addressed negotiation of wages was Section 9(b) of
P.L. 92-392 in 1972. Since that later enactment purported to be
government-wide, did it supplant 43 U.S.C. 618n?
B. When there is a dispute as to what are prevailing rates, 43
U.S.C. 618n requires the resolution to be made by the Secretary of the
Interior, subject to the concurrence of the Secretary of Labor.
To what extent are others, not specified in the statute (such as
arbitrators, the Federal Labor Relations Authority, etc.), without
jurisdiction to render final decisions on such disputes?
Answer to Question No. 1
Section 9(b) of Pub. L. No. 92-392 is a savings provision which
protects certain labor-management contract provisions from being
affected by the provisions of Pub. L. No. 92-392 which generally govern
the wages of prevailing rate employees.
Section 704 of Pub. L. No. 95-454 is also a savings provision which
further expands on the protection afforded the contract provisions of
employees who negotiate their wages under section 9(b) of Pub. L. No.
92-392. Section 704 provides that employees whose contract provisions
are negotiated under section 9(b) may negotiate their pay and pay
practices in accordance with prevailing rates and pay practices without
regard to certain provisions in title 5, United States Code, including
more specifically 5 U.S.C. 5544, or any rule, regulation, decision or
order relating to rates of pay or pay practices under 5 U.S.C. 5544.
With respect to Mr. Meierotto's first question, 43 U.S.C. 618n, which
is specific legislation dealing with how the wages and compensation of
Boulder Canyon Project employees may be set, has not been superseded by
section 9(b) of Pub. L. No. 92-392. Section 15 of the Boulder Canyon
Project Act requires that employees covered by section 15 shall be paid
not less than the prevailing rate of wages or compensation for work of a
similar nature prevailing in the locality of the project. Section 15,
therefore, is the legal basis for setting the pay of Boulder Canyon
Project employees.
The subsequently enacted section 9(b) of Pub. L. No. 92-392 and
section 704 of the Civil Service Reform Act are of different effect in
that they do not prescribe the basic pay entitlements of the covered
employees. Rather, the latter two sections are merely savings clauses
which guarantee that the labor-management contract provisions of the
covered employees may be continued regardless of certain stated
restrictions in various compensation laws found in title 5, United
States Code, which are otherwise applicable to prevailing rate
employees. Section 15 of the Boulder Canyon Adjustment Act and section
9(b) of Pub. L. No. 92-392 are in fact complementary and are not
inconsistent with each other. Question 1A is answered accordingly.
In regard to Question 1B, however, we shall not venture to delineate
the limits of the Federal Labor Relations Authority's jurisdiction over
employees covered by both section 9(b) of Pub. L. No. 92-392, August 19,
1972, 5 U.S.C. 5343 note, and section 15 of the Boulder Canyon Project
Adjustment Act. We feel that question may more properly be directed to
the Federal Labor Relations Authority.
2. Assuming 43 U.S.C. 618n has an independent existence unlimited by
laws not purporting to repeal it or portions thereof, does the term
"prevailing rate of wages or compensation" allow negotiation of payments
not otherwise permitted to employees under 9(b) of P.L. 92-392?
Examples:
A. In Amell v. U.S. 390F.2d 880(1968), the Court of Claims held that
fringe benefits are not encompassed within the terms "wages" or
"compensation."
B. On March 28, 1975, the Assistant Secretary of the Department of
the Interior, as concurred in by the Assistant Secretary of the
Department of Labor on April 8, 1975, (pursuant to the Section 15
procedure), rejected the contention of William S. Davis, an employee of
the Boulder Canyon Project, that the prevailing rate process must take
into account the value of free housing and utilities provided to
employees of the Los Angeles Department of Water and Power who work at
the Project site and whose base wages are the predicate for the wages of
the employees of the Project. Similarly, rejected were further
contentions that the Government, alternatively, should provide free
housing or a comparable allowance.
C. In McCoy and Local 1978, American Federation of Government
Employees v. Larsgaard, Project Manager, Boulder Canyon Project, AFGE
contended that the Project improperly terminated the busing of employees
between their homes and their worksites, especially since Los Angeles
DWP and Southern California Edison transport their employees from
Boulder City down to the dam. The Government defended primarily on the
basis of Comptroller General rulings on 31 U.S.C. 638a which preclude
residence-to-work transportation. On December 15, 1976, Judge Roger D.
Foley, of the U.S. District Court for the District of Nevada, dismissed
the action having been advised by counsel for plaintiffs "that
plaintiffs have withdrawn their opposition to defendants' Motion for
Judgment on the Pleadings." Since that time, AFGE has advocated that we
grant some form of monetary compensation in lieu of the transportation.
We have taken the position that to allow some payment as a substitute
for an illegal practice would subvert the statutory proscription.
D. It should be evident why we are reluctant to pose other
variations of the same theme and to set forth union proposals that have
never reached a formal stage. It should be equally evident how a ruling
on what Section 15 means when it uses the term "compensation" can put to
an end a great many present and future disputes.
Answer to Question No. 2
The legislative history of the Boulder Canyon Project Adjustment Act
does not explain the term "prevailing rate of wages or compensation."
Moreover, there is a dearth of judicial precedent as to the meaning of
"wages or compensation" under 43 U.S.C. 618n.
The Court of Claims' decision in Amell v. United States, 390 F.2d
880(1968), however, while not dealing with 43 U.S.C. 618n, is
instructive. In Amell the court was called upon to construe section 606
of the Federal Employees' Pay Act of 1945, 59 Stat. 304, as amended, 5
U.S.C. 946(1964), and section 202(8) of the Classification Act of 1949,
63 Stat. 954, as amended, 5 U.S.C. 1082(1964).
The Classification Act of 1949 states in section 202(8):
* * * compensation shall be fixed and adjusted from time to time as
nearly as is consistent with the public interest in accordance with
prevailing rates and practices in the maritime industry * * * .
The Federal Employees' Pay Act of 1945 states in section 606:
Employees * * * may be compensated in accordance with the wage
practices of the maritime industry.
The question before the court in Amell was whether the maritime
employees covered by the above-cited laws were entitled to an increase
in their base wage rates in an amount equivalent to the increased
contributions made by private shipping companies to the pension fund of
the private sector maritime employees.
The Court of Claims found:
Much of the difficulty presented by this case is occasioned by the
use of the word "compensation" in the comparability provision of the
Classification Act of 1949, in the regulations, and in Article XII of
the negotiated contract. Since neither party has cited any decisional
law which is dispositive of the question, we think the congressional
intent is to be determined by viewing the term "compensation" in its
broad statutory context and in connection with various benefits which
Congress has provided for MSTS employees in other laws. From such an
analysis it becomes apparent that Congress did not intend "compensation"
to cover either the whole ambit of employment costs or those in issue
here. 390 F.2dat 884.
Thus, the inference to be drawn from the fact that benefits for MSTS
employees are provided in various statutes, totally distinct from the
Classification Act of 1949, is that the word "compensation," as used in
that statute, is not broad enough to encompass benefits provided in
other laws. 390 F.2dat 885.
Thus, the Court of Claims has interpreted laws with wording similar
to that in section 15 of the Boulder Canyon Project Adjustment Act, to
mean that "compensation" is not so broad as to include all of the
monetary benefits which employees may be granted. We think the court's
reasoning is applicable to our interpretation of the meaning of "wages
or compensation" as used in section 15. Consequently, we do not think
wages or compensation includes every item of reimbursement which could
be paid to an employee.
Specifically, we conclude that the meaning of compensation under
section 15 does not include travel expenses for commuting, housing
allowances, or similar fringe benefits. We note that similar expenses
of Federal employees, such as travel expenses for temporary duty or the
furnishing of Government-owned quarters, are specifically provided for
by law, e.g., chapters 57 and 59 of title 5, United States Code. It is
significant that these expenses or allowances are not authorized in
chapter 55, title 5, United States Code, concerning Pay Administration,
but are authorized under separate chapters of title 5 specifically
designated for fringe benefits and nonpay allowances. Since Congress
has in this manner specifically provided for payment of such nonpay
benefits and allowances to Federal employees, including employees of the
Boulder Canyon Project, we find it necessary to conclude that these
various benefits and allowances are not intended also to be covered
under the general term of "wages or compensation" under the compensation
laws. Accordingly, the payment of the above-described fringe benefits
to Boulder Canyon Project employees would not be appropriate under law
because these benefits neither come within the term "wages or
compensation" in section 15 nor are they specifically provided for in
other laws which have been enacted to allow for payment of the various
noncompensation benefits and allowances.
We believe, however, that it would be inappropriate for us to attempt
to set guidelines as to whether other possible entitlements do or do not
fit within the term "wages or compensation" under section 15.
We do not think it wise or possible to so delineate the term "wages or
compensation," and our decision is limited to the specific benefits and
allowances dealt with herein.
3. Assuming both that Section 15 has an independent existence and
further that Section 15 allows or requires some things to which
employees operating under Section 9(b) of P.L. 92-392 are not entitled,
can Section 15 be applied to employees of other Bureau of Reclamation
dams who have been merged or intermingled for purposes of administration
and efficiency, with employees of the Boulder Canyon Dam?
Explanation-- As pointed out in our June 9, 1978, submission, the
establishment of the Department of Energy resulted in transferring to
that Department employees of the Bureau of Reclamation whose work was
associated with the transmission of electricity. This left a greatly
reduced work force engaged in power generation at the Parker and Davis
Dams in the now defunct Parker-Davis Project, which was administratively
adjacent to the Boulder Canyon Project. The employees at the Parker and
Davis Dams have been placed for administrative purposes in a new project
entitled the Lower Colorado Dams Project which encompass also the
Boulder Canyon Project. The union, which represents Parker-Davis
employees and negotiates wages for them pursuant to 9(b) of P.L. 92-392,
has presently agreed to coordinated wage bargaining with the union which
represents the Boulder Canyon project employees whose wages are
negotiated. The obvious question is whether the Parker-Davis employees
can obtain "compensation" to which they are not entitled under 9(b) by
virtue of the extension of Section 15 to them?
Answer to Question No. 3
Whether employees of the now defunct Parker-Davis Project are
entitled to "compensation" under section 15 of the Boulder Canyon
Project Adjustment Act depends on whether these employees are now
engaged in the " * * * construction * * * operation, maintenance, or
replacement of any part of the Hoover Dam * * * ." It does not appear
that Parker-Davis employees are actually engaged in any of the
activities associated with the Hoover Dam. However, we pass no judgment
upon whether Parker-Davis employees may bargain to have their wages and
compensation determined in the same manner as Boulder Canyon Project
employees. An answer to this question concerning the extent of the
Parker-Davis employees' right to bargain their compensation as if they
were covered by section 15, if it still needs to be answered, should be
directed to the Federal Labor Relations Authority.
B-198257, June 12, 1980, 59 Comp.Gen. 526
Contracts - Payments - Progress - Limitation - What Constitutes
"Contract Price" - Incremently-Funded Contract
Under fixed-priced, incremently funded contract, progress payments
may be made to contractor up to 80 percent of total contract price so
long as progress payments do not exceed total amount of funds allotted
to the contract.
Matter of: Progress Payments Pursuant to Raytheon Company Contract,
June 12, 1980:
Major S. R. Moody, USA, Disbursing Officer, Defense Contract
Administration Services Region, Boston, Massachusetts, requests our
decision on the propriety of certain progress payments under contract
No. F-08635-79-C-0043 with Raytheon Company. The Disbursing Officer
disagrees with the contracting officer as to the extent of progress
payments which may be allowed under the contract.
The total contract price is $39,094,140 (subsequently increased to
$39,506,140 by change order). However, the contract is being
incremently funded, with $12,000,000 allotted initially and $18,978,500
allotted subsequently. An additional allotment of $8,527,640 is
scheduled for fiscal year 1981.
The contract provides that progress payments may not exceed 80
percent "of the total contract price." Using the $39,506,140 figure to
represent the total contract price, the contracting officer has approved
progress payments to the contractor not to exceed 80 percent of
$39,506,140.
The Disbursing Officer believes that the total contract price means
the total amount obligated so far to the contract. Under the Disbursing
Officer's interpretation, the contractor has already been overpaid,
since progress payments have been made in excess of 80 percent of
$30,978,500, the total amount obligated to the contract as of this date.
We agree with the contracting officer's approach. Defense
Acquisition Regulation E-509.7 defines the "contract price" to mean "the
total amount fixed by the contract * * * to be paid for complete
performance of the contract." Using this definition the contract price
is $39,506,140 for complete performance of the contract, not the amount
allotted.
Nothing in the "Allotment of Funds" or "Limitation of Government's
Obligation" clauses of the contract states otherwise. The "Allotment's"
clause provides that for purposes of the Limitation of Government's
Obligation clause, the Government's contractual obligation only extended
to the amount initially allotted ($12,000,000), but that additional
allotments were expected to be made as set forth in the contract
schedule.
The "Limitations" clause provides that:
(1) Of the total price * * * the sum of $12,000,000 is presently
available for payment and allotted to this contract. It is anticipated
that from time to time additional funds will be allotted to this
contract until the total price of these items is allotted. (The amount
allotted to this contract was increased from $12,000,000 to
$30,978,500.)
It is evident from the above that the Government's total obligation
under the contract is limited to the amount of funds allotted to the
contract, which amount may be less than the total contract price. The
"Limitations" clause further provides that if additional funds are not
allotted, the contract will be terminated for the convenience of the
Government but that the Government will not be obligated in any event to
pay or reimburse the contractor in excess of the amount allotted to the
contract (paragraph 3 of the clause). Clearly there would not be any
need to terminate the contract for convenience if, as the Disbursing
Officer suggests, the total amount allotted represented the contract
price. The contract would simply expire without any need to invoke the
termination procedure.
Therefore, although the contractor may be paid up to 80 percent of
the total contract price under the "Progress Payments" clause, the
payment may not exceed the total amount allotted to the contract.
B-196010, June 11, 1980, 59 Comp.Gen. 522
Contracts - Awards - Small Business Concerns - Procurement Under 8(a)
Program - Scope of GAO Review - Evaluation of Proposals By Procuring
Agency in Behalf of SBA
In light of broad discretion afforded Small Business Administration
(SBA) under "8(a)" program General Accounting Office reviews SBA actions
in such procurements to determine that regulations were followed, but
does not disturb judgmental decisions absent showing of bad faith or
fraud. Where contracting agency acts on behalf of SBA in evaluating
proposals and recommending contractor to SBA under 8(a) program,
agency's actions will be reviewed under criteria applicable to SBA
actions. Contracts - Awards - Small Business Concerns - Procurement
Under 8(a) Program - Procurement Statutes and Federal Procurement
Regulations - Generally Not Applicable
Agency's selection of offeror for award of 8(a) contract on basis of
initial technical proposals without written or oral discussions
contemplated by Federal Procurement Regulations is not legally
objectionable since normal competitive procurement practices are not
applicable to 8(a) procurements. Contracts - Negotiation - Debriefing
Conference - Timeliness
Agency failure to debrief unsuccessful offeror until month after
request for debriefing is not improper where regulation specifies no
time frame for debriefing and delay is attributed to unavailability of
necessary agency personnel. Contracts - Awards - Small Business
Concerns - Procurement Under 8(a) Program - Evaluation of Proposals by
Procuring Agency - Conclusiveness
Although protester raises several objections to agency's evaluation
of its proposal, since there is no indication in record of fraud or bad
faith by agency evaluators there is no basis to object to the agency's
determination. Contracts - Protests - Procedures - Bid Protest
Procedures - Time for Filing - Date Basis of Protest Made Known to
Protester
Protest allegations not filed until more than 10 working days after
basis for allegations was known or should have been known are untimely
and ineligible for consideration under Bid Protest Procedures.
Matter of: Arawak Consulting Corporation, June 11, 1980:
Arawak Consulting Corporation (Arawak) protests the evaluation,
selection and award process used by the Department of Health, Education,
and Welfare, now the Department of Health and Human Services (HHS),
under request for proposals (RFP) No. 105-79-1200, which solicited
services consisting of technical assistance, short-term training, and
the conduct of an evaluation of youth participation and community
services job development demonstration projects.
Arawak, whose technical proposal was ranked second to that of the
successful offeror, Dialogue Systems, Inc. (Dialogue), contends that the
selection process was defective because HHS failed, prior to making an
award, to conduct competitive negotiations that would have permitted
Arawak the opportunity to correct any perceived deficiencies in its
proposal. Arawak also argues that HHS failed to provide it with a
debriefing until more than a month had elapsed following the selection
of Dialogue for award. Finally, Arawak contends that its proposal was
erroneously evaluated. For the reasons stated below the protest is
denied.
This requirement was solicited as a set-aside under the authority of
the "8(a)" program of the Small Business Act, 15 U.S.C. 637(a)(1976), as
amended by Public Law 95-507, 92 Stat. 1757, which authorizes the Small
Business Administration (SBA) to enter into prime contracts with any
Government agency having procurement powers, and to arrange for the
performance of such contracts by letting subcontracts to socially and
economically disadvantaged small business concerns.
HHS' regulations applicable to the procurement of technical services
under the 8(a) program provide that, except in cases where SBA selects a
firm for an 8(a) award, or where one 8(a) firm has exclusive or
predominant capability or technical competence to perform the work
within the time required, the selection of a contractor shall be made
through "limited technical competition." In such cases written technical
proposals may be required from the participating firms. 41 C.F.R.
3-1.713-50(a)(2)(1979). Where limited technical competition is
determined appropriate, the firms to be included in the competition will
be decided by HHS in consultation with SBA. 41 C.F.R. 3-1.713-50(a)(4).
Due to a potential adverse impact on the limited financial resources of
these firms, usually no more than three to five firms should be
nominated for the limited technical competition. 41 C.F.R.
3-1.713-50(a)(6). In this instance, HHS, in consultation with SBA,
selected three prospective contractors, including Dialogue and Arawak,
for the limited technical competition.
Technical proposals from the three offerors were reviewed by a
Technical Evaluation Panel (TEP). Dialogue was awarded the highest
rating of 85.8 and Arawak was next at 72.4. These ratings, together
with a TEP summary report, were forwarded to the HHS contracting officer
for review to ensure that the evaluation criteria were properly applied.
The contracting officer approved the TEP report and submitted copies of
it to SBA with a request that HHS be permitted to obtain a cost proposal
from Dialogue and conduct negotiations with that firm. As a result of
those negotiations Dialogue received the award.
Because of the broad discretion afforded the SBA and the contracting
agencies under the applicable statute and regulations, our review of
actions under the 8(a) program is generally limited to determining
whether the regulations have been followed and whether there has been
fraud or bad faith on the part of Government officials. Orincon
Corporation, 58 Comp.Gen. 665(1979), 79-2 CPD 39; Kings Point Mfg. Co.,
Inc., 54 Comp.Gen. 913(1975), 75-1 CPD 264.
HHS' regulations recognize that the ultimate responsibility for
nomination of an 8(a) subcontractor is in the SBA, 41 C.F.R.
3-1.713-50(a), and HHS indicates that it obtains SBA's approval before
entering into negotiations with the successful firm. It is therefore
our view that HHS was acting on behalf of SBA in dealing with the
competing 8(a) firms and evaluating their proposals and that the scope
of our review in this case, even with respect to the evaluation of
proposals, is limited as described above. See Arcata Associates, Inc.,
B-195449, September 27, 1979, 79-2 CPD 228.
Arawak contends that HHS was obligated to conduct discussions with it
to enable that firm to correct deficiencies in its proposal. Federal
Procurement Regulations (FPR) Sec. 1-3.804 (1964 ed.amend. 155) requires
that in negotiated procurements written or oral discussions generally
shall be conducted with all offerors in the competitive range. However,
we believe that section 8(a) of the Small Business Act, to further a
socioeconomic policy of fostering the economic self-sufficiency of
certain small businesses, authorizes a contracting approach which in
general is not subject to the competition and procedural requirements of
the FPR and the statutory provisions they implement. See Ray Baille
Trash Hauling, Inc. v. Kleppe, 477 F.2d 696(5th Cir. 1973); Eastern
Tunneling Corp., B-183613, October 9, 1975, 75-2 CPD 218. See also
Vector Engineering, Inc., 59 Comp.Gen. 20(1979), 79-2 CPD 247.
Consequently, since neither the applicable HHS nor SBA regulations
require that discussions be held regarding an offeror's technical
proposal, HHS did not act improperly by not conducting discussions with
Arawak.
With regard to the debriefing of unsuccessful offerors under the
"limited technical competition" procedure, HHS' regulations merely state
that a debriefing, when requested in writing, shall be provided to an
unsuccessful offeror. 41 C.F.R. 3-1.73-50(b). In this instance,
Arawak, by letter of August 1, 1979, requested a debriefing.
The debriefing was conducted on August 30. HHS reports that the
debriefing could not be held earlier due to the unavailability of both
the project officer and his assistant. In view of the absence of any
specified time frame for conducting a debriefing after receipt of a
written request, and the absence of evidence of a deliberate delay by
HHS, we do not believe that the agency acted improperly.
Arawak takes exception to the evaluators' criticisms of its technical
proposal as set forth in the TEP report. For example, Arawak objects to
the evaluators' judgments that the protester's use of a logistics
coordinator in its proposed management plan was unnecessary and that
Arawak lacked process evaluation staff expertise. Arawak also objects
to the agency's finding that its proposal contained three informational
insufficiencies or omissions and to an evaluator's comment that key
proposed individuals do not represent a geographical cross-section. The
protester argues that the "equal 13 point spreads" between each of the
offeror's evaluation scores are statistically improbable and are somehow
indicative of an improper evaluation.
Although it is clear that Arawak does not agree with the HHS
evaluators' judgment in these instances, Arawak does not argue that HHS
acted in bad faith or that fraud was involved in the evaluation process.
We have reviewed the evaluation record and there is no indication of
either bad faith or fraud. Thus, we have no basis to object to HHS'
evaluation. See Jones Steel Erections, Inc., B-196800, December 4,
1979, 79-2 CPD 389.
Finally, Arawak has made several allegations which we consider
untimely. These are predicated on various matters appearing on the
individual rating sheets of the various members comprising the TEP or in
Dialogue's proposal. The allegations are that Dialogue was accorded
preferential treatment over Arawak through the waiver of various
informational inadequacies in Dialogue's proposal whereas Arawak was
held responsible for its informational deficiencies; Dialogue's
proposal failed to include resumes for proposed subcontract staff;
Dialogue's "proposal authorship was not presented;" and the initial
point scores on the proposals were changed several times.
Our Bid Protest Procedures, 4 C.F.R.Part 20(1980), require that
protest allegations be filed not later than 10 working days after the
basis for protest is known or should have been known, whichever is
earlier. 4 C.F.R. 20.2(b)(2).
In this instance, Arawak's correspondence reveals that it received
the individual rating sheets (and a copy of the Dialogue proposal) in
February 1980; however, the protest allegations based on this
information were not received by our Office until April 4, 1980.
In view of their untimely filing, we decline to consider them.
The protest is denied in part and dismissed in part.
B-195732, June 11, 1980, 59 Comp.Gen. 518
Appropriations - Availability - More Than One Available - Election of
One Effect - Contracts - Cost Overruns
Where Environmental Protecting Agency initially elected to charge
no-year "R & D" appropriation with expenditures for cost-plus-fixed-fee
contract, continued use of the same appropriation to the exclusion of
any other is required for payment of cost overrun arising from
adjustment of overhead rates to cover actual indirect costs which
exceeded the estimated provisional rates provided for in the contract.
Appropriations - Obligation - Contracts - Rule
As general rule, cost overruns and contract modifications within
scope of original contract should be funded from appropriation available
in year contract was made. Current appropriations may only be used if
additional costs amount to new liability, not provided for in original
contract. In instant case, original funds were "no-year" appropriations
and are therefore available for both old and new obligations.
Matter of: Recording Obligations Under EPA cost-plus-fixed-fee
Contract, June 11, 1980:
An Environmental Protection Agency (EPA) certifying officer has
requested our decision on several questions concerning the proper
appropriation against which to charge a $474.03 cost overrun on that
agency's cost-plus-fixed-fee contract with the Institute of Gas
Technology for technical consulting services. For the reasons that
follow, the cost overrun must be charged against the same appropriation
from which the original contract was funded.
The basic contract, with an estimated cost and fixed fee totalling
$28,600, was executed on January 17, 1975, and was later modified
through a series of supplemental agreements to extend the period of
performance, adjust the number of man hours or level of effort required
from the contractor, and to revise the negotiated overhead rates used to
compute the indirect cost. Of these modifications, only Modification
No. 4, March 23, 1979, revising the final overhead rate, required an
adjustment in the estimated cost of the contract. That amendment
provided as follows:
1. ARTICLE VI-- Estimated Cost and Fixed Fee-- is hereby amended.
The estimated cost of this contract is $27,097.03, exclusive of the
fixed fee of $1,977. The total estimated cost and fixed fee is
$29,074.03.
2. ARTICLE VIII-- Indirect Costs-- is amended to incorporate the
following negotiated rates for the period shown below: (TABLE OMITTED)
3. Recapitulation: (TABLE OMITTED)
The final overhead rates set out above were negotiated pursuant to
Clause 29 of the contract's general provisions which provides in
pertinent part:
29. NEGOTIATED OVERHEAD RATES
(a) Notwithstanding the provisions of the clause of this contract
entitled "Allowable Cost, Fixed Fee, and Payment" the allowable indirect
costs under this contract shall be obtained by applying negotiated
overhead rates to bases agreed upon by the parties, as specified below.
(b) The Contractor, as soon as possible but not later than ninety
(90) days after the expiration of his fiscal year, or such other period
as may be specified in the contract, shall submit to the Cost Review and
Policy Branch of the Contracts Management Division with a copy to the
cognizant audit activity, a proposed final overhead rate or rates for
that period based on the Contractor's actual cost experience during that
period, together with supporting cost data. Negotiation of final
overhead rates by the Contractor and the Cost Review and Policy Branch
shall be undertaken as promptly as practicable after receipt of the
Contractor's proposal. In the event the contractor has more than one
contract with the Environmental Protection Agency, only one submittal
shall be required with respect to each applicable rate.
(c) Allowability of costs and acceptability of cost allocation
methods shall be determined in accordance with paragraph (a)(i)(A) and
(B) of the clause of this contract entitled "Allowable Cost and Fixed
Fee and Payment."
(d) The results of each negotiation shall be set forth in a
modification to this contract, which shall specify (1) the agreed final
rates, (2) the bases to which the rates apply, and (3) the periods for
which the rates apply. The incorporation of the negotiated final
overhead rates by contract modification shall not change any monetary
ceiling, contract obligation, or specific cost allowance or disallowance
provided for in the contract.
The contract also contains a "Limitation of Cost" clause which
provides that once funds equal to the estimated cost or ceiling are
expended, the contractor is under no obligation to continue performance
and EPA is under no obligation to fund the overrun until the amount
allotted to the contract is increased. This clause operates to give EPA
an effective tool to prevent the overexpenditure of appropriated funds
by establishing the estimated cost as the limit of the Government's
obligation to make payment, while at the same time providing a method
whereby the Government could increase the estimated cost and authorize
the contractor to continue performance.
Cf., Weinschel Engineering Co., Inc., 1962 BCA para. 3348 (1962).
The certifying officer states that in fiscal year 1975, the Mobile
Air Pollution Control program, of which we assume this contract was a
part, was funded with both Research and Development (R&D) and Abatement
and Control (A&C) funds. He states that the original contract was
funded in fiscal year 1975 from R&D appropriations. However, EPA
proposes to charge the increase in the contract's price, resulting from
Modification No. 4 to the A&C appropriations available for obligation in
fiscal years 1979 and 1980. The contracting officer notes that the
program is currently funded with only "A&C" funds.
The certifying officer asks the following questions:
1. Should an overrun be funded from the original appropriation, the
current year appropriation, or can either appropriation be used?
2. Is there a general rule that a certifying officer can use to
determine the proper appropriation to be charged with cost overruns from
prior year contracts?
3. Does a contract modification which extends the period of
performance and increases the cost without a change in the scope of work
affect the source of funding?
For fiscal year 1975, EPA received separate lump-sum appropriations
under the headings "Research and Development" and "Abatement and
Control." Each appropriation was:
(T)o remain available until expended: Provided, That this
appropriation shall be available only within the limits of amounts
authorized by law for fiscal year 1975. Agriculture-Environmental and
Consumer Protection Appropriation Act, 1975, Pub. L. No. 93-563, 88
Stat. 1835(1974).
For fiscal year 1979 EPA received separate lump-sum appropriations
for "R&D" and "A&C," but the funds remain available for expenditure for
only 2 years. Department of Housing and Urban Development-- Independent
Agencies Appropriation Act, 1979, Pub. L. No. 95-392, 92 Stat. 791,
796(1978).
The increased cost of this contract must be paid from the original
appropriation charged with the contract: the 1975 "R&D" appropriation.
With respect to the continued use of "R&D" funds, rather than "A&C"
funds, 31 U.S.C. 628(1976) restricts the use of appropriations to the
particular purposes which they were intended by the Congress to serve.
Neither the "R&D" nor the "A&C" appropriation expressly provides for the
Mobile Air Pollution Control program. Neither is it apparent on the
face of the contract whether the "A&C" appropriations can properly be
charged with expenses of the contract. We will assume, however, that
either of the two appropriations can be reasonably construed as
available for Mobile Air Pollution Control program expenditures. We
have held that in such cases an administrative determination as to which
appropriation will be charged may be accepted. However, continued use
of the same appropriation to the exclusion of any other for the same
purpose is required.
23 Comp.Gen. 827(1944); 10 id. 440(1931). Thus, even if we assume that
either appropriation could have been reasonably construed as available
for the original contract, EPA is bound by its election. Therefore, we
do not believe the modification in overhead rates may properly be funded
from an "A&C" appropriation.
The determination of whether an overrun should be charged against the
original appropriation or the current appropriation is governed by the
terms of the original contract. When the Government's liability to pay
the increased cost arises from the terms of the original contract and is
within that contract's scope, the appropriation initially used to fund
the contract must be charged.
Increased costs may result from changes in specifications, delay,
increases in overhead rates, and so forth. The Government's liability
to pay for such increased costs is governed by standard clauses such as
the "Changes" clause or, as in the present case, by the "Negotiated
Overhead Rates" clause. Thus, where a contract's estimated cost
increases because of the operation of such a provision contained in the
original contract, the Government's liability to pay that increased cost
arises at the time the contract is executed and payment must be made
from the appropriation current when that original agreement is made.
See 55 Comp.Gen. 768(1976); 50 id. 589(1971); 23 id. 943(1944). A
current or subsequent appropriation may be used only if the contract
modification gives rise to a new liability involving an obligation
incurred in the year that appropriation is available. In such cases,
the original appropriation is not available. 57 Comp.Gen. 459(1978);
56 id. 414(1977); 37 id. 861(1968).
Modification No. 4, which increased the estimated cost of the present
EPA contract, was issued pursuant to Clause 29 "Negotiated Overhead
Rates" of the original contract. That clause entitles the contractor to
a price adjustment under certain specified conditions. Accordingly, no
new liability is created when a modification is issued in accordance
with its terms.
Neither, in our view, does a limitation of cost clause operate to
create a new liability. The limitation of cost provision warns the
contractor not to incur costs above a particular ceiling unless the
ceiling is raised by allotting additional funds to the contract.
Accordingly, under the EPA contract, the contractor was not entitled to
payment for an overrun unless the increase was within the cost
limitation or the ceiling was raised. Clause 29, on the other hand,
bound the Government to suspend contract performance or to raise the
ceiling to cover increased overhead rates so long as chargeable
appropriations had not been exhausted and they remained available for
obligation. It follows that where a change or modification does not
fall outside the general scope of the contract, it will affect the
source of funding only if it is not authorized by the contract terms and
the amendment is not based on any antecedent liability.
In the present case, EPA's 1975 R&D funds, from which the original
contract was funded, are "no year" appropriations and are available
until expended. Accordingly, they may be charged with both old and new
"R&D" obligations. That appropriation is properly chargeable with the
increased contract price which arose from Modification No. 4.
B-197682, June 5, 1980, 59 Comp.Gen. 515
General Services Administration - Services For Other Agencies, etc. -
Space Assignment - Rental - Liability of GSA For Damages to Agency
Property
Government Printing Office (GPO) may not reduce Standard Level User
Charge (SLUC) payments to General Services Administration (GSA) by
amount of loss suffered by GPO when its supplies were damaged by water
leaking through roof while stored at a GSA Stores Depot. In authorizing
SLUC payments Congress intended to generate revenue and not to create a
landlord-tenant relationship with all the attendant legal rights and
duties. General Services Administration - Motor Pool Vehicles -
Liability for Damages - Requisitioning Agency v. GSA
Regulation authorizing GSA to recover expenses connected with repair
of vehicles damaged in accidents while used to provide interagency motor
pool service is proper under 40 U.S.C. 491 (Act) since it is part of the
cost of establishing, operating, or maintaining a motor vehicle pool or
system. Furthermore, one purpose of Act was establishment of procedures
insuring safe operation of motor vehicle on Government business.
Charging agency for losses caused by employee misconduct or improper
operation of vehicle might help to promote vehicular safety, since it is
agency, not GSA, which has direct control over employee using vehicle.
Matter of: Interagency Property Damage Liability, June 5, 1980:
Duwayne D. Brown, authorized certifying officer of the Government
Printing Office, requests an advance decision on whether vouchers may be
certified for payment under circumstances he describes as follows:
The first voucher concerns the General Services Administration's
system of charging commercial rates for rental space utilizing the
Standard Level User Charge (SLUC). Subsequent to implementation of
GSA's SLUC system, the Government Printing Office incurred damages to
property stored in the GSA Stores Depot, Franconia, Virginia. Roof
leaks damaged paper stored in the warehouse, recurring incidents going
back to November 1976. Accordingly, over $20,000 of Government Printing
Office paper was damaged by the water from these roof leaks. Deductions
were made from current SLUC billings. Subsequent correspondence with
GSA and our own legal staff denied the right of recovery from GSA based
on Comptroller General Decision (B-177610 dated December 15, 1977 (57
Comp.Gen. 130)).
The other instance concerns KSA Invoice No. 985702 that includes
$473.30 which represents repairs to a GSA rental vehicle damaged in an
accident in which a Government Printing Office employee was the driver.
Under 41 CFR 101-39.704 (Amendment C-28, November 1973) and
101-39.807(b) which were promulgated pursuant to 40 U.S.C. 491, our
legal staff recommends payment.
Because he believed that the advice he had received from GPO's
counsel was conflicting, Mr. Brown sought an advance decision from this
Office. For the reasons discussed below, we agree with the advice given
by GPO's legal staff.
The issue presented in your first question was considered and decided
in the case you cite, 57 Comp.Gen. 130(1977). There we were asked by
the Defense Department:
whether GSA should reimburse agencies "for damage to or losses of
furniture, furnishings, or equipment which result from building
failures" where a commercial landlord would be liable "either by
recovery from a lessor, where one is involved, or through a set-aside
for that purpose in the Federal Buildings Fund." As an alternative to
reimbursement for damages, DOD suggests that GSA "reduce its Standard
Level User Charges to the Agencies by an amount equivalent to the
premiums paid by the commercial landlords for liability coverage so that
the agencies could then underwrite their position as self-insurers."
In rejecting both proposals, we pointed out the general rule against
interagency reimbursements for property damage, but then went on to say:
Given the general rule which prohibits claims for damages between
Federal agencies, recovery of damages from GSA would depend upon
whether, in providing that rental rates "shall approximate commercial
charges for comparable space and services," rather than providing that
such rates be based on cost alone, Congress intended to invest tenant
agencies with all the rights that the agencies would have against a
commercial landlord * * * . On this issue, both the legislative history
of section 490(j) and our comments on the draft bill are instructive.
In view of the above, it seems clear that Congress intended by the
reference to "commercial" charges only to create extra revenue, not to
invest tenant agencies with all rights they would have against a
"commercial" landlord.
For the same reasons, it is also clear that GSA is not required to
lower its rental charges by an amount equal to that which a commercial
landlord would pay for liability insurance since the rental charges are
not based on cost. There are many expenditures that go into a
commercial rental charge for space that are not applicable to GSA.
Among these are taxes, depreciation, interest on a long-term debt, and
profit, as well as liability insurance. Since it was the intent of
Congress that the funds representing the difference between rates based
on cost and commercial rates be used to finance new buildings, the
rental charges should not be lowered. Id. at 131-132.
Since the first question presented is the same in all material
aspects as that presented in 57 Comp.Gen. 130, we hold that GSA is
entitled to payment of SLUC's assessed GPO without reduction. The
voucher to reimburse GSA for deductions made from SLUC charges may be
certified for payment.
As to the second question, we note that GSA's interagency motor
vehicle pools are operated and maintained under a revolving fund
established by 40 U.S.C. 491(d), which provides:
(1) The General Supply Fund provided for in section 756 of this title
shall be available for use by or under the direction and control of the
Administrator for paying all elements of cost (including the purchase or
rental price of motor vehicles and other related equipment and supplies)
incident to the establishment, maintenance, and operation (including
servicing and storage) of motor vehicle pools or systems for the
transportation of property or passengers, and to the furnishing of such
motor vehicles and equipment and related services pursuant to subsection
(b) of this section.
(2) Payments by requisitioning agencies, so served shall be at price
fixed by the Administrator at levels which will recover, so far as
practicable, all such elements of cost, and may, in the Administrator's
discretion, include increments for the estimated replacement cost of
such motor vehicles, equipment and supplies.
Thus, the law authorizes the payment of all costs connected with the
establishing, maintaining, and operating of motor vehicle pools or
systems from the General Supply Fund established under 40 U.S.C. 756,
and the recovery of these costs from agency users.
GSA has issued regulations, as authorized by 40 U.S.C. 486(c) and
subject to Executive Order 10579, December 1, 1957, 19 Fed.Reg. 7925 (40
U.S.C. 486 note) to implement the provisions of 40 U.S.C. 491 which are
set forth in 41 C.F.R.Part 101-39 entitled "Interagency Motor Vehicle
Pools." 41 C.F.R. 101-39.704 provides:
(a) Except as provided in (b), below, GSA will be responsible for the
costs incurred whenever an interagency motor pool vehicle is damaged.
(b) When an employee damages an interagency motor vehicle through
misconduct or improper operation as defined in Sec. 101-39.704, GSA will
charge all costs to the agency employing the operator, including the
fair market value of the vehicle less any salvage value, if the vehicle
is damaged beyond economical repair. GSA will furnish the agency an
accident report regarding the incident. Each agency shall be
responsible for disciplining its employees who are guilty of damaging
motor pool vehicles through misconduct or improper operation.
(1) The costs chargeable to the agency include costs for removing and
repairing the vehicle or in the case of total loss, the replacement of
the vehicle, including travel and other costs attributable to the
accident.
(2) If an agency has information or facts which would have a bearing
on the accident, the agency may furnish the data to GSA and request that
the costs charged to and collected from the agency be credited to the
Agency. The final determination of agency responsibility will be made
by GSA, based upon Government as well as police accident reports and any
available witness statements.
It is clear that expenses connected with the repair of a vehicle used
to provide interagency motor pool service is part of the cost of
establishing, operating, or maintaining a motor vehicle pool or system
and therefore is proper for recovery under the law. Furthermore, in our
opinion, charging such losses directly to the agency whose driver is
responsible for the loss is properly within GSA's discretion. Since one
of the purposes in enacting 40 U.S.C. 491 was to establish procedures to
insure safe operation of motor vehicles on Government business and since
it is the agency which uses the vehicle, and not GSA, which has direct
control of the employees using the vehicle, charging the employing
agency for losses caused by employee misconduct or improper operation
might help to promote vehicular safety.
In addition, since the GSA revolving fund is intended to be operated on
a businesslike basis, it is inequitable to impose upon the revolving
fund a loss for which the managing agency is in no way responsible.
Consequently, in answer to the second question, GPO is required to
reimburse GSA for damage to vehicles which are a part of the interagency
motor pool operated by GSA. If otherwise proper, the voucher covering
this cost may be certified for payment.
B-196185, June 5, 1980, 59 Comp.Gen. 512
Contracts - Specifications - Tests - First Article - Waiver - Time for
Establishment Eligibility
Information in support of waiver of first article testing may be
submitted after bid opening, regardless of invitation for bids provision
requiring its submission with bid, because such information relates to
bidder's responsibility which may be established after bid opening.
Where bidder, prior to award, obtained first article approval for same
item under prior contract, agency is not required to evaluate bid on
basis of furnishing another first article, and agency should consider
prior approval in determining whether to waive first article testing
under solicitation which is subject of protest. Contracts -
Specifications - Tests - First Article - Waiver - Approval of Same Item
Pending Protest on Later Procurement
Where record does not establish that protest of agency's refusal to
waive first article testing was filed only to delay award until
protester's first article was approved under prior contract for same
item, agency is not precluded from considering waiver for protester when
first article approval is granted under prior contract while protest is
pending.
Matter of: Bruno-New York Industries Corp., June 5, 1980:
Bruno-New York Industries Corporation (Bruno) protests the Army's
refusal to waive first article testing and to award Bruno a contract
under invitation for bids (IFB) DAAA09-79-B-4822 for 450 ignition test
sets used in shop equipment. For the reasons stated below, we recommend
that the agency consider waiving first article testing for Bruno.
The IFB, issued on July 26, 1979, by the Army Armament Materiel
Readiness Command (Army), required first article testing and approval,
but also provided for waiving that requirement where "supplies identical
or similar to those called for in the schedule have been previously
furnished by the offeror and have been accepted by the Government." The
IFB permitted bids to be submitted on the basis of first article testing
and on the basis of the test being waived. In the event a bidder
desired to bid on the basis of a waiver of first article testing the IFB
required it to submit with the bid the contract number under which
identical or similar supplies were previously accepted by the
Government.
Bids were opened on September 14. Bruno bid a unit price of $319
without first article approval and $324.10 with such approval, but
failed to submit any contract number in support of its claim for waiver.
Aul Instruments Inc. bid $310 without and $320 with first article
approval.
Bruno's eligibility for waiver may hinge upon a prior contract
(DAAA09-79-C-4210) which Bruno has with the Army to produce the same
item. Although the contract required submission of a first article test
report by April 19, 1979, Bruno had not submitted its first article when
on September 19 the Army decided to require first article testing for
both firms under the subject solicitation. Bruno protested this
determination to our Office on September 25. In March while the protest
was under consideration, Bruno obtained first article approval.
The Army contends that waiver is not proper since Bruno failed to
include the contract number with its bid as required by the IFB. The
agency further argues that its determination on September 19 not to
waive first article testing for Bruno was proper since at that time the
firm had not received first article approval under its prior contract.
The Army takes the position that Bruno should not benefit from the delay
resulting from its protest. The agency contends that Bruno's protest
was filed only to postpone the award until it received first article
approval under its prior contract and that the integrity of the
competitive bidding system would be damaged if Bruno were permitted to
benefit from such a tactic.
Although the Army argues that Bruno's failure to include the contract
number in its bid prevented the agency from waiving first article
testing for Bruno, it is our view that such failure does not preclude
waiver since the decision whether to waive first article testing relates
to the bidder's responsibility and evidence of bidder responsibility may
be submitted after bid opening. See Craig Systems Corporation,
B-188495, June 23, 1977, 77-1 CPD 449. Thus, while the contracting
officer's determination not to waive first article testing on September
19 was correct, as Bruno had not previously furnished the required items
nor had they been accepted by the Government prior to September 19, see
Bogue Electric Manufacturing Co., B-193878, May 10, 1979, 79-1 CPD 330,
now that Bruno has first article approval, the Army is not legally
precluded from evaluating Bruno's bid on the basis of its actual needs.
In other words, under the rules governing bid evaluation, the Army is
not required to evaluate Bruno's bid solely on the basis of the firm's
furnishing a first article, something the Army at this point may not
need.
As the decision whether to waive first article testing for a
particular bidder is essentially an administrative one we are not
recommending that Bruno be granted a waiver under this solicitation.
Wilco Electric, Inc., B-194872, September 24, 1979, 79-2 CPD 218. In
light of our conclusion, however, that there is no legal impediment to
first article waiver here for Bruno, we are recommending that the Army
consider pursuant to the solicitation's "Waiver of First Article
Approval" provision the approval of Bruno's first article under contract
DAAA09-79-C-4210 in its determination whether to waive first article
testing for Bruno under this solicitation.
We take note of the Army's concern over the benefit to Bruno from the
delay attendant to its protest. In a variety of circumstances, however,
agencies have held up awarding a contract, allowing a particular bidder
to qualify for award. See, e.g., Ver-Val Enterprises, Inc., B-198076,
March 25, 1980, 80-1 CPD 223; B-178043, July 27, 1973 (where the Army
delayed award to permit a bidder to obtain operating authority from a
regulatory agency). Although we stated in one case that an undue delay
of an award solely for the purpose of permitting a bidder to qualify for
waiver of a first article requirement would be questionable, in that
same case we denied a protest of the Army's delay in making award and
considering of first article waiver for a bidder which did not request
waiver in its bid and which submitted a first article for evaluation
after bid opening. See B-175015(1), September 29, 1972. Thus, we think
Bruno, reasonably believing it would shortly qualify for first article
waiver, could have filed a good faith protest of the Army's intention to
make award without regard to the possibility of Bruno's being able to
qualify for waiver if award were delayed for a reasonable period of
time.
While of course the Army was not required to hold up award if its needs
did not so permit, we note that the Army has not yet made award, even
though the regulations permit an agency to make award notwithstanding a
pending protest when its needs so require. See Defense Acquisition
Regulation Sec. 2-407.8(b)(3). Thus, under these circumstances, we do
not believe there is anything improper with Bruno's benefiting from the
situation here.
B-195140, June 4, 1980, 59 Comp.Gen. 509
Transportation - Household Effects - Military Personnel - Advance
Shipments - Prior to Issuance of Orders - Vessel Overhaul Scheduled
Circumstances-- where members' permanent change-of-station orders are
not timely issued (when a ship is scheduled for overhaul) because of
delay in determining the overhaul port due to Government contract
bidding requirements-- may be considered unusual circumstances incident
to military operations. Therefore, regulations may be amended to
authorize transportation of household effects in such cases upon a
statement of intent to change the ship's home port, but prior to
issuance of orders. Transportation - Household Effects - Military
Personnel - Advance Shipments - Orders Canceled, etc. - Payment of
Return Expenses
Where members' permanent change-of-station orders are not timely
issued when a ship is scheduled for overhaul and the regulations are
amended to permit shipment of household effects before orders are
issued, regulations may be further amended to authorize the return
shipment of household effects if the ship overhaul is cancelled.
Matter of: Transportation of household effects prior to issuance of
orders, June 4, 1980:
This case involves authority to ship members' household goods without
issuance of orders because of an unusual situation which arises when
Navy ships are scheduled for overhaul but the overhaul port is not known
until shortly before the scheduled date of the overhaul.
Three issues are presented. First, may the Joint Travel Regulations
be amended to authorize the transportation of household goods at
Government expense of members of the uniformed services based on a
statement of intent to change a ship's home port but prior to issuance
of permanent change-of-station (PCS) orders where the ship is scheduled
for overhaul and the PCS orders cannot be timely issued. Second, if the
regulations may be amended to authorize shipment of household goods in
advance of issuance of orders in the circumstances described above, may
the regulations also be amended to provide that the goods may be
returned to the member's old or a new local residence at Government
expense in case the scheduled overhaul of a vessel is cancelled and the
home port change is revoked after the household goods have been picked
up and placed in storage-in-transit pending shipment. And, third, if
the regulations may not be amended to provide for the return of the
household goods in the circumstances described in the second question,
may the regulations be amended to provide that an advance shipment of
household effects is authorized under the circumstances described in the
first question, provided that the member concerned signs a written
agreement to pay any of the costs incurred in connection with the
shipment of household effects in the event the scheduled overhaul is
cancelled.
The Assistant Secretary of the Navy (Manpower, Reserve Affairs and
Logistics) requested an advance decision on these issues. The matter
was forwarded here through the Per Diem, Travel and Transportation
Allowance Committee (PDTATAC Control No. 1358).
The Assistant Secretary refers to a problem that has arisen in
connection with paragraph M8017, Volume 1, Joint Travel Regulations (1
JTR), and our ruling in 52 Comp.Gen. 769(1973).
Paragraph M8017 provides that the transportation of household goods
at Government expense is authorized prior to the issuance of PCS orders
provided that the request for such shipment is supported by:
1. a statement from the order-issuing authority, or his designated
representative, that the member was advised prior to the issuance of
such orders that they would be issued;
2. a written agreement by the member to pay any additional costs
incurred for shipment to another point required because the new
permanent duty station named in the orders is different from that named
in the statement prescribed in item 1; and
3. a written agreement to remit the entire cost of shipment if PCS
orders are not subsequently issued to authorize shipment.
Paragraph M8017 further provides that the length of time prior to the
issuance of the PCS orders during which a member may be advised that his
orders will be issued may not exceed the relatively short period between
the time when a determination is made to order the member to make a PCS
and the date on which the orders are actually issued. General
information that may be furnished the member concerning the issuance of
orders before the determination is made to actually issue the orders,
such as time of eventual release from active duty, time of expiration of
term of service, date of eligibility for retirement, date of expected
rotation from overseas duty, etc., may not be considered as advice that
the orders are to be issued. This paragraph is based on our ruling in
52 Comp.Gen. 769.
A problem has arisen in connection with the reference paragraph
concerning the shipment of household goods in advance of orders for
members assigned to Navy vessels preparing to enter overhaul. Since a
vessel usually spends 9 months to a year or more in an overhaul port,
the Navy changes the home port of the vessel being overhauled from
wherever it is located prior to overhaul to the overhaul port so that
families and household goods can be shipped at Government expense to the
new location. However, contract bidding procedures for overhauling Navy
vessels required by law often do not permit timely identification of
overhaul sites.
This has resulted in the promulgation of home port change messages and
certificates as late as 2 weeks prior to the commencement of the
overhaul. Thus, while members and transportation officers may be
alerted to a forthcoming move of a vessel which will take place on a
specific date, Government bills of lading cannot be issued until the
actual overhaul port is known and PCS orders and home port change
certificates have been issued. Without a Government bill of lading,
firm arrangements cannot be made with household goods carriers to pack
and pick up household goods for storage and/or shipment. This means
that the members concerned are not afforded reasonable time to make
arrangements for the relocation of their households and families. It is
the view of the Navy that this situation results in an inequity for the
members assigned to such a vessel, since members ordered on a normal PCS
usually receive their orders at least 90 days prior to the effective
date of their move and consequently have ample time to make arrangements
for the relocation of their families and household goods.
The Navy has proposed a change to the JTR which would authorize the
shipment of household goods in advance of orders for eligible members
assigned to ships preparing to enter overhaul based on a statement of
intent to change the home port of a vessel to an undetermined overhaul
site on a specified date. This statement of intent would be issued only
when it is known that less than 90 days will exist between the time of
determination of a specific overhaul site and the actual departure of
the vessel to such site.
Section 406(e) of title 37, United States Code (1976), provides that
when orders directing a PCS for the member concerned have not been
issued, or when they have been issued but cannot be used as authority
for the transportation of his dependents, baggage, and household
effects, the Secretaries concerned may authorize the movement of the
dependents, baggage, and household effects and prescribe transportation
in kind, reimbursement therefor, or a monetary allowance in place
thereof, in cases involving unusual or emergency circumstances including
those in which the member is serving on permanent duty at stations
outside the United States, in Hawaii or Alaska, or on sea duty.
In discussing the legislative history of 37 U.S.C. 406(e) we stated
in 45 Comp.Gen. 159 at 162(1965) that:
* * * While the emphasis of the statutory provision is upon the
advance return of dependents, the legislative history of the law
indicates an intent to provide authority for movement of dependents and
household effects between points in the United States incident to
unusual or emergency situations when the member is on sea duty. In S.
Rept. No. 733, on H.R. 5007, 81st Cong., 1st sess. (which became the
Career Compensation Act of 1949), on page 22, the Senate Committee on
Armed Services, referring to section 303(c) stated in pertinent part as
follows:
"This subsection also includes provisions for the transportation of
dependents even though there is involved no change of station in order
that dependents may travel at Government expense between points in the
United States where the service member is on sea duty or on duty outside
the United States at a post of duty where dependents are not permitted
to accompany him. * * * "
Thus, Congress has recognized that members serving on sea duty occupy
a position not unlike those members who are assigned to duty stations
overseas. In 49 Comp.Gen. 82 at 824(1970) we stated:
* * * it is our opinion that 37 U.S.C. 406(e) provides authority for
the movement of dependents and household effects from place to place in
the United States in unusual or emergency circumstances incident to some
military operation or requirement * * * .
In the case of members assigned to vessels preparing to enter a port
for overhaul, the contract bidding procedures established by the
Government for overhauling Navy vessels do not always permit timely
identification of the overhaul site. In those circumstances we believe
to require that orders be issued before household effects could be
transported at Government expense could result in undue hardship to the
members and their dependents and may therefore be regarded as unusual
circumstances incident to military operations, as contemplated by
section 406(e). On that basis we have no objection to amending the
regulations as suggested by the Navy to permit movement of household
effects based upon a statement of intent to change a vessel's home port
incident to overhaul but prior to issuing PCS orders. Similarly, the
regulations may be amended to provide for return of the household goods
from storage if the overhaul is cancelled. Accordingly, the first and
second questions are answered yes, and a no answer is required to the
third question.
B-197646, May 29, 1980, 59 Comp.Gen. 505
General Services Administration - Services For Other Agencies, etc. -
Excess Real Property - Maintenance Costs - Liability to Holding Agencies
General Services Administration (GSA) regulations make GSA
responsible for cost to agencies of maintaining excess real property,
beginning one year after it becomes excess. FPMR 101-47.402-2(b). Air
Force spent $197,546 to maintain property. GSA says it is liable to
reimburse only $56,000 because it offered to pay only that amount and
because it lacked funds to pay more. GSA is liable for full amount but
we will not require GSA to seek deficiency appropriation for
intragovernmental payment. GSA should budget for these expenses or
change its regulation. Set-Off - Authority - Interagency Claims
In dispute between General Services Administration (GSA) and Air
Force over Air Force claim for reimbursement, Air Force withheld
Standard Level User Charge payment owed to GSA in order to collect
unrelated debt. Inter-agency claims are not to be collected by offset
but should be submitted to General Accounting Office for adjudication.
Matter of: Liability of General Services Administration for Cost of
Maintaining Excess Real Property Held by Air Force, May 29, 1980:
This is in reference to the dispute between the General Services
Administration (GSA) and the Air Force (AF) over reimbursement of
expenses incurred for the protection and maintenance of two parcels of
Federal excess real property-- the Matagorda Island Air Force Range and
the associated Port O'Connor Dock Facility, Calhoun County, Texas.
As explained below, we agree that GSA should reimburse the AF for the
balance of the protection and maintenance costs incurred by AF.
However, it would require a deficiency appropriation to do so and we see
no purpose in requiring this action under the circumstances. Also,
offset by a creditor agency against a debtor agency is not appropriate.
AF should remit the balance owed to GSA for Standard Level User Charge
fees.
The AF remained in possession of these installations after they were
declared excess to AF requirements, and continued to provide protection
and maintenance services for twelve months, as required of the holding
agency by the terms of the Federal Property Management Regulations
(FPMR). Beginning on October 1, 1977, GSA, as the disposal agency under
the FPMR, became obligated to provide these services itself or to
reimburse the AF for the cost of these services and on October 15,
presented the AF with a proposed protection and maintenance agreement
with an $18,000 maximum on the costs it would reimburse to the AF for
the first quarter of fiscal year 1978 (FY 78). Since the AF expected
that the level of protection and maintenance required by the FPMR would
necessitate expenditures in excess of $18,000, the agreement was neither
signed nor returned and identical agreements, covering the second and
third quarters, were likewise disregarded.
The AF billed GSA $197,546 representing its actual costs for the
protection and maintenance services provided during the first three
quarters of FY 78. Due to inadequate funds, GSA denied any obligation
to reimburse more than $54,000, representing the payment of $18,000 for
each of the three quarters, as proposed by GSA originally. In an
attempt to satisfy this debt, the AF withheld $197,546 owed GSA for
third quarter FY 78 Standard Level User Charges (SLUC) for space
occupied by the AF outside the National Capital Region. GSA has
submitted the matter as a claim for the remaining $143,546 in SLUC
charges. We here consider the propriety of the actions of both GSA and
the AF.
As a preliminary matter, interagency claims are not to be collected,
as the AF did, by offset. The AF must pay the SLUC charge due GSA.
Disputed interagency bills should be submitted to this Office for
settlement, as provided in the GAO Manual of Policies and Procedures for
the Guidance of Federal Agencies (title 7, sec. 8.4(1)(c)).
Responsibility for the care and handling of Federal excess real
property-- property not needed by the agency holding it-- is addressed
in section 202(b) of the Federal Property and Administrative Services
Act of 1949, as amended (40 U.S.C. 483(b) (1976)) and the implementing
Federal Property Management Regulation (FPMR), 41 C.F.R. 101-47.401 et
seq. (1979).
Under section 202(b), the agency in possession is required to perform
the care and handling of its own excess property. Compare section
203(b), 40 U.S.C. 484(b), under which GSA, as the agency responsible for
disposing of surplus property-- property not needed by any agency-- is
vested with discretion either to furnish the protection and maintenance
services for the surplus property itself or to require the agency in
possession (the holding agency) to perform this function. Despite this
distinction in the statute between treatment of surplus and excess real
property, GSA has adopted a policy of treating all care and handling
responsibilities, for both surplus and excess real property, in the same
manner. In this regard, FPMR section 101-47.402-1 provides in part
that:
The holding agency shall retain custody and accountability for excess
and surplus real property * * * and shall perform the physical care,
handling, protection, maintenance, and repairs of such property pending
its transfer to another Federal agency or its disposal. * * *
The holding agency must bear the cost of providing care and handling
services for a maximum of twelve months plus the period preceding the
first day of the next succeeding fiscal year quarters. FPMR section
101-47.402-2(a). Thereafter, if the property has not yet been
transferred to another agency or otherwise disposed of by the disposal
agency, FPMR section 101-47.402-2(b) provides that:
* * * the expense of physical care, handling, protection,
maintenance, and repairs of such property from and after the expiration
date of said period shall be reimbursed to the holding agency by the
disposal agency.
This is done even though, under the excess property statute, the
holding agency is responsible for these costs insofar as they pertain to
excess property. 40 U.S.C. 483(b).
GSA has not denied its liability to the AF under the FPMR nor has it
questioned the amount which the AF spent. It only disputes the amount
which it is obligated to reimburse. Based upon its understanding that
the regulations implicitly contemplate reimbursement of costs only to
the extent of available resources, GSA believes that no agreement with
the AF was necessary to limit its responsibility for costs. GSA
contends that its quarterly obligation to the AF should not exceed
$18,000 (a total of $54,000 for three quarters) both because it
attempted to limit its liability to this amount and because "budget
limitations precluded us from funding these costs at a higher level," so
that, in GSA's view, "no additional funds are available for this
purpose." The AF, on the other hand, has interpreted the regulations to
require reimbursement of actual protection and maintenance costs which
it expended.
The general GSA policy governing reimbursable excess property
expenses is embodied in FPMR section 101-47.401-1 which states:
(a) * * * the management of excess real property and surplus real
property, including related personal property, shall provide only those
minimum services necessary to preserve the Government's interest
therein, realizable value of the property considered.
Although GSA, under its regulations, has assumed financial
responsibility for excess property after 12 months, the applicable
statute makes the care and maintenance of excess property the
responsibility of the holding agency, without a time limit. 40 U.S.C.
483(b). There is therefore no doubt that AF funds were available for
the purpose for which they were expended. Accordingly, reimbursement of
the AF by GSA is not required in order to prevent an improper
expenditure.
This is not to say that GSA can avoid its self-imposed responsibility
for care of Government property by pleading insufficient funding. We
addressed this issue in a letter report to GSA, "Improvement Needed in
Management of Protection and Maintenance Funding," LCD-78-336, July 31,
1978. The property which is the subject of this decision, the Matagorda
Island Air Force Range and Dock, was among those discussed in that
report. We said then:
Since GSA has 12 to 15 months before it becomes financially
responsible for the property, we believe that it should be able to
anticipate the funding needs for the protection and maintenance for
those properties remaining in its inventory and include an estimate for
such costs in its budget.
We do not concede that GSA can negate the effect of its regulations
by failing to budget or obligate sufficient funds to carry out its
responsibilities. However, we see no useful purpose to be served by
requiring, in effect, that GSA seek a deficiency appropriation merely to
reimburse another Government agency in an intra-governmental
transaction.
We have no general objection to GSA's practice under the cited
regulations of establishing ceilings on reimbursable costs where the
holding agency agrees to the proposed amount. Under these
circumstances, the holding agency presumably will have determined either
that the services required by the regulations can be furnished at the
agreed amount or that it is capable of assuming any additional expenses.
Where no agreement is adopted, however, so long as the holding agency
furnishes only those services required by the regulations, GSA should
budget for and reimburse the actual cost of these services.
Alternatively, GSA can amend its regulation to make the holding agencies
responsible for these costs, so that they can budget for them.
B-196908, May 28, 1980, 59 Comp.Gen. 502
Officers and Employees - Transfers - Relocation Expenses - Real Estate
Expenses - Retransfer of Employee - To Former Station
Employee was transferred back to former duty station and was
reimbursed expenses of selling former residence there even though he did
not contract to sell former residence until after he had been notified
of retransfer. Under Beryl C. Tividad, B-182572, October 9, 1975, he
may retain amount reimbursed. However, Tividad is overruled
prospectively. Hereafter, transferred employee is under same obligation
to avoid unnecessary expenses as an employee whose transfer is canceled
and is entitled to only those real estate expenses which he has incurred
prior to notice of retransfer and those which cannot be avoided.
B-173783.141, Oct. 9, 1975, also overruled.
Matter of: Warren L. Shipp - Real Estate Expenses, May 28, 1980:
We have been asked to determine whether an employee may be reimbursed
real estate expenses in connection with the sale of his residence at his
former duty station where he contracted to sell that residence after he
had been notified that he was to be retransferred to that same duty
station.
Mr. W. Smallets, Finance and Accounting Officer, National Security
Agency (NSA), has asked us whether Mr. Warren L. Shipp is entitled to
real estate sale expenses. Mr. Shipp, an NSA employee, was transferred
from Fort Meade, Maryland, to Princeton, New Jersey, in August 1978, and
was authorized relocation expenses, including real estate transaction
expenses. He was notified April 25, 1979, that he was to be transferred
back to Fort Meade and he was retransferred to his former duty station
in August 1979. On May 9, 1979, Mr. Shipp entered into a contract to
sell his former Maryland residence and on August 8, 1979, he submitted a
claim for expenses associated with the sale of that residence. His
claim for real estate expenses was paid in the amount of $4,671.60. In
the following week he submitted a claim for real estate expenses
incurred in conjunction with the purchase of a residence in the Fort
Meade area. The record does not indicate that Mr. Shipp's claim for
real estate purchase expenses has been paid. Based on our holding in
B-167141, July 23, 1969, Mr. Smallets asks whether Mr. Shipp should be
required to reimburse the Government the $4,671.60 paid as real estate
sale expenses.
Our decision in B-167141, July 23, 1969, involved an employee who
entered into a contract for sale of his residence at his old station
after he had been notified that he was being retransferred to his old
duty station at Fort Meade. In holding that the retransferred employee
was not entitled to residence sale expenses, we held that " * * * after
the advisement of his transfer back to Fort Meade * * * (the claimant)
could no longer reasonably predicate the sale of his residence on the
(earlier) change of duty station from Fort Meade * * * ."
The basis for that decision was repudiated in Beryl C. Tividad,
B-182572, October 9, 1975, and in Ray L. Boman, B-173783.141, October 9,
1975. The holding in Beryl C. Tividad involved an employee who was
granted a 1-year extension of time to complete the sale of her home at
her former duty station in New Orleans. One month later, in August
1973, she was retransferred from Temple, Texas, to her former duty
station. Four months thereafter she contracted to sell her old
residence in New Orleans and also contracted to purchase a home in the
same area. Based on paragraph 2-6.1e of the Federal Travel Regulations
(FTR) (FPMR 101-7) pertaining to the 1-year time limitation for real
estate transactions and setting forth the standards for extending that
1-year period, the agency involved disallowed the residence sale
expenses on the ground that the sale of the employee's New Orleans
residence did not reasonably relate to her transfer from New Orleans to
Temple.
In that case we pointed out that 5 U.S.C. 5724a, which provides for
the reimbursement of real estate expenses, requires a finding that a
transfer is in the interest of the Government. Once that finding is
made, the authorization of the benefit is restricted only by the terms
of the implementing regulations. The regulations pertaining to real
estate transaction expenses require a determination that a sale is
reasonably related to a transfer only when an extension of the 1-year
settlement date limitation is sought and granted and when transfers
involving short distances are made. They do not authorize or permit an
administrative determination in all cases that a particular real estate
transaction relates to a transfer. Therefore, we held that the employee
was entitled to the reimbursement claimed since the right to be
reimbursed for transfer-related expenses arises once it is determined
that a transfer is in the interest of the Government. In effect, the
Tividad and Boman cases overruled B-167141 and permitted reimbursement
of real estate purchase and sale expenses incurred at the duty station
to which the employee is retransferred without regard to a determination
that the residence transaction reasonably related to the transfer.
In a related line of cases, we have considered the relocation
expenses entitlement of employees who were given transfer orders and
whose transfers were subsequently canceled. If the employee's duty
station has not changed as a result of the canceled transfer, the
employee is treated for reimbursement purposes as if the transfer had
been completed and employee had been retransferred to his former duty
station. B. Lee Charlton, B-189953, November 23, 1977, and William E.
Weir, B-189900, January 3, 1978. He may be reimbursed expenses incurred
in good faith during the time the transfer orders were in effect, if the
expenses claimed would have been payable if the transfer had been
consummated.
In the case of real estate expenses, we have recognized that an
employee who entered into an enforceable contract to sell his residence
at his duty station under transfer orders that were subsequently
canceled may be reimbursed for real estate sale expenses even though
settlement did not occur until after the transfer orders were canceled.
B-177130, February 2, 1973. Where an employee's efforts to sell his
residence have not progressed to the point of executing the sale, the
extent to which real estate expenses are reimbursable may depend upon
whether the employee has entered into a listing agreement that may be
revoked without penalty. Wm. E. Jackson, Jr., B-181321, November 19,
1974. If, under applicable state law, the arrangement with the real
estate agent binds him to pay a brokerage fee in the event he
unilaterally cancels the agreement, the employee may be reimbursed for
brokerage fees limited to the amount payable if the employee had
withdrawn the property from sale.
Neil Gorter, B-194448, December 11, 1979.
We are now of the view that the canceled transfer cases appropriately
place the burden upon the employee to avoid unnecessary expenditures and
ought to be extended to retransfer situations to the extent the employee
has not substantially changed his position in reliance on the initial
transfer. For this reason, the Tividad and Boman decisions are
overruled. The new rule is that an employee who is transferred back to
a former duty station is under the same obligation to avoid unnecessary
expenses as an employee whose transfer is canceled. Therefore, once an
employee is notified that he is being transferred back to his former
duty station, the Government's obligation to reimburse real estate
expenses is limited to the expenses already incurred and those which
cannot be avoided.
Because adoption of the concept of avoidable expenses in the
retransfer situation involves a changed construction of law, the Tividad
and Boman cases are overruled prospectively only. See George W. Lay, 56
Comp.Gen. 561(1977). Since Mr. Shipp was properly reimbursed for his
selling expenses under those decisions, he is not required to refund the
reimbursement he received to the Government. He may also be reimbursed
for his purchase expenses if that has not yet been done.
B-196243, May 28, 1980, 59 Comp.Gen. 498
Contracts - Negotiation - Evaluation Factors - Factors Other Than Price
- Relative Importance of Price
Where record does not justify contracting officer's finding that
competing proposals are essentially equal, award to offeror on basis of
lower estimated cost is improper departure from stated solicitation
evaluation factors which place emphasis on technical merit.
Matter of: John Snow Public Health Group, Inc., May 28, 1980:
John Snow Public Health Group, Inc. (JSI), protests the award of a
cost-plus-fixed-fee, requirements type contract for consultant technical
assistance, to Analysis Management and Planning, Inc. (AMPI), under
request for proposals (RFP) No. HSA240-BCHS-164(9), issued by the Health
Services Administration (HSA), Department of Health, Education and
Welfare, now the Department of Health and Human Services (HHS), JSI
contends that HSA improperly based the award upon the lowest estimated
cost rather than the evaluation criteria in the RFP, and, alternately,
that it neglected to perform the requisite cost analysis to determine
whether the offerors' respective cost estimates were realistic.
The RFP sought proposals for technical assistance to be rendered
during fiscal year 1980 to HEW Regions I and II regional staffs and
Bureau of Community Health Services (BCHS) supported health care
projects. Technical proposals were to comport with the requirements
specified in the Technical Proposal Instructions, and were to be
evaluated in accordance with certain evaluation criteria which were as
follows:
The technical proposals shall be evaluated in accordance with the
following factors listed in their relative order of importance:
1. Personnel and Experience: 60
2. Problem and Approach: 30
3. Facilities: 10
No factors other than those listed above will be used in the
evaluation of the offeror's technical proposal.
Award will be made to the offeror submitting the proposal determined
to be most advantageous to the Government. Cost will be considered
secondary to technical merit in the award selection process.
Two proposals-- from AMPI and JSI, the incumbent-- were received by
the August 10, 1979 opening date and were forwarded for initial
evaluation to the technical evaluation panel. The proposals were scored
by the panel as follows: (TABLE OMITTED)
It is reported that, although JSI received the higher aggregate
technical score (as well as the higher average score in each of the
three evaluation categories) and submitted the lowest price, AMPI's
proposal was deemed technically acceptable and within the competitive
range. Telephone conversations were held with both offerors on
September 20, 1979, for the purpose of discussing technical deficiencies
noted in the original technical evaluations, and best and final offers
were then submitted on September 25, as follows: (TABLE OMITTED)
These modified proposals were reviewed by the evaluation panel and on
September 28 the Chairman, citing six significant elements of the JSI
proposal, recommended that award be made to JSI on the basis of
technical superiority.
Later on September 28, the contracting officer met with members of
the evaluation panel, including the Chairman, to determine the margin of
JSI's remaining superiority and was informed that, had the modified
proposals been scored, JSI's rating would have increased to 96 or 97 and
AMPI's to 85 or 86. On the basis of this information as well as her own
examination of the proposals, the contracting officer determined that
AMPI's proposal was as technically acceptable as JSI's. In the
contracting officer's opinion, the remaining deficiencies in AMPI's
proposal would likely be true of any non-incumbent contractor without
recent experience in Regions I and II while must of JSI's superiority
was attributable to factors not required by the RFP. Since the
contracting officer deemed the proposals to be essentially equivalent on
technical merit, she concluded that award to AMPI at an $18,000 lower
estimated cost would be in the best interests of the Government. The
contract was awarded to AMPI on September 28.
JSI asserts initially that since its proposal was clearly technically
superior to AMPI's, as reflected in the point scores assigned the two
proposals by the evaluation panel, award to AMPI was necessarily based
on lower cost. Award on this basis, it argues, was improper because the
RFP emphasized technical considerations in the evaluation while
assigning only "secondary" importance to price. In support of its
contention, JSI also cites Federal Procurement Regulation (FPR) Sec.
1-3.805-2(n), which states that estimated costs should not be the
controlling factor in cost-plus-fixed-fee contract awards since such
estimates may not be indicative of actual final costs.
We have stated in a number of decisions that "once offerors are
informed of the criteria against which their proposals are to be
evaluated, it is incumbent upon the procuring agency to adhere to those
criteria or inform all offerors of changes made in the evaluation
scheme." Telecommunications Management Corporation, 57 Comp.Gen.
251(1978), 78-1 CPD 80; Genasys Corporation, 56 Comp.Gen. 835,
838(1977), 77-2 CPD 60. Under this standard, it would be improper to
induce an offer representing the highest quality and then reject it in
favor of a materially inferior offer on the basis of price. Signatron,
Inc., 54 Comp.Gen. 530(1974), 74-2 CPD 386. This is not to say,
however, that cost may never be considered under these circumstances.
Indeed, even where it has been designated as a relatively unimportant
evaluation factor, cost may become the determinative factor if source
selection officials find that no proposal is clearly superior based upon
other more significant criteria. Bunker Ramo Corporation, 56 Comp.Gen.
712(1977), 77-1 CPD 427.
We note at this juncture that it is neither our function nor our
practice to conduct a de novo review of technical proposals and make an
independent determination of their relative merit. This is the function
of the procuring agency. We will question a contracting official's
conclusions regarding the technical merits of proposals only upon a
clear showing of unreasonableness, abuse of discretion or violation of
procurement statutes or regulations. E-Systems, Inc., B-191346, March
20, 1979, 79-1 CPD 192.
The HSA contracting officer's conclusion that the JSI and AMPI
proposals were technically equal was based upon her observation that
JSI's point score superiority was attributable to AMPI's lack of recent
experience in Regions I and II, and to the inclusion in JSI's proposal
of factors, such as current library and computer resources, which
enhanced JSI's rating, but were not "required" by the RFP.
We do not believe the contracting officer's conclusions were
reasonable in this respect. For example, while the RFP does not require
the maintenance of a current library or the use of computer resources
for this project, neither did it require the use of any other specific
facilities, resources or subcontractors to perform the required tasks.
In this regard, JSI proposed the use of a Puerto Rico based
subcontractor to provide on-site technical assistance and training for
the tasks which were to be performed in Puerto Rico and the Virgin
Islands. That firm's experience in the health care field in a Spanish
speaking "culturally acceptable" environment was recognized as an asset
by the technical evaluators, but was discounted by the contracting
officer for the most part because of the proposed cost ($12,500).
The technical evaluators also found portions of the AMPI technical
proposal to be "unacceptable." For example, it was the technical
evaluators' opinion that AMPI did not satisfactorily clarify its
understanding of the "problems" in Puerto Rico, or that firm's
understanding of the "programmatic" issues of Region I. Moreover, other
areas of the AMPI proposal were judged only "marginally acceptable" by
the review panel. On the other hand, no reservations were expressed
regarding the JSI technical proposal after the receipt of best and final
offers.
We believe that implicit in the language of the RFP that "cost will
be considered secondary to technical merit," is an invitation to
offerors to propose the use of methods, facilities, and resources which
they believe will best accomplish the desired result, not necessarily at
the lowest cost, but at a cost to the Government which is fair and
reasonable. We also believe that the contracting officer recognized the
technical merit of JSI's proposal by her conclusion that:
The JSI and AMPI cost proposals are quite similar in their
composition and given the fact that both are experienced in delivering
like technical assistance efforts, it can be concluded that both cost
proposals are reasonable, realistic and probable.
However, it can also be concluded * * * that AMPI offers the Chevrolet
model required by the RFP, while JSI offers the more expensive Cadillac
version.
There is, therefore, no suggestion that the 5.6 percent higher JSI
cost proposal was unreasonably high for that which was offered nor, in
our view, does the record support a finding that the competing proposals
were essentially equal. Thus, there appears to have been an improper
departure from the stated evaluation factors, since ultimately technical
merit and cost were given equivalent consideration in the evaluation.
In our opinion, the contracting officer improperly awarded this contract
to the lowest priced offeror, since notwithstanding her statement that
the two proposals were "essentially equal," the record does not support
her conclusion. Charter Medical Services, Inc., B-188372, September 22,
1977, 77-2 CPD 214. In view of the foregoing, we do not believe it is
necessary to consider the protester's alternative basis for protest,
i.e., that the contracting officer neglected to perform a cost analysis
on the AMPI cost proposal. Nonetheless we point out that there is
evidence on the record to show that a limited cost analysis was
performed.
JSI has recognized that it may not be practical to provide any
meaningful relief in this case because of the extent of the contract
performance. See Cohu, Inc., 57 Comp.Gen. 759(1978), 78-2 CPD 175.
Here, about two-thirds of the term of the contract has been completed,
and we therefore do not believe it would be in the best interest of the
Government to disturb the present award. Nonetheless, we are bringing
the matter to the attention of the Secretary of Health and Human
Services.
The protest is sustained.
B-164371, May 28, 1980, 59 Comp.Gen. 494
Leaves of Absence - Lump-Sum Payments - Rate at Which Payable -
Increases - Prevailing Rate Employees
A prevailing rate employee is on the rolls on the date a wage
increase is ordered into effect but separates before the effective date
of the increase. The period covered by his accrued annual leave extends
beyond the effective date of the increase. He is entitled to receive
his lump-sum annual leave payment, authorized under 5 U.S.C. 5551(a),
paid at the higher rate for the period extending beyond the effective
date of the increase. 54 Comp.Gen. 655(1975), distinguished.
Compensation - Wage Board Employees - Prevailing Rate Employees -
Increases - Prospective - Separation After Wage Survey Date Effect
A prevailing rate employee who separates after a wage survey is
ordered but before the date the order granting the wage increase is
issued and his accrued annual leave extends beyond the effective date of
the increase is entitled to have his lump-sum leave payment paid at the
higher rate for the period extending beyond the effective date of the
increase, as long as the order granting the new wage rate is issued
prior to the effective date set by 5 U.S.C. 5344(a).
Matter of: Prevailing Rate Employees, May 28, 1980:
The issue presented is whether prevailing rate employees who are
being separated from employment are entitled to have their lump-sum
annual leave payment include a wage increase when they are on the rolls
on the date the order is issued granting that wage increase but are
separated before the effective date of the increase, and the period
covered by their accrued leave extends beyond the effective date of the
increase. Also, we are asked to decide whether such employees are
entitled to have their lump-sum annual leave payment include a wage
increase when they separate prior to the date the order granting that
wage increase is issued, but the period covered by their accrued leave
extends beyond the effective date of the increase. For the reasons
stated below employees in the first situation are entitled to have their
lump-sum annual leave payment include the wage increase. Employees who
fall under the second situation are also entitled to have their lump-sum
annual leave payments include the wage increase if they separate after
the date a wage survey is ordered, and the order granting the new wage
rate is issued prior to the effective date of the increase.
These questions were presented in letter of April 24, 1979, from
Assistant Secretary of the Army (Manpower and Reserve Affairs), and
arise as a result of our decision in 54 Comp.Gen. 655(1975). There we
held that prevailing rate employees who separated prior to the date the
order granting a wage increase is issued may have their lump-sum leave
payments retroactively adjusted only if they died or retired between the
effective date of the increase and the date the order granting the
increase was issued, and then only for services rendered during this
period.
We based our decision on the fact that any adjustment would have to be
made when the order granting the new wage rate is issued and that, at
the time, orders granting wage increases were usually issued after the
statutory effective date of the increases.
We do not view the above decision as controlling the present
situation. Rather, it should be limited to situations concerning the
payment of retroactive wage increases governed by 5 U.S.C. 5344(b). The
present case concerns the payment of prospective wage increases, i.e.,
wage increases ordered into effect prior to their effective dates.
Although section 5344 is not controlling here because it is designed
to deal with instances where the order granting the wage increase is
issued after the effective date of such increase, it does influence the
outcome. That section provides in part that:
(a) Each increase in rates of basic pay granted, pursuant to a wage
survey, to prevailing rate employees is effective not later than the
first day of the first pay period which begins on or after the 45th day,
excluding Saturdays and Sundays, following the date the wage survey is
ordered to be made.
(b) Retroactive pay is payable by reason of an increase in rates of
basic pay referred to in subsection (a) of this section only when--
(1) the individual is in the service of the Government of the United
States, including service in the armed forces, or the government of the
District of Columbia on the date of the issuance of the order granting
the increase; or
(2) the individual retired or died during the period beginning on the
effective date of the increase and ending on the date of issuance of the
order granting the increase, and only for services performed during that
period.
Thus, as long as the order granting a wage increase is issued prior
to the effective date mandated by section 5344(a), any salary changes or
payments for lump-sum leave will be prospective payments and section
5344(b) will not apply.
We will first consider the situation where a prevailing rate employee
separates between the time the order granting a wage increase is issued
and the date the increase is to become effective. In 47 Comp.Gen.
773(1968) we held that when a General Schedule civil service employee
was to be separated from Government service, and was to receive a
lump-sum payment for accrued annual leave, that payment should be
adjusted to reflect a general salary increase which was granted prior to
his separation but became effective during the period that would have
benefited the employee had he remained on the rolls until exhausting his
accrued annual leave. That decision was based on 5 U.S.C. 5551(a) which
provides, in pertinent part, as follows:
An employee * * * who is separated from the service or elects to
receive a lump-sum payment for leave * * * is entitled to receive a
lump-sum payment for accumulated and current accrued annual or vacation
leave to which he is entitled by statute. The lump-sum payment shall
equal the pay the employee or individual would have received had he
remained in the service until expiration of the period of the annual or
vacation leave. * * *
It is important to note that for the purpose of this section,
"employee" includes both General Schedule and Wage Board (Prevailing
Rate) employees.
In addition to the above statute, 47 Comp.Gen. 773 was also based on
the rationale that the right of an employee to the lump-sum payment
vests at the time of the employee's separation. Thus, the lump-sum
payment is to be computed on the basis of the employee's rights at the
time of separation under all applicable laws and regulations at that
time which would have affected his compensation had he remained in the
service for the period covered by his leave. See also 43 Comp.Gen.
440(1963); 26 id. 102(1946); and Federal Personnel Manual, Chapter
550, subchapter 2-3 (November 3, 1975). In effect, upon separation
prior to the effective date of a wage increase an employee for salary
purposes only is considered to be on the rolls of his agency until his
accrued leave expires. Therefore, such an employee is entitled to any
service for the period covered by his leave. Thus, since in 47
Comp.Gen. 773 the order granting the wage increase was issued prior to
the employee's retirement and would have been effective to increase his
rate of compensation had he remained in the service until his annual
leave was exhausted, the employee was entitled to be paid for his leave
at the higher rate for any period covered by his lump-sum payment
extending beyond the effective date of the increase.
In response to a submission similar to the one at hand we applied the
above rationale to prevailing rate employees and allowed payment at the
higher rate. See B-165201, October 2, 1968. Therefore, the first
question is answered in the affirmative.
The second issue is whether prevailing rate employees are entitled to
an adjustment of their lump-sum annual leave payments when they separate
prior to the date the order granting a wage increase is issued but the
period covered by their accrued leave extends beyond the effective date
of the wage increase. We are limiting our consideration of this
question to those cases, in which the order granting a wage increase is
issued prior to its effective date, i.e., the effective date set by 5
U.S.C. 5344(a). In 26 Comp.Gen. 201, 105(1946) we considered a similar
set of circumstances. There we held that an employee who separated
prior to the date a statute authorizing a wage increase was passed would
not be entitled to the benefit of a salary increase even though his
unused leave would extend beyond the effective date of the increase.
Our decision was based on the ground that at the time of the employee's
separation the new salary rates were not authorized by statute.
In other words, the employee did not have a vested right to the increase
at the time of his separation.
As can be gleaned from the above, an employee who separates prior to
the effective date of a wage increase must have a vested right to the
increase before he becomes entitled to receive his lump-sum payment at
the new rate. That is, at the time of an employee's separation the
statutory mechanism for the wage increase must already have been enacted
and the requirement for making the wage adjustment on the effective day
of the increase must mandate action by the person or agency in charge of
such adjustment. See 47 Comp.Gen. 773.
Prior to the enactment of 5 U.S.C. 5341 et seq. (1976), governing the
pay adjustments of prevailing rate employees, the executive branch had
great discretion in establishing an administrative system governed by
regulation for adjusting the pay of prevailing rate employees. This
discretionary system, under which the executive branch was free to
establish, change and amend wage adjustment procedures, was an
administrative, as distinguished from a statutory, system, in that the
resultant pay adjustment was discretionary with the executive branch and
not controlled by legislative guidelines and standards. In contrast,
the system presently in effect established under 5 U.S.C. 5341 et seq.
has been narrowly defined by Congress so that the acts leading to a pay
adjustment for prevailing rate employees performed by executive branch
personnel are ministerial in nature leaving nothing to their discretion
or judgment. With this in mind, we held in 54 Comp.Gen. 305(1974) that
the adjustment of wage rate of prevailing rate employees under 5 U.S.C.
5341 et seq. may no longer be considered as granted administratively,
but rather must be considered to be an increase in pay granted by
statute. See also Federal Personnel Manual Letter No. 531-47, May 28,
1975.
Under 5 U.S.C. 5343(b) the Office of Personnel Management is required
to schedule full-scale wage surveys every 2 years and interim surveys
between each 2 consecutive full-scale wage surveys. We have been
informed that the surveys are ordered to be conducted at the same time
every year. Also, under section 5344(a) the effective date of any wage
increase has been established to be no later than the first day of the
first pay period which begins on or after the 45th day following the
date the wage survey is ordered to be made.
Thus, once a wage survey has been ordered to be made the employee can
reasonably expect to receive a statutory wage increase within
approximately 45 days of the order. Since a wage increase will be
effective within 45 days after an order is given to conduct a wage
survey it can be said that once the survey is ordered the employee would
have a vested right in that increase if he were on the rolls on the
effective date of the increase.
As in 47 Comp.Gen. 773, the actual amount of the increase may not be
established, but the right to an increase in pay, in an amount to be
determined, is in being.
Therefore, even though an employee separates prior to the date the
order granting a wage increase is issued, he is entitled to receive his
lump-sum annual leave payment at the higher rate if his separation
occurs after the date a wage survey is ordered to be made and his annual
leave extends beyond the effective date of increase, so long as the
order granting the new wage rate is issued prior to the effective date
mandated by section 5344(a). The employee, however, is only entitled to
be paid at the higher rate for the amount of his leave extending beyond
the effective date of the increase.
We realize that this decision does not provide any relief for the
prevailing rate employee who separates before the effective date of the
wage increase, and the order granting the new wage rate is issued after
the effective date of the increase. However, this result is statutorily
mandated. In such a case, the lump-sum annual leave payment would be
covered by the retroactive adjustment provisions of 5 U.S.C. 5344(b),
which prohibit any such adjustment.
Accordingly, a prevailing rate employee who is on the rolls on the
date an order granting a wage increase is issued, but separates before
the effective date of the increase, is entitled to receive his lump-sum
annual leave payment at the higher rate for the period his leave extends
beyond the effective date of the increase. Moreover, a prevailing rate
employee who separates before the date of the order granting the wage
increase is also entitled to receive his lump-sum annual leave payment
at the higher rate for any leave extending beyond the effective date of
the increase if he separates after a wage survey is ordered to be made,
and the order granting the new wage rate is issued prior to the
effective date set by section 5344(a).
B-139703, May 28, 1980, 59 Comp.Gen. 489
Appropriations - Availability - Attorney Fees
Federal Bureau of Investigation (FBI) Agents and paid FBI informant
may be reimbursed from FBI salaries and expenses appropriation for
payment of attorneys fees assessed against them in their individual
capacities in a civil action, providing it is administratively
determined that the employees' obligation was incurred in the
accomplishment of the official business for which the appropriation was
made.
Matter of: Reimbursement of Attorney Fees Assessed Against
Individual Employees, May 28, 1980:
The Assistant Attorney General, Civil Division, Department of
Justice, has requested our opinion on whether Government funds may be
used to pay attorney fees assessed against three Federal Bureau of
Investigation (FBI) agents and an FBI informant (Federal defendants) in
their individual capacities in a suit for damages. We hold that
Government funds may be used to reimburse the employees for attorneys
fees assessed against them, subject to the qualifications discussed
below.
The agents and the informant are defendants in the case of Hampton v.
Hanrahan (Civil Action No. 70-C-1384, N.D. Ill.), an action for money
damages brought against them and against State law enforcement officers
arising from a raid on an apartment occupied by members of the Black
Panther Party. The Department of Justice (DOJ) has been providing legal
representation to the Federal defendants based on its determination that
the suit arose out of actions within the scope of their employment.
The raid occurred on the morning of December 4, 1969, when police
officers of the "Special Prosecution Unit" of the State's Attorney's
Office, Cook County, Illinois, entered a Chicago apartment occupied by
Party members. The officers were acting pursuant to a warrant issued by
the Cook County Circuit Court, authorizing them to search for and seize
illegal weapons. Shortly after the officers entered the apartment, gun
fire erupted, killing two occupants and wounding others. The police
seized unregistered and other illegally held weapons, and arrested the
surviving occupants on State criminal charges. Cook County grand jury
indictments against the survivors were ultimately dismissed.
The surviving occupants of the apartment and the legal
representatives of the two deceased occupants brought suit against the
Federal defendants, basing their claims on the laws conferring a right
of action for violation of civil rights (42 U.S.C. 18983, 1985(3), and
1986), the Constitution, and the Illinois wrongful death statute. The
exact nature of the Federal defendants' actions in connection with the
raid is currently being litigated. However, the defendants' petition
for a writ of certiorari and the Court of Appeals opinion indicate that
the case against the Federal defendants is partly based upon the fact
that the FBI had had since the 1950s, a program under which it had been
conducting covert actions against various domestic organizations.
In 1967, the program was expanded to include groups such as the Black
Panther Party. The Federal defendants are the men who, on the day of
the raid, were the Special Agent-in-Charge of the Chicago office of the
FBI, the supervisor of the Racial Matters Squad of the FBI Chicago
office, a Special Agent of the FBI assigned to the Racial Matters Squad,
and a paid FBI informant.
The complaint charged some or all of the Federal defendants with
intentionally or negligently depriving the occupants of the apartment of
their civil rights by participating in the planning and execution of the
raid; by conspiring to bring about the malicious prosecution of the
plaintiffs' on the State criminal charges or failing to prevent it by
conspiring to obstruct justice; by denying the plaintiffs their
Constitutional right to counsel; and by impeding vindication of some
plaintiffs on the State charges. In addition, the Federal defendants
were charged under State law with the wrongful death of the two deceased
occupants of the apartment. Hampton v. Hanrahan, 600 F.2d. 600, 607(7th
Cir. 1979).
The action was tried in the United States District Court for the
Northern District of Illinois before a jury in 1976 and 1977. The trial
court directed verdicts in favor of the defendants, and an appeal was
taken. The Court of Appeals reversed the District Court's decision,
holding that the plaintiffs had established a prima facie case, and
therefore that their evidence should have been allowed to be considered
by the jury. The Court then remanded the case to the District Court for
a new trial.
The Court also granted plaintiffs' request for an award of attorneys'
fees for their appellate work, inviting plaintiffs to submit a statement
of the fees requested. The Court said nothing then about whether
payment was expected to come from the Federal defendants individually or
from the Government. 600 F.2d 600, supra.
The Award of attorneys' fees to the plaintiffs was made under the
Civil Rights Attorneys' Fees Awards Act of 1976, 42 U.S.C. 1988(1976),
which allows awards of costs, including reasonable attorneys' fees, to
the prevailing party in an action for violation of civil rights. The
Federal defendants then filed a petition for a writ of certiorari in the
Supreme Court, one of the grounds of which is that the Court of Appeals
erred in awarding attorneys' fees to the appellants because they are not
"prevailing parties" within the meaning of 42 U.S.C. 1988.
The DOJ also asked us at that time whether it could properly include
the attorneys' fees assessed against the defendants when certifying for
payment from the judgment appropriation the award of costs in favor of
the plaintiffs under 28 U.S.C. 2412 and 2414. (Letter dated June 25,
1979.)
We responded that an opinion from us would be premature because the
defendants were seeking certiorari; the question would be moot if the
Supreme Court overturned the award of attorneys' fees. B-139703,
December 28, 1979.
Meanwhile, the Court of Appeals, having heard the parties on the
issue of the amount of fees and the way they should be allocated among
the defendants, awarded plaintiffs $99,910. Apparently the Federal
defendants argued that any award against them of attorneys' fees should
be paid by the United States because in its Order, the Court said it
agreed with them that any award against them was to be collected from
the Federal defendants, "in their official capacity rather than in their
personal capacities, in the absence of a finding of bad faith." Order,
December 12, 1979, p. 13. The Order assessed the Federal defendants for
one-third of the total award.
The DOJ, as a result has renewed its request to us. It intends to
argue to the Court of Appeals that 42 U.S.C. 1988 does not allow an
award of attorneys' fees against the United States. This position,
according to the Assistant Attorney General may conflict with the
individual interests of the Federal defendants. If the Department's
view that 42 U.S.C. 1988 does not waive the sovereign immunity of the
United States prevails, then the burden of paying the court's award of
attorney's fees may fall upon the defendants individually. Therefore,
the defendants will have to obtain private counsel to represent their
interests, unless we hold that the Government may reimburse the
defendants for the attorneys' fees awarded by the court.
The question the Department now poses is thus different from the
initial one. The issue the Department now presents (at this point
completely hypothetical) is whether Government funds could be used to
reimburse the defendants in the event they personally have to pay the
award of attorneys' fees. This could happen if the Court of Appeals
assesses the fees against them in their individual capacities because,
as a matter of law, it agrees with DOJ that it could not assess the fees
against the United States and that assessment of the defendants in their
official capacities is, in effect, assessment against the United States.
As the submission suggests, and as additionally indicated informally by
a DOJ attorney representing the Federal defendants individually, the
Department now needs an opinion before the related issue being appealed
to the Supreme Court is decided, because if it cannot reimburse the
defendants it represents they may wish to hire private counsel to assert
their interests, in opposition to the Department's position.
It would appear that the action against the defendants arose by
reason of the performance of their duties as employees of the FBI.
(One defendant was a paid informant but for present purposes he may be
regarded as having been an employee of the Bureau.) It has long been our
view that the United States may bear expenses, including court-imposed
sanctions, which a Government employee incurs because of an act done in
the discharge of his official duties. 44 Comp.Gen. 312, 314; 31 id.
246; 15 Comp.Dec. 621.
This conclusion reflects the broader principle that where an
appropriation is made for a particular object, by implication it confers
authority to incur expenses which are necessary or incident to the
accomplishment of the object or for which the appropriation was made,
except as to expenditures in contravention of law, or for some purpose
for which other appropriations have been made specifically available.
See 44 Comp.Gen. 312, 314; 38 id. 782, 785; 32 id. 326. Hence, funds
appropriated for the FBI's expenses could be used to pay an award of
attorneys' fees made against the defendants individually, providing it
is administratively determined that the defendants' obligation arose as
a result of the performance of their duties as employees of the FBI.
Payment would be proper as long as the actions giving rise to the
obligation constitute officially authorized conduct. The Government
will not reimburse an employee for an obligation resulting from conduct
which, though performed while the employee was carrying out his assigned
duties, was not actually part of them. For example, we held that the
Office of Price Stabilization could not pay the fine of an employee who
double parked while he was performing his job-- making deliveries--
since double parking was not part of his official duties. 31 Comp.Gen.
246(1952). On the other hand, in 44 Comp.Gen. 312(1964), we held that
FBI funds could be used to pay a contempt fine imposed upon an FBI agent
when, in violation of a District Court order but in accordance with
Justice Department regulations and specific instructions of the Attorney
General, the agent refused to answer questions put to him during a
judicial hearing.
The appropriation "Federal Bureau of Investigation, Salaries and
Expenses," contained in the Departments of State, Justice, and Commerce,
the Judiciary and Related Agencies Appropriation Act, 1980, Public Law
96-68, approved September 24, 1979, 93 Stat. 416, 420, provides funds
for, among other things " * * * expenses necessary for the detection,
investigation, and prosecution of crimes against the United States * * *
."
FBI officials are in the best position to make the determination, in
the first instance, of whether the attorneys' fees assessed against
their employees were necessarily incurred incident to the accomplishment
of FBI official business for which the appropriation referred to above
was made and as part of the employees' authorized duties.
This Office will not question such a determination if it is supported by
substantial evidence.
B-194807, May 27, 1980, 59 Comp.Gen. 486
Quarters Allowance - Basic Allowance for Quarters (BAQ) - Termination -
Members Without Dependents - Sea or Field Duty for 3 Months or More -
Temporary or Permanent
The prohibition contained in 37 U.S.C. 403(c) against payment of
basic allowance for quarters (BAQ) to members without dependents while
on field or sea duty of 3 months or more applies to temporary as well as
to permanent duty assignments. Station Allowances - Military Personnel
- Temporary Lodgings - Entitlement - Members Without Dependents - After
Extended Sea or Field Duty
Temporary lodging allowance (TLA) may be paid under current
regulations on return to permanent station of a member without
dependents who must give up his permanent housing while on temporary
duty away from his permanent station for extended periods. However, it
may be prudent to amend the regulations to specifically provide
guidelines for payments of TLA in this situation. TLA may be authorized
regardless of whether the member actually loses entitlement to BAQ for
the period of temporary duty, by being assigned to field or sea duty,
provided it is clear that the member reasonably anticipated loss of BAQ
under the temporary duty deployment and that is the reason the member
relinquished his quarters.
Matter of: BAQ and TLA for members on sea or field duty, May 27,
1980:
The Commandant of the Marine Corps has requested our decision on
several questions concerning the entitlement to basic allowance for
quarters (BAQ) and temporary lodging allowances (TLA) of members who are
assigned to temporary additional duty away from their permanent stations
in Hawaii. The request has been assigned Control Number 79-12 by the
Per Diem, Travel and Transportation Allowance Committee.
The Marine Corps' 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 field duty or sea duty for a period of 3
months or more.
The Marine Corps advises that it has a program under which members
permanently stationed in Hawaii are assigned to temporary additional
duty in connection with unit deployment. Members so assigned are away
from their permanent station for as long as 7 months, and many, while
absent, serve on sea duty or field duty for 3 months or more.
At the commencement of deployment, those members living in Government
bachelor housing are dispossessed of their quarters in order to make the
space available for assignment to other members who, while the deployed
members are away, initially arrive for permanent duty or return with
another unit completing deployment. Those members residing in private
housing who have no dependents for BAQ and who deploy under orders
contemplating field or sea duty of 3 months or more are also compelled
to vacate their permanent quarters incident to deployment in most
instances, because they anticipate losing entitlement to BAQ with which
to maintain their quarters during the deployment.
Upon return to their permanent station, both categories of members
who were required to surrender their permanent quarters incident to
deployment must frequently occupy temporary lodging facilities from
commercial sources while seeking permanent quarters on the local economy
or awaiting assignment or reassignment to Government quarters.
In view of these circumstances the Marine Corps presents several
options which would authorize either a continuation of BAQ entitlement
or entitlement to TLA.
The first question is whether the prohibition contained in 37 U.S.C.
403(c)(1976) against the payment of BAQ to members without dependents
while on field or sea duty applies to temporary as well as to permanent
assignments. For the following reasons, we hold that it does apply to
both.
Section 403(c), in requiring termination of BAQ for members without
dependents while on field or sea duty, makes the exception that "(f)or
purposes of this subsection, duty for a period of less than three months
is not considered to be field duty or sea duty." However, it makes no
distinction between temporary and permanent duty. Thus, it is the
length of the assignment that is crucial-- not whether the assignment is
permanent or temporary. We have specifically held that a member
assigned to temporary additional duty on board ship for 3 months or more
loses his entitlement to BAQ during that period. Matter of Lieutenant
William R. Miller, USCGR, 59 Comp.Gen. 192(1980).
In view of the answer to the first question, a second question is
asked. That is, may the loss of entitlement to basic allowance for
quarters or the termination of assignment to Government quarters be
considered a reason beyond the control of a member that makes it
necessary for him to vacate his permanent quarters incident to
commencement of a temporary additional duty assignment contemplating
field or sea duty of 3 months or more for the purpose of paying him TLA
under the existing regulations incident to his return from the
assignment?
The Marine Corps explains that members without dependents must give
up their permanent housing when they begin temporary additional duty
away from their permanent stations. When these members return to their
permanent stations at the end of their temporary additional, they have
no permanent quarters to return to, and thus they must often stay in
hotels while awaiting assignment to Government quarters or looking for
private housing.
Temporary lodging allowance is authorized under 37 U.S.C. 405(1976)
which is a broadly worded statute authorizing the Secretaries concerned
to pay 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, whether or not he is in a travel
status.
The Joint Travel Regulations (1 JTR), para. M4303-1, item 2, contain
the Secretaries' regulations providing for TLA--
whenever the overseas commander designated by the Service concerned
determines that, for reasons beyond the control of the member, it has
become necessary for a member once established in permanent quarters in
the vicinity of the members' duty station to vacate such permanent
quarters, permanently or temporarily and utilize hotel or hotel-like
accommodations in the vicinity of his permanent duty station while
seeking other permanent quarters or pending reoccupancy of the permanent
quarters formerly occupied, as the case may be; * * *
The Marine Corps asks whether members in the described situations may
be considered to have vacated their permanent quarters for reasons
beyond their control and are thus eligible for TLA under 1 JTR, M4303-1,
item 2, when they return to their permanent stations.
The situation described by the Marine Corps seems to fall within the
provisions of paragraph M4303-1, item 2. In addition we note that the
situation of a member returning from temporary duty in the situation
described is similar to that of a member upon initial reporting at a new
duty station pending assignment to quarters or completion of
arrangements for permanent accommodations when Government quarters are
not available. Thus, we would not object to payment of TLA in the
situations described by the Marine Corps.
The last question to be answered is whether the allowable payment of
TLA would be different if the member concerned were entitled to BAQ
during part of his temporary additional duty assignment or if, after
relinquishing his quarters on the basis of his orders contemplating sea
or field duty of 3 months or more, his entitlement to BAQ continued
throughout his absence because the field duty or sea duty did not
eventuate as contemplated?
Temporary lodging allowance is intended to reimburse a member
whenever the service concerned determines that, for reasons beyond his
control, it is necessary for him to vacate his permanent quarters.
Therefore, in the circumstances described by the Marine Corps, we would
not object to payment of TLA if it can be established that the member
had to relinquish his quarters because in view of his deployment he
reasonably expected that he would lose his BAQ entitlement. It is our
view that the fact that because of unanticipated circumstances the
member actually did not lose, or only partially lost, BAQ entitlement
need not prevent him from being paid TLA.
While as is indicated above we would not object to payment of TLA
under current regulations in the described circumstances, the services
may find it prudent to revise the regulations to specifically cover
these circumstances.
B-195501, May 23, 1980, 59 Comp.Gen. 474
Contracts - Protests - Timeliness - Solicitation Improprieties -
Apparent Prior to Closing Date for Receipt of Proposals
Protest based upon alleged impropriety in solicitation (failure to
define central business district and preference to be accorded to
location therein) which was apparent prior to date set for receipt of
initial proposals is untimely since not filed in General Accounting
Office (GAO) prior to closing date for receipt of initial proposals and
will not be considered on merits. Section 20.2(b)(1) of GAO Bid Protest
Procedures, 4 .C.F.R.PART 20(1980). Contracts - Protests - Timeliness -
Significant Issue Exception
Although protest issue based upon contention that President of United
States exceeded his authority by issuing national policy giving first
consideration to locating Federal facilities in centralized community
business areas when filling space needs in urban areas is untimely, this
issue will be considered on merits because it is an issue which we
consider to be significant to procurement practices and procedures.
Section 20.2(c) of GAO Bid Protest Procedures, 4 C.F.R. part 20(1980).
Federal Property and Administrative Services Act - Procurement Policies
- President's Authority - Space Needs - Urban Areas - Central Business
District Preference
Protest that President of United States exceeded his authority to
prescribe procurement policies under section 205(a) of Federal Property
and Administrative Service Act of 1949 (40 U.S.C. 481, et seq. (1976))
is denied. Section 201 of act establishes Government policy to promote
economy and efficiency, and, even though direct effect of policy
established by President (giving first consideration locating Federal
facilities in centralized community business areas when filling Federal
space needs in urban areas) will be to increase cost to Government in
present procurement, long-term effect of such policy might be to promote
economy and efficiency throughout Government. Contracts -
Specifications - Restrictive - Justification - Public Policy
Considerations
Leasing agency has primary responsibility for setting forth minimum
needs, including location of facility, and GAO will not object to
agency's choice of location unless choice lacks reasonable basis. Where
GSA preference for central business district was based on Federal policy
giving first consideration to leasing space in centralized community
business area, and GSA coordinated procurement with officials of using
agency, we cannot find that GSA's preference for central business
district space was without reasonable basis. Therefore, protest on this
basis is denied. Partnership - Death of Partner - Contract Award to
Surviving Partner/s
Submission of offer for Government contract by partnership creates
obligation which is not revoked by death of one partner prior to
acceptance of offer by Government where, under applicable State law,
partnership liabilities were not discharged upon death of partner,
remaining partner had right to wind up partnership affairs, and son of
deceased partner and surviving partner in capacity as executors of
deceased partner's estate were willing and able to perform under
contract awarded. Contracts - Protests - Procedures - Bid Protest
Procedures - Time for Filing - Date Basis of Protest Made Known to
Protester
Protest that awardee's proposal should not have been accepted by
agency because awardee's initial proposal and its acknowledgment of
amendment to solicitation were submitted late is untimely and will not
be considered on merits where this basis of protest was known to
protestor more than 10 days before filing of protest. Section
20.2(b)(2) of GAO Bid Protest Procedures, 4 C.F.R. part 20(1980).
Contracts - Negotiation - Responsiveness - Concept Not Applicable to
Negotiated Procurements
Protest alleging that awardee's proposal for leasing contract is
"nonresponsive" in several respects is denied since procurement was
negotiated and, therefore, these deficiencies were merely factors to be
taken into account by contracting agency in evaluation of proposal.
Leases - Repairs and Improvements - Limitations - Economy Act -
Applicability Determinations - Direct v. Indirect Government Payments
The 25-percent limitation on alterations, improvements, and repairs
contained in Economy Act (40 U.S.C. 278a(1976)) is for application only
where Government is to pay directly for alterations, improvements, and
repairs of leased premises. In present case, Government only pays such
costs indirectly insofar as lessor uses rent received under lease to
amortize costs of alterations, improvements, and repairs to rented
premises. Therefore, 25-percent limitation is not for application.
Leases - Rent - Limitation - Fair Market Value Determination
Protest that rental to be paid by Government exceeds 15 percent of
fair market value of leased premises and, therefore, violates Economy
Act (40 U.S.C. 278a(1976)) is denied where our in camera review of GSA
"Analysis of Values Statement (Leased space)" provides no basis to
conclude that net rental exceeded Economy Act limitation on rent.
Matter of: Charles Hensler and Helen Kreeger, May 23, 1980:
The partnership of Charles Hensler and Helen Kreeger
(Hensler/Kreeger) has protested the award of a contract by the General
Services Administration (GSA) to the partnership of E. Perin Scott and
John E. Scott, Jr. (Scott), pursuant to solicitation for offers (SFO)
No. GS-05B-13032. The contract is for the lease of a building to house
the Social Security Administration (SSA) office in Madison, Indiana.
To the extent the protest is timely, we find it to be without merit.
The SFO, issued September 15, 1978, solicited offers for 5,400 square
feet of general office space and requested that offers be submitted by
October 2, 1978.
The SFO cover page stated in a prominent place: "Location: Madison,
Indiana, within the city limits with preference for the Central Business
District." This statement was repeated in Schedule AA entitled "General
Space Requirements." The Hensler/Kreeger offer and an offer made by M.
P. Humbert were received on October 2. The Scott OFFER WAS NOT RECEIVED
UNTIL OCTOBER 16. AN UNDATED ADDENDUM (ADDENDUM No. 1) reduced the
requirement to 4,790 square feet and extended the date for receipt of
offers to February 9, 1979. Addendum No. 1 was acknowledged by
Hensler/Kreeger on February 27, by Scott on February 21 and by Humbert
on February 8. On May 22, 1979, a telegram was sent to all three
offerors requesting best and final offers no later than June 1, 1979.
Scott and Humbert submitted final offers on May 25, 1979.
Hensler/Kreeger's final offer was submitted on May 24, 1979, but only
offered 4,055 square feet of office space. On June 12, 1979, GSA
notified Hensler/Kreeger that its offer was nonresponsive because it
ONLY OFFERED 4,055 SQUARE FEET, AND GSA ALLOWED HENSLER/KREEGER AN
opportunity to submit a responsive offer. An offer to lease 4,790
square feet was received from Hensler/Scott even though the
Hensler/Kreeger offer was lower by approximately $6,00 per year.
Hensler/Kreeger received notification that its offer was rejected on
July 5, 1979, and protested to our Office on July 19, 1979.
The protest raises several grounds of protest, summarized briefly as
follows:
1. GSA's stated preference for a location in the central business
district is criticized because:
a. While this preference was based upon Executive Order 12072, 43
Fed.Reg. 36869(1968) (E.O. 12072), which sets forth a national urban
policy giving first consideration to centralized community business
areas when filling Federal space needs in urban areas, GSA misconstrued
the national urban policy statement of E.O. 12072 and erroneously
applied it to the present procurement for office space needed to serve a
predominantly rural area.
b. The solicitation was deficient because it failed to define or
describe the boundaries of the central business district of Madison.
Since Madison has two central business districts and the Hensler/Kreeger
property is within one of them, the Hensler/Kreeger offer should have
been selected for award because it was lower in price that the Scott
offer.
At best, the solicitation was ambiguous in this regard.
c. Application of E.O. 12072's national urban policy to the present
procurement was improper because E.O. 12072 is invalid since it exceeds
the authority vested in the President to prescribe procurement policies
under section 205(a) of the Federal Property and Administrative Services
Act of 1949. 40 U.S.C. 486(a)(1976).
d. GSA's rejection of Hensler/Kreeger's offer on the basis that the
property was not located in Madison's central business district was
improper because the central business district preference was not listed
in the SFO as a factor for evaluation and award. Therefore, the
preference should have been used as a tie-breaker and considered only in
the event that suitable space was offered by more than one offeror at
virtually identical prices. Alternatively, if the preference could have
been considered as an award factor, the SFO was deficient for failing to
advise offerors of the relative importance of the central business
district preference.
2. The contract awarded to Scott is not valid because the offer was
made by the partnership of John Scott, Sr. E. Perin Scott, but John
Scott, Sr. died before GSA accepted the offer.
3. Scott's offer was submitted to GSA after the due date for receipt
of offers and, therefore, should not have been considered for award by
GSA.
4. Scott's offer was nonresponsive to the requirements of the SFO in
several respects. First, Scott's building is surrounded by high curbs
and, therefore, fails to meet the minimum standards published by the
American National Standard Institute, Inc., for use by the physically
handicapped which were incorporated into the SFO. Second, the Scott
offer should not have been accepted because the space offered by Scott
was retail commercial ground floor space which under the award factors
listed, GSA should have weighed as a factor against Scott's offer as
part of the award decision. Third, the space proposed by Scott, may
constitute a fire hazard" because it is located next to a paint store.
Fourth Addendum No. 1 requested offers "for a 5 year lease with 3 years
firm and an alternate offer of 5 years, 1 year firm," but Scott crossed
out that portion of the addendum regarding the alternate offer of 5
years with 1 year firm.
5. The contract awarded to Scott is invalid because it violates
provisions of the Economy Act of 1932, 40 U.S.C. 278a(1976), setting
limits on the amount of money the Government may spend for alterations,
modifications, and repairs of leased space and on the annual rental
which may be paid for leased property.
Protest Issue 1b is a matter which should have been apparent to the
protester prior to the date set for receipt of initial proposals. Since
this issue was not filed with either the agency or our Office until
after the date set for receipt of initial proposals, it was untimely
filed under section 20.2(b)(1) of our Bid Protest Procedures, 4 C.F.R.
part 20(1980), and will not be considered on the merits. Somervell &
Associates, Ltd., B-192426, August 18, 1978, 78-2 CPD 132. Similarly,
insofar as Issue 1d is based on the alleged failure of the SFO to give
the relative importance of central business district district
preference, that issue is untimely and will not be considered further.
Regarding Issue 1c, the solicitation contained no reference to E.O.
12072 or its stated policy of giving first consideration to locating
Federal facilities in centralized community business areas when filling
Federal space needs in urban areas. The fact that the preference for a
central business district location was based upon E.O. 12072's national
urban policy was raised for the first time in GSA's report on this
protest dated October 29, 1979. Hensler/Kreeger's protest challenging
the President's authority to issue such a policy was raised in its
comments on the report and conference on this protest held on December
11, 1979. These comments were filed in our Office on December 21, 1979,
and, therefore, this aspect of the protest was also untimely filed since
section 20.2(b)(2) of our Bid Protest Procedures requires a protest to
be filed within 10 days after the basis for the protest is known.
However, since this issue presents a direct challenge to the acquisition
of facilities for Federal agencies, we will consider the merits of Issue
1c under section 20.2(c) of our Procedures as involving an issue
significant to procurement practices or procedures. Edw. Kocharian &
Company, Inc., 58 Comp.Gen. 214(1979), 79-1 CPD 20.
We see no merit in Hensler/Kreeger's argument that the President
exceeded the authority granted to him under the Federal Property and
Administrative Services Act of 1949, 40 U.S.C. 481, et. seq., when he
formulated the national urban policy in E.O. 12072. See Fairplain
Development Company, et al, 59 Comp.Gen. 409(1980), 80-1 CPD 293, where
we found no basis to question the President's authority.
Regarding Issues 1a and 1d, GSA admits that the SFO's stated
preference for a location in the central business district was an
attempt to implement the national urban policy formulated by the
President in E.O. 12072. Under GSA's interpretation of this policy, the
SSA office which is presently housed in the Hensler/Kreeger property
within the Madison city limits, an urban area, would have to be
relocated to a building within the central business district of Madison
as long as a suitable location could be found in the central business
district at a reasonable price.
Though GSA concedes that the subject solicitation did not attempt to
describe the boundaries of Madison's central business district, GSA
believes that it is clear that the Hensler/Kreeger property is outside
of the central business district. GSA contends that Hensler/Kreeger
knew that its property could not qualify as within the central business
district but wanted to be considered anyway. GSA acquiesced in
Hensler/Kreeger's desire to have its location considered for award, but
only in the event that a suitable central business district location
were not offered would award be made to any offeror which was not
located in the central business district. Accordingly, offers were
restricted to the city limits of Madison and the central business
district requirement was stated as a mere preference. GSA says it
consulted with SSA officials in deciding to relocate the SSA office and
contacted local officials (including the Mayor of Madison and the
Madison Chamber of Commerce) before determining the boundaries of the
central business district. GSA argues that the preference for a central
business district location was made very clear in the SFO and that the
preference did not have to be included in the "Award Factors" section
since that section specifically stated that the award factors listed
would be considered in addition to the "conformity of space offered to
the specific requirements of this solicitation."
The protester attempts to show that Madison has two central business
districts-- an old, downtown area (where the Scott building is located)
and a new, shopping/business mall which is just 1-- 1 1/2 miles away
from the downtown area (where Hensler/Kreeger's building is located).
In support of this argument, Hensler/Kreeger has submitted several
letters from reliable local officials (including the Governor of
Indiana, Madison City Council members, and SSA office employee). These
letters also express the opinion that the SSA office could better serve
its function at the present Hensler/Kreeger location since most of the
SSA clients live in surrounding rural areas to which Hensler/Kreeger's
property is more accessible. The protester states that only 2.7 percent
of the SSA office's clients actually live in the old, downtown area of
Madison, Madison's population is only 14,000, and, therefore, concludes
that, since the SSA office serves a primarily rural area, the national
urban policy of E.O. 12072 has no application to this procurement.
Hensler/Kreeger also asserts that GSA's Commissioner of the Public
Buildings Service, in a directive issued on September 5, 1978,
specifically exempted SSA branch and district offices from the policy of
E.O. 12072 because their service areas are clearly defined sectors of
city, suburban, or rural communities.
Section 101-18.100(c) of the Federal Property Management Regulations
(FPMR) (1978), regarding the leasing of property, provides that
competition be obtained to the maximum extent practical among those
locations meeting minimum Government requirements. We have held that
the leasing agency has the primary responsibility for setting forth its
minimum needs, including the location of the facility, and we will not
object unless its determination lacks a reasonable basis. Dr. Edward
Weiner, B-190730, September 26, 1978, 78-2 CPD 230.
We cannot conclude that GSA's decision to restrict the solicitation
to offers of space within the city limits, where it had been located
since at least 1972, with a preference for the central business
district, was without a reasonable basis. The preference was the result
of the President's national urban policy which we have concluded was a
proper exercise of the authority delegated to the President under
section 205(a) of the Federal Property and Administrative Services Act.
Therefore, this aspect of the protest is denied.
Executive Order 12072 provides, in part, that:
1-103 Except where such selection is otherwise prohibited, the
process for meeting Federal space needs in urban areas shall give first
consideration to a centralized community business area and adjacent
areas of similar character, including other specific areas which may be
recommended by local officials.
Accordingly, the issue of whether to locate a Federal facility in the
centralized community business area need only be considered in
connection with Federal space needs in urban areas. Although the
services of the Madison SSA office are provided to a very large,
predominantly rural area and Madison itself only has a population of
14,000, we believe the central business district preference was properly
for application in the procurement because, even though E.O. 12072 does
not define "urban area," Madison would be considered an "urban area"
under the definition employed in the Federal Urban Land-Use Act, 40
U.S.C. 535(1976), and the SSA office had long been located in Madison.
Therefore, it was proper to conclude that there was a Federal space need
in an urban area under E.O. 12072. /1/
Since the SSA office had been housed in the Hensler/Kreeger building
previously and had operated in a most efficient manner from that
location, we infer that the urban location suited the needs of SSA very
well. We note also that Hensler/Kreeger apparently never voiced any
opposition to restricting the competition to offers within the city
limits of Madison.
Additionally, GSA did consult with some local officials and coordinated
its efforts with SSA officials before determining to relocate to the
old, downtown business area of Madison. We conclude that the present
need for office space was truly "urban" in nature and that E.O. 12072
was for application. We also note that the September 5, 1979,
implementing directive issued by the Commissioner of the Public
Buildings Service did not automatically exempt SSA branch and district
offices from the national urban policy as argued by the protester, but,
rather, it allowed such offices to be exempted at the discretion of GSA
and using agency officials.
We also think that GSA'S determination that the Hensler/Kreeger
property was not within the central business district and, therefore,
not entitled to the preference was reasonable. GSA did attempt to
ascertain from local officials where the central business district was
located. Furthermore, it appears that Hensler/Kreeger was aware that
GSA did not believe the Hensler/Kreeger property to be in the central
business district, but that GSA acquiesced in Hensler/Kreeger's request
that its property be considered. Scott also provided an aerial
photograph to us which clearly shows that the Hensler/Kreeger property
is located near the city limits rather than at the center of the town.
Moreover, we think that it was not necessary for the preference to have
been expressed as an award factor since the preference was stated
prominently on the cover page and in Schedule AA, and Hensler/Kreeger
was thereby put on notice that the preference would be considered in
addition to the listed award factors in connection with "conformity of
the space offered to the specific requirements" of the solicitation. In
this connection, we note that the protester was aware of the preference
provision and considered it an evaluation factor, albeit, as a
"tie-breaker." We are not persuaded that the preference was to be used
only as a tie-breaker, since nothing in the SFO so indicates. It is our
view that the preference was just one of many factors to be considered
by GSA in determining whether the space offered met the requirements of
the solicitation and the needs of SSA. For the above reasons, the
protest is denied on this point.
The original Scott offer (received by GSA on October 2, 1978) was
made by the partnership of John E. Scott and E. Perin Scott. It was
signed by E. Perin Scott alone in his capacity as partner. Addendum No.
1 was acknowledged on February 21, 1979, in the name of Scott Realty
Company, by E. Perin Scott, again in his capacity as partner.
A search of records at the Circuit Court of the County of Jefferson,
Indiana, conducted by the protester on September 4, 1979, revealed that
John E. Scott died sometime in March 1979. The letters Testamentary sent
us by the protester show that John E. Scott, Jr., and E. Perin Scott
were sworn in by the court as executors and authorized to administer the
estate of John E. Scott on March 26, 1979. The final offer on behalf of
the Scott Realty Company was made by E. Perin Scott on May 25, 1979, and
was not accepted by GSA until July 2, 1979. Hensler/Kreeger contends
that Scott's contract was not valid since one of the partners of the
Scott Realty Company died before GSA accepted the Scott offer. We do
not agree and find that the Scott contract was not invalid because of
the death of John E. Scott before GSA accepted the Scott offer.
Ordinarily, the death of a partner dissolves the partnership, unless
the partnership agreement provides for the continuance of the
partnership after the death of a partner. See 35 Comp.Gen. 529(1956)
and cases cited therein. In the present case, it appears that there was
no written partnership agreement. However, this would not have
prevented the surviving partner from carrying out the contractual
obligations of the partnership, including the obligation to perform
under this lease if GSA accepted John E. Scott's and E. Perin Scott's
offer. Under Indiana law, a partnership is not terminated on
dissolution but continues until the winding up of partnership affairs is
completed, surviving partners may bind the partnership after dissolution
by completing transactions which are unfinished at dissolution, and
dissolution upon death of a partner does not discharge existing
liabilities of a deceased partner regarding obligations incurred while
he was a partner. Burns Indiana Stat. Ann. tit. 23, Sec. 4-1-30 to Sec.
4-1-37 (1949). When a partnership is dissolved, each partner may have
partnership property applied to discharge partnership liabilities.
Burns Indiana Stat. Ann. tit. 23, Sec. 4-1-38(1) (1949). In such
circumstances, we have held that the death of a partner in the period
between the offer by the partnership and the acceptance by the
Government does not discharge the partnership's obligation created by
offering on a Government solicitation. See 35 Comp.Gen. 529, 531,
supra. This is particularly SO IN THE PRESENT CASE SINCE THE SURVIVING
PARTNER AND THE SON OF THE deceased were jointly appointed as executors
to administer the deceased partner's estate, the deceased partner's son
was willing to step into the shoes of the deceased and continue the
partnership, award was made to the partnership comprised of the
surviving partner and the son of the deceased were willing and able to
perform under the contract awarded.
The protester contends that GSA should not have awarded the contract
to Scott because Scott was late in submitting both its initial offer and
is acknowledgment of Addendum No. 1 to GSA. The record shows that
Hensler/Kreeger was aware of this basis for its protest by October 17,
1978, when a letter inquiring about Scott's late offer was sent from
Hensler/Kreeger to a United States Senator who forwarded the inquiry to
GSA for its response. GSA responded to the Senator by letter of
November 20, 1978, and explained that as a matter of policy offers were
accepted by GSA in leasing procurements up to the time of award.
Hensler/Kreeger did not protest to our Office until July 19, 1979. This
protest issue was untimely filed under section 20.2(b)(2) of our Bid
Protest Procedures because Henlser/Kreeger was aware of this basis for
protest more than 10 days before the protest was filed with either the
agency or our Office. Therefore, we will not consider this issue on its
merits.
Hensler/Kreeger alleges that the award to Scott was improper since
Scott's offer was nonresponsive to the SFO in several respects. The
protester contends that the Scott property does not have ramps for the
handicapped as required by the SFO. The protester also contends that
the Scott property is a "fire-trap" primarily because it is allegedly
located next to a paint store. Hensler/Kreeger also argues that Scott's
offer should have been rejected since it offered retail commercial
ground floor space.
Scott has responded that its property does have ramps for the
handicapped, that there is a finance company between Scott's space and
the paint store, and that it has sufficiently altered the space offered
so that it cannot be considered retail commercial ground floor space.
GSA has taken the position that Scott's property either meets the
SFO's requirements of Scott will have to alter the property to meet the
requirements at its own expense.
The protester has the burden of proving its case. In the present
case, the conflicting statements of the parties are the only evidence on
these points. The protester has not substantiated its case. Fire &
Technical Equipment Corp., B-191766, June 6, 1978, 78-1 CPD 415.
Moreover, even if all of the above allegations were proven to be
correct, they would not be grounds for automatically rejecting Scott's
offer, but rather they would be factors to be taken into account by GSA
during evaluation of offers since the term "nonresponsiveness" is
inappropriate in a negotiated leasing procurement such as the present
case.
51 Comp.Gen. 565, 570(1972). We agree that GSA could require Scott to
correct any inadequacies which were contrary to the terms of the
contract negotiated.
Finally, Hensler/Kreeger argues that Scott's offer was
"nonresponsive" since Addendum No. 1 requested offers for a 5-year lease
with 3 years firm and alternate offers for a 5-year lease with 1 year
firm, but Scott only made an offer for a 5-year lease with 3 years firm.
This argument fails because the SFO requested, but did not require,
offers for alternate leasing arrangements. Moreover, we note that
Hensler/Kreeger itself only made an offer on the 5-year lease with 3
years firm. Accordingly, Hensler/Kreeger was not prejudiced in any way
by acceptance of Scott's offer.
A conference was held on this protest on December 11, 1979. At that
conference counsel for Scott argued that our Office should not recommend
that GSA terminate Scott's contract, even if we were to find
improprieties in the procurement, because Scott had already expended
great sums of money on alteration of its premises to meet the terms of
the contract. (We note that the Government will indirectly pay these
costs to Scott since Scott has amortized the alteration costs over the 3
firm years of the lease.) In support of this argument, Scott stated that
$19,000 had already been spent on, alterations, $36,000 was already
committed, and that, by occupancy, Scott would have expended
approximately $60,000 preparing for this contract. Thus, Scott argued
that the Government would be liable for substantial damages if it
wrongfully terminated the contract.
Hearing this, counsel for Hensler/Kreeger indicated that it believed
that the contract with Scott probably violated the Economy Act of 1932
and requested that GSA make available to it a copy of GSA For 387,
"Analysis of Values Statement (Leased Space)," concerning this award.
GSA agreed to make this information available to our Office for our in
camera review only since the information is confidential in nature.
Subsequently, in its comments on the conference submitted on December
21, 1979, Hensler/Kreeger charged that the contract awarded to Scott
violated the Economy Act limitations on annual rental which may be paid
and on the amount which may be paid for alterations, improvements, and
repairs of rented premises.
At the outset, we believe this protest issue to have been untimely
filed since this basis of protest should have been known to
Hensler/Kreeger upon receipt of the agency report on the protest, dated
October 29, 1979, but the protest on this issue was first filed in our
Office on December 21, 1979, with the protester's comments on the report
and conference.
Since more than 10 days had elapsed between the time the protester
should have been aware of the basis of its protest and the filing of the
protest on that basis, the protest on that issue is untimely under
section 20.2(b)(2) of our Procedures. However, since the protester is
alleging that GSA will be expending appropriated funds in violation of
statutory prohibitions, we consider this issue to be worthy of comment.
Due to the confidential nature of the information contained in GSA's
"Analysis of Values Statement (Leased Space)" our discussion of that
analysis is necessarily limited.
The Economy Act sets two limitations on Government spending
concerning rental of space for Government purposes. In accord with 40
U.S.C. 278a, the Government is prohibited from spending for rent each
year more than 15 percent of the fair market value of the rented
premises as of the date of the lease. This section also limits the
amount which may be expended by the Government for alterations,
improvements, and repairs of rented premises to no more than 25 percent
of the rental for the first year of the lease. However, the 25-percent
limitation on alterations, improvements, and repairs contained in the
Economy Act only applies where the Government is to pay directly for the
cost of alterations, repairs, and improvements to leased premises. 30
Comp.Gen. 58, 60(1950). Since, in the present case, the Government will
only pay for the costs of alterations, improvements, and repairs of the
rented premises indirectly insofar as the lessor uses the rent received
under the lease to amortize such expenses, the 25-percent limitation of
the Economy Act is not for application in this case. Therefore, we need
only consider that portion of the protester's argument which alleges
that the rental to be paid by the Government under this lease exceeds 15
percent of the fair market value of the rented property.
The protester bases its argument upon a fair market value for the
entire Scott building of $56,147 (all figures rounded to nearest
dollar). This value represents the assessed cash value of the building
according to the Office of Madison Township Assessor. Hensler/Kreeger
estimates that the space leased to the Government under Scott's contract
is about 22 percent of the space of the building and, therefore,
calculates the fair market value of the leased space to be $14,036.
Based upon this fair market value estimate, the protester calculates
that the Economy Act rental ceiling (15 percent of the fair market
value) is $2,105. The protester contends that the net rental (gross
rental less value of services and utilities provided) is $5,791, or more
than the double ceiling allowed under the Economy Act.
Henlser/Kreeger's estimate of the fair market value of the rented
space is based on assessed cash value which, we suppose, is used for tax
purposes.
While we understand that the protester is making a good-faith effort to
approximate the fair market value, we do not agree that the assessed
cash value is necessarily equal to the fair market value. We have
examined GSA's appraisal of the leased premises and find no basis to
object to the appraisal values stated therein. Therefore, we will use
the fair market value stated by GSA on Form 387 for purposes of this
decision.
The Scott contract provides for a gross annual rent of $31,135, which
includes annual charges for cleaning services and utilities and
maintenance. The term "rent" as used in the Economy Act limitation
means the net rent after deducting the value of any special services
provided by the lessor as part of the total rental consideration. See
29 Comp.Gen. 299(1950). Subtracting the value of these services from
the rental total of $31,135, using GSA's appraised fair market value,
and taking 15 percent of that figure to arrive at the Economy Act
limitation on rental, we cannot conclude that the net rental exceeded
the Economy Act limitation on rent. Therefore, we have no basis to
sustain the protest on this point.
The protest is denied in part and dismissed in part.
/1/ For a discussion of the term "urban area" as used in E.O. 12072
and the requirements of the Rural Development Act of 1972, 42 U.S.C.
3122(b)(1976), see our decision in Fairplain Development Company, et
al., 59 Comp.Gen. 409(1980), 80-1 CPD 293.
B-193734, May 21, 1980, 59 Comp.Gen. 471
General Services Administration - Services For Other Agencies, etc. -
Expired Agencies - Post-Expiration Claims - Certification for Payment
Authority
General Services Administration (GSA) may certify for payment claims
and debts of an expired Federal agency so long as agency and GSA have
specific written agreement for this service prior to the agency's
expiration, and obligation for payment also arose prior to agency's
expiration. Under 31 U.S.C. 82b GSA would become "agency concerned" for
purpose of certifying vouchers pertaining to obligations of expired
agency. 44 Comp.Gen. 100, modified.
Matter of: Authority of the General Services Administration to
certify for payment claims against expired agencies, May 21, 1980:
The General Services Administration (GSA) has asked for guidelines
concerning its authority to certify for payment claims that are debts of
Federal agencies which have expired. In this regard, it suggests it be
allowed to continue to certify claims or legal debts as part of its
service of closing out the routine affairs of defunct agencies. GSA
states that its authority to perform this function is section 601 of the
Economy Act of 1932, as amended, 31 U.S.C. 686. For the reasons
indicated below, we agree that GSA can certify for payment claims that
are debts of an expired Federal agency so long as the agency, prior to
its expiration, has authorized GSA, in writing, to carry out this
function and the debt was incurred before expiration.
Pursuant to agreements entered into under the Economy Act, 31 U.S.C.
686, GSA frequently provides administrative support services to
Government agencies (for purposes of this case, the term "agency"
includes Federal departments, independent establishments, commissions,
etc.). These services include the audit and certification for payment
of agency obligations. See 55 Comp.Gen. 388, 389(1975). GSA also
carries out certain "close-out" functions on behalf of expired agencies.
These functions include the certification for payment of valid claims
against an agency, based on obligations incurred prior to the agency's
expiration but not presented for payment until after its expiration.
GSA has been providing this service for a number of years. Prior to the
time that GSA undertook this service, at least some of the
post-expiration claims were settled by the General Accounting Office.
See 33 Comp.Gen. 384, 386(1954); 14 id. 490, 491(1934); 3 id. 123,
124(1923).
At first glance, it would appear that 31 U.S.C. 82b is an obstacle to
GSA undertaking the above-described closeout function. That section
provides, in part:
* * * disbursing officers under the executive branch of the
Government shall (1) disburse moneys only upon, and in strict accordance
with, vouchers duly certified by the head of the department,
establishment, or agency concerned, or by an officer or employee thereof
duly authorized in writing by such head to certify such vouchers.
We have held that this section requires that a certifying officer be
an officer or employee of the agency whose funds are to be disbursed.
44 Comp.Gen. 100, 101(1964). We have found this requirement is met
where the agency whose funds are being disbursed designates an employee
of another agency to act as its certifying officer. Id., at 101.
However, these principles were formulated in instances in which one
agency performed administrative functions for a still existing agency.
We never directly considered whether an agency can contract to have
another agency undertake its certification responsibilities after its
expiration.
On the other hand, it has been our longstanding rule that after an
agency expires, the services of all its members and employees terminate
and neither its members nor employees can undertake activities on its
behalf for the purpose of concluding the agency's affairs or otherwise.
B-182081, January 26, 1977; 14 Comp.Gen. 738, 739(1935). Accordingly,
it would appear that a GSA employee designated to serve as a certifying
officer of a functioning agency could not continue to act in that
capacity after that agency's expiration. Thus, if GSA certifying
officers may lawfully certify for payment debts of expired agencies,
they must do so as GSA employees.
The act of which 31 U.S.C. 82b is a part, in great measure, was
intended to meet the urgent need of the Government to fix definitely the
responsibilities of disbursing and certifying officers. See S. Rept.
No. 916, 77th Cong. 1st Sess. 4(1941). We acknowledge that the phrase
in section 82b, "vouchers duly certified by the head of the department,
establishment or agency concerned," was understood as referring to
existing departments, establishments or agencies, the proper
certification of whose vouchers enabled a disbursing officer to disburse
monies. However, there is no evidence that the Congress intended to
limit the section's coverage to functioning agencies. It is quite
possible that in enacting section 82b, the Congress neither considered
nor contemplated situations in which one agency would certify for
payment claims against an expired agency.
Accordingly, we find nothing in section 82b or its legislative
history to prevent our viewing the "department, establishment or agency
concerned" as the agency actually performing the certification in
instances in which the agency whose funds are being disbursed no longer
exists. We think this view is consistent with section 82b and our
decisions because an agency which has expired can no longer be
considered the "department, establishment or agency concerned."
Moreover, to interpret the phrase "department, establishment, or agency
concerned" as referring solely to the agency whose funds are being
disbursed even when that agency no longer exists would, under our
decisions, preclude the payment of the agency's accounts, a result we
are sure the Congress did not intend.
Therefore, for the purposes of section 82b, GSA becomes the "agency
concerned" after the expiration of the agency for which it performs
administrative services. Thus, GSA certifying officers can continue to
certify the agency's vouchers after the agency has expired.
GSA has no independent authority to certify the vouchers of other
agencies. Therefore, our conclusion is limited to instances in which an
agency, as part of a written Economy Act agreement, has authorized GSA
to continue the function of certifying its voucher for payment after it
expires.
Further, the vouchers must represent obligations properly incurred
prior to the agency's expiration. As a practical matter, we understand
that GSA certifying officers would merely be performing the essentially
ministerial function of insuring that a claimant had fulfilled its
obligation to the Government and was thus entitled to be paid.
B-196823, B-183828, May 20, 1980, 59 Comp.Gen. 470
Pay - Retired - Reduction - Civilian Employment - State Law Effect -
Community Property States
The Dual Compensation Provisions in 5 U.S.C. 5532 reduce the retired
pay entitlements of retired officers of Regular components who are
employed in civilian positions with the Federal Government. The fact
that under a State community property law the spouse of the retiree is
considered to be entitled to part of the retired pay does not permit
that part of the member's retired pay to be excluded from dual
compensation reduction since Federal law controls payment of such pay.
Matter of: Commander Alfred H. Gaehler, USN, Retired, May 20, 1980:
This action is in response to correspondence from Commander Alfred H.
Gaehler, USN, Retired, concerning his entitlement to refund of certain
deductions made from his military retired pay.
The file reflects that for the major portion of his post-retirement
years, Commander Gaehler was employed by the Federal Government in a
civilian capacity. Since he was a retired Regular officer of the Navy,
his military retired pay became subject to the limitations contained in
the Dual Compensation Act, 5 U.S.C. 5532, and his retired pay was
reduced accordingly.
Commander Gaehler questions the legality of that reduction. He
states that he is a resident of the State of California, a community
property state, and asserts that one-half of his retired pay is his, the
dual compensation reduction is for application only to that portion.
Commander Gaehler refers to certain court actions regarding the
division of property under the California community property laws. The
court decisions referred to in his letter and the news article attached
held that in the division of property law, anticipated pension or
retirement benefits should in most instances be taken into account.
Those decisions are not directly applicable to the situation here. Here
there is no dissolution of a marriage or contingent pension benefit.
The question involves the retiree's entitlement to retired pay. It has
been recognized that Federal law is supreme and must control when there
is a conflict between it and State law. Wissner v. Wissner, 338 U.S.
655(1950). This principle was recently applied by the Supreme Court in
a case involving the propriety of considering a contingent Railroad
Retirement benefit in the division of community property.
The court prohibited consideration of such benefit based upon the
supremacy of Federal law. Hisquierdo v. Hisquierdo, 439 U.S. 572(1979).
Also recognized in that decision was the court that may be exercised by
Congress over the payment of pension or retirement benefits.
Subsection (b) of 5 U.S.C. 5532 provides:
(b) A retired officer of a regular component of a uniformed service
who holds a (civilian) position is entitled to receive the full pay of
the position, but during the period for which he receives pay, his
retired or retainer pay shall be reduced * * * .
It is evident from that provision that a retired officer of a Regular
component employed in a civilian capacity with the Federal Government is
not entitled to receive retired pay at the same rate as he would be
entitled if he were not so employed. On the question of the
constitutionality of such distinction, see Puglisi v. United States, 215
Ct.Cl. 86(1977), cert. denied, 435 U.S. 968(1978). The Congress has
limited the amount of retired pay to be paid retired Regulars who are
employed in Federal positions. This law must govern over any provision
of State law which might otherwise defeat its purpose.
Therefore, the fact that under a State community property law the
spouse of the retiree is considered to be entitled to part of the
retired pay does not permit that part of the member's retired pay to be
excluded from dual compensation reduction since Federal law controls
payment of such pay. Thus, because of the limitations imposed by 5
U.S.C. 5532(b), Commander Gaehler's retired pay entitlement is actually
less than it would otherwise be. This reduced amount represents his
maximum retired pay entitlement under Federal law.
Accordingly, he is not entitled to any additional amount predicated
on the fact that he resides in a State which has a community property
law.
B-197436, May 19, 1980, 59 Comp.Gen. 467
Contract - Data, Rights, etc. - Disclosure - Timely Protest Requirement
Protest against disclosure of confidential data in request for
proposals (RFP) filed prior to closing date for receipt of proposals is
timely as protest against solicitation impropriety under 4 C.F.R.
20.2(b)(1)(1980). Contract - Data, Rights, etc. - Disclosure - Requests
for Proposals - Denial of Disclosure
Protest that disclosure of contractor's negotiated cost and manpower
estimates to perform current contract in RFP for next contract period
violated exemption 4 of Freedom of Information Act and Trade Secrets Act
and placed contractor at competitive disadvantage in procurement is
denied. In view of need for judicial determination of conduct violative
of Trade Secrets Act, extraordinary remedy of cancellation of ongoing
competitive procurement and directing agency to award, in effect,
sole-source contract is not appropriate.
Matter of: ARO, Inc., May 19, 1980:
ARO, Inc. (ARO), has protested the alleged unauthorized disclosure of
privileged and confidential manpower and cost data by the Arnold
Engineering Development Center (AEDC), Arnold Air Force Station,
Tennessee.
ARO is the incumbent contractor for the operation and maintenance of
the aerodynamic and propulsion test facilities at AEDC. Under its
contract, ARO is required to submit reports of its estimates of the
manpower and costs required to perform the contract.
AEDC, on November 16, 1979, issued draft request for proposals (RFP)
No. F40600-80-R-0001 in preparation for conducting a competitive
procurement for the operation of the AEDC facilities for fiscal years
1981-1985. Included in the RFP as attachment 3 to section "M" was a
reproduction of ARO's estimate, dated October 11, 1979, for fiscal year
1980 of manpower and costs to perform the contract. On December 13 and
14, 1979, 21 companies attended an industry briefing conducted by AEDC.
On February 22, 1980, AEDC issued a competitive RFP bearing the
above-noted number and setting the closing date for receipt of initial
proposals as May 27, 1980.
ARO contends that the release of this privileged and confidential
commercial and financial data has placed ARO at a competitive
disadvantage because it permits competitors to determine the manner in
which ARO allocates its resources in performance of the contract. ARO
argues that the release of this data violates the Freedom of Information
Act (FOIA) (5 U.S.C. 522(1976)) and the Trade Secrets Act (18 U.S.C.
1905(1976)). As a remedy, ARO requests that our Office recommend
withdrawal of the RFP and exercise of the option in ARO's contract for a
year in the expectation that the data will be stale in a year and a new
RFP would permit viable, realistic competition.
Initially, AEDC argues that ARO's protest was untimely filed under
our Bid Protest Procedures (4 C.F.R. part 20 (1980)). AEDC states that
ARO had 10 working days to file its protest from November 16, 1979, the
issuance date of the draft RFP and the date on which the basis of the
protest was known or should have been known (4 C.F.R. 20.2(b)(2)(1980)).
ARO responds that it was protesting an impropriety contained in the
solicitation and, therefore, a timely protest could be filed until the
closing date for receipt of proposals, May 27, 1980 (4 C.F.R.
20.2(b)(1)(1980)).
We find the protest to be timely filed. Our Office has held that the
disclosure of proprietary or confidential information in a solicitation
constitutes an impropriety in a solicitation for the purposes of our
timeliness requirements and a filing prior to the closing date for
receipt of proposals is timely. Applied Control Technology, B-190719,
September 11, 1978, 78-2 CPD 183; and Francis & Jackson, Associates, 57
Comp.Gen. 244(1978), 78-1 CPD 79.
As stated above, ARO contends that the release of attachment M-3
violates exemption 4 of the FOIA which protects "trade secrets and
commercial or financial information obtained from a person and
privileged or confidential" from disclosure. Further, ARO argues that
the actions of AEDC have violated the mandate of the Trade Secrets Act
that no Government office or employee should disclose:
* * * information which concerns or relates to the trade secrets,
processes, operations, style of work, or apparatus, or to the identity,
confidential statistical data, amount or source of any income, profits,
losses, or expenditures of any person, firm, partnership, corporation or
association * * * .
The data contained in attachment M-3 lists the tasks and subtasks set
forth in the Statement of Work in ARO's contract and gives the
negotiated estimate for labor, material and costs for each task and
subtask. It also shows the estimated allocation of General and
Administrative (G&A) expense to the contract.
The Air Force's position is that attachment M-3 is a carbon copy of
Supplemental Agreement P00099 to ARO's present contract and that when
this data was incorporated in ARO's contract, it entered the public
domain and its subsequent use i, the RFP was not improper.
Further, the Air Force points to our Office's decision regarding a
protest of the 1977 award to ARO (Burns & Roe Tennessee, Inc., B-189462,
July 21, 1978, 78-2 CPD 57; affirmed August 3, 1979, 79-2 CPD 77) to
show the release of the data is not harmful to ARO. In the 1977
procurement, the same type of data was contained in the RFP and we
stated that the manning estimates contained in the RFP were "in the
grossest sense" and could only be viewed as a starting point for anyone
not familiar with the operation of AEDC.
While we do not view the statement in the prior decision as
dispositive here, since it was dicta in the case, release of the data
not having been in issue, we believe it reasonably could have led the
Air Force to release the data in connection with this procurement.
The Air Force, as noted above, maintains that its release of the ARO
data was not prohibited by any law and was done pursuant to an entirely
proper objective-- assuring the widest possible competition for the AEDC
operation and maintenance contract. We believe that this Air Force
position has substantial merit.
Moreover, the relief sought from us by ARO is relief which this
Office should not provide. Initially, we point out that the basic
objective of the FOIA is disclosure, not withholding of information.
Chrysler Corporation v. Brown, 441 U.S. 281(1979). The courts permit a
"reverse FOIA" action only when it can be shown that the information
falls within one of the FOIA exemptions and is also "not in accordance
with law" as stated in 5 U.S.C. 706(2)(A). The type of action is based
on the Administrative Procedure Act (5 U.S.C. 702). See Chrysler,
supra, and Burroughs Corporation v. Brown, Civil Action No. 78-520-A
(E.D. Va., January 3, 1980).
ARO places great reliance on the recent decision in Burroughs, supra,
in support of its position that the release was improper. Burroughs
held that data of a similar nature to the ARO data released by the Air
Force, submitted by a contractor pursuant to its contractual obligations
in connection with its equal employment opportunity undertakings, should
not be released under exemption 4 of FOIA and the Trade Secrets Act.
Burroughs thus was an action to prevent release of the data. In fact,
all of the cases cited by ARO are actions brought to prevent the release
of data. None involves situations where the data has already been made
public, and we could only conjecture what relief a court might grant
when presented by these facts or what corrective action might be
ordered.
The remedy requested by ARO is extraordinary in that it would
terminate an ongoing competitive procurement undertaken pursuant to
statutory mandate (10 U.S.C. 2304(g)(1976)) and direct the Air Force in
effect to make a sole-source award to ARO. We do not find this an
appropriate remedy for our Office to provide.
Moreover, based on Chrysler, supra, to reach the result requested by
ARO would require a determination that the action of specific officials
of the Air Force violated the Trade Secrets Act. Any such finding of
violation of a criminal statute ought to be made by a court of competent
jurisdiction, not by our Office.
Accordingly, the protest is denied.
B-198361, May 16, 1980, 59 Comp.Gen. 465
General Accounting Office - Jurisdiction - Contracts - In-house
Performance v. Contracting Out - Cost Comparison - Exhaustion of
Administrative Remedies
Protest against propriety of cost evaluation performed under Office
of Management and Budget Circular No. A-76 is dismissed until review
under formal administrative procedure has been completed. General
Accounting Office bid protest forum will no longer be available to
protests against such cost evaluations until administrative remedy, if
available, has been exhausted.
Matter of: Direct Delivery Systems, May 16, 1980:
The Department of the Army has requested an expedited decision from
our Office on a jurisdictional question incident to a protest by Direct
Delivery Systems challenging a cost comparison which led to a
determination by the Army to perform certain functions in-house rather
than by contract. The cost comparison was conducted under the guidance
of Office of Management and Budget Circular No. A-76 (A-76), Revised
Mary 29, 1979. Direct Delivery Systems' challenge to the propriety of
the cost evaluation has been both filed with our Office as a protest and
appealed under cost evaluation review procedures newly established by
the Army. For the reasons stated below, Direct Delivery Systems'
protest is dismissed without prejudice and may be reinstated after
completion of the Army's review.
The new edition of A-76 referred to above, published at 44 Fed.Reg.
20556, April 5, 1979, establishes a more comprehensive and systematic
cost evaluation scheme to be used in governmental make-or-buy decisions
than that prescribed by prior editions of the circular and also requires
that agencies establish an administrative review procedure to protect
the rights of affected parties and provide for the expeditious
determination of appeals. The Army established its review procedure in
Department of the Army Circular No. 235-1, dated February 1, 1980, which
provides for the appointment of a three-member board to perform an
independent and objective study of challenges by affected parties to
A-76 cost studies and issue a written decision within 30 days.
Generally, the outcome of the make-or-buy decision is determined by a
comparison of the costs of Government performance (in-house) with the
costs of contractor performance (contracting out). The cost of
contracting out is determined by the responses of potential contractors
to a solicitation for the services in question; the cost of performance
using Government employees is estimated. Essentially, if the cost of
contracting out is lower, then a contract is awarded to the lowest cost
acceptable offeror and the affected Government employees may be
reassigned or released; conversely, if the evaluation shows the cost of
in-house performances to be lower, then the solicitation is canceled and
action taken to retain or hire the employees necessary to perform the
function. Direct Delivery Systems is the incumbent contractor for a
portion of the work called for by the solicitation which an A-76 cost
evaluation showed could be performed in-house at lower cost.
We review A-76 cost evaluations to assure that bidders are not
induced to prepare and submit bids only to have them arbitrarily
rejected as the result of an erroneous cost evaluation. Crown Laundry
and Dry Cleaners, Inc., B-194505, July 18, 1979, 79-2 CPD 38; Jets,
Inc., 59 Comp.Gen. 263(1980), 80-1 CPD 152. We believe 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,
cf. Sanders Company Plumbing and Heating, 59 Comp.Gen. 243(1980), 80-1
CPD 99, and a protest filed with our Office prior to this final decision
would be premature. Constantine N. Polites & Co., B-189214, October 18,
1979, 79-2 CPD 267. Therefore, we will no longer consider protests
challenging A-76 cost evaluations unless the administrative appeal
process, if available, has been exhausted.
We reach this result mindful that prior decisions of our Office might
have implied a contrary result. See Jets, Inc., supra; Tri-States
Service Company, B-195642, January 8, 1980, 80-1 CPD 22; Amex Systems,
Inc., B-195684, November 29, 1979, 79-2 CPD 379. However, we
distinguish these cases on the basis that the implementation of the
revised A-76 had been delayed by section 814 of the Department of
Defense Appropriation Authorization Act, 1979, Pub. L. 95-485, 92 Stat.
1611, 1625, and no formal administrative review process was available in
any of these cases.
Accordingly, the protest is dismissed but may be reopened after
completion of the Army's review.
B-197485, May 16, 1980, 59 Comp.Gen. 463
Statutes of Limitation - Military Service Suspension - Active Duty
Requirement
The exception to the 6-year statute of limitations, 31 U.S.C. 71a,
tolling the running of the 6-year period for members of the armed forces
in wartime, is applicable only to members on active duty and does not
apply to the claim of a former Navy member for retired pay which first
accrued while he was on the temporary disability retired list and for
severance pay which first accrued when he was discharged from that list.
Matter of: Charles V. Waldron, May 16, 1980:
This decision is the result of an appeal by Mr. Charles V. Waldron, a
former chief petty officer in the Navy, to an action taken by our Claims
Division, which informed him that his claim for retired and disability
severance pay could not be considered because it has not been timely
filed. For the following reasons we must conclude that Mr. Waldron's
claim cannot be considered because it is barred by the time limitations
of the act of October 9, 1940, 54 Stat. 1061, as amended by Public Law
93-604, approved January 2, 1975, 88 Stat. 1965, 31 U.S.C. 71a(1976).
Chief Petty Officer Charles V. Waldron, USN, Retired, was transferred
to the Temporary Disability Retired List (TDRL) on August 31, 1963. He
was paid retired pay commencing September 1, 1963, through May 30, 1964.
On June 1, 1964, his retired pay was suspended because his whereabouts
were unknown. Mr. Waldron was discharged from the TDRL with entitlement
to severance pay on September 30, 1968. By letter dated July 29, 1978,
he filed a claim with the Navy for retired pay for the period June 1,
1964, through September 30, 1968, and for the severance pay due on his
discharge from the TDRL on September 30, 1968. The Navy forwarded the
claim as doubtful to our Claims Division because of the period of time
which elapsed since the claim first accrued. By letter dated December
14, 1978, Mr. Waldron was informed that his claim was barred under the
provisions of the above-cited act.
That act, as codified in 31 U.S.C. 71a(1), provides in 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.
Mr. Waldron's claim for retired pay began to accrue in 1964, when the
payments authorized by 10 U.S.C. 1202 and 1401 were suspended because
his whereabouts were unknown. His claim for severance pay under 10
U.S.C. 1203 and 1212 accrued in 1968, when he was discharged from the
TDRL with severance pay and payment was not made because his whereabouts
were still unknown. His claim was filed in the Claims Division of this
Office on November 23, 1978, more than 10 years from the date it
accrued, and considerably longer than the 6-year limitation set forth in
31 U.S.C. 71a, and as a result was barred from consideration by this
Office.
Counsel for Mr. Waldron has advanced the view that the last proviso
in 31 U.S.C. 71a, relating to an individual serving in the military or
naval forces during the time of war or when war intervenes within 5
years after a claim accrues, who may present his claim within 5 years
after peace is established, should be controlling in this case. In this
regard, counsel has cited authority to show that the Vietnam conflict
should be considered a war within the meaning used in the statute and if
this view is adopted, Mr. Waldron's claim would have been filed within 5
years of the date peace was established.
We need not discuss whether the Vietnam conflict is to be considered
a war for the purposes of the statute since it is our view that the last
proviso of 31 U.S.C. 71a(1) is not for application on the basis of the
facts in Mr. Waldron's case.
The statute refers to "any person serving in the military or naval
forces of the United States." We construe "serving" as referring to
serving on active duty. Furthermore, the provision was enacted simply
to protect the interests of soldiers and sailors whose military status
in time of war might interfere with their freedom of action to file a
claim with our Office. See B-194474, October 24, 1979. In other words,
if an individual serving in the armed services had a claim which accrued
during war or his claim accrued and subsequently war broke out, such
individual is granted additional time following the establishment of
peace to file a claim because of the potential inability to file because
of his duties in wartime.
Mr. Waldron's case is different from those which could be considered
under the war-time proviso. When Mr. Waldron's claim arose he was not
on active duty; he was in fact in a retired status on the temporary
disability retired list. The commencement of the Vietnam conflict had
no bearing whatever on his ability to file a claim with this Office.
This is applicable to his claims for both retired pay and severance pay.
We would also like to point out that the limitation prescribed in the
statute, upon consideration of claims by this Office, is not a mere
statute of limitation but is a condition precedent to the right to have
claims considered by the General Accounting Office.
Compare Bartlesville Zinc Company v. Mellon, 56 F.2d 154(1932) and
Carpenter v. United States. 56 F.2d 828(1932). Further, in the absence
of specific statutory exemption, we have no authority to dispensation in
matters involving the act, and legally we may make no exceptions to its
provisions.
Accordingly, whatever the reason for Mr. Waldron's failure to file a
timely claim with this Office, we have no authority to consider it, and
we must sustain the action of our Claims Division.
B-198237, May 15, 1980, 59 Comp.Gen. 461
Travel Expenses - Private Parties - Attendants - Handicapped Employees
Employee who is handicapped by blindness and cannot travel alone
claims travel expenses and per diem entitlement for an attendant in
connection with officially approved permanent change of station.
Transportation expenses and per diem expenses incurred by attendant to
handicapped employee may be allowed as necessary to the conduct of
official business and consistent with explicit congressional intent to
employ the handicapped and prohibit discrimination based on physical
handicap. 56 Comp.Gen. 661 and B-187492, May 26, 1977, modified
(amplified).
Matter of: Alex Zazow - Attendant for Handicapped Employee - Travel
Expenses on Permanent Change of Station, May 15, 1980:
Kenyon I. Dugger, Jr., an authorized certifying officer for the
Internal Revenue Service (IRS), has requested a decision as to whether
transportation and per diem expenses may be reimbursed for the services
of an attendant accompanying Mr. Alex Zazow, a handicapped IRS employee,
to his new post of duty and on a house-hunting trip.
Mr. Zazow is blind and requires the assistance of a companion when
traveling to an unfamiliar area. The report states that Mr. Zazow was
authorized to effect a change in his post of duty from Baileys
Crossroads, Virginia, to Denver, Colorado, under Form 4253,
Authorization for Moving Expense, No. TPS-79-8, which provided for
transportation to the new post of duty and also a house-hunting trip in
connection with the official change of station. The authorization was
for payment of these expenses to Mr. Zazow as a single employee. In
August 1979, Mr. Zazow filed a travel voucher claiming reimbursement for
travel expenses incurred in effecting his change of post of duty and for
a house-hunting trip for both himself and the attendant who accompanied
him. The IRS disallowed the expenses of the attendant because Mr.
Zazow's relocation orders did not specify an attendant to accompany him,
and IRS regulations only address payment of expenses for an attendant
when accompanying a handicapped employee to and from temporary duty
stations.
In our decision in H. W. Schulz, B-187492, May 26, 1977, we allowed
travel expenses incurred by an attendant for a handicapped consultant in
connection with temporary duty travel. While noting that the Federal
Travel Regulations (FTR) (FPMR 101-7) (May 1973) do not specifically
provide for reimbursement of the travel expenses of an attendant for a
handicapped person, we reasoned as follows:
Within the Federal Government there is a commitment to employ the
handicapped and to prohibit discrimination because of physical handicap.
See 5 U.S.C. 7153(1970) and the Federal Personnel Manual, chapter 306,
subchapter 4. Congressional intent favoring employment of the
handicapped is also evidenced in the Rehabilitation Act of 1973, Public
Law 93-112, 87 Stat. 355(1973), and the Rehabilitation Act Amendments of
1974, Public Law 93-516, 88 Stat. 1617(1973), which are codified in
title 29, United States Code, chapter 16 (Supp. V. 1975).
Section 792 of title 29, United States Code, established the
Architectural and Transportation Barriers Compliance Board which has the
responsibility to insure the accessibility by the handicapped to
Federally occupied or funded buildings and facilities and to determine
to what extent transportation barriers impede the mobility of
handicapped persons. The Board has advised our Office that:
" * * * it would be a frustration of the underlying legislative
intent to provide greater employment opportunities to the disabled
and to identify and eliminate discriminatory practices if the
handicapped employees in these cases were made to bear the
expenses actually necessary for them to execute their employment."
After careful consideration, we conclude that when an agency
determines that a handicapped employee, who is unable to travel without
an attendant, should perform official travel, the travel expenses of an
attendant are "necessary travel expenses" incident to the employee's
travel. Such necessary travel expenses may include transportation
expenses and per diem. * * *
In a companion case issued on the same day, John F. Collins, 56
Comp.Gen. 661(1977), we held that requiring a handicapped employee to
bear the additional expense of an escort would cause him to suffer a
financial loss as a result of traveling on official business, and in the
future might prevent the employee from conducting official business,
thereby resulting in the agency's loss of the employee's services.
Thus, denying the attendant's travel expenses could frustrate Government
policies with regard to employment of the physically handicapped.
Although the Schulz case did not involve a claim for per diem for the
attendant, our Collins decision directly addressed such an entitlement
and stated our conclusion that there is "no reason to distinguish
between transportation expenses and per diem expenses incurred by an
attendant for a handicapped employee. Both are 'necessary travel
expenses' incident to the official travel of the employee and may be
allowed." 56 Comp.Gen. 661, 662, supra.
We likewise see no reason to distinguish between temporary duty and
permanent change of station for the purpose of reimbursing the expenses
of an attendant of a handicapped employee. Accordingly, we conclude
that Mr. Zazow's reclaim voucher for the necessary travel expenses
incurred by his attendant incident to officially approved change of
station travel may be certified for payment, if otherwise correct.
In addition, the certifying officer has asked this Office how to
determine the per diem rate for the two individuals under the
lodgings-plus method contained in para. 1-7.3 of the FTR. In this case,
the attendant was a friend. In view of this his per diem rate should be
the single rate both for the house-hunting trip and the relocation
travel, not the 3/4 rate for a family member. The two individuals
consistently shared lodging expenses under the travel authorization.
Therefore, in determining per diem rates, the lodging expenses should be
divided equally between Mr. Zazow and the attendant.
B-195969, May 15, 1980, 59 Comp.Gen. 450
Foreign Differentials and Overseas Allowances - Education for Dependents
- New Appointee
New appointee was hired for position in Trust Territory of the
Pacific Islands. Custody of his children was divided equally between
employee and his former wife. He may receive education allowance
authorized by Standardized Regulations (Government Civilians, Foreign
Areas) for children meeting defined criteria presented in the
Standardized Regulations for periods beginning when each child became a
member of his household at the overseas post. This decision modifies
(amplifies) 52 Comp.Gen. 878. Transportation - Dependents - Overseas
Employees - Children Parents Divorced
Employee's transportation expenses for minor children whose custody
has been divided between the employee and his former spouse are
reimbursable pursuant to 5 U.S.C. 5722 when his children met definition
of "immediate family" as set forth in para. 2-1.4d of Federal Travel
Regulations, and became "members of employee's household" consistent
with decisions of this Office. Length of time which children actually
live with parent-employee and discernible intent which characterizes
these periods are integral evidentiary facts which must be considered in
determining entitlement to travel expenses. Officers and Employees -
Overseas - Dependents - Education - Travel Expenses
Employee's entitlement to education allowances under 5 U.S.C. 5924(4)
and transportation expenses under 5 U.S.C. 5722 for his minor children
whose custody has been divided between the employee and his former
spouse is predicated on affirmative finding-- satisfactorily established
here-- that children are "residing" at the parent-employee's overseas
post and not merely engaged in "visitation travel" to the
parent-employee's post while actually residing elsewhere.
Transportation - Dependents - Overseas Employees - Children - Attend
Colleges, Schools, etc.
The entitlement to an education allowance pursuant to 5 U.S.C.
5924(4) and transportation expenses pursuant to 5 U.S.C. 5722 provided
for the children of a Federal employee, as a parent with only a divided
right to custody of those children, must be determined by employing
agency based upon the facts of the particular case. Doubtful cases
should be referred to this Office.
Matter of: Ernest P. Gianotti - Education Allowance - Transportation
Expenses - Divided Custody of Minor Children, May 15, 1980:
The issues presented relate to the allowability of travel and
transportation expenses and education allowances for the children of an
employee stationed outside the continental United States in the light of
a divorce decree providing that custody of the children shall be divided
equally between the employee and his former wife.
For the reasons stated at length below, we have concluded, based upon
the facts of this case, that the employee as a new appointee may be
allowed travel and transportation expenses for his children under 5
U.S.C. 5722 and education allowances for his children under 5 U.S.C.
5924. The period of entitlement for each child begins with the time
when the facts and the intent of the parties show that the child became
a member of the employee's household at the overseas duty station. The
employee may not be allowed the expenses or allowances for "visitation
travel" when the child actually resides elsewhere.
This decision is issued in response to a letter from Mr. Dennis J.
Hubscher, an authorized certifying officer for the Department of the
Interior, requesting an advance decision on the propriety of payment of
transportation expenses and an education allowance for the children of
Mr. Ernest F. Gianotti, Associate Justice, High Court, Trust Territory
of the Pacific Islands (TTPI).
Mr. Gianotti was appointed to the position of Associate Justice
effective December 15, 1977, and was authorized travel and relocation
expenses to his first duty station in the TTPI. At the time of his
appointment, Mr. Gianotti had equal custody of two minor daughters under
a divorce decree dated May 30, 1974. At the time this claim was filed
the divorce decree provided in pertinent part that Mr. Gianotti was
granted the physical care, custody and control of the children from the
1st day of December 1974, until the 1st day of June 1975, and like
periods each year thereafter, at the family home in Great Falls,
Montana. His former wife was granted physical custody of the children
at the family home for the other 6 months of each year. The decree
prohibited either of the parties from removing either of the children
from Cascade County, Montana, without the prior written consent of the
other party, or an order of a court having jurisdiction to make such an
order.
The record shows that in August 1978 Mr. Gianotti was authorized an
educational allowance for his older daughter, Christine, who attended
Hawaii Preparatory Academy during the 1978-1979 school to spend the
summer with her father. In that same month Mr. Gianotti's younger
daughter, Lisa, traveled to TTPI from Montana, where she had resided
with her mother throughout the 1978-1979 school year. At that time, in
view of the terms of the custody decree, a question was raised
concerning Mr. Gianotti's entitlement to an education allowance for
Christine for the 1978-1979 school year as well as to travel expenses
for Lisa.
Pursuant to the statutory authority contained in section 5924(4) of
title 5, United States Code, an education allowance may be granted to an
employee in a foreign area. In accordance with the implementing
regulations contained in section 270 of the Standardized Regulations
(Government Civilians, Foreign Areas) the purpose of the education
allowance is to assist in defraying those costs necessary to obtain
educational services which are ordinarily provided without charge by the
public schools in the United States; plus, in those cases where
adequate schools are not available at the employee's post, the costs of
room and board and periodic transportation between such posts and the
nearest locality where an adequate school is available.
Our primary concern in the present case is with Mr. Gianotti's
eligibility for the education allowance for his children in
circumstances where, incident to a divorce decree, he has had only a
divided right to their custody.
An education allowance may be provided for children meeting the
following definition established in subsection 271.h of the Standardized
Regulations:
"Child" means a dependent who is one of the children defined in
section 040m (2) and (4) and who is eligible for education at the
elementary or secondary school level (grades K-12) except that such
child must have attained the age of four years and must not have reached
his/her 21st birthday.
The referenced definition of eligible "children" in section 040m
reads as follows:
m. "Family" means one or more of the following relatives of an
employee residing at his post, * * * ;
(2) Children who are unmarried and under 21 years of age or,
regardless of age, are incapable of self-support. The term shall
include, in addition to natural offspring, step and adopted children and
those under legal guardianship of the employee or the spouse when such
children are expected to be under such legal guardianship at least until
they reach 21 years of age and when dependent upon and normally residing
with the guardian. (See subchapters 270 and 280 on education allowances
and educational travel.)
In our decision in 52 Comp.Gen. 878(1973), we discussed the effect of
a divorce decree, under which joint custody is awarded to both parents,
on the employee's entitlement to a separate maintenance allowance. The
question was raised as to whether, inasmuch as both divorced parents
remain in the same legal relationship to the children with respect to
custody as before the divorce, entitlement to allowances and other
benefits under Government regulations of an employee-parent with joint
legal custody would also remain the same. We concluded in part that the
definition of "children" presented in section 040m(2) of the
Standardized Regulations is sufficiently broad to include children whose
custody, incident to a divorce decree, has been placed jointly in the
employee and his former spouse.
In the present case, however, we address the clearly distinguishable
circumstances where the court entered an order which divided or
alternated the custody of the Gianotti children between their parents.
That is, the custody of the children was not jointly in both parents,
but rather the children were given first to one and then to the other
parent for specified periods under conditions also prescribed by the
court.
In view of the various factors which may affect the desirability of
an order for divided custody, it is evident that the trial court has
discretion as to whether it will divide custody, and that decision must
depend upon the facts of the particular case. See 92 A.L.R.2d 695,
699(1963). Just as surely, the entitlement to certain expenses and
allowances provided for the children of a Federal employee, as a parent
with only a divided right to custody of those children, must be
determined based upon the facts of the particular case. Thus, for
example, in our decision in B-129962, November 17, 1976, a Foreign
Service Officer contended that the Government's failure to pay for
visitation travel of a divorced officer's dependents when he lacks legal
custody but nevertheless supports them was unfair.
We held that 5 U.S.C. 5924, as implemented by the State Department
Standardized Regulations, authorized travel and educational allowances
for family members residing at the officer's post, but made no provision
for "visitation travel" to the employee's post by his dependent children
residing elsewhere.
It is also important to note, recalling the express purpose of the
education allowance, that even where an employee's eligibility can be
satisfactorily established, the selection of a school is not an
unfettered prerogative of the employee. As a result, section 272.2 of
the Standardized Regulations introduces the rates which apply for the
education allowance, stating in part as follows:
Rates of education allowance are provided for "school at post,"
"school away from post" and "home study." Where a local school is
adequate, the "school at post" and the "school away from post" rates are
identical. In this circumstance, the rate for "school away from post"
does not reflect the costs of attending a boarding school but simply
indicates the allowance available for an employee who desires to send
his/her child away to school despite the availability of an adequate
local school. Where a local school is inadequate, an allowance rate is
established to assist with the costs of attending the nearest and,
transportation considered, least expensive adequate boarding school. *
* *
In accordance with section 271e, of the Standardized Regulations a
"school away from post" means an elementary or secondary school so far
beyond daily commuting distance of the employee's post as to necessitate
board and room in connection with attendance. Allowable expenses in
connection with a qualifying child's attendance at a school away from
post are set forth in the following provisions of subsection 277.2 (July
1, 1979) of the Standardized Regulations:
277.2 School away from Post (Sec. 271e)
a. Items listed in section 277.1a. through d.;
b. Room and board; limited to $250 per month for up to 10 months
when child does not reside in school dormitory but instead uses private
boarding facilities;
c. Periodic transportation of the child between the post and the
school, not to exceed trips indicated by school's vacation closing
calendar or necessary weekend trips if boarding is on a 5-day basis.
Subsection 271a. of the Standardized Regulations defines an
"Education allowance" as an allowance to assist an employee in meeting
the extraordinary and necessary expenses, not otherwise compensated for,
incurred by reason of his service in a foreign area in providing
adequate elementary and secondary education for his children.
Accordingly, upon determining an employee's eligibility for an education
allowance, it remains the responsibility of the authorizing officials to
determine the type and extent of the qualifying employee's entitlement
under the governing regulations.
Mr. Gianotti's claim for reimbursement for the transportation
expenses of his two minor children in traveling to Truk, TTPI, is
subject to a significantly different analysis. Under section 5722 of
title 5, United States Code, Mr. Gianotti may be reimbursed for the
transportation expense of his immediate family from the place of actual
residence at the time of his appointment to the place of employment
outside the continental United States, and these expenses on his return
from his post of duty outside the continental United States to the place
of his actual residence at the time of his appointment.
Implementing regulations contained in the Federal Travel Regulations
(FPMR 101-7) (May 1973) (FTR) require in paragraph 2-1.5a(2) that the
maximum time for beginning allowable travel and transportation-- except
in circumstances not pertinent here-- shall not exceed 2 years from the
effective date of the employee's appointment, or, in the case of Mr.
Gianotti's immediate family, December 15, 1979.
In addition, paragraph 2-1.4d of the FTR (FPMR Temp. Reg. A-11, Supp.
4, April 29, 1977) defines "immediate family" as follows:
d. Immediate family.
(1) Any of the following named members of the employee's household at
the time he reports for duty at his new permanent duty station or
performs authorized or approved overseas tour renewal agreement travel
or separation travel:
(a) Spouse;
(b) Children of the employee or employee's spouse who are
unmarried and under 21 years of age or who, regardless of age, are
physically or mentally incapable of self-support (The term
"children" shall include natural offspring; stepchildren;
adopted children; and grandchildren, legal minor wards, or other
dependent children who are under legal guardianship of the
employee or employee's spouse.);
(c) Dependent parents (including step- and legally adoptive
parents) of the employee or employee's spouse (See (2), below, for
dependent status criteria.); and--
(d) Dependent brothers and sisters (including step- and legally
adoptive brothers and sisters) of the employee or employee's
spouse who are unmarried and under 21 years of age or who,
regardless of age, are physically or mentally incapable of
self-support. (See (2), below, for dependent status criteria.)
(2) Generally, the individuals named in 2-1.4d(1) (c) and (d) shall
be considered dependents of the employee if they receive at least 51
percent of their support from the employee or employee's spouse;
however, this percentage of support criteria shall not be the decisive
factor in all cases. These individuals may also be considered
dependents for the purposes of this chapter if they are members of the
employee's household and, in addition to their own income, receive
support (less than 51 percent) from the employee or employee's spouse
without which they would be unable to maintain a reasonable standard of
living.
The operative effect of the "immediate family" requirement on the
transportation expense entitlement under the Federal Travel Regulations
was the subject of our decision in B-187241, July 5, 1977. There, we
directly addressed the issue of transportation expenses of minor
children.
Following a presentation of our decision in 52 Comp.Gen. 878, supra, we
reasoned further as follows:
We recognize that in modern divorce proceedings, as here, the
employee-father should, wherever possible, share in the legal custody
and upbringing of a child or children of the marriage. Further, it is
noted that the welfare of the minor children being of utmost importance,
and particularly where the children are attending school, it is not
always feasible for them to spend an equal amount of time in the
households of both the mother and the father. However, in order for an
individual to be covered by the definition of "immediate family" as it
appears in the regulations and consequently entitled to the
transportation allowance being claimed, it is necessary for that person
to be one of the named individuals and a member of the household of the
employee.
With respect to the term "household," such term is not defined in the
regulations. We have stated that the term is one of uncertain meaning
and that persons may be members of the same household even though they
are not living under the same roof.
However, the facts in this case show that the children actually
reside with their mother approximately 11 months of each year and
although the employee has joint custody of said children, rather than a
permissive right to visit the minors, plans for them to visit at his
residence in Juneau for one month during the summer, and is financially
responsible for the support of his children, the period of time during
which they actually live with the claimant is not of sufficient duration
to warrant a determination that the children are in fact "members of the
employee's household."
As a result, recalling our decision in B-129962, November 17, 1976,
supra, we believe that the length of time which Mr. Gianotti's children
actually lived with their father at the overseas station, and the intent
which characterized these periods spent with their father, are integral
evidentiary facts which must be considered in the determination of the
individual entitlements to travel and transportation expenses. Here
again, it is the facts of this particular case which must support Mr.
Gianotti's claim for travel and transportation expenses for his
daughters under 5 U.S.C. 5722, and the implementing regulations.
In connection with our further development of Mr. Gianotti's claim,
we have been advised that he now has custody of both daughters.
Specifically, appropriate decrees were entered giving Mr. Gianotti full
custody of his daughter Christine effective August 27, 1979, and full
custody of his daughter Lisa effective November 30, 1979. In addition,
the following listing has been provided which indicates the daughters'
whereabouts from December 1977 to the present:
December 15, 1977, to May 31, 1978-- Both daughters in Montana
June 1979 to September 1979-- Both daughters in Saipan
September 2, 1978, to June 1979-- Lisa in Montana, Christine at
H.P.A.
June 1979 to September 1979-- Both daughters in Saipan
September 1979 to Present-- Christine at H.P.A.
September 1979 to December 9, 1979-- Lisa in Montana
December 10, 1979, to January 10, 1980-- Lisa in Saipan
January 10, 1980, to Present-- Lisa at H.P.A.
Based upon these findings, and in conjunction with the legal analyses
noted earlier, the following allowances and expenses may be certified
for payment in regard to each of Mr. Gianotti's daughters.
Christine's residence in Montana during the period from December 15,
1977-- the effective date of Mr. Gianotti's appointment as Associate
Justice, High Court, TTPI-- through May 31, 1978, creates no entitlement
in Mr. Gianotti for an education allowance and in fact no such allowance
is claimed.
Christine's travel on or about June 1, 1978, from the Gianotti family
home in Montana-- the place of actual residence at the time of Mr.
Gianotti's appointment as Associate Justice-- to Truk, TTPI-- Mr.
Gianotti's overseas duty station-- may be reimbursed pursuant to section
5722 of title 5, United States Code.
Although Christine actually resided with her father in Truk for only
3 months over the summer-- leaving for school at Hawaii Preparatory
Academy on or about September 1, 1978-- the facts support a finding that
it was the intent of the parties that she remain with her father for an
extended period to include her attending school. As we noted earlier,
we believe that persons may be members of the same household even though
they are not living under the same roof. The situation here, where
Christine would have been residing with her father but for her
attendance at a school away from post, is a good example of our extended
construction of the concept of "member of the household of the
employee." Thus, in the circumstances presented the record supports the
determination that when she traveled to Truk in June of 1978 Christine
became a "member of Mr. Gianotti's household" within the meaning of
paragraph 2-1.4d of the FTR and our decision B-187241, July 5, 1977,
supra. This conclusion is further supported by the fact that from and
after June 1, 1978, Christine was either residing with her father at his
overseas duty station or attending school away from that post.
Accordingly, Christine's travel to Truk in June of 1978 is reimbursable
pursuant to 5 U.S.C. 5722(1976).
In view of the findings noted above, Christine's matriculation at
Hawaii Preparatory Academy from September 1978 to June 1979 entitled Mr.
Gianotti to an education allowance under the provisions of 5 U.S.C.
5624(4)(1976) and implementing regulations contained in section 270 of
the Standardized Regulations. Under the facts of this case we conclude
that the definition of "children" presented in section 040m(2) of the
Standardized Regulations is sufficiently broad to include a child such
as Christine whose custody, incident to a divorce decree, has been
divided equally between the employee and his former spouse.
We note, however, that at this point the applicable divorce decree
allowed flexibility for either spouse to remove the children from
Montana, provided prior written consent of the other party, or a court
order was obtained. On this point the record contains a photostated
copy of an undated, handwritten note, signed by one "A. McCracken,"
which extends permission for Christine Gianotti "to attend H.P.A. her
senior year." While we do not question the authenticity of this
document, we do not find that it is sufficient to comply with the
nondiscretionary consent requirement ordered by the court. In the
circumstances presented by Mr. Gianotti's claim we feel that an
affidavit of the former spouse is required to sufficiently establish
compliance with the court order's requirements. See 52 Comp.Gen. 878,
881, supra,
Presuming that this affidavit will be provided, it would clearly
support the contention that Christine was primarily residing with Mr.
Gianotti as his dependent child within the meaning of section 271h., and
section 040m(2) of the Standardized Regulations. As a result, Mr.
Gianotti would be entitled to receive an education allowance pursuant to
section 270 of the Standardized Regulations, incorporating definitions
and entitlements contained in sections 271 a., b., c., and e.; 271.1;
and 277.2 of those regulations.
One caveat should be noted in regard to Mr. Gianotti's education
allowance for Christine which is based on the "school away from post"
standards defined in subsection 271e., of section 270 of the
Standardized Regulations. As we noted earlier, in those cases where
adequate schools are not available at the employee's post, the "school
away from post" provisions of section 277.2 of the Standardized
Regulations provide, in subsection 277.2(c), for periodic transportation
of the child between the post and the school. As a result, the
"educational travel" provisions of section 280 of the Standardized
Regulations-- which are granted in lieu of an education allowance-- are
not applicable to Christine's case. And, in fact, section 276.2 would
appear to clearly preclude the payment of both educational travel and an
education allowance where the child attends school in the United States
(which under section 040a of the regulations includes Hawaii) by
providing as follows:
An education allowance shall not be paid for a child in the United
States * * * (3) for the 12-month period immediately following his/her
arrival in the U.S. under educational travel authority (Sec. 280) nor
for any period thereafter during which he/she continues to be educated
in the United States.
Christine's travel from school in Hawaii to her father's location
post in Saipan in June of 1979, as well as her return to Hawaii
Preparatory Academy in September 1979, are provided for and included in
the "school away from post" education allowance to which Mr. Gianotti is
entitled under section 277.2 of the Standardized Regulations.
Similarly, Christine's matriculation at Hawaii Preparatory Academy from
September 1979, to the present time is also covered by the education
allowance entitlement under section 277.2 of the Standardized
Regulations.
As in Christine's case, Lisa's residence in Montana during the period
from December 15, 1977, through May 31, 1978, creates no allowance
entitlement for Mr. Gianotti and, as we have noted, no such allowance is
claimed.
Lisa's travel from the family home in Montana to Truk, TTPI, in June
of 1978, was not reimbursable under 5 U.S.C. 5722(1976). In view of her
return to Montana in September 1978, after a 3-month summer visit, the
record does not support any intention on the part of the parents that
Lisa would reside with her father as a member of his household within
the meaning of paragraph 2-1.4d of the FTR and our decision B-187241,
July 5, 1977, supra. We believe Lisa's travel in June of 1978 was
primarily for the purpose of a summer visit, and this is evidenced by
the fact that Lisa returned to the family home in Montana where she
resided with her mother and attended public schools for the ensuing
9-month period.
In conjunction with these findings we must conclude that although 5
U.S.C. 5924, as implemented by the Standardized Regulations, authorized
educational allowances for qualifying dependents residing at an
employee's post, there is no provision for educational allowances for an
employee's dependents who reside elsewhere. See B-129962, November 17,
1976, supra. This conclusion is made especially clear by the following
"special rule" in regard to education allowances for a child in the
United States contained in section 276.2 of the Standardized
Regulations:
An education allowance shall not be paid for a child in the United
States (1) who is residing with his/her mother, father, or legal
guardian. * * *
Therefore, since Lisa resided with her mother at the family home in
Montana and attended public schools from September 1978 through June
1979, Mr. Gianotti is not entitled to an education allowance for Lisa
during this period.
Lisa's travel to Saipan in June 1979 is subject to the same analysis
as applied to her travel to Truk in June 1978. Here again, Lisa's
return to the family home in Montana in September 1979 serves to
characterize her trip to Saipan as a summer visit with her father.
Thus the record does not support any intention on the part of the
parents that Lisa would reside with her father as a member of his
household within the meaning of paragraph 2-1.4d of the FTR and our
decision B-187241, July 5, 1977, supra. Therefore, Lisa's travel from
the family home in Montana in June 1979 was not reimbursable under the
travel and transportation expense entitlement provided by 5 U.S.C.
5722(1976).
In connection with the court's decree giving Mr. Gianotti full
custody of Lisa effective November 30, 1979, the expanded record shows
that Lisa traveled to Saipan to join her father on December 10, 1979.
Thus, in the circumstances presented, Lisa's travel from the family home
in Montana-- the place of actual residence at the time of Mr. Gianotti's
appointment as Associate Justice effective December 15, 1977-- to Saipan
(TTPI)-- Mr. Gianotti's overseas duty station-- may be reimbursed
pursuant to section 5722 of title 5, United States Code. At this point,
the facts clearly support the intention of all of the parties involved
that Lisa was joining her father for the purpose of residing at his
overseas duty station as a dependent member of his household within the
meaning of paragraph 2-1.4d of the FTR and our decision B-187241, July
5, 1977, supra. Also, Lisa's travel on December 10, 1979, when viewed
with Mr. Gianotti's effective date of appointment of December 15, 1977,
satisfies the regulatory requirement-- contained in paragraph 2-1.5a(2)
of the FTR-- that the maximum time for beginning allowable travel and
transportation shall not exceed 2 years from the effective date of the
employee's appointment.
The expanded record further shows that Lisa traveled from her home in
Saipan on January 10, 1980, to attend Hawaii Preparatory Academy. At
this point Mr. Gianotti's entitlement to an education allowance for his
daughter Lisa is subject to essentially the same legal analysis as that
presented above in the case of daughter Christine. In short, the fact
that Lisa remained in Saipan for only a month before traveling to a
"school away from post" does not affect her status as a member of Mr.
Gianotti's household, nor does that fact affect Mr. Gianotti's
entitlement to both travel and transportation expenses for Lisa under 5
U.S.C. 5722, and an education allowance for Lisa under 5 U.S.C. 5924.
The fact remains that, in the circumstances presented, Lisa's arrival in
Saipan in December 1979 was for the purpose of residing with-- as
opposed to visiting-- her father as a member of his household.
Therefore, Mr. Gianotti is entitled to an education allowance for his
daughter Lisa commencing in January 1980, and subject to the legal
analysis provided above in the case of daughter Christine.
B-196286, May 12, 1980, 59 Comp.Gen. 444
Contracts - Specifications - Tests - Benchmark - Requirements - Status
to Protest
Agency and incumbent contractor argue that merits of protest
regarding benchmark should not be considered since protester did not
participate in benchmark and since at least one retrial would have been
held if required. General Accounting Office will consider merits of
protest because (1) neither regulatory guidance nor express agency
commitment guaranteed any participant a second benchmark attempt, (2)
competition is not maximized by forcing vendor to attempt benchmark it
cannot complete successfully, and (3)protester's participation in
benchmark, which it believed to be defective, might have resulted in
subsequent untimely protest. Contracts - Specifications - Tests -
Benchmark - Structure - Propriety
Protester contends that (1) benchmark narrative does not fully
describe complete functions to be performed, (2) system-controlled
variables tested in benchmark are not set our in mandatory requirements,
(3) one runstream is not documented having nonincumbent offerors
guessing how to accomplish it, and (4) converting relatively large
amount of undocumented proprietary code is an undue restrictive burden.
Contentions are meritorious. Recommendation is made that appropriate
corrective action be taken. Contracts - Specifications - Restrictive -
Minimum Needs Requirement - Administrative Determination -
Reasonableness
Protester's objections-- to five minor benchmark requirements on
ground that they provide incumbent contractor undue advantage-- are
without merit, since (1) these items do not prohibit protester from
competing, (2) there is no showing that requirements are in excess of
agency's minimum needs or unreasonable, and (3) there is no showing that
incumbent gained any advantage through unfair Government action or
preference.
Matter of: ADP Network Services, Inc., May 12, 1980:
ADP Network Services, Inc. (ADP), protests, the proposed procurement
by the Small Business Administration (SBA) of teleprocessing services
under the Teleprocessing Services Program's Multiple Award Schedule
Contracts.
Under this program, user agencies which have received approval from
the General Services Administration (GSA), as SBA has here, may place
orders for teleprocessing services against schedule contracts after the
user agency (1) evaluates the technical service features of those
vendors with schedule contracts, (2) eliminates from consideration those
that do not meet its requirements, and (3) selects the vendor's schedule
contract offering the lowest system life cost, price and other factors
considered.
The SBA issued a notice of mandatory requirements and ADP responded;
SBA notified ADP that all mandatory requirements had been met and
advised ADP that a benchmark would be held. On September 13, 1979,
benchmark materials were transmitted to ADP and ADP was advised that its
benchmark would be performed on October 5, 1979. On September 24, 1979,
SBA and ADP participated in an informational conference concerning the
benchmark package and that day ADP filed a protest with the contracting
officer. On September 28, 1979, the contracting officer advised ADP
that benchmarks would proceed as scheduled. Four days later, ADP
protested here.
ADP essentially requests: (1) the elimination of all unnecessary
proprietary code from the benchmark; (2) the postponement of 30 days to
allow competing vendors to develop functional equivalents for all
incumbent vendor proprietary code that cannot be eliminated or
documented; (3) elimination of all benchmark requirements that are not
mandatory; and (4) permission for vendor personnel to attend the
benchmark to assist SBA personnel in case they are unfamiliar with the
vendor's system.
In response, SBA contends that it has adhered to GSA guidance for
acquiring commercial teleprocessing services and it is not in violation
of applicable regulations or decisions.
SBA reports that the technical requirements do not include things not in
the benchmark and there is nothing in the benchmark which could have
caused ADP to fail, which were not deemed mandatory requirements. SBA
argues that GSA regulations indicate that if a concern attempts to
benchmark and fails, at least one retrial at a reasonable interval is to
be provided; in the instant case, however, ADP chose not to avail
itself of this GSA requirement. It is SBA's opinion that its
determination to eliminate ADP from further consideration due to its
failure to benchmark is consistent with our decisions and GSA
regulations.
The incumbent contractor, Computer Sciences Corporation (CSC), notes
that GSA guidelines provide that at least 20 calendar days be allowed
for vendors who have already met the mandatory requirements to prepare
for the benchmark demonstration and the protester was allowed 23 days;
additionally, at least one retrial is allowed. Applying these
principles to this protest, CSC argues that ADP would not have been
disqualified if it were unable to complete the demonstration the first
time. In CSC's view, ADP has not established that the SBA requirements
are unduly restrictive and ADP has not shown that SBA was arbitrary in
the listing of its minimal needs. CSC also states that SBA's actions
are reasonable because "ADP would not have been precluded from competing
on a cost basis, assuming it had met the mandatory requirements, had it
not successfully completed the benchmark."
At the outset, we must reject SBA's and CSC's contention that ADP's
failure to attempt the benchmark when scheduled forecloses its further
participation in the procurement. First, SBA's and CSC's belief that
ADP or any vendor should have known that it was entitled to a second
attempt to accomplish the benchmark is not supported. The GSA guidance
both rely on for support, GSA Handbook, Teleprocessing Services Program,
FPMR 101-36, October 1978, states with regard to benchmarks that:
Recommended practices. The following practices are to assist
selecting activities in organizing their benchmark efforts * * *. The
primary consideration is to achieve a benchmark which is representative
of the selecting activity's actual workload at minimum cost. These are
suggested practices, not hard and fast rules. They are designed to
convey concepts, specific details of application are left to the
selecting activity.
Thus, in view of the nonmandatory nature of GSA's guidance, absent an
express promise of a second benchmark attempt (Tymshare, Inc., B-192987,
August 28, 1979, 79-2 CPD 158), no vendor would be entitled to a second
attempt as a matter of right. Here, the record does not indicate that
SBA expressly guaranteed ADP a second attempt.
Second, in view of the relative cost associated with benchmarking
($20,000 to $40,000) as compared to the projected value of the
procurement ($400,000), it would not be reasonable to require a vendor
to attempt a benchmark which it knew it could not successfully
accomplish. Such a requirement would not tend to maximize competition.
Third, if ADP had objections to the benchmark and participated
without protest, a subsequent protest to our Office might have been
untimely. See, e.g., Comshare, Inc., B-192927, December 5, 1978, 78-2
CPD 387 (failure to protest within 10 days of receipt of benchmark
package or, at the very latest, within 10 days of the actual benchmark
test); Tymshare, Inc., B-190822, September 5, 1978, 78-2 CPD 167
(failure to protest within 10 days of notice that agency would not
change benchmark as requested by protester); Information International,
Inc., B-191013, May 31, 1978, 78-1 CPD 406 (failure to protest within 10
days of notice of agency's failure to correct benchmark package as
requested by protester).
Accordingly, we will not summarily deny ADP's protest; instead, we
will consider the merits of ADP's specific objections to the benchmark
package.
ADP objects to benchmark request I.A.-- "(e)xecute the runstream in
Exhibit 1A"-- because that runstream is an undocumented proprietary
runstream of the incumbent; it includes the INFONET (a CSC component)
system variable #V, a capability not required by SBA's notice of
mandatory requirement. Other than SBA's general denial of any
improprieties, the record contains no SBA explanation or rebuttal. CSC,
however, did respond to this objection by explaining that the runstream
is written in standard General Program Subsystem (GPS) command language,
fully documented by INFONET and is similar to a number of other widely
used command languages. In CSC's view, the narrative included in the
benchmark package fully describes the functions to be performed.
We have reviewed the factual dispute concerning whether the benchmark
narrative fully describes the functions to be performed by Exhibit 1A.
We conclude that the benchmark narrative is not self-documenting and
requires knowledge of how the INFONET system functions as well as the
INFONET system documentation. In particular, we find the following:
(1) line 50 is confusing because it has no apparent function; and (2)
there is a special feature (lines 51-60, and line 30) in the benchmark
requirement that is not apparent from SBA's notice of mandatory
requirements. Accordingly, this aspect of ADP's protest has merit.
ADP also objects to the benchmark requirements ID.3, "(s)et and
internal variable," because internal variables are not required by SBA's
notice, and I.D5, "(i)nterrupt the COBOL program and set #V8 to 0610 and
begin execution with a Go statement," because system variables are not
required by SBA's notice and the "Go" statement is INFONET-specific.
ADP notes that the program WP1.CT includes the INFONET-specific
characteristic of setting a system variable (#V0) for testing outside of
the program; further, the Job Code Language (JCL) tests the system
variable #V0 after execution; and system variable #V8 is set by the JCL
prior to executing program E2. In ADP's view, there is no requirement
in the SBA notice for setting and testing system variables and these
characteristics are incumbent-specific granting INFONET an unfair
competitive advantage.
In reply, CSC explains that (1) system variables such as #V0 and V8
are common to a number of time-sharing systems and are not specific to
INFONET, (2) SBA's notice requires user addressable variables such as
the return or condition code, and (3) it is evident that in order to
fulfill the requirement for "prompting, testing and branching" that the
value entered by the user must be placed in an area which is addressable
and that the contents of this area reflects the value entered-- in other
words, a variable. CSC contends that the requirement for variables
addressable at the command level is obvious.
We have reviewed this factual dispute also. In our view, the
requirement for variables addressable at the command level is not
obvious. However, we believe it is inferred from the "prompting,
testing and branching" requirement which would be meaningless without
such variables. However, there is no express requirement for the
capability to query a system-controlled variable like "#V0." That
requirement could be met by most major time-sharing vendors, but not all
vendors' systems would permit the system variable to be read directly as
the benchmark required. Accordingly, we believe that this portion of
the requirements and objectives of this portion of the benchmark should
be better explained by SBA and SBA's mandatory requirements and
benchmark requirements should be made consistent.
Next, CSC explains that the "Go" statement is used to resume a
program after it has been interrupted, a concept universal among
computer systems, and ADP should have had no problem with this function
since its command language contains two commands which accomplish the
same function: CONTINUE and REENTER. In CSC's view, the lack of
documentation is immaterial because the runstream is straightforward and
self-variables are also easily achieved by setting return codes and by
reading the values from a file.
We conclude that the runstream is not self-documenting because the
capabilities and functions of the commands are not apparent on their
face. Initially, offerors would need the documentation linking file
names used in the runstream to the benchmark programs.
In addition, the runstream requires a program written in proprietary
language and analysis of that program's functions would require an
expert in that language. In that regard, the benchmark instructions are
useless; they lack clarity and sufficient detail to adequately explain
what is expected. Therefore, this aspect of the benchmark should be
revised.
ADP objects to two other benchmark requirements: (1) "Exhibit 4E"--
on the ground that it is an undocumented proprietary JCL runstream that
tests a return code whereas only COBOL is required to test a return code
by the SBA notice; and (2) "Exhibit 5B, 5C and 5D"-- on the ground that
these programs represent approximately 1,400 lines of proprietary ALADIN
code, requiring conversion of an entire system in order to benchmark,
but the documentation supplied is insufficient in system logic, flow and
detail, thus not satisfying GSA requirements relative to converting
proprietary code.
In response to (1) above, CSC again notes that the GPS command
language is fully documented and is similar to command languages
implemented by other vendors; also, the ability to set a return code
from either COBOL or a command is required by the SBA notice and
emphasized in a letter of clarification. Neither SBA nor CSC
specifically responded to (2) above.
Our concern is whether exhibits 4E, 5B, 5C and 5D constitute an undue
burden of converting undocumented code. These exhibits are all written
in proprietary code; thus, a nonincumbent contractor must start from
scratch when attempting to execute these programs. The task is much
more difficult than conversion from standard languages and the
documentation supplied is minimal when compared to the task. There is
no documentation on the internal logic of the programs or of their
relationship to one another. There is no sample outputs to use in the
task; further, example reports are not correlated to exhibits. There
should have been complete sample output and test data for every program
used in the benchmark. Finally, the benchmark is structured so that the
greatest expense is directed toward areas that count the least.
Accordingly, we find this aspect of ADP's protest to be meritorious.
ADP also objects to the following five benchmark requirements for the
primary reason that they provide the incumbent an undue advantage: (1)
"read files from cassette or floppy disk"-- specific hardware interface
requirements are restrictive; (2) "reformat"-- this is a proprietary
ALADIN procedure; (3) "number types"-- the incumbent's system does this
but the requirement is not in the SBA notice; (4) "display Data Base
name, pages of overflow"-- overflow pages are a feature of the
incumbent's ALADIN system, which is not common to other systems; and
(5) "blind benchmark"-- SBA personnel are not familiar with nonincumbent
vendors' equipment to the same degree as incumbent's and any incumbent
bias cannot be prevented or detected.
IN RESPONSE, CSC NOTES THAT: (1) SBA'S NOTICE CALLS FOR THE ABILITY
TO ACCESS DATA RESIDING ON A DATA CASSETTE DEVICE AND ADP'S COMMAND
"READ" PERFORMS THE FUNCTION OF TRANSFERRING DATA FROM A PAPER-TYPE
DEVICE TO ANOTHER FILE; (2) SBA SUPPLIED A COMPLETE DESCRIPTION OF THE
INPUT FILE FORMAT AND A LISTING OF THE REFORMATTED OUTPUT FILE; THE
INCLUSION OF THE ALADIN LANGUAGE PROGRAM LISTING DOES NOT PREVENT THE
VENDOR FROM REFORMATTING THE DATA AND (3) THE NUMBER OF TAPES ASSIGNED
TO A USER BECOMES AN IMPORTANT ITEM IN DETERMINING THE RESOURCES
CONSUMED BY THE USER FOR BILLING PURPOSES. NEITHER CSC NOR SBA
EXPRESSLY RESPONDED TO ADP'S ITEMS (4) AND (5) ABOVE.
We have carefully examined the arguments regarding these five
objections and note at the outset that none of these items would prevent
ADP from competing. ADP could satisfy all the requirements from a
functional or performance standpoint. While certain system adjustments
may be necessary on ADP'S part, there is no showing that the SBA
requirements are in excess of its minimum needs. Although the incumbent
probably had an advantage, there is no showing that CSC obtained that
advantage through unfair Government action or preference. Further, we
have no basis to conclude that these requirements were unreasonable.
See Informatics, Inc., B-190203, March 20, 1978, 78-1 CPD 215, affirmed
sub nom., 57 Comp.Gen. 615(1978), 78-2 CPD 84. Accordingly, this aspect
of ADP's protest is denied.
In conclusion, the protest is sustained in part and denied in part.
By letter of today, we are forwarding our recommendations for corrective
action to the Administrator of SBA.
B-195773, B-195773.2, May 8, 1980, 59 Comp.Gen. 438
Contracts - Awards - Discount Considered - Multiple-Award Discounts
Procurement for expansion of computer system, wherein two of five
items are sole source, and request for proposals, while prohibiting all
or none offers, permits multiple-award discounts without any prohibition
against unbalanced offers, is improper and recommendation is made that
contract awarded be terminated and sole-source items be negotiated and
competitive items be recompeted. This decision is modified by 59
Comp.Gen. 658. Contracts - Negotiation - Evaluation Factors - Factors
Other Than Price - Experience
Procuring activity, in the interest of furthering competition, should
review experience requirements for qualification of maintenance
personnel with view toward reducing number of years of experience or
accepting equivalent education and training to fulfill portion of
requirement. Contracts - Negotiation - Evaluation Factors - Criteria -
Experience
Contracting agencies may properly utilize evaluation factors which
include experience and other areas that would otherwise be encompassed
by offeror responsibility determination when needs of agencies warrant
comparative evaluation of those areas. Contracts - Negotiation -
Evaluation Factors - Criteria - Subjective Judgment Factor
Protest against use of subjective evaluation factors is denied
because where evaluation factors are utilized in negotiated procurement,
the use of such criteria and numerical scoring is merely an attempt to
quantify what is subjective judgment about merits of various proposals.
Matter of: Interscience Systems, Inc.; Cencom Systems, Inc., May 8,
1980:
Interscience Systems, Inc. (Interscience), and Cencom Systems, Inc.
(Cencom), protested request for proposals (RFP) No. WA79-D169 issued by
the Environmental Protection Agency (EPA) as being unfair and
prejudicial to offerors on various grounds.
The RFP was for numerous items of automatic data processing equipment
to expand EPA's National Computer Center at Research Triangle Park,
North Carolina. The RFP also invited proposals for maintenance on the
existing system and the newly acquired items.
The RFP requested offers on the following subsections with separate
prices for each:
Subsection 2.1-- Central Processing Systems Expansion (CPSE)
Subsection 2.2-- Disk Storage Subsystems
Subsection 2.3-- Tape Subsystems
Subsection 2.4-- Printing Subsystems
Subsection 2.5-- Maintenance on Government-Owned Univac Equipment
Subsections 2.2, 2.3 and 2.4 are for items which are plug compatible
with the Sperry Univac (Univac) CPSE and subsection 2.5 is for
maintenance on currently owned Univac equipment.
On March 3, 1980, EPA made award to Univac of all subsections of the
RFP, except subsection 2.4, notwithstanding the pendency of the protest
because of urgency under section 1-2.407-8(b)(4) of the Federal
Procurement Regulations (1964 ed. amend. 68). Subsection 2.4, which was
for a laser printer, IBM Model 3800 or equal, was deleted by amendment 7
to the RFP and was awarded to IBM based on its General Services
Administration (GSA) schedule contract prices.
Interscience and Cencom contend that the manner in which the RFP was
structured precluded any meaningful competition because certain items
included in the solicitation were sole source to Univac and because
discounts for multiple awards were permitted.
The protesters argue that subsections 2.2 and 2.3, the disk storage
and tape subsystems, were and are available from numerous firms and that
viable competition exists for these items. However, subsection 2.1, the
CPSE, is alleged to be a sole-source item to Univac. Interscience and
Cencom argue that EPA should have been aware of this fact and broken out
subsection 2.1 as a sole-source item and negotiated directly with Univac
for the item while competing the remainder. The same reasoning applies
to subsection 2.5, the maintenance of existing Government-owned Univac
equipment.
The protesters contend that by allowing offerors to quote
multiple-award discounts, EPA defeated the alleged purpose of
prohibiting "all or none" offers. The RFP's instructions provided as
follows:
(a) Offerors may propose on one or more subsections of the Statement
of Work * * * . However, although offerors may propose a lower price if
awarded two or more subsections, all-or-none offers are not acceptable
and will not be evaluated.
Both Interscience and Cencom argue that a sole-source supplier can
unbalance its bid by bidding high on the items which are sole source and
low on the competitive items and through the use of the multiple-award
discount remain low for the overall procurement. Interscience posits
the following example:
The undiscounted Univac list price for purchase and maintenance for
all five subsections (with the exception of Section 2.4) is
approximately $14.5 million for a 60 month systems life without giving
effect to present value calculations. The undiscounted INTERSCIENCE
list price on an equivalent basis for Sections 2.2 and 2.3 is under $4.5
million.
Of the total Univac price of $14.5 million, approximately $6.0
million relates to Sections 2.2 and 2.3 and $8.5 million relates to
Section 2.1 and 2.5.
If Univac offered individual discounts on each section plus a
discount for bidding all five sections-- all such discounts totaling 42
percent-- the net Univac bid would be $8.4 million.
If INTERSCIENCE bid Sections 2.2 and 2.3 ENTIRELY FREE OF CHARGE to
EPA, it would have $8.5 million (the Univac list price for the other
sections of the RFP) added to its bid for EPA's cost comparison purposes
and would LOSE THE AWARD by $100,000.
The protesters allege that the combining of the sole-source items
(2.1 and 2.5) with the other subsections for which there is competition
and the allowance of the multiple-award discounts were continuing
attempts by EPA to assure that Univac won any competition. The
protesters state that the factual background of the procurement reveals
EPA's intent.
In June of 1978, EPA requested a Delegation of Procurement Authority
(DPA) from the GSA to negotiate sole source with Univac to extend the
current Univac support contract from February 1979 to September 1982.
Also requested was permission to procure additional equipment necessary
to expand the DPA ADP Center's capacity.
By letter of August 31, 1978, GSA summarized its position with regard
to the EPA request and advised that EPA could extend the current Univac
contract until February 1979, that GSA was suspending consideration of
the request to extend the contract until September 1982, and that:
You will, as soon as possible, publish a notice in the Commerce
Business Daily stating your desire to acquire, subject to the
availability of funds, the ADPE listed in your August 18, 1978, letter.
The synopsis will list each component required by make, model number,
nomenclature and quantity, and will solicit from vendors letters of
interest in competing on a make/model or plug compatible equivalent
basis. Those items for which no interest is expressed may then be
acquired on a sole source basis. Any items which precipitate
affirmative response will be acquired only after an appropriate
competitive solicitation.
Notwithstanding the above condition, the protests allege, EPA
included sole-source subsections 2.1 and 2.5 in the competitive RFP to
the detriment of the peripheral equipment manufacturers who could have
competed for the disk and tape subsystems.
In response to the protests, EPA states that it expected competition
and received expressions of interest on all subsections of the RFP and
that by utilizing the multiple-award-discount provision it sought to
assure the lowest system cost to the Government. By employing the
discount provisions, EPA contends that it was able to take advantage of
economies of scale, particularly in the area of the maintenance,
required to be furnished on each subsection.
We do not know upon what EPA based its belief that competition was
expected on subsections 2.1 and 2.5 prior to receipt of proposals since
the agency has only made a general statement as to that expectation.
However, the responses to the RFP clearly support the noncompetitive
allegations of the protesters. Univac proposed on all subsections
except 2.4. Cencom submitted a proposal on subsection 2.2, which was
found technically unacceptable. The only other response received by EPA
was a letter prior to the closing date for receipt of proposals from a
third-party broker of computer equipment. The letter requested a
relaxation of the specifications so that it could propose used Univac
equipment for a portion of subsection 2.1. EPA made no change in the
specifications and did not respond to the letter. Moreover, the RFP
required that all items offered must be new equipment of a current
production model.
We believe at that point in time it should have been clear to EPA
that no competition existed for subsections 2.1 and 2.5 EPA's subsequent
actions show it was aware of the situation because following the receipt
of initial proposals, on October 26, 1979, EPA placed a notice in the
Commerce Business Daily that subsections 2.2 and 2.3 would be competed
under a new RFP. During this same timeframe, EPA made award to IBM for
the laser printer as the only offeror for that item and began
negotiations with Univac looking toward an award of subsections 2.1 and
2.5.
In a supplemental contracting officer's statement regarding the
protest, EPA advised that "As the negotiations went forward, it became
apparent that EPA could not conclude an acceptable agreement * * * ."
Thereafter, amendment 7 to the RFP was issued to all prospective
offerors extending the due date for receipt of proposals to January 4,
1980, on the four remaining subsections. Again, only Univac responded
to subsections 2.1 and 2.5.
EPA has cited numerous past decisions of our Office dealing with the
acceptability of group or multiple-award discounts (e.g., Moir Ranch and
Construction Company; Mulino Construction Company, Inc., B-191616, June
8, 1978, 78-1 CPD 423); however, none of those cases involve the
commingling of sole-source items with items on which competition exists
in the same procurement.
While EPA states that by prohibiting all or none offers it sought to
make the procurement competitive, we find that including the
allowability of multiple-award discounts in this case without any
prohibition against unbalanced bids could have led to the same result.
Notwithstanding EPA's contention that the inclusion of the
multiple-award discounts would assure the lowest cost to the Government,
we have recognized that competition and lower cost can be better
achieved by negotiating contracts for sole-source items and soliciting
competitively for other items without any restriction concerning all or
none bids or, in this case, multiple-award discounts. Martin & Turner
Supply Company, 54 Comp.Gen. 395(1974), 74-2 CPD 267, and B-153257, May
14, 1964.
Therefore, giving consideration to the prior-quoted GSA letter of
August 31, 1978, and our past decisions, we believe the Univac contract
was improperly awarded since it was apparent that Univac was an
effective sole source for subsections 2.1 and 2.5 of the RFP. Moreover,
Univac was probably aware of its sole-source position as to the two
subsections. Without competition, either actual or expected, or cost
and pricing data, there was no assurance that reasonable prices were
obtained.
Therefore, based on our holding regarding the lack of competition for
subsections 2.1 and 2.5, and the effect the multiple-award discounts had
on subsections 2.2 and 2.3, we recommend that Univac's contract be
terminated under Article XXV of the contract which permits the
Government to discontinue rental payments on 30 days' notice.
Subsections 2.2 and 2.3 should be recompeted in a separate procurement.
Sole-source negotiations should be commended with Univac for subsections
2.1 and 2.5. This action will make the procurement consistent with the
intent of the GSA August 31, 1978, letter. While normally this action
would render moot the additional bases of protest set forth by Cencom,
we will comment on the issues as they may reoccur in any recompetition.
Cencom questions the experience requirements maintenance personnel
must meet in order to be acceptable under the RFP. The RFP requires the
on-site maintenance supervisor to have 10 years' experience including 2
years' supervisory experience and the hardware specialist to possess 6
years' experience. Cencom argues that while these requirements may be
necessary for the maintenance of the mainframe computer (subsection
2.1), to require the same experience qualifications for maintenance of
the equipment being procured under subsections 2.2 and 2.3 is excessive
and detrimental to competition. Cencom contends that an offeror for
subsection 2.1 can utilize the same maintenance personnel to meet the
requirements of subsections 2.2 and 2.3 at no additional cost.
Cencom further states that the use of years of experience as the sole
criterion in determining the qualifications of maintenance personnel is
improper as it gives no credit for education or training. Only Univac,
according to Cencom, could comply with the maintenance requirements and
this structuring of the RFP requirements was an attempt by EPA to assure
that Univac would continue to have sole responsibility for the
maintenance of all equipment (mainframe and peripherals) at the Computer
Center.
EPA has responded by stating that maintenance is a critical element
of the contract to insure a minimum of system downtime so that EPA can
fulfill its mission requirement and meet the needs of the user
community. The use of the number of years of experience was the least
restrictive common denominator for specifying EPA's minimum needs
regarding qualifications of maintenance personnel.
The determination of the Government's minimum needs, the method of
accommodating them and the technical judgments upon which those
determinations are based are primarily the responsibility of the
contracting officials, who are most familiar with the conditions under
which the supplies or services have been or are to be used. Therefore,
our Office will not question agency decisions in those respects unless
clearly shown to be erroneous. Tyco, B-194763, B-195072, August 16,
1979, 79-2 CPD 126. While not deciding the issue, we believe, in the
interest of furthering competition, EPA should review the experience
requirements with a view to reducing them regarding the 2.2 and 2.3
subsections or accepting equivalent education and training to fulfill a
portion of the requirement.
Finally, Cencom has protested that the evaluation criteria contained
in the RFP are ambiguous and subjective and an offeror did not know how
its proposal would be evaluated and the importance which EPA placed on
cost versus technical in the award selection.
The RFP, as initially issued, appears to have been deficient because
it only stated that award would be based on "price and other factors"
without stating how price related to the determination of which proposal
would be "most advantageous to the Government." However, amendment 5 to
the RFP contained answers to questions posed by offerors and, in
response to a question regarding the evaluation criteria, EPA noted that
price would be dominant in the selection of technically acceptable
offerors for award. We find this to have been sufficient to advise
offerors of the importance EPA placed on price vis-a-vis technical.
Concerning the allegation that the criteria were ambiguous, Cencom
cites as an example that experience was to be point scored in the
technical evaluation and also considered in determining an offeror's
responsibility.
We have recognized that contracting agencies may properly utilize
evaluation factors which include experience and other areas that would
otherwise be encompassed by offeror responsibility determination when
the needs of those agencies warrant a comparative evaluation of those
areas. Design Concepts, Inc., B-184754, December 24, 1975, 75-2 CPD
410. Accordingly, we have no objection to the use of experience factors
in this manner.
With regard to the subjectiveness of the criteria, this is always the
case where evaluation factors are utilized in a negotiated procurement
and the use of such criteria and numerical scoring is merely an attempt
to quantify what is a subjective judgment about the merits of various
proposals. Interactive Sciences Corporation, B-192807, February 23,
1979, 79-1 CPD 128.
Accordingly, the joint protests are sustained and the separate Cencom
protest is denied.
By letter of today, we are advising the Administrator of the
Environmental Protection Agency of our recommendation.
Since this decision contains a recommendation for corrective action,
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-197824, May 5, 1980, 59 Comp.Gen. 436
Transportation - Bills of Lading - Notations - Carrier Liability - Loss
or Damage of Property
Amount recovered from carrier of household goods in excess of the
released value of 60 cents per pound per article for total loss of
household goods in transit should be refunded to carrier rather than
paid to member since declaration of excess value by member on commercial
bill of lading was not effective for shipment moving under Government
bill of lading.
Matter of: Four Winds Van Lines, Inc., May 5, 1980:
The Certifying Officer of the U.S. Army Claims Service requests an
advance decision pursuant to 31 U.S.C. 82d of the propriety of payment
to a member of the service, Major Charles P. Ahnell, of amounts
recovered from a carrier for damage in transit to the household goods of
Major Ahnell.
Pursuant to permanent change of station the household goods, weighing
12,120 pounds, of Major Ahnell were picked up by Four Winds Van Lines,
Inc. (Four Winds) on July 28, 1978, in Ann Arbor, Michigan, for
transportation to Pittsburgh, Pennsylvania, under Government bill of
lading (GBL) M-3310350. The GBL also authorized 90 days storage in
transit. Major Ahnell declared a lump sum valuation of $30,000 on the
carrier's commercial bill of lading No. 214-08-77.
The goods were transported to Pittsburgh, Pennsylvania, and placed in
storage at George Transportation on July 29, 1978. On or about August
23, 1978, a fire at the warehouse completely destroyed the household
goods. Notice of the loss was dispatched on August 25, 1978, to Four
Winds by the Transportation Officer, U.S. Army Support Element, Oakdale,
Pennsylvania.
On November 29, 1978, Major Ahnell filed a claim for $84,110.83 under
the Military Personnel and Civilian Employees' Claims Act of 1964, 31
U.S.C. 240-243, and an assignment to the Government of the rights of
recovery of the owner was executed. The claim exceeded the maximum
amount of $15,000 allowable under the Claims Act and the claim was,
therefore, approved for the maximum. Payment was made to Major Ahnell
on or about June 21, 1979.
A demand on the carrier for the full amount of $84,110.83 was
executed by Major Ahnell on May 2, 1979, and was dispatched to Four
Winds by the Army Claims Service. Four Winds sent a check for $7,272 in
full and final settlement based on released valuation of 60 cents per
pound per article ($.60 x 12,120 pounds). The Army Claims Service
returned the check to Four Winds and claimed $30,000 on the basis of the
lump sum declared value on the commercial bill of lading.
Four Winds again sent the check for $7,272 to the Army Claims Service
stating that the Government bill of lading "specifically states that
goods were released at $.60 per pound" and the shipper did not pay for
additional valuation on his shipment. Under the description of articles
on the GBL a notation states: "HOUSEHOLD GOODS/REL VAL 60[ PER LB PER
ART."
The Army Claims Service forwarded the file to the United States Air
Force Accounting Center for collection by setoff which was effected in
the full amount of $30,000.
The tariff or special rate authority noted on the covering GBL is
"GRT 1Y" which refers to Government Rate Tender I.C.C. No. 1-Y, a tender
issued under authority of section 22 of the Interstate Commerce Act
applicable to the services furnished by Four Winds under the GBL
contract. Provision for declared or released valuation for shipments
under GBLs is made in paragraph (j) and for shipments under commercial
bills of lading is made in paragraph (k) of GRT 1-Y. Had the shipment
moved under a commercial bill of lading the notation on the commercial
bill of lading would have been effective to declare a valuation of
$30,000 for the shipment.
The present shipment, however, moved under a GBL and is governed by
the provisions of paragraph (j), subparagraph (A) of which provides that
the shipment " * * * will be deemed released to a value of 60 cents per
pound per article, unless otherwise specifically annotated on the
Government Bill of Lading." The notation on the face of the GBL
specifically states that the shipment is released to 60 cents per pound
per article.
The terms of the commercial bill of lading do not form a part of the
contract of carriage of a Government shipment under a GBL except to the
extent that the terms are incorporated by reference. The terms of the
commercial bill of lading are incorporated by reference under the terms
and conditions on the reverse of the GBL except as formerly provided in
4 CFR 52 and now provided in 41 CFR 101-41. Subparagraph (b) of section
101-41.302-3 again provides that the GBL is subject to the same rules
and conditions as govern shipments made on the usual commercial forms
unless otherwise specifically provided or stated herein. And
subparagraph (e) further provides that the shipment is made at the
restricted or limited valuation at or under which the lowest rate is
available, unless otherwise indicated on the face of the GBL. The
lowest rate appears to be available at the 60-cent per pound valuation
and the 60-cent per pound valuation is expressly stated on the face of
the GBL. Therefore, the desire of the owner to provide for a higher
released valuation was ineffective as a part of the contract of
carriage, and, if effective at all, is effective only as a separate
contract between the owner and the carrier.
As a separate contract it would seem to be only a contract for
insurance. The regulations of the Interstate Commerce Commission, 49
CFR section 1056.15(a), prohibit the carrier of household goods from
selling insurance to shippers. Therefore, as a contract for insurance
the declaration of excess valuation also fails because it is contrary to
the Interstate Commerce law.
Accordingly the amount recovered from the carrier in excess of 60
cents per pound per article should be refunded to the carrier rather
than being paid to the owner of the household goods.
B-198301, May 1, 1980, 59 Comp.Gen. 433
Transportation - Travel Agencies - Restriction on Use - Applicable
Regulations - Notice Status - Individual Government Travelers
Employee of Department of Interior and traveler whose transportation
is reimbursable by that Department, unaware of regulation precluding use
of travel agents, purchased airline tickets from travel agencies with
personal funds. Reimbursement is permissible in an amount not exceeding
cost of transportation if transportation had been purchased directly
from carrier. Modified (extended) by 60 Comp.Gen. -- (B-201777, May 6,
1981).
Matter of: Department of the Interior - Inadvertent use of Travel
Agents, May 1, 1980:
The Assistant Secretary for Policy, Budget and Administration of the
United States Department of the Interior (Interior) requests an
exemption from our restrictions against the use of travel agents to
procure official Government travel, see 4 Code of Federal Regulations
(CFR), 52.3 for an Interior employee and another traveler whose travel
is to be paid by Interior.
The purpose of the exemption is to permit reimbursement for roundtrip
air fare purchased from travel agents with personal funds. The travel
involved transportation to Washington, D.C., in connection with a
meeting with Secretary of the Interior Cecil D. Andrus concerning the
Pacific Fisher Management Council Salmon Management Plan for 1980. The
Assistant Secretary states that both travelers responsible for procuring
the passenger transportation services from the travel agents were
unaware of the requirement restricting the use of travel agencies.
Furthermore, he states that Interior personnel are currently being
advised of the restrictions on the use of travel agents for official
Government travel, and he believes that equity and fairness dictate that
an exemption should be authorized in this instance since the Government
received the benefit of the transportation.
In our decision, B-103315, August 1, 1978, in response to a similar
request by the Assistant Secretary of the Army (Manpower and Reserve
Affairs) we held that members or civilian employees of the uniformed
services who individually 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 exemptions should be admonished that official Government
travel ordinarily is purchased directly from the 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 both the Military and Civilian Personnel volumes of the
Joint Travel Regulations (JTR). See 1 JTR paragraph M2200, 2204 and 2
JTR paragraph C2207. See also 58 Comp.Gen. 710(1979).
With respect to civilian employees of the United States, paragraph
1-3.4(b) of the Federal Travel Regulations (FTR) publishes provisions
relating to the use of reduced fares offered by the carriers and by the
travel agents. Subparagraph (1) provides for the use of the lower fares
offered by the carriers when it can be determined prior to the start of
the trip that such services are practical and economical to the
Government. Subparagraph (2) authorizes the use of group or charter
fares sold by travel agents when such use will not interfere with the
performance of official business. An administrative determination is
required prior to the travel that the use of the reduced fares will
result in a monetary savings to the Government, and will not interfere
with the conduct of official business.
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 directly
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.
We believe that the same principle set out in our decision B-103315,
supra, and 58 Comp.Gen. 710, is applicable to this case. 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 service been obtained by the
traveler directly from the carrier.
This is consistent with 4 CFR 52.3 which states regarding the use of
travel agencies that:
(c) No payment is to be made to a travel agency for charges in excess
of those which would have been properly chargeable had the requested
service been obtained by the traveler direct from the carrier or
carriers involved.
This decision is also consistent with our reasoning in those
transportation cases where a contract with a carrier to perform
interstate transportation service on a Government bill of lading is
unenforceable because the carrier lacks operating authority as required
under the Interstate Commerce Act, 49 U.S.C. 1 et seq. (1976). In such
circumstances, since the Government has received the benefit of these
services, we have authorized payment on a quantum merit basis.
B-193727, May 18, 1979.
Therefore, we authorize payment of the travel vouchers in question
consistent with this decision. Since the GSA is responsible for
promulgating the FTR, we are sending that agency a copy of our decision
in this matter for its consideration.
The vouchers and supporting papers accompanying your request are
returned.
B-198204, May 1, 1980, 59 Comp.Gen. 431
Appropriations - Obligation - Contracts - Definite Commitment Required
Since Government agency did not mail acceptance of bid to contractor
prior to expiration of period of availability for obligation of fiscal
year 1979 appropriation, no "binding agreement" within meaning of 31
U.S.C. 200(a)(1976) arose in fiscal year 1979 which would provide basis
for recording obligation against fiscal year 1979 appropriation and,
therefore, fiscal year 1980 funds must be used.
Matter of: Department of the Treasury, Customs Service, May 1, 1980:
The Department of the Treasury, Customs Service, requests a decision
regarding the propriety of recording an obligation in fiscal year 1979
(FY 79) where the document providing the basis for the obligation was
misplaced due to an apparent distribution error and not discovered until
the following fiscal year. A brief summary of the circumstances
reported follows.
The obligation relates to a procurement for construction of certain
employee residences. The project was identified as an FY 79
requirement, the project cost was included in Customs Financial Plan,
and the project was approved on March 1, 1979. Invitation for bids
(IFB) No. CS-79-42 was issued on August 9, 1979, and bids were opened on
September 10, 1979. Gerrico Construction Inc. (Gerrico) submitted the
low, responsive bid. During the week of September 17, 1979, the
president of Gerrico was telephonically informed that his bid had been
accepted and that award would be made to Gerrico. On September 22,
1979, Customs assigned FY 79 contract number Tc-79-54 to the Gerrico
contract. On September 28, 1979, the contracting officer signed SF 23
(Construction Contract) which by reference incorporates the Gerrico
signed bid. Upon signing the document, the contracting officer
immediately relinquished control over it by placing it in the Customs
distribution/mailing system. Due to an error, the document did not
reach the Customs Accounting Division or the contractor in FY 79. The
contractor's calls prompted an internal file search which disclosed the
error. On October 18, 1979, the Customs Comptroller, at the request of
the Procurement Officer, approved the obligation for FY 79.
On October 22, 1979, the contract document (SF 23) was mailed to
Gerrico under cover of a letter entitled "Notice of Award." The purpose
of this letter was to confirm the original telephonic notice of award
and to transmit the misplaced written acceptance of the bid.
Notwithstanding the Customs Comptroller's approval of the obligation of
the FY 79 contract, the Accounting Division delayed action based upon
the late mailing.
On November 21, 1979, the Director, Logistics Management Division,
formally requested that the Director, Accounting Division of the Office
of Financial Management and Program Evaluation, record the FY 79
obligation. On December 11, 1979, it was determined that a formal
Comptroller General decision should be obtained prior to recording of
the FY 79 obligation and that the FY 80 appropriation be charged in the
interim.
Customs requests that in reaching our decision we consider: (1) the
requirements for recording an obligation set forth in 31 U.S.C.
200(a)(1976); (2) that the award was executed within the period of
availability of the appropriation and the contracting officer
relinquished control of it by placing it in the distribution/mailing
system with the full intent of furnishing the document to the contractor
in a timely manner; (3) if it is found that the signing of the contract
award and relinquishing of control of it by the contracting officer on
September 28, 1979, were insufficient to constitute a valid obligation
of the Government, then the oral notification of award and the assigning
of a contract number of September 22, 1979, would have constituted a
valid Government obligation; (4) the amount of the contract ($198,388)
is a significant part of the FY 79 Customs construction budget and use
of FY 80 funds will result in cancellation of another needed
construction project; and (5) this construction project is a planned
acquisition, a bona fide FY 79 need, not a last-minute attempt at
obligating FY 79 funds.
The applicable statute, 31 U.S.C. 200(a), provides that after August
26, 1954, no amount shall be recorded as an obligation of the Government
unless it is supported by documentary evidence of a binding agreement in
writing between the parties thereto, including Government agencies, in a
manner and form and for a purpose authorized by law, executed before the
expiration of the period of availability for obligation of the
appropriation or fund concerned for specific goods to be delivered, real
property to be purchased or leased, or work or services to be performed.
Before it can be concluded that there was a "binding agreement" for
purposes of this statute, we have held that the following factors must
be present:
1. Each bid must have been in writing.
2. The acceptance of each bid must have been communicated to
the bidder in the same manner as the bid was made. If the bid was
mailed, the contract must have been placed in the mails before the
close of the fiscal year. If the bid was delivered other than by
mail, the contract must have been delivered in like manner before
the end of the fiscal year.
3. Each contract must have incorporated the terms and
conditions of the respective bid without qualification.
Otherwise, it must be viewed as a counteroffer and there would be
no binding agreement until accepted by the contractor.
35 Comp.Gen. 319, 321(1955). Here, the record indicates that factors
1 and 3 are present; thus, our consideration is directed toward factor
2, particularly as it concerns communication of the Government's
acceptance to the bidder.
In the circumstances, the "binding agreement in writing" required by
31 U.S.C. 200(a) came into existence when the Government mailed SF 23 to
Gerrico. See 35 Comp.Gen. 272(1955) (based on theory of a common law
rule in effect at least since Adams v. Lindsell, 1 B.&Ald. 681(1818).
In general, an acceptance is mailed when it is placed within the control
of postal authorities authorized to receive it; merely delivering it to
a messenger with directions to mail it amounts to nothing until the
messenger actually deposits it in the mail; here, mailing means handing
the acceptance properly addressed and stamped to a postman and
depositing it in a street mailbox or a letter chute in an office
building. Williston on Contracts, 3rd ed. Sec. 85.
It is well settled that the acceptance of a contractor's offer by the
Government must be unconditional. See, e.g., Laurence Hall d/b/a
Halcyon Days, B-189697, February 1, 1978, 78-1 CPD 91. The key to the
Government's unconditional acceptance, where the acceptance is mailed,
is the release of control of the acceptance by actually dispatching it;
in other words, here, the contract was formed and the obligation arose
when the Government released control of the acceptance by placing it in
the Post Office's custody. See Kleen-Rite Corporation, B-190160, July
3, 1978, 78-2 CPD 2.
Since the acceptance was not mailed until FY 80, we must conclude
that the obligation did not arise until FY 80, requiring the use of FY
80 funds.
B-198242, April 24, 1980, 59 Comp.Gen. 428
Appropriations - Restrictions - Contract Services - Plant Care and
Watering - Federal Office Buildings - Assigned v. Public, etc. Areas
Extent of prohibition against using appropriated funds for plant care
and watering contracts with private firms, contained in fiscal year 1980
HUD Appropriation Act, is uncertain.
However, violation of provision clearly occurs when appropriated funds
are used for private maintenance contracts for office plants located in
areas which are assigned work spaces of particular Federal employee or
employees.
Matter of: Contracts for maintenance of office plants, April 24,
1980:
This decision interprets section 409 of the Department of Housing and
Urban Development - Independent Agencies Appropriation Act, 1980, Pub.
L. No. 96-103, 93 Stat. 771, 788 (HUD Appropriation Act). This
provision prohibits the use of appropriated funds for plant maintenance
contracts. For the reasons indicated below, we conclude that this
section is violated when appropriated funds are used for contracts to
maintain plants located in offices to which particular Federal employees
are assigned. On the other hand, without further clarification from the
Congress, we are unable to conclude that the section is violated if the
plants are located in publicly or commonly used areas which are not the
work spaces of any particular employees.
Section 409 of the HUD Appropriation Act provides:
No part of any appropriation for the fiscal year ending September 30,
1980, contained in this or any other Act shall be used to contract with
private firms to provide plant care or watering services.
If read literally, this section would prohibit the use of any
appropriated money for any contract for maintenance of plants, wherever
located. For example, it would prohibit contracting for landscaping
services outside of Federal office buildings, contracting for tree and
shrubbery care in national cemeteries, and contracting by municipalities
for maintenance of their parks if Federal revenue sharing funds were
used, as well as contracting for watering office plants within Federal
buildings.
However, after examining the legislative history of this provision,
we believe that the Congress did not intend such a broad application of
the prohibition. The provision was introduced as a floor amendment to
the HUD Appropriation Act by Senator Sasser. In explaining the need for
this provision, Senator Sasser stated his belief that the Government
should not be spending its money to care for "office" plants for Federal
employees. For example, he stated:
Mr. President, in the final analysis, the question comes down to
"Should the taxpayers pay for office plants for Federal employees?"
Consequently, Mr. President, I am offering an amendment that would
prohibit Federal agencies from using appropriated funds to contract with
private firms to provide plant care and watering services. (125
Cong.Rec. S10725 (daily ed. July 27, 1979)).
Senator Sasser was then asked by Senator Proxmire whether the
proposed amendment would apply to activities in city parks and similar
activities. Senator Sasser replied:
No; this would be activities which are conducted in the offices of
various agencies wherein they contract with a private plant service to
come by and water their plants. (Id. at S10726)
Although the Senate adopted this amendment, while the bill was in
conference, Senator Proxmire again expressed concern about the coverage
of the amendment. The staff of the Senate Appropriations Committee
informally asked this Office for its interpretation of the amendment.
In a letter to the committee staff dated August 10, 1979, Richard Brown,
GAO's Director, General Services and Controller, stated:
* * * Based upon the legislative history involved, we have concluded
that it is the clear intent of the sponsor that no part of any
appropriation for fiscal year 1980 should be used to contract with
private firms to provide plant care to watering services in interior
offices housing Federal employees.
At the request of Senator Proxmire, this letter was printed in the
Congressional Record to aid the Senate in its consideration of the
conference report on the HUD Appropriation Act. In explaining the
amendment at that time, Senator Proxmire stated that the prohibition was
"clearly meant to apply to plants in interior offices * * * ."
Based on this history, we believe that the Congress intended that the
prohibition only apply to plant maintenance contracts inside Federal
offices. In our opinion, maintenance contracts for outdoor plants were
not intended to be covered.
Moreover, we are not certain that the Congress intended the
prohibition to apply to all plants located inside Federal buildings or
in rented space controlled and occupied by the Federal Government.
For example, in introducing the amendment, Senator Sasser stated that
he didn't think Tennessee taxpayers would want to pay for indoor office
plants "for Federal employees." Further, the GAO letter printed in the
Congressional Record interpreted the prohibition as extending to plants
in interior offices "housing Federal employees." Finally, Senator
Proxmire explained that the prohibition applied to plants in interior
offices "which I think we can agree should be cared for by the occupants
of those offices rather than a private contractor." From these
statements, it would appear that the Congress intended that the
prohibition only apply to office space to which particular Federal
employees are actually assigned. In such space, it appears that the
Congress intends that the occupant should care for the plants.
Therefore, we conclude that the prohibition is violated when fiscal
year 1980 appropriated funds are used for private contracts to care for
or water plants located in areas where an individual or group of Federal
employees are assigned to work. We would be forced to take exception to
any expenditure for these contracts. On the other hand, it is not clear
that the Congress intended the prohibition to apply where the plants
maintained are in publicly or commonly used areas which are not the
assigned work space of any particular employee or employees. In the
absence of further clarification by the Congress, we cannot conclude
that these contracts violate the act. Therefore, we will not object to
expenditures for plant maintenance in such public or common areas.
B-197100, April 24, 1980, 59 Comp.Gen. 424
Environmental Protection and Improvement - Environmental Protection
Agency - Appropriations - Availability - Public Intervenors - Financial
Assistance
In deciding whether intervenor in proceedings should receive
financial assistance, agency should examine income and expenses and net
assets of applicant to determine whether applicant can afford to
participate without assistance. If intervenor has insufficient
resources to participate in proceeding, agency may provide full or
partial assistance from appropriated funds. However, fact that
intervenor would be forced to choose among various public activities,
and could not afford to participate in all of them, does not, without
more, make participant unable to finance own participation. Agency may
not use appropriated funds to assist such participant. Payments -
Advance - Prohibition - Exceptions - Grants
Since agency is authorized to provide assistance to needy
intervenors, as explained in General Accounting Office decisions, under
Federal Grant and Cooperative Agreement Act of 1977 agency may properly
characterize this assistance as grant.
If so characterized, prohibition against advance funding contained in 31
U.S.C. 529 does not apply provided adequate fiscal controls to protect
Government's interests are utilized. 56 Comp.Gen. 111(1976) and
B-139703, September 22, 1976, distinguished.
Matter of: Environmental Protection Agency Public Participation
Program, April 24, 1980:
The General Counsel of the United States Environmental Protection
Agency (EPA) has requested our opinion on the agency's proposed pilot
public participation program. Specifically, she asks whether the draft
of the notice establishing the program conforms with decisions of this
Office concerning the use of appropriated funds to assist participants
in agency proceedings.
We have examined the EPA draft notice and find, that with two
exceptions, it is in conformity with our previous decisions. We also
conclude that the enactment of the Federal Grant and Cooperative
Agreement Act of 1977, Pub. L. No. 95-224, 92 Stat. 3, 41 U.S.C. 501
note, subsequent to our earlier decisions, requires us to modify the
statements we set forth in those decisions that advance payments to
intervenors are not permissible.
The question of the legal authority of Federal agencies to provide
financial assistance to intervenors in their proceedings has been before
this Office Several times in the past. See, e.g., Costs of
Intervention-- Food and Drug Administration, 56 Comp.Gen. 111(1976);
Costs of Intervention-- Nuclear Regulatory Commission, B-92288, February
19, 1976. In these decisions we addressed the extent to which payments
to intervenors may be considered "necessary expenses" within the
discretion of Federal agencies in carrying out their statutory
functions. We determined that an agency may use appropriated funds to
finance the cost of intervenors in its proceedings when it determines
(1) that the participation of a particular party is necessary for the
agency to determine the issue before it, or "can reasonably be expected
to contribute substantially to a full and fair determination" of that
issue; and (2) the party is indigent or otherwise unable to finance its
own participation.
On page 16 of EPA's draft notice, the following statement appears:
In its January 7, 1977, Advance Notice of Proposed Rulemaking, EPA
stated its belief that the "financial inability" test would be met if an
organization had already committed all its available funds to other
uses. In Opinion No. B-180224 (April 5, 1977), the Comptroller General
disagreed, saying that the correct test was "more stringent than the EPA
interpretation." However, the exact nature of the correct test was not
and never has been specified by the Comptroller General, except that in
an earlier opinion, he had held that an applicant does not have to be
actually indigent to meet it. Decision B-139703, December 3, 1976, p.
6.
From the earliest of our decisions on the question of using
appropriated funds to provide assistance to intervenors, it has been our
position that the agency itself, rather than this Office, must determine
whether to provide this assistance. Accordingly, we have never set
forth a stringent test to be followed, but rather guidelines to assist
the agency in making this decision.
For example, in the opinion referred to in the EPA notice, we did not
speak of a "correct test." Rather, we found that EPA's own formulated
test, which would have allowed assistance to a party which had
sufficient funds to participate on its own but chose to spend them for
another purpose, was not satisfactory. Specifically, we stated:
Accordingly, EPA's interpretation of our position on the question of
eligibility for reimbursement in terms of lack of financial resources is
not correct. Our approach is more restrictive than the EPA
interpretation.
As noted by EPA, we have repeatedly indicated that an agency could
use appropriated funds to assist intervenors if it determines that the
party is indigent or otherwise unable to finance its participation. It
is this latter phrase which EPA states needs further clarification.
We believe that assistance should be extended only to those
individuals and organizations which cannot afford to participate without
this assistance. An agency should consider the income and expense
statements, as well as the net assets, of applicants for assistance. If
the agency concludes that the applicant has insufficient resources to
participate in the proceeding, it may use appropriated funds to offset
the applicants' cost in whole or in part.
On the other hand, the mere fact that the participant would have to
choose among alternative activities and could not, for example,
participate both in a rulemaking proceeding of EPA and an adjudication
by another agency, or lobbying activities in the Congress, does not mean
that that party needs financial assistance in order to participate. In
such instances, we would expect the participant to choose which public
activities are most significant and to use its own resources to
participate in those activities.
In one of our earlier decisions, B-139703, September 22, 1976, we
stated:
* * * 31 U.S.C. 529(1970) prohibits the making of advances of public
money in any case unless authorized by the appropriation concerned or
other law. Since we are not aware of any such authorization on the part
of the Commission which would apply here, we must conclude that payments
for the participation here involved must be made on a reimbursement
basis. Thus the Commission could make disbursements only as
participation is actually accomplished. Of course, such participation
might be accomplished prior to the close of a Commission proceeding.
While the inability to make advance payments might in some cases impeded
or prevent the Commission from obtaining desired participation, 31
U.S.C. 529 clearly requires statutory authority for advance payments in
this context.
Also, see Costs of Intervention-- Food and Drug Administration, 56
Comp.Gen. 111, 115(1976). Although not stated explicitly, our position
was based on what we perceived as the contractual nature of the
relationship between the agency and the intervenor.
The EPA draft notice recognizes our position in the following
statement on page 15:
* * * the Comptroller General's opinions preclude payment of
compensation before the work in question is completed. Accordingly, in
normal cases the money will be committed when the application is
approved, but will not be paid out until the comments are received.
But the notice goes on to say:
However, in appropriate cases applicants may request, and EPA may
grant, progress payments in proportion to expenses already incurred as
of that time. Without such a provision the ability of participants to
prepare their comments might be unreasonably constrained by cash-flow
problems.
This proposed payment to a participant prior to actual participation,
or submission of an intervenor report, regardless of its desirability,
would not be permissible under our prior decisions. The mere fact that
an expense has been incurred, without transfer of a concrete benefit to
the Government, does not make the payment any less a violation of the
advance payment prohibition, if the relationship between the agency and
the intervenor is contractual.
On the other hand, subsequent to our decisions the Congress enacted
the Federal Grant and Cooperative Agreement Act of 1977, Pub. L. No.
95-224, 92 Stat. 3 (to be codified at 41 U.S.C. 501 et seq.). One
result of this Act was the establishment of standards to distinguish
Federal assistance relationships from Federal procurement relationships
(and cooperative agreements), regardless of traditional labels for the
type of transaction involved.
The Act directs agencies to use procurement contracts whenever the
principal purpose of the relationship between the Government and the
recipient is the acquisition, by purchase, lease, or barter, of property
or services for the direct benefit of the Federal Government. Agencies
are to use a grant instrument whenever the principal purpose of the
relationship is assistance; i.e., the transfer of money, property,
services, or anything of value to the interest in order to accomplish a
public purpose of support or stimulation, and there is to be no
substantial involvement of the Government in the contemplated activity.
(Under the same circumstances, if substantial involvement by the
Government is contemplated, the proper instrument is a cooperative
agreement.) See Bloomsbury West, Inc., B-194229, September 20, 1979;
Burgos & Associates, 58 Comp.Gen. 785(1979).
The Act gives considerable weight to an agency's own characterization
of the type of relationship it proposes to enter as a grant, cooperative
agreement or contract (assuming, of course, that it has the underlying
authority to engage in the activity involved in the first place.) In
this instance, we have already ruled (B-180224, May 10, 1976) that EPA
has implied authority to assist intervenors under the conditions set
forth in the Comptroller General's many decisions on this topic.
While the agency must set forth its rationale for its particular
characterization of the relationship, we will not question its
determination unless it is clearly contrary to the statutory guidance in
the Act.
The EPA draft notice describes the relationship between EPA and the
participant receiving funds as a grant. We believe that this is a
reasonable determination. It appears that the principal purpose of
EPA's transfer of funds is to assist participants not otherwise able to
contribute to the agency's rulemaking proceedings. The input of all
intervenors may be said to be for the direct benefit of the Government
but the financial assistance is for the principal benefit of would-be
intervenors who lack sufficient resources to participate without it.
As we stated above, our earlier recommendation, that advance funding
of intervenors in agency proceedings was precluded by 31 U.S.C. 529, was
based on the contractual nature of the funding relationship. However,
31 U.S.C. 529 does not preclude advance funding in grant relationships.
In fact, one of the characteristics of a grant is that the grantee may
receive funds prior to completing the purposes of the grant.
We note that EPA does not propose to give each applicant a blank
check by making all the funds available at the start of the grant
period. The draft notice states quite explicitly (see portions quoted
above) that in "normal cases," no payments will be made until the agency
receives the intervenor's comments. In other cases (where there are
cash flow problems) payments will be made only "in proportion to expense
already incurred as of that time." We are satisfied that the proposed
method of funding these grants will provide adequate fiscal controls to
protect the Government's interests.
Therefore, if an agency which is funding public participants
characterizes the relationship as a grant, which it is authorized to do
under the Grants and Cooperative Agreement Act of 1977, 31 U.S.C. 529
does not preclude participants from receiving funds in advance of the
completion of participation subject to the provision of adequate fiscal
controls, as discussed above. Our earlier decisions, which held to the
contrary, are distinguished.
B-196356, April 24, 1980, 59 Comp.Gen. 422
Bids - Prices - Below Cost - Effect on Bidder Responsibility
Since contracting agency found successful bidder to be responsible,
there is no basis to question award merely because bidder allegedly
submitted below-cost bid. Bids - Responsiveness - Test to Determine -
Unqualified Offer to Meet All Solicitation Terms
Where successful bidder takes no exception to invitation's
Davis-Bacon provisions, question of whether successful bidder will
comply with Davis-Bacon Act is matter of contract administration and not
for consideration under General Accounting Office's Bid Protest
Procedures. Contracts - Labor Stipulations - Davis-Bacon Act - Minimum
Wage etc. Determinations - Compliance - Partners, etc. in
Laborer/Mechanic Status
Where individual members of partnership perform work of laborers or
mechanics on project subject to Davis-Bacon Act, contracting agency
should ensure that such partners are paid in accordance with act and
payroll reporting requirements are met.
Matter of: T.W.P. Company, April 24, 1980:
T.W.P. Company (TWP) protests the award of a contract to Bill Ward
Painting & Decorating (Ward) under invitation for bids (IFB) No.
F04612-79-B-0023 issued by Mather Air Force Base, California (Air
Force).
The IFB solicited bids for the repainting of family housing
interiors. The Air Force received five bids with Ward being the low
bidder and TWP second low. Ward was also incumbent contractor, which in
the past had subcontracted the work to Gorman and Sons Painting
(Gorman), a partnership consisting of a husband, wife and two sons as
coequal partners. Gorman was scheduled to perform the work under this
contract as well.
The grounds for TWP's protest are that: 1) Ward's bid is below cost;
2) in the past the Air Force has not required Ward to comply with the
Davis-Bacon Act's minimum wage or payroll reporting requirements and
will not require Ward to comply under this solicitation; and 3) because
the Air force did not intend to enforce the Davis-Bacon requirements in
regard to Ward, the bidders did not compete on an equal basis.
However, for the reasons indicated below, we find no basis to disturb
the award which the Air Force has made to Ward.
At the outset, we note that our Office has often stated that
acceptance of a below-cost bid is not legally objectionable. Ward Smith
Transfer and Storage Company, Inc., B-196970, December 14, 1979, 72-2
CPD 409; Radiology Services of Tidewater, B-194264, June 18, 1979, 79-1
CPD 432. In fact, rejection of a below-cost bid requires a finding that
the bidder is nonresponsible.
Consolidated Elevator Company, B-190929, March 3, 1978, 78-1 CPD 166.
The Air Force determined that Ward was responsible, and this Office does
not review affirmative determinations of responsibility unless fraud on
the part of procuring officials is shown or it is alleged that
definitive responsibility criteria have not been met, neither of which
is present in this case. SAI Comsystems Corporation, B-196163, February
6, 1980, 80-1 CPD 100.
The IFB in this case required compliance with the pertinent wage
determinations issued by the Secretary of Labor pursuant to the
Davis-Bacon Act, 40 U.S.C. 276a(1976), which were attached to the IFB.
The Davis-Bacon Act requires that certain Government contracts over
$2,000 for the "construction, alteration, and/or repair, including
painting and decorating," of public buildings or public works within the
United States contain a provision to the effect that no laborer or
mechanic employed directly upon the site shall receive less than the
prevailing wage, including basic hourly rates and fringe benefits, as
determined by the Secretary of Labor. Further, the act states that
these wages will be paid "regardless of any contractual relationship
which may be alleged to exist between the contractor * * * and such
laborers and mechanics."
In its bid, Ward did not take exception to the IFB's Davis-Bacon
provisions. Accordingly, there is no basis to claim that Ward's bid was
nonresponsive since it is an offer to perform, without exception, the
exact thing called for in the invitation and upon its acceptance binds
Ward to perform in accordance with all the IFB's terms and conditions.
49 Comp.Gen. 553, 556(1970). Whether Ward or its subcontractor complies
with the invitation's Davis-Bacon provisions is a matter of contract
administration and not for consideration under our Bid Protest
Procedures, 4 C.F.R.part 20(1980), which are reserved for considering
whether an award or proposed award complies with statutory, regulatory
and other legal requirements. See, e.g., Albert S. Freedman d/b/a
Reliable Security Services, B-194016, February 16, 1979, 79-1 CPD 122.
It is the Air Force's responsibility to monitor the contract and to take
appropriate action if the contract is not properly performed.
Parenthetically, we note that Ward states the dollar amount delegated to
labor by Gorman was more than Davis-Bacon wages.
Protest denied.
However, we believe it is incumbent upon us to comment on the Air
Force's position that the Davis-Bacon Act does not apply to
subcontractors such as Gorman. It is Air Force policy that to the
extent contract work is performed by coequal partners of a bona fide
partnership, no Davis-Bacon coverage is applicable to those partners
since they are not "laborers" or "mechanics" within the meaning of the
act.
Consequently, the Air Force has not and will not require Ward to comply
with the Davis-Bacon Act, despite the Davis-Bacon provision contained in
the IFB. The Air Force states that it instituted this policy because
the Department of Labor has not provided any current guidance regarding
the applicability of Davis-Bacon wage rates when the work is to be
performed, as here, by coequal partners rather than by individuals
working for an hourly wage.
The Davis-Bacon Act provides that the prevailing wage will be paid to
all laborers and mechanics "regardless of any contractual relationship
which may be alleged to exist between the contractor and subcontractor
and such laborers and mechanics." In other words, the purposes of the
act cannot be defeated by a claim that, due to some contractual
relationship, an individual is an independent contractor although he he
is in fact performing the work of a laborer or mechanic. The
controlling element, therefore, is the type of work performed, not the
contractual relationship between the parties. See 41 Op.Att'yGen.
488(1960); and cf. United States v. Landis & Young, 16 F.Supp.
832(W.D.La. 1935).
In view of the above, each of Gorman's coequal partners should be
paid no less than the prevailing Davis-Bacon wage when actually
performing the work on this project. Therefore, the Air Force should
take whatever steps are necessary to ensure compliance with the various
requirements of the act. In addition, the Air Force should ensure that,
in the future, whenever a member of a partnership performs the work of a
laborer or mechanic on a project that falls within the scope of the
Davis-Bacon Act, the prevailing wage determination is applied.
By separate letter of today, we are informing the Secretary of the
Air Force of our findings.
B-195845, April 24, 1980, 59 Comp.Gen. 417
Contracts - Awards Small Business Concerns - Award Prior to Resolution
of Nonresponsibility Determination - Certificate of Competency
Processing Delay - Military Procurement
Agency did not act improperly in awarding contract to second low
bidder prior to expiration of bids where small business low bidder was
found to be nonresponsible and Small Business Administration (SBA) was
unable to process certificate of competency (COC) prior to bid
expiration which was considerably beyond 15-day period for processing
COC set forth in Defense Acquisition Regulation (DAR). General
Accounting Office - Jurisdiction - Contracts - Small Business Matters -
Nonresponsibility Determination - Scope of GAO Review
Under 15 U.S.C. 637(b)(7), Small Business Administration (SBA) has
authority to conclusively determine that small business concern is
responsible. General Accounting Office (GAO) generally will not review
SBA determination to require issuance of COC or to reopen a case where
COC has been denied absent prima facie showing of fraud or willful
disregard of facts. Since SBA was provided opportunity to determine
matter and agency properly made award, it is not appropriate for GAO to
consider small business concern's responsibility.
Matter of: Ken Com, Inc., April 24, 1980:
Ken Com, Inc., (Ken Com), a small business firm and the low bidder
under invitation for bids (IFB) No. 62474-78-B-0089, issued by the Naval
Facilities Engineering Command, San Bruno, California (Navy), protests
the Navy's determination that Ken Com was nonresponsible, and the
subsequent award to Contra Cost Electric, Inc. (Contra Costa) while the
Small Business Administration (SBA) was considering a certificate of
competency (COC) for that firm.
The IFB was issued on April 16, 1979, as a total small business
set-aside for an energy monitoring and control system for the Pacific
Missile Test Center. Ken Com's bid was the lowest received on the items
to be awarded while Contra Costa's bid was second low. The Defense
Contract Administration Services Management Area, San Diego, California
(DCASMA) performed a preaward survey to determine the low bidder's
responsibility, and recommended that award not be made to Ken Com.
Consequently on July 7, the contracting officer referred the matter to
the SBA San Diego District Office pursuant to Defense Acquisition
Regulation (DAR) Sec. 1-705.4(c) (DAC 76-19, July 27, 1979) /1/ so that
Ken Com could be considered for a COC.
Initially the SBA's District Office advised the Navy by letter of
July 10 that Ken Com would file for a COC and projected a decision by
July 30. As a result of this information the Navy requested and
received from the bidders an extension of their bid acceptance dates
from July 22, to August 21. On July 27, the Navy was informed by the
SBA District Office that the matter was being referred to SBA's San
Francisco Regional Office and that they expected that a COC would be
issued by August 6. On August 10 the Navy determined that award should
be made to Contra Costa because no written information had been received
from the SBA regarding the COC since the July 10 letter and the SBA had
taken longer than the 15 days provided by DAR Sec. 1-705.4(c) for
processing a COC. On August 14, however, before award had been made,
SBA's Regional Office informed the Navy that since the procurement
exceeded $500,000 only the SBA Central Office in Washington could issue
a COC, that it would recommend that the Central Office issue a COC to
Ken Com and that it expected a final decision from the Central Office by
August 21. On August 21, the bid expiration date, the Navy awarded the
contract to Contra Costa as a COC had not yet been issued.
DAR Sec. 1-705.4 sets forth the procedures the Navy must follow if a
bid or proposal of a small business firm is rejected for
nonresponsibility. That section provides in pertinent part:
(a) * * * Contracting officers shall accept SBA certificates of
competency as conclusive of a prospective contractor's responsibility *
* * unless the contracting officer has substantial doubt as to the
concern's ability to perform, in which case the procedures in (f) and
(g) apply. * * *
(c) If a bid or proposal of a small business concern is to be
rejected because the contracting officer has determined the concern to
be nonresponsible, the matter shall be referred to the appropriate SBA
field office * * * . The award shall be withheld until SBA action
concerning issuance of a COC or until 15 working days after the SBA is
so notified, whichever is earlier * * * .
(e) SBA field offices will notify the PCO (Procuring Contracting
Officer) of each case where they (i) plan to issue a Certificate of
Competency, or (ii) are submitting a case to SBA, Washington, D.C., for
approval prior to issuance of a Certificate of Competency, and will
provide the contracting officer or his designated representative with a
brief written statement citing the reasons for SBA's proposed
affirmative action. Prior to final SBA action, the PCO * * * will be
afforded an opportunity to meet or communicate with SBA field office
representatives and furnish to them new or additional information on the
case. * * * Every effort should be made to resolve any differences
between the SBA and the Departments through a complete exchange of
pre-award information developed by each agency.
Paragraph (f)(i) provides that on the basis of new information the
contracting officer may make an affirmative determination of
responsibility and withdraw the COC referral. However, if agreement
cannot be reached between the SBA field office and the contracting
officer and a substantial doubt exists as to the ability of the
contractor to perform, subsection (f) provides two alternatives:
(ii) * * * the contracting officer shall request the SBA field office
to suspend action and to forward the case to SBA, Washington, D.C. (HQ
SBA), for review * * * . The 15-day period referred to in (e) shall be
automatically suspended when the contracting officer requests SBA to
suspend action and forward the request to HQ SBA * * * .
or,
(iii) * * * the contracting officer may conclude it would not be
practicable to withdraw his request for Certificate of Competency
action. In that case, the contracting officer shall inform the SBA
field office that it must issue a COC as a prerequisite to contract
award. However, such action shall not be taken by the contracting
officer without prior approval at a level above the contracting officer.
The Navy's position in this matter is relatively simple. It states
that it would not have disagreed with the issuance of a COC if SBA
determined one was appropriate. However, the Navy maintains that it
waited for a time considerably in excess of the required 15-day period
(DAR Sec. 1-705.4(c) and when the SBA failed to definitively inform it
that a COC would be issued by the date that the extended bids were to
expire it awarded the contract to the next low bidder.
Ken Com contends that the Navy's action in awarding the contract to
Contra Costa while its COC application was pending before the SBA
violates both the spirit and letter of the Small Business Act (15 U.S.C.
631 note) and the implementing DAR provisions. While the Protester
concedes that the Navy withheld award longer than the 15-day period
normally required for processing a COC, it argues that the portion of
DAR Sec. 1-705.4(f)(ii) suspending the 15-day period for appeals to SBA
Headquarters is applicable to this situation.
IN THIS REGARD, THE PROTESTOR CONTENDS THE RECORD SHOWS THAT THE SBA
advised the Navy that it intended to issue a COC and that, at least, as
of August 10, when the Navy determined that award should be made to
Contra Costa because of Ken Com's nonresponsibility, the Navy disagreed
with the SBA's proposed determination. In these circumstances, Ken Com
argues, the regulations required the Navy to seek resolution with the
SBA Regional Office and failing that to appeal to SBA Headquarters in
Washington in accordance with DAR Sec. 1-705.4(f)(ii). That, the
protester contends, would have resulted in an automatic suspension of
"any time period." On the other hand, Ken Com argues, if, as the Navy
insists, it did not disagree with SBA's proposed action, it should have
waited for SBA to finish its process.
We disagree with Ken Com's position that the suspension of the 15-day
period provided in DAR Sec. 1-705.4(f)(ii) is applicable to this matter.
Basically, this provision sets forth a rather elaborate method of
appeal to be used where a contracting officer has a "substantial doubt
as to a concern's ability to perform" despite the SBA's conclusion that
a COC is appropriate. See DAR Sec. 1-705.4(a). The scheme in DAR Sec.
1-705.4(f)(ii) is set in motion when an SBA field office proposes to
issue a COC and the contracting officer still believes that the firm
will not be able to perform. In such a case the matter is to be
referred to the SBA Headquarters and if the Headquarters affirms the
field office's determination the agency is then permitted to submit a
formal written appeal to the SBA. Only in the event the contracting
officer requests that the field office suspend action and forward the
matter to SBA Headquarters does the suspension of the 15-day period
become operative.
We are unable to find anything in the record which indicates that the
Navy at any point concluded that it would not accept a COC as conclusive
of Ken Com's responsibility or that it disagreed with SBA's proposed
action at any level. The Navy's August 10 determination to award to
Contra Costa does not, in our view, reflect disagreement with possible
COC issuance for Ken Com, but only that the anticipated COC was not
forthcoming within the predicted time frame. The fact that the matter
was transferred from SBA's District Office to its Regional Office and
finally to Washington Headquarters was not because of any Navy
disagreement with the inclination and recommendations of the lower level
SBA offices, but merely because SBA's rules required Headquarters
approval of COCs issuance in procurements above $500,000. Since the
contracting officer did not appeal to SBA Headquarters and certainly was
not obligated to file an appeal, the process set forth in DAR Sec.
1-705.4(f)(ii) was not activated and the matter was governed by the
"normal procedures" set forth in DAR Sec. 1-705.4(c) and (e).
Although these provisions envision close cooperation and
communication between the SBA and the agency during the COC process and
provide for notification to the agency by the SBA field office if it
plans to issue a COC or refer the matter to Washington, we do not
believe that these provisions require the agency to withhold award for
more than the specified 15-day period. In this regard, we have held
that advice from an SBA field office that a COC would issue where final
approval was required from the Washington Office is advisory and not of
such effect as to prevent the agency from making an award to another
bidder. See B-170102, December 2, 1970. Thus, although the Navy
appears to have been advised by SBA field office personnel that a COC
likely would issue, we are unable to find that the Navy's actions in
determining on August 10 that award should be made to Contra Costa and
in actually awarding the contract to that firm on August 21 were
improper. Likewise we do not believe, as the protester argues, that the
agency was obligated by law or "principles of fairness" to request
bidders to further extend their bids in order for the SBA to complete
the COC process.
Ken Com also argues that the Navy's initial determination of
nonresponsibility is "totally devoid of any merit." The protester argues
that the Navy's conclusion that Ken Com is not capable of performing the
work is refuted by the fact that another Federal agency has contracted
with Ken Com to do virtually the same work as that required under this
solicitation.
The SBA has the authority to conclusively determine that a small
business concern is responsible. 15 U.S.C. 637(b)(7) (Supp. I 1977).
This Office has no authority to review SBA's determination to require
issuance of a COC, or to reopen a case where a COC has been denied
unless the protester has made a prima facie showing of fraud or willful
disregard of facts. See SMI/New York; Sweepster, Inc., B-194009, July
24, 1979, 79-2 CPD 55. The regulation, DAR Sec. 1-705.4(c), provides
that in most instances SBA must issue a COC within 15 days after the
matter is referred to it or the agency may award the contract to the
next low bidder. In this case SBA was given the opportunity to decide
the matter but did not complete the process within the 15-day period and
the Navy did not act improperly in then awarding the contract to Contra
Costa after withholding award for a time in excess of the required
15-day period. Under the circumstances, since the agency authorized by
law to determine Ken Com's responsibility was given the required
opportunity to do so, we do not believe it would be appropriate for us
to now review the matter of Ken Com's responsibility.
The protest is denied.
/1/ DAC 76-19 did not substantially change the working of the prior
version of DAR Sec. 1-705.4.
B-195347, B-195348, April 24, 1980, 59 Comp.Gen. 415
Departments and Establishments - Services Between - Reimbursement -
Merit Systems Protection Board Services - Travel Expenses of Hearing
Officers
Merit Systems Protection Board ordered all hearings conducted by its
hearing officers to be conducted in Board's field offices instead of
home areas of appellants. Due to resulting inconvenience, both
employing agencies and employees and their unions offered to reimburse
Board for travel expenses of hearing officers if hearings were moved to
home areas. Board may not accept reimbursement from other agencies or
augment its appropriations by accepting donations from employees or
unions.
Matter of: Merit Systems Protection Board - Travel expenses of
hearing officers, April 24, 1980:
This case presents two issues for our decision: (1) whether the
Merit Systems Protection Board may accept full or partial reimbursement
from other Federal agencies for the travel expenses of the Board's
hearing officers, and (2) whether the Board may accept reimbursement
from employees or their unions for such travel expenses.
The circumstances giving rise to the Board's request for a decision
are described as follows:
While the Board came into existence on January 1, 1979, as the
adjudicatory successor to the Civil Service Commission, the Reform Act
imposed many additional responsibilities on the Board. As a result,
there was a reduction in the funds available to cover the expenses of
conducting employee appeal hearings. Therefore, on May 18, 1979, the
Board determined that its hearing officers would no longer be sent to
the home area of the employee appellant to conduct hearings. Instead,
in order to reduce travel expenses, the Board ordered that all hearings
be conducted within its various offices.
The Board states that this policy has provoked complaints from
employing agencies, employees, and their unions. The Board has received
voluntary offers from agencies, employees, and unions to reimburse all
or part of the hearing officers' travel expenses if the Board will
schedule the hearings in the home areas of the employees.
The Merit Systems Protection Board was established by title II of
Public Law 95-454, October 13, 1978, 92 Stat. 1111, et seq., 5 U.S.C.
1201. The Board is authorized to hear, adjudicate, or provide for the
hearing or adjudication of all matters within its jurisdiction, 5 U.S.C.
1205(a)(1). /1/ Additionally, section 7701 of title 5, United States
Code, provides that an employee or applicant for employment may submit
an appeal to the Board from any action appealable to the Board under any
law, rule, or regulation, and that an appellant shall have the right to
a hearing.
The law is silent concerning the location of the hearing but presumably
the site of a hearing may be set under the authority of the Board to
prescribe regulations necessary for the performance of its functions
pursuant to 5 U.S.C. 1205(g). Thus, the Board has the authority to
require that all hearings be conducted within its various field offices.
However, if the Board is authorized to accept reimbursement, it
appears that the Board would authorize hearing officers to travel to the
home areas when reimbursement of the travel expenses has been promised
by employing agencies, employees or their unions. The Board would make
the appropriate payment for the hearing officers' travel and obtain the
agreed upon reimbursement from the parties and apply it to the Board's
appropriation from which the hearing officers' travel was paid.
We shall first address the question of reimbursement by the employing
agencies.
Section 628-1 of title 31, United States Code (1976), provides that
no funds shall be withdrawn from one appropriation account for credit to
another except as authorized by law. Such a transfer of funds is
authorized by the so-called "Economy Act," 31 U.S.C. 686(1976), as
reimbursement for services performed by one agency at the request of
another. However, the Economy Act is applicable only when there is no
other statute which specifically authorizes the provider agency to
render the service in question and when the requested service is not a
part of its mission for which it has already received appropriated
funds. B-192875, January 15, 1980. In the instant case 5 U.S.C.
1205(a)(1), supra, states that the Board shall provide for the hearing
or adjudication of all matters within its jurisdiction. Thus, the Board
is required to provide for a hearing or adjudication when an employee
presents an appeal within the jurisdiction of the Board. When a hearing
is appropriate under the statute or the Board's regulations, the Board
is required to provide a hearing officer and is authorized to designate
the site of the hearing. We believe that the Board is required not only
to pay the hearing officer's salary but also his necessary travel
expenses. Accordingly, reimbursement of the hearing officer's travel
expenses by another Federal agency would be an augmentation of the
Board's appropriations.
We are unaware of any other provision of law that would permit a
transfer of appropriated funds from the employee's agency to the Board
for this purpose. Therefore, we hold that the Board may not accept
reimbursement from another Federal agency for the travel expenses of a
hearing officer to a hearing site away from one of the Board's field
offices.
The remaining question is whether the Board may accept voluntary
reimbursement from an employee or a union. The threshold question here
is whether the Board's acceptance of the voluntary reimbursement of its
hearing officers' travel expenses constitutes an unauthorized
augmentation of its appropriations.
The general rule is that appropriations may not be augmented with
funds from private sources unless specifically authorized by law.
Congress has from time to time provided a particular Government activity
with specific authority to accept donations and to use the funds for
agency purposes. 26 Comp.Dec. 43(1919), 23 Comp.Gen. 694(1944), 36 id.
268(1956), 46 id. 689(1967).
Applying the foregoing general rule to the present case, the Merit
Systems Protection Board would be authorized to accept the reimbursement
of hearing officer's travel expenses from employees or unions only if
the Congress has provided it with specific statutory authority to accept
such donations and apply them for the specified purposes. In its
submission the Board does not refer to any specific authority to accept
donations. Our analysis of the Board's organic act, the Civil Service
Reform Act of 1978, supra, and the Reorganization Plan No. 2 of 1978,
supra, does not disclose the requisite authority. It follows that any
funds received by the Board for the purpose of reimbursing it for the
travel expenses of its hearing officers would be considered an improper
augmentation of its appropriations. See Customs Service, 59 Comp.Gen.
294(1980).
In summary, we find no authority for the Board to accept voluntary
reimbursement from either employees or their unions or from other
Federal agencies for the travel expenses of the Board's hearing
officers.
/1/ The provisions of title 5, United States Code, which are cited
herein were added or amended by Public Law 95-454.
B-192483, April 24, 1980, 59 Comp.Gen. 409
Contracts - Protests - Procedures - Bid Protest Procedures - Time for
Filing - Significant Procurement Issue Exception
Although it is not clear that protest of restriction to locations in
central business district of Benton Harbor, Michigan, in solicitation
for lease of office space is timely, protest will be considered as
raising a significant issue since it concerns agency's implementation of
Executive Order (E.O.) 12072, 43 Fed.Reg. 36869(1978) dealing with
preference for location of Federal facilities in urban areas.
Contracts - Protests - Authority to Consider - Executive Branch Policy
Determinations
General Accounting Office (GAO) will not normally review agency
compliance with Executive Branch policies under Bid Protest Procedures
but will consider protest which contends such policies are contrary to
applicable procurement statutes and regulations. Contracts -
Specifications - Restrictive - Justification - Public Policy
Considerations
Leasing agency has primary responsibility for setting forth minimum
needs, including location of facility. GAO will not object to agency's
choice of location unless that choice lacks reasonable basis. General
Services Administration - Services For Other Agencies, etc. - Space
Assignment - Including Leasing - Urban Location Restriction - Legality
As Rural Development Act of 1972, 42 U.S.C. 3122(b)(1976) defines
"rural area" as any community with population of less than 50,000 which
is not immediately adjacent to city with population of 50,000 or more
and General Services Administration (GSA) defines "urban area" for
purposes of E.O. 12072 as any incorporated community with population of
10,000 or more, solicitation restricting offers for leased office space
to buildings in central business district of city of 16,481 is
compatible with both requirements and is within the authority of GSA
under sections 490(e) and 490(h)(1) of 40 U.S. Code (Federal Property
and Administrative Services Act of 1949).
Matter of: Fairplain Development Company et al., April 4, 1980:
The Fairplain Development Company (Fairplain) protests the General
Services Administration's (GSA) rejection of its proposal to lease 8,720
square feet of office space. GSA had rejected the proposal because the
offered space was outside the area specified in the solicitation (No.
GS-5B-12966). GSA sought space within the central business district of
Benton Harbor, Michigan, into which it intended to move the District
Office, Social Security Administration (SSA) from Fairplain Plaza, which
is owned by Fairplain and is outside the specified area.
The City of Benton Harbor, Michigan, has filed a statement supporting
the restriction to its central business district. The owner of a
building in the restricted area has presented arguments also favoring
the space restriction. Bertrand Township, the Township of Buchanan,
Benton Township and the Human Resources Commission, a tri-county agency
dealing with problems of the aged, have expressed opposition to moving
the SSA district office to downtown Benton Harbor. St Joseph Township,
the City of New Buffalo, the City of Coloma and a County Commissioner of
Berrien County have also protested the relocation of the SSA district
office.
GSA states the location restriction was imposed to implement national
urban policy as set forth in Executive Order 12072, 43 Fed.Reg.
36869(1978) (E.O. 12072). GSA contends Fairplain's protest is untimely
under our Bid Protest Procedures, 4 C.F.R.Part 20(1979), and as the
subject matter concerns Executive Branch Policy, it is not appropriate
for our review under our bid protest function.
The agency points out that the solicitation issued on May 10, 1978,
unequivocably limited consideration to the downtown area and contends
that since Fairplain's protest was not filed with our Office until after
the date set forth in the solicitation for the receipt of offers the
protest is untimely under section 20.2(b)(1) of our Bid Protest
Procedures. GSA also contends that all of the protests filed by the
interested communities and groups are untimely for the same reason.
There is some doubt as to the timeliness of the protests. However,
since the concern GSA's acquisition of facilities for Federal agencies,
we will consider the merits under section 20.2(c) of our Bid Protest
Procedures as involving an issue significant to procurement practices or
procedures. Edw. Kocharian and Company, Inc., 58 Comp.Gen. 214(1979),
79-1 CPD 20.
As the subject matter of this protest concerns Executive Branch
policy with respect to urban areas, GSA suggests it is not appropriate
for resolution under our Bid Protest Procedures. It argues that under
these Procedures, we review agency compliance with applicable
procurement statutes and regulations, not with Executive Branch
policies. In support of this position, GSA cites Systems & Programming
Resources, Inc., B-192190, August 16, 1978, 78-2 CPD 124; Comtem, Inc.,
Request for Reconsideration, B-186983, March 9, 1977, 77-1 CPD 173; and
Kasper Brothers, B-188276, February 8, 1977, 77-1 CPD 99.
We do not normally review allegations of an agency's failure to
comply with Executive Branch policies under our Procedures. However, we
do review agency compliance with or implementation of such policies when
it is contended that such policies are contrary to applicable
procurement statutes and regulations. See 53 Comp.Gen. 102(1973);
American Can Company, B-187381, B-187658, March 17, 1977, 77-1 CPD 196.
Fairplain contends the requirement that office space be located in
downtown Benton Harbor unduly restricts competition and conflicts with
applicable statutes and regulations. It argues that while the
restricted area may be the central business district of Benton Harbor,
it is clearly not the central business district of the three rural
counties served by the SSA district office.
It states that because Benton Harbor has a population of approximately
16,481, comprising about 6 percent of the total population of the area
served, GSA erred in treating Benton Harbor as an urban area and in
applying the urban renewal preference to its downtown area.
Fairplain argues that neither E.O. 12072 nor GSA implementing
regulations requires or even permits the restriction of this procurement
to space within the central business district of Benton Harbor.
Moreover, Fairplain contends that E.O. 12072 exceeds the authority
delegated to the President by section 205(a) of the Federal Property and
Administrative Services Act of 1949 (Property Act), as amended, 40
U.S.C. 486(a)(1976), and it is therefore without legal effect.
Fairplain states the only directive Congress has provided with respect
to locations preferred for Federal facilities is found in the Rural
Development Act of 1972, 42 U.S.C. 3122(b)(1976), which establishes a
rural area preference.
GSA admits the restriction in the subject solicitation was imposed to
implement the national urban policy. It contends the restricted area is
large enough to ensure adequate competition and states that the SSA's
determination to relocate into the central business district of Benton
Harbor is supported by local officials. GSA concedes the entire area
served by the SSA district office is rural as defined by the Rural
Development Act. Therefore, it argues, locating the office in the
central business district would comply with both the Rural Development
Act and, because it would serve to strengthen the city, with E.O. 12072.
Federal Property Management Regulations (FPMR) Sec. 101-18.100(1978)
regarding the leasing of property provides that competition is to be
obtained to the maximum extent practical among those locations meeting
minimum Government requirements. This section further provides that
material consideration shall be given to the efficient performance of
the agencies' missions and programs with due regard to the convenience
of the public served and the health and safety of employees. Among the
other required considerations are the need for development and
redevelopment of areas, the impact the site selection will have in
improving social and economic conditions and "insofar as practicable in
accordance with section 601(b) of the Rural Development Act of 1977 (86
Stat. 674), first priority will be given to locating leased space for
new offices" in rural areas with "due consideration" being given to E.O.
11512 which has been replaced by E.O. 12072.
We have held that the leasing agency has the primary responsibility
for setting forth its minimum needs, including the location of the
facility and we will not object unless its determination lacks a
reasonable basis. Dr. Edward Weiner, B-190730, September 26, 1978, 78-2
CPD 230.
Section 601 of the Rural Development Act of 1972, Pub. L. No. 92-419,
86 Stat. 657, 674, amended section 901(b) of the Agricultural Act of
1970, 42 U.S.C. 3122(b), to read as follows:
Congress hereby directs the heads of all executive departments and
agencies of the Government to establish and maintain departmental
policies and procedures giving first priority to the location of new
offices and other facilities in rural areas as defined in the private
business enterprise exception in section 1926(a)(7) of Title 7.
In part, 7 U.S.C. 1926(a)(7) provides that for purposes of loans and
grants for private business enterprises, the terms "rural" and "rural
area" shall not include any area in any city or town which has a
population in excess of 50,000 inhabitants. As Benton Harbor's
population is under 50,000, it and the current location of the SSA
office are both within a rural area for purposes of the Rural
Development Act.
E.O. 12072 cites as its authority Section 205(a) of the Property Act
and provides that:
1-103 Except where such selection is otherwise prohibited, the
process for meeting Federal space needs in urban areas shall give first
consideration to a centralized community business area and adjacent
areas of similar character, including other specific areas which may be
recommended by local officials.
While the E.O. does not define "urban area," it authorizes the
Administrator, GSA, to issue regulations and criteria to implement its
policy. Under this authority, the Administrator has proposed an
amendment to the FPMR (44 Fed.Reg 18707, March 29, 1979). Among other
things this amendment would in Sec. 101-17.003-33 define "urban area"
as:
Sec. 101-17.003-33 Urban Area.
* * * any Standard Metropolitan Statistical Area (SMSA) as defined by
the Department of Commerce. An area which is not an SMSA is classified
as an urban area if it is one of the following:
(a) A geographical area within the jurisdiction of any incorporated
city, town, borough, village or other unit of general local government,
except county or parish, having a population of 10,000 or more
inhabitants;
(b) that portion of the geographical area within the jurisdiction of
any county, town, township, or similar governmental entity which
contains no incorporated unit of general local government, but has a
population density equal to or exceeding 1,500 inhabitants per square
mile; or (c) that portion of any geographical area having a population
density equal to or exceeding 1,500 inhabitants per square mile and
situated adjacent to the boundary of any incorporated unit of general
local government which has a population of 10,000 or more inhabitants.
Basically, this means that any incorporated community with a
population of 10,000 or more is considered by GSA to be an "urban area."
This definition is taken from the Federal Urban Land-Use Act, 40 U.S.C.
535(1976).
The E.O. on its face does not conflict with the Rural Development Act
which was an attempt by Congress to improve the economy and living
conditions in rural America. H.R. Rep. 835, 92nd Cong., 2nd Sess. 1,
reprinted in (1972) U.S. Code Cong. and Ad. News 3147.
On the other hand, the purpose of the E.O. was to put Federal
facilities in central business districts in urban areas in order to
revitalize the economy in the Nation's cities.
See 14 Weekly Comp. of Pres. Doc. 1427-1428, August 16, 1978. Inherent
in the E.O. is the fact that a determination has already been made by an
Executive agency that its office will be located in an urban area.
While the Rural Development Act defines the term "rural area" as any
community with a population of less than 50,000 which is not immediately
adjacent to a city with a population of 50,000 or more, GSA proposes to
define "urban area" for purposes of the E.O. as any incorporated
community with a population of 10,000 or more. Under these two
definitions, a community with a population between 10,000 and 50,000
such as Benton Harbor, may be considered to be urban by GSA for purposes
of the application of the E.O. Such a position is compatible with the
Rural Development Act and the E.O., both of which have the same
functional purpose: to revitalize the economy of the United States.
Moreover, section 490(h)(1) of 40 U.S.C. authorizes GSA to enter into
lease agreements for periods not in excess of 20 years in buildings
which are in existence or to be erected by the lessor and to assign and
reassign space therein to Federal agencies. Under section 490(e) of 40
U.S.C., GSA is authorized, in accordance with policies and directives
prescribed by the President under section 486(a), to assign and reassign
space of all Executive agencies in Government-owned and leased buildings
if the Administrator determines such assignment or reassignment is
advantageous to the Government in terms of economy, efficiency or
national security.
Since in this case we see no conflict between the E.O. and the Rural
Development Act and in view of the Administrator's broad authority to
assign and reassign building space for Executive agencies, GSA is
authorized to require the location of Federal offices in the central
business district of Benton Harbor. Under these circumstances, no
useful purpose would be served by an extended discussion of Fairplain's
position that the E.O. exceeds the authority of the President. In
support of its argument, Fairplain's cited American Federation of Labor
and Congress of Industrial Organizations, et al. v. Alfred E. Kahn et
al., C.A. D.C. No. 9-1564, June 22, 1979, where the Court found the
President's voluntary wage and price standards were sufficiently related
to economy and efficiency to be authorized by the Property Act. We do
not interpret this decision as a diminution of the authority of the
President and we cannot conclude the courts would find the national
urban policy so unrelated to economy and efficiency in Government
procurement as to treat E.O. 12072 as having been issued without
statutory authority.
The E.O., as implemented by GSA, is not inconsistent with the Rural
Development Act, and we are award of no legal basis upon which the
restriction of competition to the central business district of Benton
Harbor could be disturbed.
This protest is denied.
B-192879, April 23, 1980, 59 Comp.Gen. 405
Contracts - Buy American Act - Foreign Products - Failure to Indicate -
Price Adjustment
Where agency concedes violation by contractor of Buy American
certification and it is not practical to remove foreign materials,
contract price should be adjusted by difference in cost of domestic
products of the quality and quantity involved and the cost of the
foreign products delivered.
Contracts - Awards - Small Business Concerns - Size - Status Protest by
Unsuccessful Bidder, etc.
Contracting officer's unilateral referral to Small Business
Administration of low offeror's eligibility for small business set-aside
obviated need for notifying unsuccessful offerors of apparently
successful offeror's identity and deadline for filing size protest.
Contracts - Awards - Small Business Concerns - Set-Asides - Eligibility
- Referral to SBA
Small Business Administration's (SBA) reliance on information
furnished by firm whose eligibility for small business set-aside
procurement is being questioned is not objectionable because SBA's
process for making such determination is not intended to be adversary in
nature. Contracts - Buy American Act - Foreign Products - End Product
v. Components
Determination by contracting officer that low offeror furnished a
domestic end product is questioned because record discloses that
comparison of costs to contractor of domestic and foreign components was
not made. Contractor's compliance with certification should be
reexamined. Contracts - Buy American Act - Foreign v. Domestic
Components of End Product - Cost Comparison - Markup by Supplier, etc.
Consideration
Markup charged to contractor by dealer of foreign components is a
necessary expense of acquiring foreign components and should be treated
as part of contractor's foreign component costs in determining whether a
domestic source end product is furnished and whether price was evaluated
for purposes of Buy American Act.
Matter of: TFI Corporation, April 23, 1980:
TFI Corporation (TFI) protests two contract awards by the Department
of the Navy to Ridge Instrument Company for installed X-ray equipment
systems. Although with respect to both awards the protester raises
similar issues related to the implementation of the Buy American Act and
to Ridge's conformance to the small business restrictions of the
solicitation, we will consider each procurement separately because of
factual differences between them.
Request for proposals No. N60921-78-R0059 was issued by the Naval
Surface Weapons Center, Silver Spring, Maryland, as a small business
set-aside for the supply and installation of a 300 KV constant potential
X-ray generator system with instruction manual and parts list. Ridge
certified in its proposal that it would furnish a domestic source end
product for purposes of complying with the Buy American Act, 41 U.S.C.
10a(1976), and its price was evaluated and an award was made to Ridge on
the basis that it would furnish a domestic end product.
Navy now concedes that Ridge has violated its certification but states
that it does not intend to cancel the contract because the X-ray system
has been delivered and installed. The Navy, however, citing our
decision 48 Comp.Gen. 504(1969), also states that it intends to
negotiate a contract price reduction.
Although the protester requests cancellation of the Ridge contract
and award to it as the low responsive, responsible bidder, we note that
the protester would not have been awarded the contract even if Ridge's
bid had been evaluated as foreign. The protester was fourth low,
whereas the products offered by the second low offeror were eligible to
be considered under waiver of the Act's application by the Secretary of
Defense for defense-related products of the United Kingdom.
The protester also argues that the contracting officer, when
referring the question of Ridge's small business eligibility to the
Small Business Administration (SBA) for determination, failed properly
to explain to SBA the issue of whether the supplies to be furnished by
Ridge would be manufactured by a large business. Moreover, TFI believes
the contracting officer failed to comply with the provision in Defense
Acquisition Regulation (DAR) Sec. 1-703(b)(1) requiring notification to
unsuccessful offerors of the apparently successful offeror and of the
deadline for filing a size protest.
The record shows that the contracting officer himself questioned
Ridge's small business status by protesting to the DBA. Moreover, the
contracting officer promptly advised TFI of the SBA's determination that
Ridge was considered eligible for the set-aside and TFI was free to
pursue this matter with the SBA Size Appeal Board pursuant to 13 C.F.R.
121.3-6(b)(ii) (1979). We are aware of no provision in the procurement
regulations requiring the contracting officer to provide offerors notice
of a firm's right to appeal to the SBA Size Appeals Board.
In addition, contrary to TFI's allegation that SBA was advised of the
non-small business status of Ridge's suppliers, the contracting officer
did point out to SBA that a portion of the equipment being offered was
to be manufactured by a large business concern. The fact that SBA, in
making its determination, relied on information furnished by Ridge
provides no basis for this Office to object to SBA's action since such
action was consistent with SBA's procedures for handling protests and
appeals of small business status. These procedures are not intended to
be adversary in nature. See 13 C.F.R. 121.3-4a-6.
The second procurement concerns Request for Proposals
N00123-78-R-0834, issued by the Naval Regional Procurement Office, Long
Beach, California. Also a small business set-aside, the solicitation
covered the furnishing and installation of an industrial X-ray system
including a lead-lined exposure cabinet. The other major elements of
the system are the X-ray tubehead and the power supply/controller, a
positioning system and power cables.
The protester questions whether the Navy had reason to believe that
Ridge was offering a foreign item because after initial proposals were
submitted and prior to award Ridge identified to the Navy manufacturer
of the component X-ray equipment being offered. Irrespective of the
Navy's ability to deduce from this information that these components
were of foreign manufacture, we note that ultimately the Navy did
consider and determine whether Ridge would comply with its certification
that it was offering a domestic source end product. However, we find
the Navy's analysis to be inconclusive and the question should be
reexamined at this time.
In response to the Navy's request for clarification, Ridge advised
the Navy that it would meet the technical specifications by furnishing
"a Philips MG-160 Constant Potential Industrial X-Ray System with a
MCN-161 metal ceramic beryllium window X-ray tubehead." Ridge also
indicated that it planned to design and provide a custom exposure
cabinet and tubehead support and enclosed literature describing the
Philips equipment. As Ridge explained in a subsequent preaward letter:
(1) the system proposed included more than an X-ray machine, (2) the
equipment purchased from Philips represented only 34.9 percent of the
total installed (contract) price, (3) only 60 percent of the cost of the
foreign equipment paid by Ridge was "assignable to a foreign source"
(that is Ridge acquired the equipment from a domestic importer which
apparently retained for itself a markup 40 percent of the price paid by
Ridge for the foreign components).
A proper determination of whether a foreign or domestic end product
is being offered must entail, in part, an analysis of the component
costs of the end product. See, e.g., 48 Comp.Gen. 727(1969). More than
50 percent of the total component costs must be attributable to
components mined, manufactured or produced in the United States to
qualify the end product as domestic in origin. DAR Sec. 6-101(a).
Here the contracting officer treated the end product being procured
as consisting of the X-ray system taken as a whole. The Philips X-ray
machine (consisting of tubehead, power supply and console) was among the
items which would make up this system, leading the contracting officer
to view the equipment which Ridge would purchase from Philips as
components.
Because the exposure cabinet, wiring and tubehead support (positioning
system) would be manufactured by Ridge or would be purchased from other
domestic sources, the contracting officer, comparing the cost of the
foreign components, before markup, with the total contract price,
concluded there was no possibility that the 50 percent foreign component
test would be violated.
We believe that this conclusion is unwarranted on the record. First,
the contracting officer seems to have accepted without explanation
Ridge's assumption that the markup charged by its supplier, a domestic
importer, is not properly considered part of the cost of foreign
components. However, the markup was applied by a dealer which
apparently is not affiliated with the contractor but may be affiliated
with the manufacturer. We view such a markup as a necessary expense of
acquiring the foreign components which should be treated as part of the
contractor's foreign component cost. Cf. 35 Comp.Gen. 7, 9(1955).
Second, the fact stressed by the contracting officer that the cost of
foreign components, including the markup, amounts to approximately 35
percent of the total contract price, does not establish that the system
being procured is a domestic source end product. In this regard, the
record does not show that the Navy has sufficient evidence to establish
that the cost of domestic components exceeds 50 percent of the total
component cost. We note in the case of the first procurement discussed
in this decision that a reexamination of the cost to Ridge of its
foreign components ultimately resulted in a determination that the end
item furnished was foreign. Accordingly, we recommend that the Navy
perform a more precise comparison of the cost of domestic versus foreign
components. In the event the Navy finds that the end product furnished
is foreign rather than domestic a contract price reduction should be
negotiated.
Finally, TFI protests Ridge's eligibility for award of this small
business set-aside procurement. However, such matters are for
consideration by the SBA, not this Office. National Ambulance Service
of Louisiana, Inc., B-193447, January 22, 1979, 79-1 CPD 40. Moreover,
the Navy has advised us that the matter was forwarded to the SBA for its
consideration in future actions as provided in DAR Sec. 1-703(b)(1)(c).
In the circumstances, we see no need for further action by this Office.
B-196045, April 22, 1980, 59 Comp.Gen. 403
State Department - Authority - Services For Other Agencies Overseas -
Housing Pool Administration
Department of State is authorized by 22 U.S.C. 846 to administer
housing pool on behalf of agencies which have leased or wish to lease
housing to be used by employees of various agencies involved in pool and
may pay rent on behalf of agencies involved directly from its own
appropriations to be reimbursed by agency users on the basis of their
share of total costs of State's operation of housing pool (including any
operating, maintenance and utility costs paid by State). Appropriations
- State Department - Reimbursement - Overseas Services to Other Agencies
- Housing Pools Cost Assessment
While a particular agency's personnel might not occupy specific unit
of housing leased by the agency and contributed to housing pool
administered by Department of State under 22 U.S.C. 846, agency's funds
could be used to pay its share of the total costs attributable to its
personnel use of housing pool.
Matter of: State Department's Assessments of Housing-Pool Costs,
Jakarta, Indonesia, April 22, 1980:
This advance decision is in response to a request from Mr. Thomas C.
Roberts, Certifying Officer, Defense Intelligence Agency (DIA), asking
whether a voucher in the amount of $71,083, representing reimbursement
to the Department of State for housing in Jakarta, Indonesia, for fiscal
year 1978 may be certified for payment.
Mr. Roberts states in his request that:
In Jakarta, Indonesia, there has been for many years a housing pool
arrangement administered by the American Embassy for the benefit of the
Embassy and certain other U.S. Government Agencies, including DIA, which
have personnel at Jakarta. Under the housing pool arrangement, each
agency is responsible for the funding of certain specific leases
regardless of whether members of their own or another agency will occupy
these leased units. Housing assignment is based on need, size of
families, and availability at time of arrival of personnel on station.
* * * The costs of all leases for housing units are paid with State
Department funds. Each housing unit is identified as being contributed
to the housing pool by a specific agency, and the costs on such housing
units are billed to the agencies concerned by the State Department under
the provisions of the Foreign Affairs Administrative Support (FAAS)
agreements in effect with the agencies. It would be a coincidence if
the sets of quarters identified as being the agency contribution to the
housing were occupied by personnel assigned to such AGENCY. FOR
EXAMPLE, DIA PROVIDES TEN HOUSING UNITS TO THE POOL, WHICH in total
consists of some 145 units. The enclosed SF 1080, submitted for your
review, reflects the State Department FAAS billing to DIA in the amount
of $71,083.00 for the cost of leasing 10 housing units in FY 1978
specifically identified as the DIA contribution to the housing pool.
DIA personnel occupied only a few of these specific housing units, the
remaining housing requirements of DIA being met by assignment of its
personnel to other housing units in the pool.
Mr. Roberts is concerned that reimbursement to State under these
circumstances might be in violation of 31 U.S.C. 628, since DIA
appropriations would be expanded to house non-DIA personnel.
Consequently, he asks:
a. Can the SF 1080 which requests reimbursement to the Department of
State by DIA for the FY 1978 lease costs of housing units identified as
the DIA contribution to the Jakarta housing pool, most of which were
occupied by other than DIA personnel, be certified for payment?
b. If the answer to the question posed in a. above is in the
negative, can the reimbursements made to the Department of State for the
same purpose for periods prior to FY 1978 be allowed to stand?
c. If the answer to the question in a. above is positive, would the
answer have been different if payments were to be made by DIA directly
to the lessors, rather than as reimbursements to the Department of State
for payments initially made to lessors by the Department of State?
31 U.S.C. 628 provides that:
Except as otherwise provided by law, sums appropriated for the
various branches of expenditure in the public service shall be applied
solely to the objects for which they are respectively made, and for no
others.
Thus this provision precludes one agency of Government from expending
funds to carry out the purposes and functions of another agency of
Government unless otherwise authorized by law.
In response to our request to the Secretary of State for the
authority to enter into the housing arrangement described above, the
Deputy Director for Foreign Buildings, Department of State, replied as
follows:
Authority for the concept of a housing pool administered by a central
administrative office can be found in section 371 of the Foreign Service
Act of 1946, 22 U.S.C. 846, which authorizes officers and employees of
the Foreign Service to perform duties and functions on behalf of any
Government agency that requests them. The purpose of this authority is
to permit technical and administrative personnel at posts abroad to
perform functions on behalf of agencies having only a few persons
assigned to a given post. Under section 311, for example, a General
Services Officer (a Department of State employee) can act as a
contracting officer on a requisition from the Agricultural Attache using
Department of Agricultural funds and authorities.
However, in answer to your second question it appears that authority
to enter into agreements providing for reimbursements to be sought from
agencies for housing exists only on the basis of actual use of the
housing by employees of the agency. Accordingly we agree with the
interpretation made by Mr. Roberts in his letter of September 7, 1979,
that application of 31 U.S.C. 628 requires that reimbursements must be
made on actual cost or use basis.
It is the position of the Department of State that the voucher
covering "assigned" leases is properly certifiable for payment if it
represents actual rentals and associated costs, but further adjustments
based on actual use are necessary to bring the housing pool arrangement
into conformity with 31 U.S.C. 628 (appropriated funds expendable only
for objects for which appropriated) and 31 U.S.C. 686 (interagency
provision of goods and services).
THE JAO JAKARTA WILL ALSO BE INFORMED OF THE NECESSITY FOR CHANGING
its arrangement so that reimbursements are sought only on the basis of
occupancy.
22 U.S.C. 846 provides that:
The officers and employees of the (Foreign) Service shall, under such
regulations as the President may prescribe, perform duties and functions
in behalf of any Government agency or any other establishment of the
Government requiring their services, including those in the legislative
and judicial branches, but the absence of such regulations shall not
preclude officers and employees of the Service from acting for and on
behalf of any such Government agency or establishment whenever it shall,
through the Department, request their services.
We were unable to locate any regulations issued to implement this
section. However, even in the absence of such regulations, the
Secretary of State is authorized to perform duties or functions on
behalf of other Government agencies when an agency requests State to do
so. The housing pool was established following an agreement set forth
in the "Joint State/USIA/AID/Defense/Library of Congress Message" dated
May 13, 1967, and falls within the authority granted to the State
Department by 22 U.S.C. 846.
Therefore, State may administer a housing pool on behalf of agencies
which have leased or wish to lease, housing to be used by employees of
the various agencies involved. Furthermore, we do not object to State's
paying the rent on behalf of the agencies involved directly from its own
appropriations, to be reimbursed by agency users on the basis of their
share of the total costs of State's operation of the housing pool
(including any operating, maintenance and utility costs paid by State).
In such a situation, while a particular agency's personnel might not
occupy the specific unit of housing leased by the agency, its funds
could be used to pay its share of the total costs attributable to its
personnel's use of housing in the pool. We do not consider this to be a
use of agency funds for a nonagency (or unauthorized) purpose in
violation of 31 U.S.C. 628.
This does not mean that DIA may be billed for a share of housing
costs that bears no relation to its actual use of housing in the pool.
If the voucher in question is not based on the costs of its occupancy of
housing in the pool, DIA should request a new assessment from State for
the FY 1978 leasing costs.
We note that State's Deputy Director for Foreign Buildings has stated
that he will instruct the JAO in Jakarta to change the billing
arrangements to conform to these principles so the problem should not
arise in the future. We see no reason to disturb the payments made for
prior fiscal years.
B-196049, April 21, 1980, 59 Comp.Gen. 397
Mileage - Military Personnel - Travel by Privately Owned Automobile -
Interstation Travel v. Travel Within Limits of Duty Station
Member of the Marine Corps travelled by privately owned vehicle from
his home in Springfield, Virginia, to Quantico, Virginia, in order to
perform temporary duty. Member's travel is interstation travel and
therefore payment of his travel allowance is governed by 37 U.S.C.
404(1976), and the implementing regulations.
Orders - Retroactive - Travel Orders
Member of the Marine Corps travelled from his home in Springfield,
Virginia, to Quantico, Virginia, in order to perform temporary duty.
Member travelled without written temporary duty travel orders issued in
advance. Although 37 U.S.C. 404 requires travel to be authorized by
written orders, the fact that the travel was required by the member's
duty assignment and that his travel was subsequently approved in writing
by competent authority as being advantageous to the Government is
sufficient to authorize his travel and entitle him to reimbursement
under 37 U.S.C. 404. Regulations - Travel - Joint - Amendments -
Military Personnel - Travel Within Area of Duty Station Reimbursement
The Joint Travel Regulations may be amended to expand the definition
of the term "area" in para. M4500-2 to reflect the view that the area
intended to be covered under 37 U.S.C. 408 for reimbursement for travel
in the vicinity of a duty station is the normal commuting area of the
station concerned. However, in implementing the proposed amendment an
arbitrary mileage radius should not be established in setting up the
local commuting areas of permanent and temporary duty stations.
Matter of: Colonel Bernard E. Clark, USMC, April 21, 1980:
The issue is whether Colonel Bernard E. Clark, a member of the United
States Marine Corps, is entitled to be reimbursed for travel expenses
under the provisions of 37 U.S.C. 404(1976), or 37 U.S.C. 408(1976),
when he travels from his permanent duty station in Arlington, Virginia,
to perform temporary duty at the Marine Corps Development and Education
Command, Quantico, Virginia. For the reasons stated below Colonel
Clark's travel is interstation travel and therefore payment of his
travel allowance is governed by 37 U.S.C. 404(1976), and the
implementing regulations.
The question was presented for an advance decision by the Disbursing
Officer, Naval Research Laboratory, Washington, D.C. The matter was
approved by the Per Diem, Travel and Transportation Allowance Committee,
which assigned it PDTATAC Control No. 79-33 and forwarded it here along
with a proposed change in the Joint Travel Regulations which is
contingent upon the decision reached in this case.
The facts as presented indicate that Colonel Bernard E. Clark's
permanent duty station was and is the Office of Naval Research,
Arlington, Virginia. During the period April 19, 1979, through June 15,
1979, Colonel Clark periodically travelled from his home in Springfield,
Virginia, to the Marine Corps Development and Education Command,
Quantico, Virginia, in order to carry out his assigned duties. Colonel
Clark made these trips with his personally owned vehicle (POV). He
traveled directly from his home rather than from his permanent duty
station since his home is 15 miles closer to Quantico.
Also, each time he travelled to Quantico he did so without formal
written temporary duty (TDY) orders.
Colonel Clark contends that his travel should be characterized as
local travel in and around his permanent duty station as provided for in
37 U.S.C. 408(1976), and volume 1 of the Joint Travel Regulations (1
JTR) paragraph (para.) M4500 et seq., and wishes to be reimbursed on
that basis. The Navy Regional Finance Center, on the other hand, argues
that Colonel Clark's travel should be characterized as if he traveled
under TDY travel orders and should be reimbursed under the provisions of
37 U.S.C. 404(1976) and its implementing regulations.
Both the Finance Center's contention and Colonel Clark's contention
center around whether Quantico, Virginia, is to be considered within the
"metropolitan area" surrounding Arlington, Virginia, Colonel Clark's
permanent duty station. A resolution of whether Quantico is within or
outside the metropolitan area surrounding Arlington, Virginia, is
determinative of whether Colonel Clark is reimbursed under either 37
U.S.C. 404 or 408.
Section 404 of title 37, United States Code (1976), provides that
under regulations prescribed by the Secretaries concerned, a member of a
uniformed service is entitled to travel and transportation allowances
for travel performed under competent orders when away from his
designated post of duty. Paragraph M3050-1 of JTR, promulgated pursuant
to that authority, provides that members are entitled to travel and
transportation allowances only while actually in a travel status, and
that members shall be deemed to be in a travel status while performing
travel away from their permanent duty station, upon public business,
pursuant to competent orders.
The term permanent station is defined in 1 JTR as the post of duty or
official station to which a member is assigned or attached for duty
other than "temporary duty" or "temporary additional duty," the limits
of which will be the corporate limits of the city or town in which the
member is stationed. 1 JTR Appendix J. Thus, under 37 U.S.C. 404 a
member may only be reimbursed travel allowances for trips which take the
member beyond his post of duty - the corporate limits of the town or
city in which the member is stationed.
While 37 U.S.C. 404 prohibits the reimbursement for travel expenses
incurred within the limits of the member's permanent duty station,
section 408 of title 37 United States Code (1976) authorizes such
payments. Under 37 U.S.C. 408, a member of a uniformed service may be
directed, by regulation of the head of the department or agency in which
he is serving, to procure transportation necessary for conducting
official business of the United States "within the limits of his
station." Expenses so incurred by him for the use of a POV at a fixed
rate shall be defrayed by the department or agency under which he is
serving, or he is entitled to be reimbursed for the expenses.
Part K, Chapter 4, of 1 JTR, implementing section 408, prescribes the
basis for reimbursement for travel within and adjacent to permanent and
temporary duty stations. Paragraph M4500-2 of 1 JTR provides that the
areas in which transportation expenses may be authorized or approved for
conducting official business will be within the limits of the permanent
and temporary duty station, and the metropolitan areas surrounding those
stations which are ordinarily serviced by local common carriers of the
cities or towns in which the stations are located, or in the comparable
surrounding areas if the posts of duty are not located within recognized
metropolitan areas.
Paragraph M4502-1 of the JTR provided at the time involved that when
authorized or approved under the conditions of Part K, members who
traveled by privately owned automobile were entitled to be reimbursed at
the rate of 17 cents per mile.
In determining the intent of 37 U.S.C. 408 we have held that its
purpose is to authorize reimbursement for the specified travel expenses
incurred incident to proper intrastation travel when the expenses are
not otherwise reimbursable under the interstation travel expense
provisions of 37 U.S.C. 404. This is aptly described by the phrase,
"within the general area surrounding the duty station ordinarily served
by local carrier." 41 Comp.Gen. 588(1962); and 35 id. 677(1956).
As stated above, Colonel Clark contends that Quantico, Virginia,
falls within the metropolitan area of his permanent duty station. To
buttress this argument he has enclosed with his claim a copy of the 1975
revised edition of the Standard Metropolitan Statistical Areas (SMSA),
prepared by the Statistical Policy Division of the Office of Management
and Budget. On page 56 of the SMSA both Arlington County and Prince
William County, in which Quantico, Virginia, is located, are determined
to be part of the Washington, D.C. Maryland, Virginia metropolitan area.
We have been informed by the Per Diem, Travel and Transportation
Allowance Committee that they have considered and rejected the SMSA as a
measurement of the local travel area. We do not find that decision to
be arbitrary, capricious or in conflict with the purpose of 37 U.S.C.
404 and 408. We will not question it. See also 37 U.S.C. 411(1976).
Moreover, we would like to point out that OMB Circular No. A-46 states
that: "(the SMSA) shall not be used in the administration of any
program unless the head of the agency has determined that such use is
appropriate to achieve the program's objective."
Colonel Clark also contends that his travel should fall within the
area of his permanent duty station since the duties and functions of his
assignment require frequent and often unanticipated travel to Quantico
from Arlington.
Thus, he argues that his travel to Quantico from Arlington is a routine
requirement of his job in order to discharge his primary duties rather
than directed temporary duty. In essence, Colonel Clark is arguing that
Quantico should be considered part of his permanent duty station.
In two previous decisions, we have been asked to determine whether
payment of mileage expenses incurred between Quantico, Virginia, and
Washington, D.C., or between Quantico, Virginia, and Arlington,
Virginia, could be made under 37 U.S.C. 408. Sec: 52 Comp.Gen.
236(1972); and 49 Comp.Gen. 709(1970). In both of those decisions,
after considering such factors as the constant travel between Quantico
and Washington, D.C., or Arlington, we held that the member's TDY
station was not within the immediate vicinity of the member's permanent
duty station and therefore the travel performed by the member
constituted interstation travel. Payment in the above cases was
governed by 37 U.S.C. 404, and the regulations issued pursuant thereto.
In view of the above two cases we find that there is no basis for
authorizing reimbursement under section 408 of title 37 in the instant
case, and any reimbursement for Colonel Clark's travel is authorized
under section 404 of title 37 and the implementing regulations.
In addition to the above, we also hold that in light of the
definition of permanent duty station, stated previously, there is no
legal basis for Colonel Clark's view that travel from Arlington,
Virginia, to Quantico, Virginia, constitutes travel between two points
within the assigned duty station. See: 44 Comp.Gen. 445(1965) and 42
id. 666(1963). Therefore, Colonel Clark may only be reimbursed under 37
U.S.C. 404.
As was stated above, 37 U.S.C. 404 requires that in order to be
entitled to travel and transportation allowances provided by that
section the travel must be performed under "orders." Moreover, paragraph
M4203-3b of the regulations, implementing section 404, describes the
policy of the uniformed services to authorize members to travel by
privately owned conveyance between the member's residence and his
temporary duty station whenever the use of the member's POV is approved
as advantageous to the Government.
In the instant case, apparently Colonel Clark's travel was not
performed pursuant to written orders issued in advance. However, for
him to perform his duties he was required to travel from Arlington to
Quantico. Thus, his case is similar to that in 52 Comp.Gen. 236, 239,
wherein we considered the fact that the voucher was subsequently
approved by competent authority as advantageous to the Government as
being, in effect, written orders sufficient to authorize travel.
Therefore, we have no objection to allowing him to recover his expenses
under 37 U.S.C. 404 at the 7 cents per mile rate.
The voucher is returned for payment on that basis.
We note that 1 JTR, paragraph M3003-2, provides for blanket or
repeated travel orders. In cases such as this where repeated travel is
to be performed it appears that issuance of such orders in advance would
be appropriate.
As is indicated previously, in submitting this case for a decision
the Committee also submitted for our consideration an amendment to
paragraph M4500-2, 1 JTR. Paragraph M4500-2 defines the area in which
transportation expenses may be authorized under 37 U.S.C. 408. The
proposed amendment would reflect the Committee's position that the area
intended to be covered by Part K, Chapter 4, 1 JTR, is the normal
commuting area of the station concerned. The proposed amendment would
read as follows:
The area in which transportation expenses may be authorized or
approved for conducting official business will be within the limits of
the duty station (permanent or temporary) and the metropolitan areas
surrounding those stations which are ordinarily serviced by local common
carriers or within the local commuting area of those stations, as
determined by the commanders directing the travel involved. It may also
include separate cities, towns, or installations located adjacent to or
in close proximity of each other and between which travel may be
performed and normally is performed by the commuting public on a daily
basis within normal commuting hours.
Apparently, it is contemplated that under the revised regulation a
determination could be made that Quantico, Virginia, is in the commuting
area of Arlington, Virginia.
Basically, we have no objection to the proposed amendment especially
in light of the increasing difficulty in determining just what
constitutes the metropolitan areas surrounding and temporary duty
stations as defined in para. M4500-2, 1 JTR. This difficulty, we
assume, stems from the continued widespread growth of the metropolitan
areas of the United States and the continued modernization of those
areas' mass transportation systems.
We would object, however, if in implementing the proposed amendment
the commanders directing the travel involved establish an arbitrary
mileage radius in setting up the local commuting areas of permanent and
temporary duty stations. Our objection is based upon the fact that the
area of travel in the immediate vicinity of a duty station for which
reimbursement would be authorized under 37 U.S.C. 408 is not to be
susceptible to rigid limitations. See the discussion in 41 Comp.Gen.
588, 590-591(1962). Our views expressed in that case remain the same.
Accordingly, para. M4500-2, 1 JTR, may be amended along the lines of
the proposed change.
B-196063, April 18, 1980, 59 Comp.Gen. 395
Compensation - Removals, Suspensions - etc. - Deductions From Back Pay -
Lump-Sum Leave Payment
Employee who was restored to duty following wrongful separation must
have lump-sum payment deducted from backpay award. 57 Comp.Gen.
464(1978).
There is no authority to permit employee to elect option of retaining
lump-sum payment and cancelling annual leave. 55 Comp.Gen. 48 and
B-175061. March 27, 1972, overruled. Debt Collections - Waiver -
Civilian Employees - Leave Payments - Lump-Sum Leave Payment
Employee was restored to duty following wrongful separation.
Lump-sum leave payment was deducted from backpay and he was recredited
with annual leave. Erroneous lump-sum payment is subject to waiver
under 5 U.S.C. 5584, but waiver is not appropriate in this case since
there was no net indebtedness. See 57 Comp.Gen. 554(1978); 56 id.
587(1977). Prior cases to the contrary, 55 Comp.Gen. 48(1975) and
B-175061, March 27, 1972, will no longer be followed.
Matter of: Vincent T. Oliver - Repayment of lump-sum leave payment -
Restoration to duty, April 18, 1980:
Mr. Vincent T. Oliver, and employee of the Department of
Transportation (DOT), has filed a claim requesting that his lump-sum
payment for annual leave of nearly $4,000 not be deducted from his
backpay award upon restoration to his position following an erroneous
separation. The issues presented for our decision are: (1) whether an
employee upon restoration to his position may choose between retaining
the lump-sum payment or receiving credit for the leave; and (2) whether
collection of the lump-sum payment may be waived under 5 U.S.C. 5584.
Mr. Oliver was removed from his position on July 12, 1976, and, in
connection with that action, he received a lump-sum payment of $3,965.25
for 255 hours of annual leave. Mr. Oliver appealed his removal to the
Civil Service Commission which reversed the removal action and ordered
his restoration to duty. He was reinstated on March 24, 1978, and
received backpay retroactive to the date of his removal, but DOT
deducted from his backpay award the amount of the lump-sum leave payment
and recredited him with 255 hours of annual leave. Mr. Oliver argues
that by recrediting 255 hours of leave representing the lump-sum payment
and by crediting him with 286 hours of leave accrued during his improper
removal, he will be forced to take long absences from duty in order to
avoid eventual forfeiture of annual leave. Therefore, he requests
waiver of repayment of the lump-sum amount and cancellation of the 255
hours of annual leave.
Under the provisions of the Back Pay Act, 5 U.S.C. 5596(1976), when
an appropriate authority corrects an unjustified or unwarranted
personnel action, the employee's pay and leave are recomputed as if the
personnel action had not occurred and he is not entitled to retain the
lump-sum payment he received for annual leave under 5 U.S.C. 5551(1976).
Thus, the payment he received in 1976 is a proper setoff against the
backpay award. Ernest E. Sargent, 57 Comp.Gen. 464(1978).
See also 32 Comp.Gen. 162(1952); 32 id. 22(1952); and 28 id.
333(1948). Also, we know of no basis on which Mr. Oliver could be
permitted to elect the option of retaining the lump-sum payment and
cancelling the annual leave.
In prior decisions involving civilian employees in similar fact
situations, we have held that a lump-sum payment could not be considered
for waiver under 5 U.S.C. 5584 since the payment was proper when made
and the others retroactively restoring the employee to his position did
not render the lump-sum payment erroneous. Bennie L. Moore, 55
Comp.Gen. 48(1975); and B-175061, March 27, 1972. By way of contrast,
however, in similar cases involving members of the uniformed services,
we have held that lump-sum payments of leave were rendered improper upon
restoration of duty and, hence, were subject to consideration for
waiver. Reserve Members, 56 Comp.Gen. 587, 590, 592(1977), and 57 id.
554, 558-559(1978). Upon further review we believe this same rule
should be applied to cases involving civilian employees. Therefore, we
now conclude that, when actions removing employees are held to be
improper in accordance with the provisions of 5 U.S.C. 5596, the
lump-sum payment made in connection with such removal may no longer be
considered "proper when made" but must be considered to be erroneous
payments. Accordingly, our prior decisions, 55 Comp.Gen. 48, supra, and
B-175061, supra, which held that consideration for waiver is not
appropriate, will no longer be followed. Generally, waiver should be
approved in such cases only to the extent necessary to avoid a net
indebtedness.
In the present case, we note that even with a deduction for the
lump-sum leave payment, Mr. Oliver received a backpay award in excess of
$29,000 so that there was no net indebtedness. In addition, under the
provisions of 5 U.S.C. 5596(b)(1)(B)(i), Mr. Oliver's restored annual
leave in excess of the maximum leave accumulation was credited to a
separate leave account. Under these circumstances, we conclude that
waiver of collection of the lump-sum payment to Mr. Oliver would not be
appropriate.
Accordingly, we hold that the agency acted properly in deducting the
lump-sum payment from Mr. Oliver's backpay award and recrediting him
with 255 hours of annual leave.
B-196342, April 15, 1980, 59 Comp.Gen. 389
Customs - Services in Foreign Airports - Recovery of Costs - Treasury
Enforcement Communications System
Where Customs Service receives no advantage from conducting passenger
preclearance activity on foreign soil vis a vis conducting passenger
clearance activities within the United States and preclearance activity
was initiated at airlines request, results in substantial cost savings
to airlines and permits airlines to better use their resources, record
supports determination that airlines are primary beneficiaries of
preclearance service. Therefore, under authority of 31 U.S.C. 483a,
Customs may continue to assess user charge against airlines and recover
that portion of its costs (including Treasury Enforcement Communications
System) that are increased by its conducting passenger preclearance on
foreign soil. 48 Comp.Gen. 24, modified (clarified).
Matter of: Customs Service Recovery of Preclearance (Including TECS)
Cost Under User Charge Statute, 31 U.S.C. 433a, April 15, 1980:
As directed in the Conference Report (H.R. Rep. No. 96-471, p. 6)
accompanying the Treasury, Postal Service and General Government
Appropriation Act, 1980, Pub. L. No. 96-74, September 29, 1979, 93 Stat.
559, the Assistant Secretary (Enforcement and Operations), Department of
the Treasury requested our views on a dispute between the U.S. Customs
Service (Customs) and the airlines as to what portion, if any, of the
cost of the Treasury Enforcement Communications System (TECS) should be
included in fees assessed airlines using Customs preclearance services
provided at some foreign airports. For the reasons explained below, we
believe Customs is legally entitled to charge airlines wishing such
services the indicated preclearance costs, including the special TECS
installations costs.
The U.S. Federal Inspection Service (FIS) conducts preclearance
inspections of passengers, crew members and their baggage at certain
foreign international airports prior to their boarding of a flight bound
for the United States. Preclearance services are provided for both U.S.
and foreign carriers. Generally the inspection is of regularly
scheduled flights, but chartered commercial flights are also inspected
whenever resources permit. A preclearance inspection is basically the
same inspection an individual would experience if he arrived at a U.S.
port of entry; however, it is conducted on foreign soil. As a result
of this inspection, the individual usually does not have to go through
U.S. Customs inspection again upon arrival in the United States.
Participating in the FIS are Customs, the Immigration and
Naturalization Service (INS) and the Animal and Plant Health Inspection
Service (APHIS). While preclearance began as an experiment at one
location in 1952, it has grown until, in 1979, there were eight
preclearance sites in three countries staffed by 177 Customs, 70 INS and
3 APHIS inspectors dedicated to passenger preclearance. In 1978, the
total FIS annual budget for preclearance operations was $12,913,472.
The serviced airlines paid $5,356,721 in user charges and overtime.
Preclearance is handling over 20 percent of the annual air passenger
traffic to the United States.
TECS is a computerized data processing system, with the central
computers located in San Diego, California, and terminals providing
access to the computer at a number of ports of entry and at preclearance
sites outside the United States.
It contains information on persons or vehicles involved in smuggling
activity and interfaces with other computer-based information retrieval
systems providing data on individuals involved in other criminal
activity.
Customs officials feed information identifying persons or vehicles
entering the United States into TECS and it immediately tells them
whether the person or individual has previously been involved in
smuggling. If so, Customs can take appropriate action which might
include requiring the person or vehicle to undergo a more thorough
examination or search.
Eighteen years elapsed between the initiation of preclearance in
1952, and Customs' adoption in regulations for recovering certain costs
connected with preclearance in 1970. Prior to that date, the only cost
recovered was overtime for employees which is reimbursable under
specific statutory authority not in question here.
In a 1968 decision commenting on the Commerce Department's proposal
to recover certain preclearance costs, we stated that:
We agree with the Assistant Secretary that the language of 31 U.S.C.
483a is very broad, and that the section contemplates that those who
receive the benefit of services rendered by the Government especially
for them should pay the costs thereof, at least to the extent that it
appears that a special benefit is conferred. In the instant case the
Assistant Secretary's letter discloses that the costs (including related
costs) of stationing men and performing services in Canada are
considerably greater than total costs to Customs would be if all of the
Customs operations were performed in the United States. Also, as
indicated above, the preclearance operation in Canada is essentially of
advantage to the airline rather than the Bureau of Customs.
Accordingly, it is our view that to the extent the costs (including
employees' compensation) of the requested preclearance services in
Canada are in excess of the costs that Customs would incur if all of the
Customs operations involved were performed in the United States, a
charge covering such excess costs would be authorized by 31 U.S.C. 483a,
if fixed in accordance with the provisions of such section. 48
Comp.Gen. 24, 28(1968).
Thereafter, under authority of section 501 of the Independent Offices
Appropriations Act, 1952, 31 U.S.C. 483a(1976), the so-called User
Charge Statute, Customs adopted regulations prescribing costs to be
reimbursed by airlines for passenger preclearance in foreign countries.
These regulations are set forth in 19 C.F.R. 24.18.
On June 13, 1979, Customs informed representatives attending the
sixth Joint Customs/Air Industry Facilitation Meeting that the entire
cost of TECS at preclearance sites would be billed to the airlines under
the authority of the User Charge Statute, and invited them to provide
any substantive legal or cost issues to Customs for consideration.
By letter dated July 20, 1979, the Air Transport Association (ATA)
which represents virtually all federally certificated United States
scheduled airlines, opposes the imposition of the charges.
Additionally, the ATA requested that Customs "review the propriety of
its excess preclearance cost regulation," which in light of several
judicial opinions it feels are without legal foundation.
In preparation of this decision we have considered both the position
of the ATA, as expressed in its July 20 letter, as well as Treasury's
response to it.
Since our decision in 48 Comp.Gen. 24(1968), and Customs' adoption of
its regulations on recovering preclearance costs, a number of decisions
have been rendered by the Supreme Court and lower Federal Courts
construing the User Charge Statute which have caused ATA to question
Customs' authority to charge airlines for the cost of preclearance in
general and TECS in particular.
In National Cable Television Association v. United States (NCTA), 415
U.S. 336(1974), the Court held that fees assessed under the User Charge
Statute must be based on "value to the recipient" and not on "public
policy" or "interest served" or "other pertinent facts."
In a companion case, Federal Power Commission v. New England Power
Co. (New England Power), 415 U.S. 345(1975), the Court amplified its
NCTA decision. The Court held that the whole industries are not in the
category of those who may be assessed under the User Charge Statute, its
thrust reaching only specific charges for specific services to specific
individuals or companies. Id. 349-351.
The Court pointed out that Office of Management and Budget Circular
A-25 construing the Act states that chargeable services:
include agency action which "provides special benefits * * * above
and beyond those which accrue to the public at large * * * . For
example, a special benefit will be considered to accrue and a charge
should be imposed when a Government-rendered service:
"(a) Enables the beneficiary to obtain more immediate or substantial
gains or values (which may or may not be measurable in monetary terms)
than those which accrue to the general public (e.g., receiving a patent,
crop insurance or a license to carry on a specific business); or
"(b) Provides business stability or assures public confidence in the
business activity of the beneficiary (e.g., certificates of necessity
and convenience for airline routes, or safety inspections or craft); or
"(c) Is performed at the request of the recipient and is above and
beyond the services regularly received by other members of the same
industry or group, or of the general public, e.g., receiving a passport,
visa, airman's certificate, or an inspection after regular duty hours)."
45 U.S. 349, 350 footnote 3.
Thereafter, the Court of Appeals for the District of Columbia Circuit
issued a series of decisions elaborating on the standards laid down in
NCTA and New England Power. See Electronic Industries Association,
Consumer Electronics Group v. Federal Communications Commission (EIA),
554 F.2d 1109(1976), and National Association of Broadcasters v. Federal
Communications Commission, 554 F.2d 1118(1976).
Further, while it is clear that any expense incurred to serve the
public generally must be excluded from a fee assessed under the User
Charge Statute, it is equally clear that a fee may be charged for an
activity even though the general public secondarily or incidentally
benefits from it, EIA, supra, 1114-1115; National Cable Television
Association, Inc. v. Federal Communications Commission, 554 F.2d 1094,
1104 (D.C. Cir., 1976); Public Service Company of Colorado v. Andrus,
433 F.Supp. 144, 152(D.C.Colo., 1977).
It is ATA's position that the elaborate, costly analysis required by
the courts for setting the proper charge is unnecessary since the excess
preclearance costs, including costs associated with TECS, are incurred
for services which may be considered as "benefiting broadly the general
public" and therefore must be excluded from any fee assessed under the
User Charge Statute.
In support of its position ATA cites Treasury's 1979 Report on
Passenger Preclearance Operations, (1979 Report) which was submitted to
both the House and Senate Appropriations Committees. Among other parts,
ATA quotes the following from page 39:
In general, preclearance provides a wide variety of benefits. The
benefits to U.S. agencies and other interested parties are:
-- APHIS is able to interdict illegal products before they enter the
U.S.
-- INS is able to interdict inadmissable aliens before their
departure for the U.S.
-- U.S. airlines gains commercial advantages and can more efficiently
use their resources.
-- Passengers benefit from the greater convenience, especially those
traveling on the same airline bound to an airport beyond the initial
U.S. gateway airport * * *
-- Customs is relieved of 20 percent of passenger clearance at U.S.
gateway airports.
On the other hand, Customs takes the position that the conduct of
preclearance primarily benefits the airlines. It points out that:
In 1952, at the request of American Airlines, a pilot preclearance
program was initiated at Toronto, Canada. The airline believed that
such a system would aid in the efficient use of its resources. Four
potential advantages were identified over the next few years: 1)
greater security with regard to illegal aliens and agricultural
products; 2) relief from the need to expand U.S. airports; 3) improved
international relations; and 4) increased utilization of aircraft. No
real advantages to Customs in its primary mission were identified. This
program continued without statutory or treaty authority until 1974, at
which time, in order to prevent a termination of the program, agreements
were negotiated with the foreign governments. These negotiations were
lobbied for, intensely, by the airline and tourist industries.
Furthermore, the 1979 Report identifies the following benefits which
the airlines have claimed:
a. Facilitates travel for the international traveler;
b. Provides competitive advantage;
c. Utilizes resources better;
d. Saves the airlines money.
While the report concluded that the evidence concerning the first two
of the claimed benefits was inconclusive, as to the latter two it
stated:
c. Better utilization of resources
According to the airlines, preclearance allows them to save on ground
time and this in turn decreases the numbers of aircraft required to
service their routes. There are savings accruing to the airlines due to
quick turn around capabilities for planes used on preclearance routes.
Planes continuing on to other destinations also save time. In addition,
aircraft do not have to be ready or available at the preclearance site
until flight departure time. Upon arrival in the U.S., the aircraft is
free to proceed directly to that carrier's regular terminal. Contrast
this with a carrier that first stops off at an international arrival
area, deplanes its passengers, and then has the aircraft towed to its
regular terminal for further use. In theory, operational costs
associated with manpower and equipment tend to increase proportionately
with the increase in time required to remain on the ground.
Figures are not readily available on how much additional flying time
is available to the airlines because of preclearance. An extensive
analysis of alternative use of aircraft equipment, the amount of
additional aircraft that would be needed to maintain the present
passenger loads, fuel costs, crew times, airports' abilities to handle
additional aircraft, etc., would be required to determine the exact
extent of resource savings because of preclearance. It can be assumed,
however, that the resource savings are extensive based on the airlines
continued strong support of preclearance.
d. Costs/savings to the airlines
(1) preclearance operations are more efficient; airlines need fewer
aircraft, crews, less fuel, etc., to accomplish the same task;
(2) the planes spend less time on the ground, therefore, the airlines
ground costs are decreased (FAA estimates that ground time costs the
airlines an average of $4.07 per minute); and
(3) airlines can use domestic terminals instead of international
terminals where user fees are higher for example (the Port Authority of
New York charges arriving user airlines $5.35 per passenger and $78 per
aircraft for the use of the International Arrival Building at JFK).
Based upon a 1971 ATA study, it was estimated that the American
carriers realized a total economic benefit for 10 years of $158,000,000.
In 1978 dollars, assuming a 6 percent inflation rate, this is
equivalent to an annual savings of $40,500,000. In addition, the
claimed additional business the airlines receive as a result of
"passenger facilitation" and "competitive advantages" should provide the
airlines with additional revenue.
Therefore, for the airlines preclearance is a useful service
providing them with significant economic benefits. If the airlines did
not have to pay the excess costs of user charges, $2,190,014 for 1978,
then their benefits from preclearance would be even higher, 1979 Rept.
pp 24-25.
ATA has also indicated that airlines taking advantage of preclearance
experience substantial savings both in capital outlays and annual
operating expenses. It also notes that eliminating preclearance could
disrupt the whole operation of an airline. See Hearings on Bureau of
Customs Pre-Clearance Activities in Canada, Bermuda, and the Bahamas
before Subcommittee on the Treasury, Postal Service, and General
Government, House Appropriations Committee, 93rd Cong., 1st Sess.,
statement of Stuart G. Tipton, Chairman, ATA, pp. 6-8 (1973).
The Customs Service has assumed that its regular clearance activities
are conducted primarily to benefit the general public and Customs has
excluded all regularly incurred costs from those it would charge the
airlines for preclearance. It seeks to recover only that portion of the
costs that are increased by its conducting preclearance activities on
foreign soil. It should also be noted that two other Federal agencies
involved in the preclearance activities, i.e., APHIS and INS who agree
that preclearance is useful in helping them carry out their particular
missions, have elected to absorb any additional costs incurred.
Customs, on the other hand, finds preclearance an "expensive and less
efficient use of its limited resources" and, as stressed in the 1979
Treasury report, quoted supra, of no real advantage in carrying out its
primary mission. Moreover, as the Customs' submission to us points out,
preclearance is not a service provided routinely to the airline industry
as a whole but only when specifically requested by a particular airline.
In such cases only the airline requesting and receiving the service is
charged a fee commensurate with the service. Others, "who clear Customs
in the traditional fashion at the border," are not charged. This policy
is clearly consistent with the court cases, cited supra.
On the basis of the Treasury report, discussed above, and the
arguments presented by ATA and Customs, we cannot say that the Customs
Service position is arbitrary or capricious. Customs may, therefore,
continue to assess a user charge against the airlines for providing
preclearance services on foreign soil.
The costs which Customs assigns to preclearance include, among
others, housing allowances, post of duty allowances, home leave and
associated transportation costs, and equipment, supplies and
administrative costs (including costs of supervising the preclearance
installation) over and above that which Customs would normally incur.
19 C.F.R. 24.18(c). All these costs appear to be proper charges under
the User Charge Statute.
As for TECS, Customs has stated that it is not charging for the
system's basic costs, but only for installation and monthly recurring
costs at preclearance sites. It is Customs' position that these are all
added costs which it would not incur if the services were performed in
the United States since no additional installation of TECS would be
required. Assuming that Customs' position is factually correct, we see
no legal basis on which to object to Customs' recovery of TECS' cost at
preclearance sites.
On the basis of the information before us, we find no legal basis to
object to the Customs Service charging the above indicated costs of
preclearance, including TECS, to airlines using the service.
B-197289, April 14, 1980, 59 Comp.Gen. 386
Appropriations - Obligation - Printing and Binding Requisitions -
Performance Continuing Beyond Fiscal Year
Fact that performance under Requisition for Printing and Binding
extends over more than one fiscal year does not mean payments are to be
split among fiscal years on basis of services actually performed.
General rule is that payments under Government contracts are charged to
fiscal year appropriation current at time legal obligation arises.
Appropriations - Obligation - Bona Fide Needs Restrictions
Printing and Binding Requisition, accompanied by copy or
specifications sufficient to allow Government Printing Office to proceed
with job, creates valid obligation if need for printing exists at time
order is submitted.
Matter of: Obligation of Appropriation for Printing - Commission of
Fine Arts, April 14, 1980:
An authorized certifying officer of the Department of the Interior,
acting as fiscal officer for the Commission of Fine Arts under an
agreement between the Department and the Commission, has requested our
decision on the fiscal year appropriation(s) to be charged for the costs
of publication by the Commission of its book "Sixteenth Street
Architecture, Volume I," which was printed by the Government Printing
Office (GPO). According to the inquiry, although printing of the book
was initially ordered by the Commission in fiscal year 1977, the
Commission has attempted to obligate part of its fiscal year 1977, 1978,
and 1979 appropriations for the work.
The certifying officer states his belief that the entire cost of the
printing job should have been charged against the Commission's fiscal
year 1977 appropriation. The Commission, on the other hand, asserts
that costs should be distributed by fiscal year based on the actual
incurrence of expenses by GPO and the availability of appropriated funds
for printing.
For the reasons indicated below, we agree with the certifying officer
that the entire cost of printing "Sixteenth Street Architecture" should
have been changed to the Commission's fiscal year 1977 appropriation.
On August 23, 1977, the Commission submitted to the Public Printer a
Printing and Binding Requisition (Standard Form 1), designated
Requisition No. 77-18. The requisition ordered the printing of 2500
copies of "Sixteenth Street Architecture, Volume I." The printing was to
be charged to the fiscal year 1977 appropriation, Salaries and Expenses,
Commission of Fine Arts. The requisition order was accompanied by the
Commission's manuscript for the book.
By letter of September 13, 1977, to the predecessor of the current
certifying officer, the Secretary of the Commission requested that
$14,000 out of the Commission's fiscal year 1977 appropriation be
obligated for the printing of the book.
The letter indicated that the GPO had given the Commission a rough
estimate for the entire job of about $21,000.
On September 28, 1978, the Commission submitted a second Printing and
Binding Requisition to the GPO, designated Requisition No. 78-23. This
requisition again ordered the printing of 2500 copies of "Sixteenth
Street Architecture, Volume I." It indicated that the job was to be
charged to the fiscal year 1978 appropriation, Salaries and Expenses,
Commission of Fine Arts. At the bottom of the form were hand-written
the word "continuing requisition to Req.-- ."
In a memorandum to the certifying officer dated September 29, 1978,
the Secretary of the Commission requested that $13,000 of the
Commission's fiscal year 1978 appropriation be obligated for the
printing job. The memorandum indicated that the GPO and informally
advised the Commission that approximately $13,000 worth of work had been
done on the Commission's order in fiscal year 1978. The memorandum was
accompanied by a copy of Requisition No. 78-23 and a new informal
estimate by the GPO of the total cost of the job, which gave a "ball
park estimate" of over $31,000.
In a letter to the certifying officer, dated August 10, 1979, the
Secretary of the Commission requested that $28,000 of the Commission's
fiscal year 1979 appropriation be obligated for the printing of
"Sixteenth Street Architecture." The letter indicates that the GPO had
informed the Commission that the actual cost of the printing would be
about $40,000.
A GPO invoice, dated October 5, 1979, indicates that the total charge
for printing the Commission book was $39,421. The GPO billed $20,700 of
this amount to Requisition No. 77-18 and $18,721 to Requisition No.
78-23. In a November 2, 1979, letter to the certifying officer, the
Comptroller of GPO stated that the job was billed to the two separate
requisitions at the request of the Commission.
As mentioned above, the Commission is of the opinion that the costs
of printing "Sixteenth Street Architecture" should be charged against
its fiscal year 1977, 1978, and 1979 appropriations in proportion to the
amount of work done by GPO in those years. We do not agree. As we
stated at 23 Comp.Gen. 370, 371(1943), the fact that performance under a
contract extends over more than one fiscal year does not mean that
payments are to be split among the fiscal years on the basis of services
actually performed. Rather, the general rule is that payments due under
a Government contract are to be charged to the fiscal year appropriation
current at the time the legal obligation arose; that is, the fiscal
year in which a bona fide need for the goods or services arose and in
which a valid contract or agreement was entered into.
See, e.g., B-125444, May 2, 1956; 27 Comp.Gen. 711, 714(1948); 23 id.
370(1943).
It should be noted that the printing requisition in question was not
issued as part of an interagency Economy Act agreement, under 31 U.S.C.
686, but rather pursuant to the specific authority of 44 U.S.C. 501.
Performance under an Economy Act agreement cannot ordinarily extend
beyond the end of the fiscal year of the funds which are being
obligated, because these funds must be deobligated at the end of the
fiscal year to the extent that performance has not been completed. See
31 U.S.C. 686-1(1976); 58 Comp.Gen. 471, 472-73(1979).
In the case of printing and binding services performed for a Federal
agency by GPO, we have held that when a requisition for printing is
accompanied by copy or specifications sufficient for GPO to proceed with
the job, and there is a present need for the printing of the ordered
publication, the order creates a valid obligation. See B-123964, August
23, 1955; 23 Comp.Gen. 82(1943). The fiscal year appropriation current
at the time of the order should be charged for full costs of the
printing, notwithstanding the fact that the work may not be completed
during the fiscal year. See id.
In the present instance, the record shows that Printing and Binding
Requisition No. 77-18, submitted to GPO August 23, 1977, contained
sufficient specifications and was accompanied by Commission-prepared
manuscript so that GPO could proceed with the job. It is also clear
that the Commission had a present need for the printing it ordered. It
follows that Requisition No. 77-18 created a lawful obligation of fiscal
year 1977 funds for the costs of printing "Sixteenth Street
Architecture." Although the Commission only recorded an obligation of
$14,000, the actual obligation created was the full cost of the printing
job. It also follows that the attempts by the Commission to obligate
fiscal year 1978 and 1979 funds for the printing were not effective.
The Commission's fiscal year 1978 and 1979 appropriations were not
available for the fiscal year 1977 printing order and may not be used to
pay for the printing of "Sixteenth Street Architecture.
It is not clear from the record whether the Commission had sufficient
unobligated fiscal year 1977 funds available to pay for the printing of
"Sixteenth Street Architecture" when it submitted its requisition to
GPO. The Commission normally receives a lump sum appropriation for
salaries and expenses. Therefore, although the Commission may not have
budgeted a sufficient sum for printing, it may have had other funds
available to pay for the printing job. However, if the Commission in
fact did not have sufficient fiscal year 1977 funds to pay for the
printing, two statutory provisions were violated.
First, subsection 1102(b) of title 44 of the United States Code
provides:
Printing may not be done for an executive department, independent
agency or establishment in a fiscal year in excess of the amount of the
appropriation.
Although the meaning of this provision is not entirely clear, it is
our opinion that it at least prohibits an agency from requisitioning
printing from GPO unless it has sufficient funds available to pay for
that printing.
Second, subsection 665(a) of title 31 of the United States Code, part
of the so-called "Antideficiency Act," provides:
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.
In this instance, if the Commission did not have sufficient funds to
pay for the printing at the time the printing requisition was submitted
to GPO, then the officer ordering the printing has violated this act.
It may be argued that the Antideficiency Act should not be applied to
the present situation (1) because GPO printing of documents involves a
transaction between two Federal agencies, (2) because the Congress will
not be forced to enact a deficiency appropriation to liquidate the
Commission's debts to GPO, and (3) because the cost to the United States
is the same whether the Commission's appropriation or GPO's revolving
fund pay for this printing. However, as we stated at 42 Comp.Gen. 272,
275, one of the purposes of the Antideficiency Act was:
* * * 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 * * * .
By incurring obligations in excess of available appropriations, the
Commission would cause the United States to incur cost greater than the
Congress had authorized. If in fact a violation of the Antideficiency
Act occurred, the provisions of 31 U.S.C. 665(i)(2) require that it be
reported to the Congress.
B-196695, April 14, 1980, 59 Comp.Gen. 384
Energy - Energy Research and Development Administration - Employees -
Agency Excepted From Competitive Services and General Schedule - Effect
- Extended Details
Employee of Atomic Energy Commission (AEC) and its successor, Energy
Research and Development Administration (ERDA), appeals disallowance of
claim based on Turner-Caldwell decisions for retroactive promotion and
backpay. Claim is denied as AEC and ERDA, the employing agencies, were
excepted from competition service as well as from General Schedule and
thus were not subject to the detail provisions of subchapter 8, chapter
300 of the Federal Personnel Manual. For this reason and because AEC
and ERDA did not have a nondiscretionary agency policy limiting details
or requiring temporary promotion after a specified period of detail, the
remedy of retroactive temporary promotion with backpay is not available.
Matter of: Jeremias Archuleta - Retroactive Promotion under
Turner-Caldwell for ERDA (AEC) Employees, April 14, 1980:
In a letter dated September 13, 1979, Mr. Jeremias Archuleta
requested reconsideration of Certificate of Settlement No. Z-2815159,
issued July 31, 1979, which denied his claim for a retroactive promotion
and backpay based on our Turner-Caldwell decisions, 55 Comp.Gen.
539(1975) and 56 id. 427(1977). We have considered his letter to
constitute an appeal of that action, and this decision is the result of
that appeal.
The record shows that Mr. Archuleta, a GG-6 Security Inspector at the
Atomic Energy Commission (AEC) in Los Alamos, New Mexico, was assigned
the duties of Operations Sergeant, a GG-7 position, on July 19, 1973.
This assignment continued until August 31, 1975, when Mr. Archuleta was
promoted to a GG-7 position. On January 19, 1975, while assigned to the
GG-7 position, Mr. Archuleta became an employee of the Energy Research
and Development Administration (ERDA), a result of the Energy
Reorganization Act of 1974, Public Law 93-438, 42 U.S.C. 5801 note. For
the record we note that since January 1, 1977, Mr. Archuleta has been an
employee of the Department of Energy. However, during all portions of
the claim he was employed by either AEC or ERDA.
The Claims Division in its action of July 31, 1979, disallowed Mr.
Archuleta's claim on the basis that his agency was not subject to
applicable Civil Service Commission (CSC) (now Office of Personnel
Management) regulations.
We uphold that disallowance for the reasons stated below.
Our Turner-Caldwell decisions held that employees detailed to
higher-grade positions for more than 120 days without Civil Service
Commission approval are entitled to retroactive temporary promotions and
backpay for the period beginning with the 121st day of the detail until
the detail is terminated. Those decisions were based on an
interpretation by the Commission's Board of Appeals and Review (now
Appeals Review Board) to the effect that under the provisions of
subchapter 8, chapter 300 of the Federal Personnel Manual an agency had
no discretion to continue to detail beyond 120 days without CSC
approval. Absent such approval, the agency had a mandatory duty to
award the employee a temporary promotion if he continued to perform the
duties of the higher-grade position.
Mr. Archuleta as an employee of the AEC and ERDA was not subject to
the applicable provisions of the Federal Personnel Manual. The AEC and
its successor, ERDA, elected to except their employees from the
competitive service as well as from the General Schedule under the
authority of section 161(d) of the Atomic Energy Act, as amended, 42
U.S.C. 2201(d), and section 106(a) of the Energy Reorganization Act of
1974, Public Law 93-438, 42 U.S.C. 5816(a). Since subchapter 8, chapter
300 of the Federal Personnel Manual, applies only to details between
positions in the excepted service that are under the General Schedule,
the remedy for extended details specified in Turner-Caldwell is
unavailable in Mr. Archuleta's case. See Matter of Israel Warshaw,
B-194484, September 21, 1979.
The AEC and ERDA issued their own regulations governing details. As
set forth at paragraph B2b of ERDA (AEC) Appendix 4108, Part VI, those
regulations provide:
Since the use of a detail may contravene sound compensation practices
and merit system principles, details should normally be for periods of
less than three months.
Unlike the detail provisions of the Federal Personnel Manual, this
regulation does not limit the AEC's or ERDA's discretion to continue a
detail beyond 3 months, nor do the related provisions of paragraph A4 of
that Appendix require the agency to temporarily promote an employee
detailed to a higher-grade position for longer than any specified period
of time. Compare Matter of Jose Lujan, 59 Comp.Gen. 200(1980).
Accordingly, since Mr. Archuleta was not subject to the applicable
provisions of the Federal Personnel Manual or to any similar
nondiscretionary agency policy, we affirm the action of our Claims
Division disallowing Mr. Archuleta's claim for a retroactive temporary
promotion and backpay.
B-184053, April 14, 1980, 59 Comp.Gen. 380
Courts - Judgments, Decrees, etc. - Interest - Patent Infringement Suit
- "Delay Compensation"
Judgment against United States for patent infringement may include
interest as "delay compensation" since infringement is viewed as a
taking by eminent domain and 28 U.S.C. 1498 authorizes "reasonable and
entire compensation." However, since determination of delay compensation
is a judicial function, it may not be awarded administratively by
General Accounting Office but is payable only where it has been
expressly awarded by Court of Claims. Courts - Judgments, Decrees, etc.
- Res Judicata - Judgment Based on Stipulation - Subsequent Claim
Where judgment of Court of Claims against United States in patent
infringement suit was based on compromise stipulation under which
plaintiff agreed to accept stipulated sum "in full settlement of all
claims set forth in the petition," terms of judgment preclude allowance
of claim for additional amounts as "delay compensation."
Matter of: RCA Corporation, April 14, 1980:
This decision results from a claim by RCA Corporation for "delay
compensation" in connection with a judgment of the United States Court
of Claims. Our Claims Division initially disallowed the claim, and RCA
sought reconsideration. For the reasons that follow, we believe the
Claims Division's disallowance must be sustained.
In May, 1975, RCA filed suit against the United States in the Court
of Claims. The suit was an action for patent infringement under 28
U.S.C. 1498(a)(1976), which provides in pertinent part:
(a) Whenever an invention described in and covered by a patent of the
United States is used or manufactured by or for the United States
without license of the owner thereof or lawful right to use or
manufacture the same, the owner's remedy shall be by action against the
United States in the Court of Claims for the recovery of his reasonable
and entire compensation for such use and manufacture. * * *
In August, 1976, the Court entered judgment in favor of plaintiff
RCA. The judgment provided as follows:
This case comes before the court on a stipulation of the parties
filed on July 28, 1976, and signed on behalf of the plaintiff and the
defendant by the respective attorneys of record, in which it is stated
that a written offer was submitted by the plaintiff to the Attorney
General and duly accepted on behalf of the defendant, whereby plaintiff
agreed to accept the sum of $450,000.00 in full settlement of all claims
set forth in the petition, and the defendant consented to the entry of
judgment in that amount.
IT IS THEREFORE ORDERED that judgment be and the same is entered for
the plaintiff in the sum of four hundred fifty thousand dollars
($450,000.00) and that any claims arising out of the allegations or
facts pleaded in plaintiff's petition be dismissed with prejudice.
On September 30, 1976, Congress appropriated funds to pay the
judgment, /1/ and on October 19, 1976, our Claims Division certified the
judgment to the Treasury Department for payment. Subsequently, RCA
claimed an additional $7,119.88 as compensation for delay in payment
between August 6, 1976, the date of the judgment, and October 22, 1976,
the date of the Treasury check. RCA contends that this is part of the
"reasonable and entire compensation" to which it is entitled under 28
U.S.C. 1498, supra. RCA calculated the amount by applying an annual
rate of 7.5% in accordance with Pitcairn v. United States, 547 F.2d
1106(Ct.Cl. 1977), cert. denied, 434 U.S. 1051(1978).
This is the first occasion we have had to consider a claim for "delay
compensation" in a patent infringement case. We conclude that there is
no legal basis for this Office to allow the claim. There are two
reasons for our conclusion, one based on the nature of "delay
compensation," and the other based on the subject judgment itself.
The general rule, consistently recognized by the Supreme Court, is
that interest is not recoverable against the United States unless
expressly provided in the relevant statute or contract. E.g., United
States v. Alcea Band of Tillamooks, 341 U.S. 48(1951). The one
exception is a taking which entitles the claimant to just compensation
under the Fifth Amendment. Alcea Band of Tillamooks, supra. Thus,
courts commonly award interest as part of just compensation in land
condemnation cases.
"Delay compensation" in patent infringement cases is a related
concept. The unauthorized manufacture or use of a patented device by or
for the United States is viewed as a taking by eminent domain, and 28
U.S.C. 1498 provides the means of obtaining the just compensation
mandated by the Fifth Amendment. Calhoun v. United States, 453 F.2d
1385, 1391(Ct.Cl. 1972). The Supreme Court has recognized that
"interest" may be allowed in a patent infringement suit under the
"reasonable and entire compensation" formula now contained in 28 U.S.C.
1498. Waite v. United States, 282 U.S. 508(1931). Although the term
"interest" is still frequently used in the decisions, it is awarded as
part of the reasonable and entire "compensation," and "is not considered
as interest per se." Pitcairn, supra, 547 F.2dat 1121. In this context,
it has become known as "delay compensation." It is generally awarded to
the date of payment of the judgment. (See cases cited below.)
Prior to Pitcairn, the Court of Claims had, with a few exceptions,
applied a 4 percent annual rate since 1944 in determining delay
compensation. Badowski v. United States, 278 F.2d 934(Ct.Cl. 1960);
Van Veen v. United States, 386 F.2d 462(Ct.Cl. 1967); Amerace Esna
Corp. v. United States, 462 F.2d 1377(Ct.Cl. 1972); Calhoun v. United
States, supra. In Pitcairn, however, the Court held that the 4 percent
rate had become outmoded by changing economic conditions, and
established a stepped percentage rate varying from 4 percent for the
years 1947-1955 to 7 1/2 percent for the years 1971-1975. 547 F.2dat
1121. RCA's claimed rate is based on this formula. For subsequent
application of the Pitcairn formula, see Tektronix, Inc. v. United
States, 552 F.2d 343(Ct.Cl. 1977), 575 F.2d 832(Ct.Cl. 1978); Leesona
Corp. United States, 499 F.2d 958(Ct.Cl. 1979).
In discussing the concept of delay compensation, the Court in
Pitcairn said:
The amount due as delay compensation in this case involves a
determination by this court of an appropriate base or yardstick by which
to measure and thereby establish the award for delay compensation. The
method of determining delay compensation should be justified by the
evidence, and the rate should be responsive to the ends of justice.
The ultimate test, of course, is that the plaintiff must receive just
compensation. 547 F.2d at 1121.
The Court went on to point out that:
The determination of a proper amount of delay compensation is a
judicial function. The discharge of that function requires the exercise
of judgment. Id. at 1122.
It is clear from the foregoing that the Court may properly award
interest as delay compensation in actions under 28 U.S.C. 1498.
However, since the determination is a judicial function, we believe the
awarding of delay compensation is a matter for the Court's
consideration, and that it is beyond our authority to award it
administratively.
It is relevant in this connection that 28 U.S.C. 1498 does not
purport to establish a rate for delay compensation. In cases where both
the entitlement to interest on judgments against the United States and
the rate are specified by statute - e.g., 28 U.S.C. 2516(b) and the
first proviso of 31 U.S.C. 724a - it is not necessary for the judgment
to expressly award interest. Where interest is payable under the
statutory provisions in such cases, it is computed as part of our
essentially ministerial function of certifying judgments against the
United States for payment under 28 U.S.C. 2414 and 2517(a). See United
States v. Maryland ex rel. Meyer, 349 F.2d 693, 696(D.C.Cir. 1965). The
absence of a congressionally established rate in 28 U.S.C. 1498 supports
the conclusion that the awarding of delay compensation is a matter
solely for the Court. Accordingly, we conclude that delay compensation
in judgments against the United States under 28 U.S.C. 1498 is payable
only where it has been expressly awarded by the Court of Claims.
Next, it is significant that the judgment in this case was actually a
compromise stipulation. It was entered in the form of a judgment
essentially to enable compliance with the payment provisions of 28
U.S.C. 2517(a). The amount of a compromise settlement is reached
through negotiation and can include whatever elements the parties may
agree upon. Any perceived delay in payment could have been taken in
consideration in the negotiations (we do not know whether this was in
fact done here) and reflected in the compromise amount.
In Tektronix, Inc. v. United States, 552 F.2d 343(Ct.Cl. 1977), the
Court concluded that, as a general proposition, the Pitcairn rates
should be applied in the future, "except where the parties stipulate
otherwise." 552 F.2dat 353, n. 19. Under the stipulation in this case,
as incorporated in the Court's judgment quoted above, "plaintiff agreed
to accept the sum of $450,000.00 in full settlement of all claims set
forth in the petition." The claim set forth in RCA's original petition,
filed on May 15, 1975, was for "reasonable and entire compensation"
under 28 U.S.C. 1498.
Thus, the terms of the judgment seem to preclude the awarding of any
additional amount.
For the foregoing reasons, we conclude that RCA's claim must be
denied.
/1/ Prior to May 4, 1977, judgments against the United States in
excess of $100,000 required specific congressional appropriations.
Since that date, unless payment is "otherwise provided for," final
judgments against the United States are payable, without regard to
amount, from the permanent indefinite appropriation established by 31
U.S.C. 724a.
B-196168, April 8, 1980, 59 Comp.Gen. 378
Contracts - Protests - Timeliness - Significant Issue Exception -
Minimum Needs Overstated
Objection to allegedly excessive solicitation requirements raised for
the first time after bid opening, while untimely, is significant issue
and warrants consideration under General Accounting Office Bid Protest
Procedures, 4 C.F.R. 20.2(c). Contracts - Specifications - Minimum
Needs Requirement - Exceeded
Where solicitation requires bid and evaluation on basis of replacing
fire hydrants by tapping existing water mains under pressure when agency
actually will permit many "dry" replacements, stated requirements exceed
Government's actual needs and restricted competition. GAO therefore
recommends termination of existing contract and resolicitation and bid
evaluation on basis of Government's best estimate of "wet" and "dry"
replacements.
Matter of: Aqualine Environmental Services, Incorporated, April 8,
1980:
Aqualine Environmental Services, Incorporated, protests the rejection
of its low bid as nonresponsive under invitation for bids (IFB) No. DABT
59-79-B-0084, issued by the Department of the Army. Aqualine also
asserts that the requirements of the IFB exceeded the Army's minimum
needs. For the following reasons, the protest is sustained on the basis
of excessive solicitation requirements and resolicitation is
recommended.
The IFB called for the replacement of 248 fire hydrants at Fort
Pickett, Virginia. Replacement of fire hydrants can be accomplished in
a "wet" or "dry" condition, depending on the need to maintain service to
other locations along the water main at the time of replacement. If it
is necessary to maintain the service, the contractor taps into the water
line and places a bypass around the hydrant to be removed and replaced.
If the maintenance of water service is not necessary, then the line can
be turned off until the hydrants have been removed and replaced. The
latter, "dry," method is significantly less expensive and takes less
time than the "under pressure" or "wet" method.
Based on alleged oral Army advice that the hydrant replacements could
be accomplished by the dry method. Aqualine included in its bid a
statement to the effect that it would install all hydrants in the dry
condition. The Army, finding that Aqualine had submitted a qualified
bid which deviated from the written IFB requirements for total wet
replacement capability, rejected it as nonresponsive and awarded a
contract to the next higher priced responsive responsible bidder.
Since bidders were required to bid as though wet replacements were
required for all 248 hydrants, Aqualine contends that this requirement
exceeded the Army's minimum needs because the work could be accomplished
dry by isolating particular work areas at Fort Pickett. It is clear
from the record of Aqualine's pre-bid opening activity that this issue,
raised for the first time after the Army rejected Aqualine's bid, was
known to Aqualine prior to bid opening. While this issue should have
been raised prior to rather than after bid opening and therefore is
untimely under our procedures (4 C.F.R. 20.2(b)(1)(1979)), the
restriction of competition caused by the Government's failure to solicit
for its actual needs goes to the heart of the competitive system because
any measure which incorporates more or less than the work to be
contracted in selecting the lowest bidder does not obtain the benefits
of full and free competition required by the procurement statutes. We
believe such an impropriety merits our review. Southeastern Services,
Inc., et al., 56 Comp.Gen. 668(1977), 77-1 CPD 390. Therefore this
matter is for consideration pursuant to the exception provided in our
timeliness rules concerning consideration of significant issues. 4
C.F.R. 20.2(c).
Our Office has held that procurement agencies must state requirements
in terms that will permit the broadest field of competition within the
minimum needs required, and when the stated requirements are beyond the
Government's actual needs, competition is restricted. Gardner Machinery
Corporation; G. A. Braun Incorporated-- Request for Reconstruction,
B-185418, September 25, 1978, 78-2 CPD 221. In the present case, while
bidders were required to bid and the bids were evaluated as though all
248 hydrant replacements were to be wet, the Army concedes that there is
a probability of many dry hydrant replacements depending upon the
occupancy of Fort Pickett which varies depending upon the time of the
year.
Accordingly, the IFB requirements overstated the actual needs of the
Army, and the protest is sustained on this issue. In view of our
conclusion that the solicitation was defective and should be revised,
the question of whether Aqualine's bid is responsive is academic.
The Army has advised us that it has not issued a notice to proceed
with performance under the existing contract. Therefore, we recommend
termination of the contract and resolicitation of requirements which
more accurately represent the actual needs of the Army. Since the Army
does not know precisely the mix of hydrants to be replaced in a wet
versus dry condition, it should require bidders to bid a job price in
accordance with the Army's best estimate of the mix and also require
bidders to furnish a price change factor which the Government either
could deduct from the job price for each dry installation required in
addition to the estimate or add to the job price for each additional wet
installation.
By letter of today we are advising the Secretary of the Army of our
recommendation for termination and resolicitation.
Because this decision contains a recommendation for corrective
action, 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-196121, April 8, 1980, 59 Comp.Gen. 376
Transportation - Dependents - Military Personnel - Dislocation Allowance
- Actual Movement of Dependents Requirement - JTR Proposed Amendment
Effect
An amendment of the Joint Travel Regulations permitting treatment of
a member with dependents who are authorized to travel with him to his
new permanent station but who, in fact, do not travel to the new
station, as a member without dependents for purposes of receiving
dislocation allowance is not prohibited by 37 U.S.C. 407. 48 Comp.Gen.
782(1969) and similar decisions will no longer be followed.
Matter of: Dislocation allowances, April 8, 1980:
This action is in response to a letter dated August 22, 1979, from
the Assistant Secretary of the Army (Manpower and Reserve Affairs)
requesting an advance decision concerning a proposed amendment to Volume
1 of the Joint Travel Regulations (1 JTR) relating to the dislocation
allowance entitlements of military members with dependents.
Specifically, the Assistant Secretary asks whether under 37 U.S.C.
407(1976) the JTR may be amended to permit a military member with
dependents, who are authorized to relocate with him, to receive a
dislocation allowance when he is transferred to a new permanent station,
where his dependents do not relocate incident to his change in permanent
duty station. As explained below, we conclude that the adoption and
implementation of such an amendment is authorized under 37 U.S.C. 407.
That statute provides:
Sec. 407. Travel and transportation allowances: dislocation
allowance
(a) Except as provided by subsections (b) and (c) of this section,
under regulations prescribed by the Secretary concerned, a member of a
uniformed service--
(1) whose dependents make an authorized move in connection with his
change of permanent station;
(2) whose dependents are covered by section 405a(a) of this title;
or
(3) without dependents, who is transferred to a permanent station
where he is not assigned to quarters of the United States; is entitled
to a dislocation allowance equal to his basic allowance for quarters for
one month as provided for a member of his pay grade and dependency
status in section 403 of this title. For the purposes of this
subsection, a member whose dependents may not make an authorized move in
connection with a change of permanent station is considered a member
without dependents.
Thus, a member who has no dependents, or whose dependents are not
authorized to move to his new station is entitled to a dislocation
allowance equal to the monthly basic allowance for quarters (BAQ) for a
member without dependents. Similarly, a member with dependents who are
authorized to and in fact do move with him is entitled to dislocation
allowance payment equal to his BAQ.
Sometimes, however, a third situation arises. A member may have
dependents who are authorized to move with him and if they did so, he
would be entitled to a dislocation allowance as a member with dependents
under 37 U.S.C. 407. However, that member may instead decide, for
whatever reason, that his dependents will not accompany him to his new
station, so that his position for change of station purposes is similar
to that of a member without dependents. Because this individual does
have dependents, we have found in the past that he cannot be considered
a member without dependents, nor is he a member with dependents who in
fact relocated with him, and therefore, we have held that section 407
does not authorize the payment of any dislocation allowance to him. 48
Comp.Gen.(1969).
In certain circumstances we have held that although a member has
dependents, since they were not entitled to Government transportation,
the member may be considered to be "without dependents" and entitled to
the appropriate dislocation allowance. See e.g., B-189020, August 18,
1977, B-176601, March 27, 1973. See Also B-188849, September 1, 1977.
However, where the circumstances do not support such a finding, the rule
currently requires that a member with dependents who are authorized to,
but do not, move incident to his change in station, is not entitled to a
dislocation allowance.
This inequity is noted in the submission, and forms the basis for the
proposal to revise the JTR definition of "member without dependents" to
include a member with dependents when the dependents do not in fact
relocate even though they are entitled to move at Government expense.
Although technically such individuals are not included in the statutory
discussion of "member without dependents," we have reconsidered the
whole matter. It seems that Congress did not intend to preclude payment
of a dislocation allowance in these cases. Both the House and Senate
Reports state in support of section 407(a)(3) that:
(A) member without dependents incurs the same general type of
additional expenses when he is not furnished Government quarters at the
new station as does a member with dependents. It is thus believed that
the original intent of the dislocation allowance will be better served
if the proposed legislation is enacted to provide an amount equal to 1
month's basic allowance for quarters for a member without dependents * *
* H.R. Rep. No. 787, S. Rep. No. 808, 90th Cong., 1st Sess. (1967).
The purpose then of section 407(a)(3) is to ensure that military
personnel receive a dislocation allowance regardless of whether they
have dependents or not. In the past, we have interpreted that section
to permit amendment of the JTR to provide dislocation allowance payments
in circumstances not specifically covered by section 407 when in keeping
with its purpose. 57 Comp.Gen. 178(1977). Similarly here, while
section 407(a)(3) authorizes dislocation allowance payments under
certain specified circumstances, it appears that Congress did not intend
to preclude payment of any allowance when a member whose dependents
although authorized to do so, do not relocate incident to his change in
permanent station. In such cases the member would usually incur the
same types of expenses as members without dependents who relocate and
are entitled to a dislocation allowance. It is now our view that these
individuals may be considered members "without dependents" for
dislocation allowance purposes. Therefore, the JTR definition of
"member without dependents" may be modified as proposed.
Decisions to the contrary, such as 48 Comp.Gen. 782, will no longer
be followed.
B-195563, April 7, 1980, 59 Comp.Gen. 374
Officers and Employees - Transfers - Relocation Expenses - What
Constitutes "Permanent Change of Station" - Temporary Position
Description - Not Controlling for Reimbursement Purpose
Employee received change-of-station travel orders to Guam, where he
purchased a residence. Residence purchase expenses are reimbursable as
14-month period that employee was stationed in Guam may be considered as
meeting the requirement of 5 U.S.C. 5724 and Federal Travel Regulations
para. 2-1.2a(1) that the transfer be for permanent duty, even though
classification report categorized position as a "temporary assignment."
Matter of: Thomas N. Wikstrom - Reimbursement of Purchasing
Residence, April 7, 1980:
John A. Murphy, Acting Chief, Fiscal Services Branch, Finance
Division, Office of Education, Department of Health, Education and
Welfare, has requested an advance decision on reimbursing expenses
incurred by Mr. Thomas N. Wikstrom for the purchase of a residence
incident to his transfer from Washington, D.C. to Guam.
The question to be decided is whether Mr. Wikstrom's transfer was
"permanent" within the meaning of 5 U.S.C. 5724 and FTR para. 2-1.2a(1).
Both the statute and implementing regulations require that the transfer
be permanent from one official station to another for reimbursement of
real estate expenses to be permitted.
The Acting Chief, Fiscal Services Branch, questions whether Mr.
Wikstrom's transfer may be considered permanent within the contemplation
of the above regulations because of the following factors. A travel
order was issued showing an approximate date of departure as August 25,
1977, and an approximate date of return as October 1, 1978. Further, a
Government Transportation Request was issued August 23, 1977, showing a
planned return to Washington, D.C. The Acting Chief points out that the
position description under which Mr. Wikstrom was employed in Guam
stated that "this is a temporary assignment to Guam not to exceed August
28, 1978," and that the record contains a memorandum dated May 23, 1979,
from a Personnel Staffing Specialist in the Office of Education which
states that from August 29, 1977, to October 22, 1978, Mr. Wikstrom was
temporarily assigned to the University of Guam. The Acting Chief did
not mention, but the record does show, that Mr. Wikstrom's travel order
authorized residence transactions expenses.
Our decisions have held, under Section 1 of the Act of August 2,
1946, as amended, now codified in 5 U.S.C. 5724(1976), that the words
"transferred from one official station to another for permanent duty"
have reference to a change in the permanent duty station of an employee
without a break in service and not to the tenure of his appointment. 27
Comp.Gen. 757(1948); 22 id. 219(1942). In this regard, we have held
that employees stationed in a foreign country for approximately 6 months
may, for the period of such detail, be considered as permanently
stationed there. 11 Comp.Gen. 153(1931). Further, the fixing of the
tenure of an appointment as either temporary or permanent, is not
synonymous with the fixing of a temporary or permanent duty station for
the purpose of reimbursing an employee's traveling expenses. 19
Comp.Gen. 347(1939). Thus, the classification description of Mr.
Wikstrom's position in Guam as a temporary assignment is not
determinative of his right to transfer expenses.
In the case before us the employee's travel orders under the heading
"change of station" specifically authorized residence transactions
expenses and the transportation of dependents and household goods.
Moreover, the Notification of Personnel Action (SF 50) stated the nature
of the action taken as "change in duty station." Under the decisions
cited above, it seems clear that a transfer for permanent duty was
effected within the meaning of the statute and the Federal Travel
Regulations, notwithstanding that the scheduled duration of the
assignment was only 14 months.
Accordingly, Mr. Wikstrom may be reimbursed for the purchase of a
residence on Guam and for his other transfer-related expenses insofar as
his claim is otherwise proper.
B-198206, April 4, 1980, 59 Comp.Gen. 369
Appropriations - Deficiencies - Anti-Deficiency Act - "Coercive
Deficiency" - International Cooperative Agreements - Indemnification
Provisions
State Department proposes to agree to indemnify Australia for damages
arising from a hurricane seeding cooperative agreement, subject to the
appropriation of funds by Congress for that specific purpose. This
violates the spirit, if not the letter, of the Anti-Deficiency Act.
Even though Congress is not legally compelled to make the
appropriations, it would be morally committed and has little choice,
particularly in view of the effect on foreign relations. This is what
we term a "coercive deficiency."
Appropriations - Supplemental - Substantive Legislation - To Correct
"Coercive Deficiency" - Propriety - International Cooperative Agreements
The Congress, in the context of a supplemental appropriation bill,
may give a Federal agency contract authority to assume liability for
damages arising out of an international cooperative agreement. However,
procedurally, this could be subject to objection as substantive
legislation in an appropriation bill. Foreign Governments - Agreements
- Cooperative - Indemnification Provisions - Authority to Settle Claims
General statutory authority to carry out international programs does
not necessarily carry with it authority to agree to settle foreign
claims against the United States. Foreign Governments - Agreements -
Cooperative - Indemnification Provisions - Insurance Premium Payments by
United States - Limitations on Liability
Payment by the United States of a portion of insurance premiums, to
protect Australia against financial liability in a joint project, is
permissible when it is a condition which Australia exacts in return for
its participation. Agreement should provide that the United States
assumes no liability beyond the amount of insurance coverage.
Matter of: Project Stormfury - Australia - Indemnification for
Damages, April 4, 1980:
This responds to various questions raised by the Acting Deputy
Assistant Secretary for Environment, Health, and Natural Resources,
Department of State (State), concerning the propriety of including
certain provisions for indemnification for damages in a cooperative
agreement to be concluded between the National Oceanic and Atmospheric
Administration (NOAA) and the Government of Australia for a weather
modification project. State is conducting the contract negotiations on
behalf of the United States.
As a continuation of Project Stormfury, a hurricane abatement
research program conducted by NOAA since the early 1960s, NOAA intends
to undertake a series of hurricane seeding experiments off the coast of
Australia in cooperation with its Australian counterpart. State asserts
that NOAA's authority to conduct these experiments is 15 U.S.C. 313
note, 49 U.S.C. 1463, "and the continued endorsement of Congress, which
each year has approved a NOAA budget containing a line item for
'hurricane modification'." Since an agreement needs to be consummated by
the end of June 1980 if activities are to commence during the 1980-81
tropical cyclone season, NOAA expects to request a supplemental
appropriation for the project in the near future.
Although it appears to be mutually recognized that virtually all
storms eligible for seeding would expire far away from land, thus
rendering the possibility of accident remote, and that proving a causal
relationship between the seeding and subsequent damage would be
difficult, Australia apparently views protection from liability for
damage as a key issue in the proposed cooperative agreement.
The submission states that Australia has proposed that the United States
agree to indemnify the Government of Australia for all damages arising
from the activities contemplated. However, according to State,
We have reason to believe that the Australians are willing to back
off from their total indemnification demand and agree to a sharing of
the risks, but will insist on firmer obligations on the part of the U.S.
Government.
Since neither NOAA nor the Department of Commerce has specific
authority to pay claims arising from their activities abroad, State has
asked a number of questions about the extent to which the United States
may properly agree to indemnification.
As State points out, the Australian proposal that the United States
provide complete indemnification for all damages that might result from
the project in an indeterminate amount is unacceptable because, aside
from the policy reasons, such a commitment would violate the
Anti-deficiency Act, 31 U.S.C. 665(a). That provision states:
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.
This office has long held that, absent specific statutory authority,
indemnity provisions in agreements which subject the United States to
contingent and undetermined liabilities contravene the Anti-deficiency
Act, supra, 35 Comp.Gen. 85, 87(1955); 16 id. 803(1937); 7 id.
507(1928).
State asks six specific questions, embodying possible alternatives to
a commitment to fully indemnify Australia. Questions 1 and 3 read as
follows:
1. Could the U.S./NOAA agree to pay a percentage of damages (no
limit), subject to the appropriation of funds by the Congress for that
specific purpose?
3. Could the U.S./NOAA agree to third party arbitration of disputes,
subject to the appropriation of funds by the Congress for the specific
purpose of paying expenses associated with and awards arising from the
arbitration process?
These proposals are subject to essentially the same Anti-deficiency
Act objection as is the full indemnity proposal. While in the proposals
embodied in questions 1 and 3, the liability to pay is still contingent
and the amount of the damages is still indefinite, it could be argued
that no violation would occur should NOAA agree to either
indemnification arrangement because no obligation will arise unless or
until the Congress makes an adequate appropriation for its fulfillment.
We concede that an agreement which makes it clear that the United States
is in no way obligated to make future payments should a contingent event
occur unless the Congress chooses to appropriate funds for such payments
does not violate the letter of the Anti-deficiency Act. However, we
think it violates its spirit.
The Anti-deficiency Act was born as a result of Congressional
frustration at the constant parade of deficiency requests for
appropriations it was receiving in the 19th century and early 20th
century, generated, it believed, by the lack of foresight and careful
husbanding of funds by Executive branch agencies. (See Annals of
Congress 10th Cong., 2d Sess. 1809.) A consistent theme runs through
myriad pages of floor debates and reports on supplemental appropriation
bills: The Congress was tired of receiving appropriation requests which
it could not, in good conscience, refuse because the agency had legally
or morally committed the United States to make good on a promise. We
term such commitments "coercive deficiencies" because the Congress has
little choice but to appropriate the necessary funds.
We think the requirement to pay an indefinite sum to Australia if a
disaster occurs, albeit not a legal obligation unless or until funds are
appropriated, is such a coercive deficiency. The fact that the
potential claimant is another sovereign nation and failure to honor the
agreement would have international consequences adds further weight to
this conclusion.
For this reason, in a number of cases decided in recent years, we
have expressed dissatisfaction with agreements which, in effect, oblige
Congress to enact deficiency appropriations. For example, in B-163058,
March 17, 1975, we found that a Department of Defense practice of
authorizing contractors to spend funds in excess of Government
contractual liability, with the expectation of reimbursement either from
subsequent year appropriations or through claims procedures "obviously
has an impact on Congressional prerogatives and we concur with the
Assistant Secretary of Defense that it should not be encouraged." See
also B-132900, June 3, 1976. In another instance, we stated that
contracts providing for assumption of risk by the Government for
contractor-owned property had to provide that nothing in the contract
could be considered as implying that Congress would, at a later date,
appropriate funds sufficient to meet deficiencies. 54 Comp.Gen. 824,
827(1975).
Question 2 reads as follows:
Could the U.S./NOAA agree to pay a percentage of damages up to a
certain amount, subject to the appropriation of funds by the Congress
for that specific purpose?
Although this proposal, unlike those in questions 1 and 3, avoids the
problem raised when the amount of liability is indeterminate by
suggesting that a maximum amount of liability be fixed, it is subject to
the same objections as proposals 1 and 3 since fulfillment of the
commitment will require a future congressional appropriation.
State also refers to an agreement which another United States agency
has with its Australian counterpart and suggests that Australia might be
equally willing to enter into such an arrangement with NOAA. State
describes that agreement as follows:
The liability provisions of that agreement provide, inter alia, that
the Australian side will purchase insurance in the amount of ten million
dollars (Australian) covering liability to third parties. For judgments
or settlements exceeding that amount, each Government agrees to pay
one-half of the amount. Payment of such sums by either side is made
contingent upon the appropriation of funds "for the specific purpose of
such indemnification" by the respective legislative bodies of the two
countries. No limit is placed on the amount of these payments.
This is essentially the same arrangement contemplated in question 1
and it raises the same problems addressed in answering that question.
That is, there is inherent in this arrangement a coercive deficiency.
State then asks:
4. If it is your opinion that the representation referred to in 1,
2, and 3 above could be made only with the endorsement of Congress, what
are your views as to how such endorsement could be obtained aside from
seeking amendment of NOAA's basic authorizing legislation (a step which
is not viewed as practical at this time)? Can this matter be handled as
part of the supplemental appropriation process?
We agree that the arrangements suggested in question one, two, and
three can be made only if authorized by the Congress. If the Congress
is willing it could enact language, in the form of contract authority,
authorizing NOAA to enter into one or any of the agreements described in
questions 1, 2, and 3. Procedurally, however, that kind of action could
be subject to a point of order if offered in the context of a
supplemental appropriation bill.
Of course, this alternative would also have a direct impact on the
budget even though the money might never have to be appropriated. While
the possibility of a mishap is remote, the potential damage, if there is
one, could be of very great magnitude, so that the amount which would
have to be authorized could be prohibitively large, as a practical
matter.
State's fifth question is as follows:
In your opinion, could the fact that a U.S. agency has a broad
statutory mandate to carry out international programs (but lacks
specific authority to, say, settle claims) have relevance as regards the
type of arrangements that could be made with a foreign government, if
such arrangements were deemed necessary in order to carry out those
programs?
As a general proposition, we would agree that an agency's statutory
mandate is relevant to the arrangement that could be made with a foreign
government. Of some relevance to this general principle is out
longstanding rule that an expenditure is covered by an appropriation
when it is reasonably necessary or incident to the execution of the
program or activity authorized by the appropriation.
E.G., 50 Comp.Gen. 534, 536(1971); 38 id. 782, 785(1959). As far as
this matter is concerned, however, we do not think that NOAA's general
statutory mandate to carry out international programs, cited above,
provides implied authority to enter into agreements to pay claims for
which the United States would not otherwise be liable. However, as
discussed below, the authority of the agency may be relevant to a
determination of whether it can enter into an agreement to protect a
participant with it in an international arrangement against liability.
State asks finally:
The possibility of procuring private insurance for this project has
been raised, and preliminary indications are that it could be obtained.
We request your confirmation that, in your opinion, there would be
neither a legal nor policy objection to the purchase of such insurance
in this situation. It is envisaged that the premium would be shared by
the two sides, and that the cost of same would be included in the
appropriation requested by NOAA.
It is true that the United States Government has a longstanding
policy that it will insure itself against its own risks. Absent express
statutory authority, funds supporting Government activities generally
cannot be applied to the purchase of insurance to cover loss of or
damage to Government property. 19 Comp.Gen. 798, 800(1940); 39 id.
145, 147(1959). Here, however, the insurance is not for the purpose of
protecting against a risk to which the United States would be exposed as
a result of participating in the project. Rather, it is the price
expected by this Government's partner in an international venture to
protect its interests. In this view, the insurance premium, with
Australia as a beneficiary, is merely one of the costs of the United
States' participation in this project for which any appropriation NOAA
receives for this purpose would be available. It should be explicitly
provided that the United States' liability under the agreement is
limited to its share of the insurance premiums.
B-194757, April 3, 1980, 59 Comp.Gen. 368
Purchases - Purchase Orders - Federal Supply Schedule - Prices -
Procurement at Lowest Price Requirement - Responsibility of FSS
Contractor
Agency may not justify purchase of other than lowest-priced dictation
system from Federal Supply Schedule (FSS) on basis of responsibility
factors, since General Services Administration determines responsibility
of FSS contractors when annual FSS contracts are awarded.
Matter of: Lanier Business Products, Inc., April 3, 1980:
Lanier Business Products, Inc. (Lanier), protests the award by the
Veterans Administration (VA) Hospital, Cincinnati, Ohio, of an order for
dictating equipment to the Dictaphone Corporation (Dictaphone) under a
Federal Supply Schedule (FSS) contract. Lanier objects to the award
because its quotation for the dictation system was less than that
submitted by Dictaphone. The protest is sustained.
Federal Property Management Regulations (FPMR) Sec.
101-26.408-2(1979) requires an agency to justify its decision to pay
more than the lowest price available under the FSS. The VA's
justification is that the performance of Lanier's local distributor
which would install and maintain the dictation system,
Donnellon-McCarthy (D-M), performed unacceptably on the maintenance
portion of the previous contract. Lanier is the FSS contractor, D-M is
its exclusive distributor for the area including the VA hospital.
Previous performance is not among the specific justifications listed at
FPMR Sec. 101-26.408-3, nor is it similar to them.
Those justifications are concerned primarily with the product, not the
contractor. VA essentially determined that D-M was nonresponsible.
That determination is not for a user agency to make when placing a
purchase order against an FSS contract. The General Services
Administration (GSA) determines the responsibility of FSS contractors
when it awards the annual contracts. See 41 C.F.R. 5A-73.301(1979).
User agencies must accept those determinations and cannot use
responsibility factors to avoid placing a purchase order with the
contractor offering the lowest-priced products meeting the user's
minimum needs.
If a user agency experiences difficulty with a contractor after
awarding a purchase order, the user may declare the contractor in
default and purchase elsewhere. FPMR Secs. 101-26.403-3 and
101-26.403-4. Under appropriate circumstances, GSA may declare an FSS
contractor in default on an overall basis for any or all items covered
by the contract. If that should occur, then user agencies may not
accept further performance from the contractor nor place further orders
with it and must purchase elsewhere. FPMR Sec. 101-26.403-6. When GSA
next awards the annual FSS contracts, defaults and other problems may be
considered in determining contractor responsibility.
Therefore, if the VA was having problems with D-M's contract
performance, as a minimum, the VA should have notified GSA so that GSA
could consider them in determining Lanier's responsibility when
subsequent annual FSS contracts were awarded. It was improper, however,
for the VA to award a purchase order to Dictaphone at a higher price
based on D-M's past performance.
The purchase order was awarded in April 1979 and the dictation system
was installed in July 1979. Therefore, no corrective action is being
recommended at this time. However, by letter of today, the matter is
being brought to the attention of the Administrator of Veterans Affairs
to prevent the occurrence of similar deficiencies in the future.
B-197873, April 2, 1980, 59 Comp.Gen. 366
Departments and Establishments - Services Between - Reimbursement -
Written Agreement Requirement - Loan of Personnel
Section 601 of the Economy Act of 1932, as amended, 31 U.S.C. 686(a),
does not require that all interdepartmental loans of employees be made
on a reimbursable basis. On the contrary, as we held in 13 Comp.Gen.
234(1934), such loans of services must be reimbursed only where so
provided by prior written agreement between the agencies involved. The
rule was neither nullified nor modified by our recent decisions in 56
Comp.Gen. 275(1977) and 57 Comp.Gen. 674(1978) which hold only that a
loaning agency must recover its actual costs, including significant
indirect costs, where reimbursement has been agreed upon in a prior
writing. Departments and Establishments - Services Between -
Reimbursement - Costs - Loan v. Transfer - Equipment, Supplies, etc.
Loans of supplies, equipment and materials may be made on a
non-reimbursed basis if for a temporary period and the borrowing agency
agrees to assume costs incurred by reason of the loan. However, as
further stated in 38 Comp.Gen. 558(1959), transfers which are or may
become permanent must be made on a reimbursable basis in order to comply
with section 601 of the Economy Act of 1932.
Matter of Reimbursement for Services, Supplies and Equipment
Furnished between Government Agencies, April 2, 1980:
This decision is in response to a letter from the General Counsel,
Agency for International Development, dated February 19, 1980,
requesting our views regarding reimbursements for services, equipment
and supplies furnished between Government agencies and departments
pursuant to section 601 of the Economy Act of 1932, as amended, 31
U.S.C. 686(a)(1976) (Economy Act). Specifically, it is questioned
whether our recent decisions in 57 Comp.Gen. 674(1978) and 56 id.
275(1977) contemplate reimbursement of actual costs for all interagency
transactions under the Economy Act, thereby overruling our determination
in 13 Comp.Gen. 234(1934) that reimbursement is required for interagency
loans of personnel only where so provided in a prior written agreement.
We were further asked whether interdepartmental loans of supplies,
equipment and materials may be made on a non-reimbursed, accommodation
basis.
Section 601 of the Economy Act, supra, was enacted to permit
Government agencies to contract with other agencies for the purchase and
sale of needed supplies and employee services. It was contemplated that
economies would be realized if agencies utilized the available resources
and expertise of other agencies. In order to encourage agencies to
supply such materials and employee services this provision authorized
reimbursement for the services and supplies involved providing, in
pertinent part, as follows:
(a) Any executive department or independent establishment of the
Government, or any bureau or office thereof, if funds are available
therefor and if it is determined by the head of such executive
department, establishment, bureau, or office to be in the interest of
the Government so to do, may place orders with any other such
department, establishment, bureau, or office for materials, supplies,
equipment, work or services, or any kind that such requisitioned Federal
agency may be in a position to supply or equipped to render, and shall
pay promptly by check to such Federal agency as may be requisitioned,
upon its written request, either in advance or upon the furnishing or
performance thereof, all or part of the estimated or actual cost thereof
as determined by such department, establishment, bureau, or office as
may be requisitioned; * * *
In 13 Comp.Gen. 234(1934) we assessed the impact of section 601 of
the Economy Act on the interagency loaning of personnel and determined
that--
* * * (i)n the absence of a written order or agreement in advance, or
unless the written order or agreement specifically provides for
reimbursement, the loan of personnel will be regarded as an
accommodation for which no reimbursement or transfer of appropriation
will be made for salaries. * * * id., at 237.
Thus, section 601 of the Economy Act, in effect, affords agencies the
option of contracting for the interagency loan of personnel with
provision for reimbursement.
This decision was neither overruled nor modified by our more recent
rulings in 56 Comp.Gen. 275(1977) and 57 id. 674(1978). Those cases
specifically addressed the separate use issue of whether certain
indirect costs must be recovered by agencies which agree to supply
services pursuant to section 601 of the Economy Act. These decisions
require reimbursement of indirect and other actual costs only in Economy
Act transactions, but not when the personnel loan is an informal
accommodation.
The holding of these cases is not inconsistent with 13 Comp.Gen. 234
and, accordingly, the rule in that case remains in effect.
We previously examined the nature of the reimbursement requirement
applicable to interdepartmental transfers of supplies, equipment and
materials in 38 Comp.Gen. 558(1959). In that case, which involved a
non-reimbursed, temporary loan of a tugboat by the Maritime
Administration to the Coast Guard, we stated that such loans of property
for temporary periods are proper where the borrowing agency agrees to
assume the costs incurred by reason of the loan. See also 30 Comp.Gen.
295(1951). However, we further determined that loans for indefinite
periods, which could become permanent transfers, violate section 601 of
the Economy Act if made on a non-reimbursed basis. Accordingly, we here
hold that while temporary loans of property between agencies may be made
on an accommodation basis, a supplying agency must be fully reimbursed
for transfers which are or could become permanent.
B-198070, April 1, 1980, 59 Comp.Gen. 365
Federal Employees Part-Time Career Employment Act - Military Leave -
Entitlement
An employee holding an appointment in the civil service as a
part-time career employee pursuant to the Federal Employees Part-Time
Career Employment Act, 5 U.S.C. 3401-3408(Supp. II, 1978), and as a
member of the Washington Air National Guard is required to perform
annual training." He is not entitled to military leave since legislative
history of the Military Leave Act indicates that part-time employees are
to be excluded from benefits.
Matter of: William P. Wisinger, April 1, 1980:
The issue presented in this case upon a request for an advance
decision from the Authorized Certifying Officer of the Water and Power
Resources Service of the Department of the Interior is whether military
leave may be granted to a part-time career employee. The answer is no.
It has long been a position of this Office that the benefits of the
Military Leave Act do not extend to part-time employees of the Federal
Government. In our decision 35 Comp.Gen. 5(1955) we determined that
statements in the legislative history of the laws authorizing military
leave precluded extending such leave to part-time employees. Section 4
of the act of July 1, 1947, 61 Stat. 239, specifically provided that the
words "officers and employees of the United States or of the District of
Columbia" as used in the military leave statutes "shall be construed to
mean all officers and employees of the United States or of the District
of Columbia, permanent or temporary indefinite, without regard to
classification or terminology peculiar to the Federal Civil Service
System."
On page 2 of Senate Report No. 327, 80th Congress, to accompany H.R.
1845 which became the act of July 1, 1947, the purpose of the provision
quoted above was explained as follows:
This bill clarifies which type of employees are entitled to military
leave. In the past, temporary indefinite employees, who might work for
many years for the Government, were not entitled to such leave. This
bill permits permanent and temporary indefinite employees to receive
military leave. It excludes, however, the purely temporary employees,
who are those employed for a definite tour of duty for periods of less
than 1 year, and part time or intermittent employees.
Therefore, the Congress indicated that the statute was not intended
to cover part-time or intermittent employees and that the addition of
the words "permanent or temporary indefinite" should not be construed to
that effect. Where the Congress intended part-time employees to receive
military leave, it has so provided by specific legislation. See the act
of June 22, 1956, 70 Stat. 331, which authorized military leave for
substitute postal employees.
(Repealed by Public Law 91-375, 6(c)(18)(B), Aug. 12, 1970, 84 Stat.
776, 5 U.S.C. 6323 note.) In the consideration of the 1956 law, a
provision which would have established military leave generally for
part-time employees with regularly scheduled tours of duty was rejected.
See the hearings on H.R. 3747 before the Subcommittee of the Committee
on Armed Services, United States Senate, June 7, 1956, at pages 11-17.
Therefore, the Congress, in restricting eligibility for military
leave to "permanent or temporary indefinite" employees (5 U.S.C.
6323(a)), excludes from eligibility employees having part-time,
intermittent, and temporary appointments for periods of less than 1
year.
The Federal Employees Part-Time Career Employment Act of 1978 October
10, 1978, Public Law 95-437, 92 Stat. 1056, extended to part-time career
employees the benefits of the Civil Service Retirement System, 5 U.S.C.
8347(g)(Supp. II, 1978), Federal Employees Group Life Insurance, 5
U.S.C. 8716(b)(Supp. II, 1978), and the health benefits program, 5
U.S.C. 8913(b)(Supp. II, 1978). However, there was no amendment
extending to part-time employees the benefits of military leave. The
language of 5 U.S.C. 6323 has remained essentially the same since our
decision in 35 Comp.Gen. 5.
In view of the above, Mr. Wisinger may not be granted military leave.
B-194610, April 1, 1980, 59 Comp.Gen. 363
Contracts - Mistakes - Contracting Officer's Error Detection Duty -
Government Estimate Comparison
Where contracting officer did not know that Government estimate was
erroneous when bidder was requested to verify low bid based on estimate
and other bids received, verification request was sufficient. Bids -
Mistakes - Unconscionable to Take Advantage - Rule
Award to low bidder after bid verification was not unconscionable,
notwithstanding second low bid was about 130 percent more than low bid,
since it is not established that contracting officer knew that
Government was "essentially 'getting something for nothing.'"
Matter of: Andy Electric Company, April 1, 1980:
Andy Electric Company (Andy) has requested that contract No.
DACA21-77-C-0062 awarded February 18, 1977, for alteration of various
fire alarm systems at Hunter Army Airfield be increased by $34,642 to
$61,221,20 because of an error in bid alleged 5 months after completion
of the work and before final settlement of the contract.
Prior to award of the contract, Andy was advised that the Government
cost estimate for the work was $37,201 and that the two other bids
received were $61,223 and $81,565. Andy consequently was requested to
verify its low bid of $26,579.20. Andy verified the bid. As a result
of Andy's present claim for an increase in the contract price, the
Government estimate was reviewed and has been revised upward to $53,508.
Andy contends that in verifying the bids it relied upon the closeness
of the then-reported Government estimate and discounted the significance
of the higher bids. Andy states that, if it had been presented with a
correct Government cost estimate, it would have made a thorough
examination of all the bid computations and discovered the error prior
to award. Because the erroneous Government estimate ALLEGEDLY WAS
RESPONSIBLE FOR THE VERIFICATION, ANDY CONTENDS THE verification request
was improper and, therefore, that it should be allowed to recover the
actual cost of the work. If recovery is not allowed on this basis, Andy
suggests that it be on the basis that it is unconscionable to hold Andy
to the contract price.
We have recognized that a narrow gap between a low bid and a
Government estimate might logically instill confidence in a bidder as to
the validity of its price. Frank Black, Jr., Incorporated, B-191647,
June 26, 1978, 78-1 CPD 463. However, we have recognized also the
inexact nature of Government estimates. Schottel of America, Inc.,
B-190546, March 21, 1978, 78-1 CPD 220. Further, advice to a bidder as
to the amount of a Government estimate and the next low bid is only for
the purpose of alerting the low bidder as to why the contracting officer
thinks there may be an error in the low bid.
It is not a representation or guarantee of the accuracy of the
Government estimate or next low bid. A low bidder has no right to
assume that a Government estimate is any more accurate than any of the
other bids. The Government estimate and the amounts bid by bidders are
dependent upon the respective perceptions and judgments of the work
involved and are also susceptible to errors in preparation. When the
contracting officer seeks verification, the contracting officer is not
indicating to the low bidder that the Government estimate and other bids
are right-- only that the low bid is out of line with those amounts and
that the bidder should review its bid to ascertain whether it made an
error. How the bidder chooses to use that information in deciding the
extent to which it will undertake a review of its bids is a matter of
judgment with concurrent risks. In that regard, we have indicated that,
when the bidder knows the information upon which the contracting
officer's request for verification is made, "the primary duty for
assuring that bid prices are correct rests with the bidder." Atlas
Builders, Inc., B-186959, August 30, 1976, 76-2 CPD 204.
In this case, the contracting officer had no knowledge that the
Government estimate was erroneous when Andy was advised of the estimate
and when the award was made. It is unfortunate that Andy chose to rely
on the closeness of its bid to the Government estimate instead of the
larger difference between its bid and the other bids in deciding not to
make a thorough review of the bid. However, as indicated above, the
responsibility for undertaking an examination of the bid to assure its
accuracy after being advised by the contracting officer as to the
possibility of error rests with the bidder.
Moreover, since the contracting officer did not know at the time of
verification and award that the Government estimate was erroneous, it is
not established that the contracting officer knew that the Government
was "essentially 'getting something for nothing'" when the contract was
consummated. Porta-Kamp Manufacturing Company, Inc., 54 Comp.Gen.
545(1974), 74-2 CPD 393. Where that element was missing, we have
considered the record to be insufficient to find a contract to be
unconscionable when the second low bid was as much as 200 percent more
than the contract price. Reaction Instruments, Inc., B-189168, November
30, 1977, 77-2 CPD 424. Here, the second low bid was only about 130
percent more than Andy's bid. Therefore, the award to Andy is not
unconscionable.
Accordingly, Andy's claim for an increase in the contract price is
denied.
B-197679, March 31, 1980, 59 Comp.Gen. 359
Interest - Debts Owed United States - General Rule - Contractual v.
Noncontractual Debts
Distinction between contractual debts and those arising from
overpayments of noncontractual benefits is not relevant in determining
whether it is proper to charge interest on debts due the Government,
pursuant to Federal Claims Collection Standards. Thus, absent a statute
or other rule to the contrary, Veterans Administration (VA) has
authority to charge interest on equitable theory that creditor is
entitled to compensation for detention of his money without regard to
manner in which obligation arose. Federal Claims Collection Act of 1966
- Procedure - Standards - Agency Implementation - Interest Collection
Federal Claims Collection Standards do not mandate procedural
requirements to be followed by agencies in charging interest on
delinquent debts. Therefore VA is free to adopt such procedural
refinements as it deems appropriate. For example, where debtor could
demonstrate that original debt notification was never received,
imposition of interest for time between original notification and later
set-off against other amounts due debtor by Government would appear to
be inequitable. Consequently, it might be desirable to provide by
regulation for a second notification.
Matter of: Collection of Interest on Veterans Administration Benefit
Overpayments, March 31, 1980:
By letter of January 29, 1980, the General Counsel of the Veterans
Administration (VA) requested our advice on implementing section 102.11
of the Federal Claims Collection Standards. That section was recently
revised to provide in part:
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 * * * .
4 C.F.R. 102.11, as amended, 44 Fed.Reg. 22701, 22702 (April 17, 1979).
The General Counsel raises questions concerning VA's authority to
charge interest on debts arising out of direct benefit or entitlement
programs, including the unauthorized provision of medical care, and
concerning the due process protection that will be necessary before
instituting a policy of charging interest.
The VA General Counsel refers to a January 3, 1977 GAO memorandum
from our General Counsel to the Director of our Financial and General
Management Studies Division, B-137762.21-0.M., containing our legal
analysis of the authority for Federal agencies to charge interest on
delinquent accounts. In that memorandum we stated the following:
While there is no general statutory provision authorizing agencies to
assess interest on delinquent accounts, such a right has been recognized
by the courts as a measure of damages for delay in payment of an
obligation. * * *
Consequently, we concluded that agencies may charge interest on
overdue accounts as long as the rate of interest is not so high as to
constitute a penalty and is assessed only after notice of the debt is
given and the debt itself is liquidated.
The VA General Counsel recognizes that the authorities cited in the
GAO memorandum clearly support a willingness by courts, in the absence
of a statutory or judicial mandate, to assess interest in situations
where the transaction giving rise to the overpayment is contractual. He
points out that this is so even where the terms of a contract contain no
specific obligation to repay the debt with interest. However, he
questions whether these authorities also support charging interest in
the situation where the debt did not arise out of a contractual
relationship.
We believe that VA has the authority to charge interest on debts
arising from direct benefit programs and that the authorities cited in
the memorandum provide support for this position.
In our opinion, the distinction between contractual debts and those
arising from overpayments of benefits is not relevant in determining
whether it is proper to charge interest on delinquent debts owed the
Government. Interest on delinquent debts has traditionally been allowed
in the absence of a statute on the equitable theory that a creditor is
entitled to compensation for the detention of his money without regard
to the manner in which the obligation arose. The standards ordinarily
applied are that the amount be liquidated and notice of the debt and the
obligation to repay the debt with interest be communicated to the
debtor.
See Restatement of The Law of Restitution, Sec. 63 and Sec. 156, Comment
b. This rationale has been applied to debts owed the Government arising
from noncontractual subsidy overpayments. Thus, in Wilson & Co. v.
Reconstruction Finance Corporation, 194 F.2d 1016(Emer.Ct.App. 1952),
the court held that it was within the power of the Government to impose
and collect interest. A series of cases that also involved the
authority of the Reconstruction Finance Corporation to charge interest
on the recovery of subsidy overpayments relied on the Wilson decision.
See United States v. Bass, 215 F.2d 9(8th Cir. 1954); H. P. Coffee
Company v. Reconstruction Finance Corporation, 215 F.2d 818(Emer.Ct.App.
1954); Riverview Packing Co. Inc. v. Reconstruction Finance
Corporation, 207 F.2d 361(3rd Cir. 1953); Reconstruction Finance
Corporation v. Service Pipe Line Co., 206 F.2d 814(10th Cir. 1953).
It is important to emphasize that a benefit overpayment which is not
repaid when due and with respect to which waiver is not granted should
not be classified as a statutory "benefit." Rather, it is a debt owed
the Government to which judicially approved, equitable rules to prevent
the unjust enrichment of the debtor at the expense of the creditor
should apply.
Similarly, we find no support for the proposition that interest must
be "judicially mandated," by which we understand the General Counsel's
argument to be that the equitable amount due as interest for failure to
timely repay a debt can only be initiated by a court and cannot be
established in the first instance by administrative action.
On the question of whether interest must be judicially mandated, a
series of cases involving overpayments of noncontractual subsidies and
amounts owed the Government as a result of contract renegotiation
proceedings endorsed the administrative imposition of interest. United
States v. Philmac Mfg. Co., 192 F.2d 517(3 Cir. 1951), a renegotiation
case, had the following to say on this point at page 519:
That interest may be recovered on money due the Government even in
unilaterally determined liability is well recognized. Likewise, it has
seemed pretty clear to courts handling cases arising under the
Renegotiation statutes that one of the objectives to be attained was
prompt collection from those who owed the Government money.
Wilson & Co. v. Reconstruction Finance Corporation, 194 F.2d
1016(Emer.Ct. of Appeals, 1952), applied the rational in the Philmac
case to a situation where interest was imposed on noncontractual subsidy
overpayments by administrative order rather than by regulation, as
follows, at 1022:
That (the Philmac) situation is closely akin to the one before us.
In one, overpayments upon contracts were in question; in the other,
overpayments on subsidies.
But in both instances, in the first by regulation, in the second by a
declared policy, known to complainant and previously acceded to by it,
the question was as to the power of the Government agency to impose and
collect interest.
While an agency determination of the amount of interest to be charged
on delinquent debts is not binding on the courts absent a statute,
judicial precedents clearly establish the right to charge interest in
such situations.
On the same issue of imposing interest on debts collected by set-off
against other amounts due the debtor by the Government, the VA General
Counsel questions the propriety of charging interest without providing
the debtor an opportunity to address the issue of his fault in failing
to repay the amount due in a timely manner. Section 8020.20b of the
Department of Treasury Cash Management Regulations, revised by
Transmittal Letter 267 (May 7, 1979), provides as follows concerning the
charging of interest on amounts owed the Government which are not
covered by contracts or other formal arrangements:
Initial notifications of amounts due the Government, not covered by
contracts, agreements, or other formal payment arrangements, will inform
the debtor of the basis for the indebtedness, the date by which payment
is to be made (due date), and the requirements concerning additional
charges for payments received after the due date.
Similarly, Section 102.2 of the Claims Collection Standards, 4 C.F.R.
102.2, requires written demands upon debtors which are to include
applicable interest requirements and which provide for an opportunity
for the debtor to contest the debt. Also, 38 U.S.C. 3102 authorizes the
Administrator of VA to waive recovery of benefit overpayments where
recovery would be against equity and good conscience.
Once a debtor has had an opportunity to contest the validity of the
underlying debt, or request its waiver, it is difficult to postulate a
situation where he would have a defense to the charging of interest
based on his delay in repaying the amount owed. In situations where a
debtor could demonstrate that the original debt notification was never
received, the imposition of interest for the time between the original
notification and the later set-off of the amount due would appear to be
inequitable. Accordingly, provision by regulation for a second
notification, before set-off, of the existence of the debt and the
amount of interest accrued since the original due date, with an
opportunity to contest the debt or the imposition of interest, might be
desirable.
In any event, the Claims Collection Standards do not mandate
procedural requirements to be followed in assessing and collecting
interest on delinquent debts. Thus VA is free to establish such
procedural refinement as it deems appropriate in implementing section
102.11.
B-195827, March 31, 1980, 59 Comp.Gen. 355
Contracts - Negotiation - Conflict of Interest Prohibitions -
Organizational - Agency Responsibilities - Medical Monitoring Services
Determination that an award to particular firm would result in an
organizational conflict of interest must be made by procuring activity,
with which lies the responsibility for balancing Government's competing
interests in preventing bias in performance of contract and awarding
contract that will best serve Government's needs to the most qualified
firm.
Contracts - Negotiation - Competition - Exclusion of Other Firms -
Exclusion on Basis of Conflict of Interest - Reasonableness of
Determination
Agency policy of not contracting with manufacturers of cardiac
pacemakers or their affiliates for followup monitoring is reasonable.
Because the health and safety of the patient is critically affected,
complete objectivity in performance of pacemaker monitoring contract is
necessary.
Matter of: Cardiocare, a division of Medtronic, Inc., March 31,
1980:
Cardiocare, a division of Medtronic, Inc. (Cardiocare), protests the
refusal of the Veterans Administration (VA) to consider the proposal it
submitted under solicitation No. M2-Q70-79. The solicitation was for
the monitoring of cardiac pacemakers implanted in VA hospital patients.
The protested solicitation was issued on March 15, 1979, by the VA's
Marketing Division for Medical Equipment. Cardiocare soon thereafter
submitted its proposal. However, the VA did not make a final decision
to exclude Cardiocare until July 31, 1979. On that date, the VA's
Director of Supply Service sent a letter to Medtronic, Inc., stating the
following:
The proposal of Cardiocare has been carefully considered at various
levels of the agency, including the Pacemaker Committee. It is our
decision that we continue our policy of not contracting for follow-up
service on pacemakers with the manufacturers of these units. It is also
our decision that the follow-up monitoring will be conducted by an
independent agency which will give us an impartial assessment of the
performance of pacemakers supplied by any and all vendors of pacemakers.
We noted in Cardiocare's appeal that the offered some services which
they contend we need and which were not offered by our contract. It is
our decision that we did not want these services. Therefore, the
argument of Cardiocare is not persuasive. They state that the purpose
of pacemaker surveillance is to evaluate the patient and not the
product. This view is not acceptable to the VA. It is our intention
that the monitoring of the patient will be conducted by the physicians
who are treating the patients on behalf of the Veterans Administration,
not by a third party. Coincidentally, Cardiocare in previous
representations emphasized the need for keeping surveillance over the
pacemaker units, not the patient. Since their affiliation with our
firm, they have switched their position to one of intent to monitor
primarily the patient. Again I must emphasize that this latter is not
the desire of the Veterans Administration.
Cardiocare states that it received the foregoing letter on August 10,
1979. By letter dated August 17, 1979, and received by us on August 20,
1979, Cardiocare protested the Director of Supply Service's decision.
Cardiocare contends that the VA's policy of having the monitoring and
evaluation of the quality and performance of a pacemaker done by
companies independent of the manufacturer violates the Federal
Procurement Regulations (FPR). The company alleges that the VA
negotiated the solicitation in a noncompetitive manner in making an
award to Pacemaker Diagnostic Clinic of America (PDCA). Cardiocare
emphasizes that FPR 1-3.101(c) (1964 ed. amend 194) provides that
whenever property or services are procured by negotiation, proposals
shall be solicited from the maximum number of qualified sources.
In applying its policy as a rigid rule Cardiocare asserts that the VA
has foreclosed considerations such as quality of service and price in
determining which companies should be awarded contracts. The company
believes that, at the very least, physicians at each VA hospital should
be able to choose the pacemaker monitoring systems they desire based on
the factors of quality and price.
With regard to the Director of Supply Service's reasons given in
support of the VA policy, Cardiocare claims that while pacemaker
monitoring does disclose the quality of a pacemaker, the actual purpose
of the monitoring is to evaluate the functioning of the heart and
pacemaker as a system. According to Cardiocare, the monitoring service
is merely a routine medical checkup for pacemaker patients and that in
the vast majority of cases, the problems detected are not related to the
quality of the pacemaker unit. Furthermore, in Cardiocare's opinion,
the policy of barring any company associated with the manufacturer of a
pacemaker is unwarranted here in view of Cardiocare's excellent record
of providing unbiased and high quality service.
Cardiocare also asserts that there is absolutely no evidence which
would imply that its relationship with Medtronic, Inc., would adversely
affect the objectivity and accuracy with which it provides its pacemaker
monitoring service. The company avers that as one of the largest
pacemaker followup services in the world, it provides both 24-hour
electrocardiogram monitoring and telephonic followup of pacemaker
patients. Following telephonic transmission of a patient's
electrocardiogram Cardiocare alleges that it analyzes and medically
reviews, through a staff cardiologist, the EKG report. The report,
including the underlying data, is then forwarded to the patient's
physician. Cardiocare avers, then, that all the data available to the
physician, since he receives an actual copy of the EKG strip.
Therefore, Cardiocare believes that there is no validity to the VA's
concern that Cardiocare might be motivated to misinterpret or fail to
mention problems detected in Medtronic's pacemakers.
The VA declares that the Director of Supply Service's July 31, 1979,
letter adequately sets forth its position in this matter. Nevertheless,
the agency states that FPR 1-3.101(c) is not applicable here because the
method of procurement involves multiple-award contracting.
Multiple-award contracts are in the nature of basic agreements as
authorized by FPR Sec. 1-3.410. The VA emphasizes that it was always
its intention to arrange for multiple contracts and, although no award
other than to PDCA has yet been made, potential contractors are being
evaluated.
In this regard, the VA states that it initially expected to contract
with Cardiocare when the firm was "independent" from Medtronic but that
after it was purchased or merged with Medtronic, Inc., Cardiocare no
longer had the independent status which the VA required. In any event,
the VA believes that because it contemplates multiple-award contracts,
such competition as is required by the FPR will be obtained.
PDCA claims that the reasons which the VA has chosen not to contract
for pacemaker monitoring services with any company which has a
relationship with a pacemaker manufacturer are in the best interest of
the Government and the VA patients themselves. In PDCA's opinion, the
VA is rightfully concerned that the data which it obtains are
independent data from a contractor who has no relationship with a
pacemaker manufacturer and upon which data a high degree of reliance can
be placed. With respect to Cardiocare's argument that it provides the
underlying data to the physician. PDCA takes the position that a
fundamental distinction must be made between the reports of the
operation of a single pacemaker and the totality of data derived from
the testing of a numerous pacemakers. According to PDCA, the VA can
detect trends in the operation of a particular make and model of
pacemaker from an analysis of the latter type of data. PDCA urges that
data analyzing numerous patients who have been tested must be collected
and analyzed by an independent company in order to insure its validity.
We have recognized that procuring activities have a legitimate
interest in protecting the Government from the bias that might result
from awarding a contract to a firm having an organizational conflict of
interest. See Planning Research Corporation Public Management Services,
Inc., 55 Comp.Gen. 911(1976), 76-1 CPD 202. At the same time, because
it is a general policy of the Federal Government to allow all interested
qualified parties an opportunity to participate in its procurement in
order to maximize competition, unless there is a clearly supportable
reason for excluding a firm, we recognize that a firm should not be
excluded from competition simply on the basis of a theoretical conflict
of interest. PRC Computer Center, Inc.; On-Line Systems, Inc.; Remote
Computing Corporation; Optimum Systems, Inc., 55 Comp.Gen. 60(1975),
75-2 CPD 35. Furthermore, the determination as to whether a sufficient
possibility exists that an award to a particular firm would result in an
organizational conflict of interest must be made by the procuring
activity, with which lies the responsibility for balancing the
Government's competing interest in (1) preventing bias in the
performance of certain contracts which would result from a conflict of
interest, and (2) awarding a contract that will best serve the
Government's needs to the most qualified firm. See Planning Research
Corporation Public Management Services, Inc., supra.
In this case, regardless of whether the monitoring service is
characterized as keeping surveillance over the pacemaker units
themselves or as checking the medical condition of the patient, it is
clear that complete objectivity is necessary. Since the record shows
that Medtronic, Inc., supplies 50 percent of the pacemakers used by VA,
Cardiocare would be placed in the position of having to decide whether
its parent company's pacemaker is adequate for VA patients if it were
AWARDED A CONTRACT. BECAUSE THE HEALTH OF THE VA PATIENTS IS SO
directly involved, we believe that the VA's policy of not contracting
with pacemaker manufacturers is reasonable.
The protest is denied.
B-193787, March 31, 1980, 59 Comp.Gen. 353
Station Allowances - Military Personnel - Temporary Lodgings -
Dependents' Relocation Overseas - Member's Change to Restricted Duty
Where a member of the uniformed services lives with his dependents in
the vicinity of his duty station outside the United States and the duty
station is reclassified from nonrestricted to restricted, thereby
requiring the dependents to be relocated to a designated place outside
the United States or in Hawaii or Alaska, the Joint Travel Regulations
may be amended to provide the member a temporary lodging allowance for
his dependents at the new designated location. To the extent this
conflicts with 50 Comp.Gen. 83, that decision will no longer be
followed.
Matter of: Temporary Lodging Allowance, March 31, 1980:
The issue is whether in our decision, Station Housing and
Cost-of-Living Allowances (Station Housing), B-193787, February 5,
1979,we intended to allow for the payment of a temporary lodging
allowance (TLA) to a member for his dependents when the dependents, who
are residing in the vicinity of a member's duty station, are relocated
incident to the member's duty station being declared a restricted area.
For the following reasons TLA may be paid in the above circumstances.
The issue was raised by letter of March 22, 1979, from the Assistant
Secretary of the Navy (Manpower, Reserve Affairs and Logistics).
In our decision Station Housing, we were asked to decide the
propriety of amending the Joint Travel Regulations (JTR) to provide for
the payment of station housing and cost-of-living allowances to members
for their dependents who were relocated under 37 U.S.C. 406(h)(1976) to
a designated place outside the United States or in Hawaii or Alaska
incident to the reclassification of the members' duty station from an
unrestricted area to a restricted area. There we stated that in the
described circumstances appropriate allowances under 37 U.S.C. 405(1976)
may be paid. Since TLA, as well as overseas housing and cost-of-living
allowances are paid under 37 U.S.C. 405, the question is whether the
phrase "appropriate allowances under 37 U.S.C. 405" includes the payment
of TLA.
Section 405 of title 37, United States Code (1976), the Statute
authorizing station allowances, is a broadly written statute which
provides for increased cost-of-living allowances, as authorized by the
Secretaries concerned, incident to a duty assignment outside the United
States. Station allowances prescribed under 37 U.S.C. 405 include: (1)
housing and cost-of-living allowances, (2) interim housing allowances,
and (3) TLA. See Lieutenant Colonel Charles D. Robinson, 56 Comp.Gen.
525, 526(1977) and 1 JTR para. M 4300-4.
The purpose of TLA is to partially reimburse a member for the more
than normal expenses incurred during occupancy of hotels or hotel-like
accommodations and expenses of meals obtained as a direct result of use
of temporary lodgings which do not have facilities for preparing and
consuming meals. 1 JTR para. M4303-1. Temporary lodging allowances are
payable when a member, his dependents, or both, are required to and do
occupy hotel or hotel-like accommodations at personal expense. 1 JTR
para. M4303-2a.
In 50 Comp.Gen. 83(1970) we were asked to decide whether the Joint
Travel Regulations could be amended to authorize TLA in a situation
similar to the one decided in Station Housing. In that decision,
however, the dependents were authorized advance return to the United
States under 37 U.S.C. 406(e) and (h). We have often stated that a
temporary lodging allowance is a permanent station allowance, not a
transportation allowance, and therefore is payable only as a consequence
of change of permanent station orders. See 49 Comp.Gen. 299(1969).
Relying upon this premise in 50 Comp.Gen. 83, we disallowed the payment
of TLA since 37 U.S.C. 406(e) and (h) only provide for the payment of
transportation allowances and nothing else.
As is stated above, however, in Station Housing, we held that a
member whose dependents were relocated under 37 U.S.C. 406(h) would be
entitled to receive allowances under 37 U.S.C. 405. Thus,
notwithstanding our decision in 50 Comp.Gen. 83, we extended the payment
of station allowances to people who are relocated under 37 U.S.C.
406(h).
In reaching our decision in Station Housing, we recognized that whenever
a duty station is reclassified and dependents are relocated to a
designated location away from the duty station the member incurs the
same expenses for his dependents as if he and his dependents moved to a
new duty station incident to a permanent change of station. Since the
member incurs the same expenses as if he and his dependents moved to a
new duty station incident to a permanent change of station the member
may be authorized the same station allowances. Following that
reasoning, since TLA is a station allowance and since we have extended
other station allowances to movements ordered under 37 U.S.C. 406(h), it
appears TLA could also be authorized in such circumstances.
Moreover, although generally in the past we have held that TLA is
payable only as a consequence of a permanent change of station, it is
also payable in other circumstances. This includes when a member, for
reasons beyond his control, must vacate permanent quarters in the
vicinity of his permanent duty station and use commercial establishments
and accommodations while seeking other permanent quarters or pending
reoccupancy of the permanent quarters formerly occupied. 1 JTR M4303-1,
item 2. See: Sergeant Herman Mitchell, Jr., 55 Comp.Gen. 1440(1976).
In consideration of the above it is now our view that 37 U.S.C. 405
is broad enough to support a carefully drawn regulation which would
provide for the payment of TLA where the member's duty station does not
change but is reclassified from a nonrestricted area to a restricted
one. Accordingly, the regulations may be amended to authorize TLA when
dependents are living with the member in the vicinity of his duty
station and are relocated to a designated place outside the United
States or in Hawaii or Alaska incident to a reclassification of the
member's duty station.
To the extent this conflicts with 50 Comp.Gen. 83, that decision will
no longer be followed.
B-156591, March 31, 1980, 59 Comp.Gen. 352
Leaves of Absence - Annual - Accrual - Maximum Limitation -
Establishment - Reemployment Under Lower Leave Ceiling
An employee who had a 45-day annual leave ceiling left the Federal
service and received a lump sum payment. Upon re-entry into Federal
service, 3 years later, the employee's annual leave ceiling is
established at 30 days since he had used all of his previous 45 days of
annual leave.
Matter of: Walter A. Radeloff - Annual Leave Ceiling, March 31,
1980:
Mr. Walter A. Radeloff appeals our Claims Division Settlement,
Z-2817694, dated November 15, 1979, which denied his claim to be given
an annual leave ceiling of 45 days upon his reinstatement with the
Government.
Mr. Radeloff served overseas from 1959-1962 and thus had a maximum
annual leave ceiling of 45 days. He transferred to the United States
and served with the Atomic Energy Commission. At the time of the
transfer, Mr. Radeloff's annual leave ceiling was 45 days and it
remained at 45 days until he separated from the Federal service in 1966.
At that time, Mr. Radeloff received a lump sum payment for his unused
annual leave. Mr. Radeloff re-entered Federal service in 1969 at which
time his leave ceiling was set at 30 days.
Mr. Radeloff believes that his leave ceiling should have been set at
45 days upon re-entry into Federal service for the following reasons.
His argument is that lump sum payment of leave is not usage as applied
by Chapter 630 of the Federal Personnel Manual. Therefore, since he had
never "used" his annual leave his ceiling should be set at 45 days. We
disagree with Mr. Radeloff's contention.
After Mr. Radeloff received his lump sum payment in 1966, he lost his
right to have that leave recredited to him as soon as the period covered
by the lump sum expired. See 5 U.S.C. 6306(1976). After the period
covered by the lump sum expired, Mr. Radeloff had received his full
entitlement for his annual leave.
In other words, at that time, he had "used" his annual leave and his
leave accumulation was liquidated. 5 U.S.C. 5551(a). When he
re-entered Federal Service, he became subject to the 30 day ceiling and
he had no right to have the 45 day ceiling reinstated.
Accordingly, our Claims Division settlement is upheld.
B-194865, March 28, 1980, 59 Comp.Gen. 349
Contracts - Protests - Timeliness - Adverse Action Basis Determination -
Resolicitation of Protested Procurement - Notice to Protester Status
Issuance of new solicitation after firm protests to agency
cancellation of prior solicitation is not adverse action on protest
where protester may reasonably believe protest is still under active
consideration. Bids - Estimates of Government - Reasonableness -
Statutory Restrictions
Protest by low bidder against reasonableness of Government estimate
is denied where agency reviewed estimate pursuant to protester's
objections and provided reasonable explanations supporting the estimate.
Despite several revisions increasing the estimate, low bid still
exceeded awardable range allowed by 33 U.S.C. 624(1976). Accordingly,
the invitation for bids was properly canceled pursuant to the statute.
Bids - Estimates of Government - Revision - Reasonableness - After
Cancellation for Price Unreasonableness
Protester's allegation that, in order to make award, agency
improperly increased its estimate from that of prior procurement
canceled due to unreasonable bids is rejected where agency explains that
increase reflects fuel costs, which increased 100 percent over the
8-months period and inconsistencies in protester's bidding pattern
indicate that protester's bid may not have been correct.
Matter of: Cottrell Engineering Corporation, March 28, 1980:
Cottrell Engineering Corporation protests the rejection of its bid
under invitation for bids DACW54-79-B-0007, issued by the Army Corps of
Engineers, Wilmington District and the resolicitation of the procurement
under IFB DACW54-79-B-0021 and IFB DACW54-79-B-0029.
On November 16, 1978, the Army issued the first IFB for maintenance
dredging at Hancock Creek, North Carolina. Cottrell was the low bidder,
with a price of $244,200 and the only other bid submitted was for
$395,800. However, Cottrell's price exceeded the Government estimate of
$176,807 by $67,393, or 38.1 percent. Because all bids exceeded the
Government estimate by more than 25 percent, they were rejected as
required by 33 U.S.C. 624(1976).
Cottrell timely protested to the Army, alleging that the Government
estimate was unreasonable. Cottrell subsequently submitted its bid
calculations and two letters detailing the items of the Government
estimate with which it disagreed. After consideration of the data
submitted by Cottrell, on March 26, 1976, the Army increased its
estimate to $192,947, or 26.6 percent below Cottrell's bid. As
Cottrell's bid was still more than 25 percent in excess of the revised
Government estimate, the Army denied Cottrell's protest. Cottrell was
so informed by telephone on April 30 and by letter of May 1. Cottrell
protested to this Office on May 14.
Meanwhile, on April 16, the Army readvertised the dredging work under
IFB DACW54-79-B-0021. Again, the low bid exceeded the Government
estimate by more than 25 percent and all bids were rejected.
A third solicitation for the dredging work was issued. Bid opening
was postponed pending disposition of Cottrell's protest with GAO.
However, because of the urgent need for the work, the Army decided to
negotiate award of the contract pursuant to Defense Acquisition
Regulation Sec. 3-215.1. Cottrell and another firm submitted offers of
$244,200 and $234,800, respectively. Both offers were within 25 percent
of the $232,128 Government estimate for this solicitation. The Army
awarded the contract to J. M. Furr Landscaping Contractor, Inc., the low
offeror.
The Army argues that the protest to this Office involving the first
IFB is untimely because it was not filed within 10 days of notice of
initial adverse agency action concerning the protest to the agency. 4
C.F.R. 20.2(a)(1979). The Army believes that upon receipt of the second
IFB dated April 16, Cottrell should have known that notwithstanding its
protest the Corps did not intend to make award under the first IFB, and
that in effect its protest to the agency was denied. Therefore, the
Army believes, Cottrell's protest filed with this Office on May 14 is
untimely.
Notice of cancellation of a solicitation or in appropriate
circumstances the issuance of a new solicitation after cancellation of
an earlier one may be the basis for protest, beginning the 10-day period
for filing the protest. See Strati Systems, B-193061, February 27,
1979, 79-1 CPD 135. Once a protest is filed with the agency, however,
the subsequent issuance of a new solicitation may or may not constitute
adverse agency action on the protest, depending on the circumstances.
On the one hand, the protester, upon receipt of a new solicitation, may
have no reason to believe that the agency is further considering the
protest. On the other hand, the protester may well be justified in
believing the agency is still actively considering the protest and that
the new solicitation was issued to cope with the possibility that the
protest would be denied. In the latter case, the adverse action will be
the agency's opening of bids or consideration of proposals rather than
issuance of the solicitation. General Leasing Corporation -
Reconsideration, B-193527, March 9, 1979, 79-1 CPD 170; Wakmann Watch
Company, Inc., B-187335, January 28, 1977, 77-1 CPD 72.
Here, Cottrell filed a timely initial protest with the procuring
agency regarding the validity of the Government estimate and it did not
construe the mere issuance of a new solicitation, which reduced the
scope of work, as adverse to its objections to the original Government
estimate.
Under these circumstances, it was not unreasonable for Cottrell to
expect prior to bid opening that the Army would make a more direct
response to its specific protest. Indeed, the agency did ultimately
respond directly to Cottrell's objection to prior to the second bid
opening. Accordingly, we view Cottrell's protest to this Office, filed
within 10 days of learning the agency had denied its protest, as timely.
Furthermore, Cottrell's protests of the second and third IFBs are based
on the cancellation of the first IFB, and therefore are timely also.
Cottrell contends that the Government estimate for the first
solicitation was unreasonably low. For the most part, the protester
disagrees with the Army's estimated production rates for the various
portions of the work. The record shows that the Army carefully reviewed
its estimate pursuant to Cottrell's objections, providing reasonable
explanations supporting the estimate. For example, the Army states that
there is no basis or precedent for Cottrell's allegation that production
would be reduced because the work is on a military reservation. The
Army believes production should be higher because public activities are
reduced and construction can proceed unhindered. Furthermore, the Army
defends its production rate of 92 cubic yards per hour as a
well-established value for hard digging. It adds that this rate is
based on extensive field operations, manufacturers' suggested production
rates and the calculated book rate for hard digging.
The Army did change its estimate to reflect increases in the time
required to transfer the dredge and to construct the dikes. A revised
estimate was developed, but Cottrell's low bid still exceeded the
awardable range prescribed by 33 U.S.C. 624. In light of the Army's
thorough review and supporting evidence, we cannot say that the revised
estimate was unreasonable. Therefore, we view the IFB as properly
canceled pursuant to the statute. See OKC Dredging, Inc., B-189507,
January 18, 1978, 78-1 CPD 44.
Cottrell also argues that the Army increased its estimate 19 percent
over 3 months in order to make an award. The protester contends that
inflation cannot account for that great an increase, and therefore the
first estimate must have been incorrect. Cottrell apparently is
comparing the estimates for the second and third IFBs, which actually
differed by 22 percent. The Army explains that the estimates for these
solicitations cannot be compared because the scope of work was decreased
for the second solicitation. The first and third solicitations were
identical. The 19 percent increase between the estimates for the first
and third solicitations occurred over a period of 8 months. The Army
states that the increase was not due to correction of errors in the
original estimate, but rather that it reflects fuel costs, which
increased 100 percent over the 8 months period.
Furthermore, the Army points out that Cottrell's bid on the third IFB
must have provided for these cost increases, and therefore its first
bid, at the same price, must have been inflated. We note that
Cottrell's bid for the reduced scope of work in the second IFB was over
$40,000 more than its bids for the first and third IFBs. Thus, while we
may not be entirely convinced by the Army's arguments, Cottrell's
inconsistent bidding does not support its position that its bids were
calculated correctly. Accordingly, we cannot say that the Army's
position is unreasonable.
Finally, Cottrell contends that despite the 25 percent limitation of
33 U.S.C. 624, it could have received the award when its bid was only
26.6 percent above the revised estimate. The pertinent regulations
provide that a bid that exceeds the Government estimate by more than 25
percent may be accepted if it is determined that the Government estimate
is too low and should be corrected. Engineering Regulation 1180-1-1,
1-372(h). The Army's corrections of the estimate under this regulation
must bring the bid within 25 percent of the revised estimate in order
for the bid to be acceptable. The record shows that the Army carefully
reevaluated its estimate and we cannot say that the Army was
unreasonable in increasing it only to the extent it did. As Cottrell's
bid still was not within 25 percent of the estimate, it could not be
accepted. Durocher Dock and Dredge, Inc., B-189704, March 29, 1978,
78-1 CPD 241.
The protest is denied.
B-197531, March 27, 1980, 59 Comp.Gen. 347
Contracts - Specifications - Deviations - Preprinted Terms, etc. -
"Waiver of Preprinted Information" Clause Effect
Low bid containing bidder's preprinted standard commercial terms and
conditions, which are at variance with requirements of invitation for
bids (IFB), may be considered for award in view of inclusion in IFB of
"Waiver of Preprinted Information" clause which permits disregarding of
preprinted information under conditions applicable here. However,
General Accounting Office recommends clause not be utilized in future as
it constitutes arbitrary convention which permits ignoring clear
language of bid.
Matter of: Dohrmann Division, Envirotech Corporation, March 27,
1980:
The Department of the Navy, Naval Regional Contracting Office,
Washington, D.C., has requested an advance decision regarding the
acceptability of the low bid of Dohrmann Division, Envirotech
Corporation (Dohrmann), submitted in response to invitation for bids
(IFB) No. N00600-80-B-0378.
The IFB was for one microcoulometric titrating system to be used to
evaluate and certify atmospheres of manned deep submergence vehicles.
The specifications required either Dohrmann components Antek
Instruments, Inc., components or equal be furnished.
While the IFB did not require the submission of descriptive
literature, it did contain the following clause:
WAIVER OF PREPRINTED INFORMATION. Signature on the Invitation for
Bids constitutes a waiver of preprinted terms and conditions appearing
on any company letterhead or other document submitted with the bid
unless the bidder states in either handwritten or typewritten form that
such preprinted terms and conditions apply to this bid.
Dohrmann submitted with its bid eight brochures describing its
equipment and a page of clauses entitled "Standard Conditions of Sale."
The technical brochures submitted with the bid present no controversy as
they show compliance with the specifications. However, the "Standard
Conditions of Sale," which appear to be Dohrmann's standard commercial
terms, are at variance with numerous terms and conditions of the IFB
and, if considered part of Dohrmann's bid, would render the bid
nonresponsive.
The Navy requests our decision as to whether the bid of Dohrmann is
acceptable under the "Waiver of Preprinted Information" clause. The
Navy states it is unclear as to the proper disposition of Dohrmann's bid
because of two decisions of our Office, which it views as reaching
conflicting results.
In 49 Comp.Gen. 851(1970), we made the following statement at page
852:
Award of a contract pursuant to formal advertising may be made under
10 U.S.C. 2305(c) only to the low responsible bidder whose bid conforms
to the invitation. We do not believe that statutory requirement may be
negated by a regulatory provision, such as Armed Services Procurement
Regulation 2-202.5(f), which presumes a bid to conform or be unqualified
where the intent of the bidder is ambiguous.
Cf. B-166284, May 21, 1969. Nor do we believe that the invitation for
bids may establish any arbitrary conventions which provide that the
clear language of the bid will be ignored unless presented in a
particular form.
The above reasoning expresses disapproval of the type of waiver
clause employed here. However, 49 Comp.Gen., supra, was a
reconsideration of B-169057, April 23, 1970, wherein we noted the
solicitation contained the "Waiver of Preprinted Information" clause and
concluded "We feel this clause lends substantial weight to the holding
here that the mere transmission of catalog information, with nothing
more, is not fatal to the consideration of the bid."
The other decision which gives the Navy concern is Searle CT Systems,
B-191307, June 13, 1978, 78-1 CPD 433. In Searle, a bidder submitted a
cover letter with its bid, the reverse side of which contained
preprinted terms and conditions varying the terms of the solicitation.
We found the bid to be nonresponsive because the bidder had incorporated
by reference at least one of the preprinted terms limiting its
liability. However, the decision appears to imply to the Navy that if
the bidder's standard terms had not been altered in violation of the
waiver clause, the clause would have been for application.
We believe these two decisions can be reconciled. In 49 Comp.Gen.
supra, we were attempting to clear away confusion in the procurement
community respecting our Office's position concerning unsolicited
descriptive literature and state our basic belief that arbitrary
conventions should not be included in solicitations which permit the
ignoring of the clear language of a bid. Therefore, we indicated that
we did not believe clauses such as the "Waiver of Preprinted
Information" should be included in solicitations as they tend to
undermine the mandate of 10 U.S.C. 2305(c).
We did refer to the waiver clause in Searle. We did not consider if
waiver would have been proper. That was unnecessary since we found that
certain waiver requirements in the clause were not present in the bid in
question and we ruled that the bid was nonresponsive for the reason
stated above.
As indicated above, we have reservations about using the clause in
solicitations. However, once the clause has been inserted in a
solicitation and bids have been received under the solicitation, we
believe it would be inappropriate to disregard the clause in the
evaluation of bids. See our secondary reliance upon the clause in
B-169057, supra.
Accordingly, while we recommend the clause not be used in the future,
we have no objection to consideration of Dohrmann's bid for award, since
under the clause, the offending preprinted terms and conditions can be
waived.
B-196359, March 27, 1980, 59 Comp.Gen. 338
Contracts - Protests - Timeliness - Solicitation Improprieties - Wage
Determinations
Protester contends that basis of protest against invitation for bids'
(IFB) improper wage determination did not arise until award of contract
even though alleged impropriety should have been apparent from
solicitation. Contention is without merit and basis of protest is
untimely under 4 C.F.R. 20.2(b)(1)(1979), since alleged solicitation
impropriety should have been apparent and protest should have been filed
prior to bid opening. Contracts - Protests - Timeliness - Significant
Issue Exception - Prior GAO Consideration of Same Issue Effect
Untimely protest against alleged improper Service Contract Act wage
determination does not present significant issue within meaning of 4
C.F.R. 20.2(c)(1979) because in previous decisions General Accounting
Office (GAO) has considered issue and matter has been subject of
detailed review and consideration by courts, Executive branch, and
Congress. Contracts - Protests - Timeliness - Freedom of Information
Act Request Involvement
Based on information obtained pursuant to Freedom of Information Act,
basis of protest-- filed within 10 days of such receipt-- against the
adequacy of IFB's estimated quantities is timely under 4 C.F.R.
20.2(b)(2)(1979) and will be considered on merits. Contracts - Protests
- Timeliness - Solicitation Improprieties - Apparent Prior to Bid
Opening
Post-bid-opening bases of protest-- (1) that bid based on excessive
prompt-payment discount, where such possibility was expressly permitted
in solicitation, should not be considered, and (2) that all bids should
be rejected because of ambiguous solicitation provision-- are untimely
under 4 C.F.R. 20.2(b)(1) (1979) to the extent that they concern
apparent alleged solicitation improprieties. Such protests must be
filed prior to bid opening to be timely under GAO Bid Protest
Procedures. Bids - Evaluation - Discount Provisions - Propriety of
Evaluation
To extent that protest is against responsiveness of awardee's bid
containing 30-percent prompt-payment discount, it is without merit since
solicitation did not restrict maximum prompt-payment discount.
Contracts - Specifications - Defective - Effect Not Prejudicial to
Bidders, etc.
To extent that protest is against agency's determination not to
reject all bids due to alleged noncompliance with IFB requirement
labeled "(A) & (B)" but intended to read "(C) & (D)," it is without
merit because intent was obvious and all bidders, including protester,
recognized obvious intent and bid on that basis. Contracts - Protests -
Court Injunction Denied - Effect on Merits of Complaint
Despite protester's view that court's decision denying protester's
preliminary injunction (suit was then voluntarily dismissed) should have
no effect on GAO resolution of protest, court's findings and views may
be considered. Contracts - Stenographic Reporting - Bid Evaluation
Factors - Prices to Public
Protester contends that (1) Federal Advisory Committee Act prohibits
contractors from charging public more than actual cost of duplication
for transcript copies, and (2) low bid proposed price in excess of that
limitation. Contention is without merit because act does not apply to
contractors. Moreover, as practical matter, public can obtain copies
from agency at $0.10 per page or contractor at $0.75 per page as it
freely elects. Bids - Estimates of Government - Reasonableness
Contention-- that IFB's estimated quantities were merely rounded-off
figures from last year's IFB and did not reflect agency's best
estimate-- is not supported by record where it is shown that estimate
was made in good faith and was based on number of anticipated hearings,
procedural changes, and projected use of new public reference rooms.
Moreover, all bids were evaluated on same estimates and there is no
indication that any bidder received any advantage.
Matter of: CSA Reporting Corporation, March 27, 1980:
CSA Reporting Corporation (CSA) protests the award of a contract to
Alderson Reporting Company (Alderson) under invitation for bids (IFB)
No. ICC-79-B-0017, issued by the Interstate Commerce Commission (ICC),
for stenographic reporting, transcription, and micrographic services.
GSA'S grounds of protest follow:
(A) The Alderson fixed price for copies of transcripts to the public
exceeds the limitations of the Federal Advisory Committee Act (FACA),
permitting the public copy charges to be used illegally to subsidize the
Government's costs for reporting services.
(B) The Alderson bid is unbalanced; there is more than reasonable
doubt as to whether it will result in the lowest overall cost to the
Government because (1) the estimate quantities for paper and microfiche
copies are not realistic, and (2) the Government may not take advantage
of the 30-percent prompt-payment discount.
(C) The Service Contract Act wage determination in the solicitation
is contrary to law and, thus, so deficient as to render the IFB legally
defective.
(D) All bids submitted are nonresponsive. None of the bidders have
complied with the specifications for pricing proposals in the IFB,
requiring rejection of the bids in a formally advertised procurement.
Shortly after GSA filed its protest, Alderson asserted that with the
possible exception of CSA's allegation (A), CSA's protest was untimely
filed under our Bid Protest Procedures (4 C.F.R. part 20(1979)), and
that the timely portion was without merit.
A few days later CSA filed a complaint in the Federal District Court for
the District of Columbia, in part to obtain injunctive relief against
award and performance until our Office could issue a decision. The
court issued its opinion and order, denying CSA's motion for a
preliminary injunction, and CSA voluntarily dismissed the civil action
at that point.
We will determine whether the bases of protest are timely, consider
the impact of the court's opinion on the preliminary injunction, and
consider the merits of the timely issues.
A. The Service Contract Act Issue
CSA contends that the Service Contract Act wage determination
included in the solicitation and resultant contract is patently
defective and in violation of the Service Contract Act, since (1) it
does not determine prevailing wage rates, (2) it does not include a
provision specifying prevailing fringe benefits, (3) it fails to
describe any classes of service employees, (4) it erroneously
establishes a nationwide rate, rather than a rate for the localities
where the work is to be performed, and (5) it does not reflect
consideration of the $8.42 an hour wage rate paid Federal employees
performing comparable work.
Alderson argues that CSA should have protested this alleged apparent
impropriety in the IFB prior to bid opening in order to be considered
timely. In reply, CSA states that Alderson's argument is incorrect in
this case because the failure to include a prevailing wage determination
is a statutory requirement which was only violated upon award of the
contract.
In CSA's view, the illegality did not exist until the contract was
awarded with the defective determination. Thus, the grounds for protest
did not exist until the contract was awarded and the protest filed
within 10 days after contract award is timely under 4 C.F.R. 20.2(b)(2)
(1979).
CSA also notes that our Office has, on prior occasions, recognized
that protests involving the Service Contract Act present issues of
widespread concern and has held that these issues should be considered
on the merits as significant issues under 4 C.F.R. 20.2(c). CSA cites
our decision in High Voltage Maintenance Corp., 56 Comp.Gen. 160(1976),
76-2 CPD 473, involving a postaward protest of the failure to include a
wage determination. There, we noted that the protest was untimely but
we resolved the issue on the merits because it was significant. Here
CSA believes that the issue-- whether a wage determination that merely
specifies the minimum wage rate constitutes a valid wage determination--
is a significant issue of widespread interest to the procurement
community, and this issue has not been considered in prior decisions by
our Office.
Further, CSA contends that, citing E-Systems, Inc., B-185724, Dec. 8,
1976, 76-2 CPD 466, the protest raises a question of congressional
intent: is the Department of Labor acting in accordance with Congress'
intent in amending the SCA?
First, regarding CSA's contention that its basis of protest is
against the award impropriety, not the solicitation impropriety, in JDL
General Contractors & Associates-- Request for Reconsideration,
B-183415, June 6, 1975, 75-1 CPD 344, we considered a similar
contention. There, the protester objected to certain specifications as
being unduly restrictive but it did not protest prior to bid opening, so
that in our initial decision we declined to consider the matter on the
merits since we considered the protest to be untimely. On
reconsideration, the protester indicated that it was not objecting to
the bid opening, but to the award. We disagreed, however, and affirmed
the earlier decision since the alleged impropriety was apparent from the
solicitation; therefore, the protest must have been filed prior to bid
opening. The instant situation is essentially the same. Here, the
alleged impropriety-- the defective wage determination-- should have
been apparent from the solicitation. In this circumstance, our Bid
Protest Procedures, 4 C.F.R. 20.2(b)(1) (1979), require that the protest
must be filed prior to bid opening to be timely. Bucks County
Association for the Blind, B-194957, June 28, 1979, 79-1 CPD 471. In
our view, adopting CSA's position would completely undermine the
necessary requirement that patent solicitation improprieties be
protested prior to the revelation of the competitive standings of
bidders on formally advertised procurements. Accordingly, this aspect
of the protest is untimely.
Second, CSA argues that this basis of protest raises a significant
issue and should be considered on the merits. We disagree. CSA's
contention-- that it is significant because in High Voltage Maintenance
Corp., supra, we viewed the lack of a wage determination as a
significant issue-- must fail since we have also held that where the
merits of a protest involve an issue which has been considered in
previous decisions, that issue is not significant within the meaning of
4 C.F.R. 20.2(c) (1979). The Public Research Institute of the Center
for Naval Analyses of the University of Rochester, B-187639, August 15,
1977, 77-2 CPD 116, affirmed, November 23, 1977, 77-2 CPD 395.
Similarly, CSA's contention-- that the Department of Labor's wage
determination was not in accord with congressional intent-- must fail
because this matter has been the subject of detailed consideration and
review by this Office, the courts, the executive branch, and the
Congress.
See The Cage Company of Abilene, Inc., 57 Comp.Gen. 549(1978), 78-1 CPD
430, where we recognized that the Department of Labor's practice of
basing wage rates on wide geographic areas when the place of performance
is not known is not clearly contrary to the Service Contract Act.
Accordingly, this basis of protest does not raise a significant
issue.
B. The Unbalanced Bid Issue
CSA contends that the IFB's estimated quantities are only estimates
from the prior year's IFB rounded off and some of them vary
substantially from the actual quantities ordered under the prior year's
contract. It appears to CSA that the ICC not only did not utilize or
consider prior experience, it had no idea what the last year's orders
had been. In sum, CSA argues that the estimated quantities did not
reflect consideration of all relevant information reasonably available
to the ICC and that actual quantities or better estimates may reveal
that CSA submitted the low bid. Next, CSA contends that Alderson's bid
based on an excessive 30-percent prompt-payment discount is in effect an
unbalanced bid since, unless the ICC can earn the discount at least half
of the time, CSA's bid would have resulted in a lower cost to the
Government.
Alderson contends that this aspect of CSA's protest filed after bid
opening is untimely because the availability of the prompt-payment
discount and estimated quantities were apparent in the IFB. Further,
Alderson argues that there is no reason to expect that the ICC will
purchase more paper transcripts than it projected in the solicitation,
and in fiscal year 1979 Alderson provided a prompt-payment discount of 2
percent for payment within 20 days and, in virtually every case, the ICC
paid within the 20-day period and obtained the discount. It is
Alderson's expectation that the same will be true of the present
contract and that the offered discount of 30 percent will always be
taken by the ICC. Accordingly, in Alderson's view, there is no
substantial doubt that the bid of Alderson will result in the lowest
cost to the Government.
In reply, CSA states that the inadequacy of the quantity estimates
provided in the IFB was not known until CSA obtained figures showing the
agency's actual experience under the prior year's contract, which was
not available to CSA prior to bid opening. CSA obtained the information
by a Freedom of Information Act request, and CSA states that it timely
protested the inadequacy of the estimates following receipt of this
information.
Since CSA's protest against the adequacy of the disclosed quantities
is based on material outside the solicitation and since CSA protested
within 10 days of receipt of that material, we cannot conclude that its
protest is untimely.
However, regarding Alderson's 30-percent discount, if CSA's protest
is essentially against the IFB's unrestricted prompt-payment discount,
then it is based on information contained in the solicitation; since
that aspect of the protest was not filed prior to bid opening, it is
untimely under section 20.2(b)(1) of our Bid Protest Procedures and will
not be considered. If CSA's protest is that Alderson's bid is
nonresponsive and, therefore, timely, it is without merit since the IFB
did not restrict the maximum prompt-payment discount. We trust,
however, that the ICC will make a reasonable effort to obtain the
discount in every instance.
C. The Rejection of All Bids Issue
CSA notes that the IFB contained a note entitled "Pertains to CLIN
No.'s (C) & (D) 0001 & 0002," which in text referred to items "(A) 0001
thru 0006 and (B) 0001 thru 0002." CSA argues that since all bidders
based their bids on the assumption that this provision in the IFB was
intended to apply to "(C) & (D)" not "(A) & (B)," all bids are
nonresponsive.
Alderson notes that it was obvious that the note was ambiguous;
however, the intent was unambiguous and the bids submitted clearly
demonstrate that all bidders were aware of the intent and none,
including CSA, was misled. In Alderson's view, CSA's protest in this
regard is not timely filed.
If CSA's protest on this point relates to an apparent solicitation
impropriety, then it is untimely and will not be considered since its
protest was not filed prior to bid opening. If CSA's protest is that
the IFB provision mentioning "(A) and (B)" actually meant "(A) & (B)"
not "(C) & (D)," thus rendering all bids, including CSA's,
nonresponsive, the protest basis is without merit since the intent was,
in our view, obvious.
II. The Effect of the Court's Opinion on the Preliminary Injunction
CSA notes that a decision to deny a motion for a preliminary
injunction is, by its nature, interlocutory and provisional; it is not
a decision on the merits of the case. In CSA's view, the court's
decision on CSA's motion for a preliminary injunction did not resolve
the issues raised in this protest and should have no effect on our
resolution of this protest.
The ICC notes that the judge listened to extensive oral argument and
considered the extensive briefs, all of which were identical to papers
filed with GAO in this protest, and it was the court's judgment that CSA
had no likelihood of succeeding on the merits.
While we recognize that the court's ruling on the preliminary
injunction is not a final resolution of the matter, we believe that it
is appropriate for our Office to consider the court's findings and
views.
CSA essentially contends that the FACA requires that rates charged by
contractors for copies of transcripts of agency proceedings shall
represent the actual cost of duplication and the Alderson bid price,
$0.75 per page, exceeds this limitation, thus violating the FACA.
Alderson contends that CSA has misconstrued the act which does not
require that contractors charge only the actual cost of duplication. In
addition, Alderson notes that the ICC has installed a copying machine in
its docket room. For a charge of as little as $0.10 per page any person
may make a copy of any page of transcript desired. Further, Alderson
states that the ICC exceeds the requirements of the FACA since the ICC
has chosen to impose no charge for retrieving transcripts for the
public.
Initially, the ICC refers to section 11(a) of the act, which provides
that "agencies and advisory committees shall make available to ANY
PERSON, AT ACTUAL COST OF DUPLICATION, COPIES OF TRANSCRIPTS * * *."
FROM THIS LANGUAGE, THE ICC CONTENDS THAT THE FACA'S RESTRICTIONS APPLY
ONLY TO THE GOVERNMENT; THEREFORE, THE GOVERNMENT MUST NOT CHARGE THE
PUBLIC MORE THAN THE ACTUAL COST OF DUPLICATING BUT THE ACT DOES NOT
PROHIBIT A CONTRACTOR FROM CHARGING MORE THAN THE ACTUAL COST OF
DUPLICATION.
Next, the ICC notes that both Alderson's public charge of $0.75 per
page and CSA's public charge of $0.55 per page exceeded prices which
they were going to charge the Government.
Finally, the ICC notes that transcripts are immediately available in
the ICC's public reference rooms for review at no charge or for copying
by the public on reproduction machines provided at a charge of $0.10 or
$0.25 per page or a microfiche chip can be obtained for $0.25 per frame
containing approximately 60 single pages. In addition, the ICC states
that the public can request that the ICC provide copies of transcripts
at $0.10 per page under the Freedom of Information Act.
In reply, CSA argues that, regardless of the alternative sources for
obtaining copies, a contractor may not charge a rate for copies in
excess of the actual cost of duplication. In CSA's view, the
legislative history of FACA clearly indicates that Congress intended the
act's price limitation to be applicable to contractors. CSA relies
primarily on this passage from the Senate Report accompanying the bill
which resulted in the FACA:
The problems of a citizen being able to obtain a copy of agency
TRANSCRIPTS AT A REASONABLE EXPENSE HAS BEEN A PERENNIAL COMPLAINT * *
*. AGENCIES HAVE TRADITIONALLY MADE CONTRACTS WITH STENOGRAPHIC
services which contain strong prohibitions against duplication, but
little if any restrictions against the purchase of such transcripts from
the contractor at the commercial rate-- which in nearly all cases is
prohibitory to average persons.
Stenographic services say they need this protection in order to make
a profit on the extension of their services. Complainants say they are
deprived of their rights to know and to obtain due process of law when
they are not allowed to copy public records of proceedings at the cost
of duplication.
S. 2064 resolved this issue in favor of the average citizen, and,
with certain minor modification, the requirements of transcript
availability have been included here. S. Rep. No. 92-1098, 92d Cong.,
2d Sess. (1972).
CSA also states that, regarding other agencies, there is a wide
disparity in the prices charged for copies sold to the public;
therefore, at a minimum, the confusion regarding applicability of FACA
to contractors should be clarified.
When considering CSA's likelihood of success on the merits of this
issue, the court concluded that CSA's argument was "without merit"
because (1) the FACA requires Federal agencies to make available to any
person, at actual cost of duplication, copies of transcripts of agency
proceedings; the act, however, does not impose a similar requirement on
a private contractor that furnishes reporting services to a Federal
agency, and (2) all ICC transcripts delivered during fiscal year 1980
will automatically become part of the public record and will be
available to the public at the actual cost of duplication. Under these
circumstances, the court concluded that the ICC met the requirements of
the FACA.
We have carefully considered the arguments of the parties and the
court's rationale, which we find persuasive. We conclude that the ICC's
award based on the Alderson bid did not violate FACA. We have held that
the act does not require any particular procedure on the part of
agencies contracting for reporting services, so long as the public is
adequately protected against paying unreasonably high prices for
duplicating services. In this connection, we have recognized that such
cost may include a reasonable factor for overhead and profit. Hoover
Reporting Company, Inc., B-185261, July 30, 1976, 76-2 CPD 102, and
decisions cited therein. Here, the ICC has not found the contractor's
prices for public copies to be unreasonable and the record before us
provides no basis for our Office to so conclude.
Moreover, as a practical matter, the public can obtain a copy of any
public record from the ICC for $0.10 per page or from Alderson for $0.75
per page as it freely elects. We can see no problem with that choice
being available to the public. Accordingly, we concur with the court in
finding this aspect of CSA's protest without merit.
As mentioned above, CSA contends that the ICC merely rounded off the
estimated quantities in last year's IFB and did not consider the actual
orders under that prior contract in establishing the estimated
quantities for the instant solicitation.
In response, the ICC reports that actual figures for the prior fiscal
year had an insignificant bearing on the new estimates and data received
from the Chief Administrative Law Judge of the Commission were more
significant. The ICC reports that the current estimates were based on
the number of anticipated hearings, procedural changes and a fundamental
change in the ICC's operating procedures for public reference rooms,
whereby microfiche, rather than single paper, copies are to be used for
the public record. This reportedly means that there will be a decrease
in the estimated amount of paper copies for certain service categories,
rendering actual 1979 data in those categories irrelevant. The ICC
notes that all bidders were provided with the same estimates and offered
prices based on them; no bidder had or received any special advantages,
insights or data from the ICC with regard to estimated needs.
In reply, CSA contends that an examination and comparison of
estimates in the subject IFB and in the IFB for the prior year indicates
that the total numbers of paper and microfiche copies were comparable to
the number of copies estimated for the prior year. Thus, the quantity
estimates in the solicitation are no more than an ad hoc percentage
increase over the past year's guesses without any review of actual
experience.
When considering CSA's likelihood of success on the merits of this
issue, the court found that CSA's argument was "without merit" because
(1) the facts disclose that the ICC's estimates did not violate the
Federal Procurement Regulations (FPR), and (2) the ICC provided
prospective contractors with estimates of the requirements under the
contract based on the number of hearings anticipated by the ICC, recent
changes in its operating procedure, and its actual requirements during
the previous fiscal year.
We have carefully examined the arguments of the parties, the numerous
decisions cited by CSA, and the court's opinion and we must conclude
that, while the similarity between quantities in the current IFB and
last year's IFB is striking in 8 of the 14 categories, that circumstance
alone does not establish CSA's point. Instead, the entire record seems
to indicate that ICC procurement officials acted in good faith and used
the best information available to formulate estimated quantities in a
rapidly shifting environment. We have no basis to conclude that
procurement regulations were violated here.
Protest denied.
B-194106, March 26, 1980, 59 Comp.Gen. 335
Leaves of Absence - Lump-Sum Payments - Refunds on Reemployment -
Installment Payments - Excess Leave Forfeiture - Reemployment on Day
After Separation
Since 5 U.S.C. 5551(a) authorizing lump-sum leave payment
contemplates an actual separation from Government service and does not
apply to a transfer such as resignation from an agency and reemployment
in another agency the following day, lump-sum payment to employee
separated by United States Information Agency and appointed by Air Force
the next day was erroneous, and refund requirement of 5 U.S.C. 6306(a)
is not applicable. In accordance with 5 C.F.R. 630-501(a), leave should
have been recredited at time of reemployment and leave forfeited as
result of failure to recredit leave account until lump-sum had been
repaid may be restored under 5 U.S.C. 6304(d)(1)(A).
Matter of: Willie W. Louie-- Restoration of Annual Leave, March 26,
1980:
By letter dated October 22, 1979, Lieutenant Colonel B. L. Proul,
Accounting and Finance Officer, Bolling Air Force Base, Department of
the Air Force, has appealed the determination by our Claims Division on
August 7, 1979, that hours of annual leave subject to forfeiture should
be restored to Mr. Willie W. Louie, a civilian employee of the Air
Force. The Claims Division found that the annual leave was forfeited as
a result of administrative error and was for restoration pursuant to 5
U.S.C. 6304(d)(1)(A). Upon review, the action of the Claims Division is
sustained.
The record shows that Mr. Louie resigned from his position with the
United States Information Agency (USIA) effective June 30, 1974, and
that he was appointed to a position the following day, July 1,1974, with
the Department of the Air Force at Andrews Air Force Base.
Incident to his resignation, the USIA paid him a lump-sum in the gross
amount of $5,136.72 for 392 hours of accrued annual leave and for 16
additional hours for two holidays which occurred during the projected
leave period.
In 1975 the Air Force and the USIA advised Mr. Louie that the
lump-sum leave payment he had received from the USIA was erroneous as he
was reemployed by the Air Force without a break in service and that he
would be required to refund the full amount of the payment.
On July 8, 1975, Mr. Louie filed a request with the USIA for waiver
of his indebtedness for the erroneous payment of lump-sum leave accrual.
Upon the denial of his request for waiver by the Claims Division on
April 20, 1977, the USIA advised him that he should refund the amount of
the lump-sum leave payment to the Department of the Air Force. On May
3, 1977, he agreed to refund the erroneous payment through setoff in the
amount of $100 from his biweekly salary payments starting with the pay
period beginning May 8, 1977.
The Air Force determined that it would not recredit the leave covered
by the refund until full repayment had been made. When Mr. Louie's
leave account was reconstructed as of the time final payment would be
made, the Air Force found that recrediting his leave as of the date of
reemployment would result in the forfeiture of 242 hours of annual leave
in excess of his maximum permissible carryover under 5 U.S.C. 6304(c).
It is this 242 hours of annual leave that our Claims Division determined
should be restored based on its finding that the Air Force's failure to
recredit Mr. Louie's leave pending repayment of his indebtedness was an
administrative error within the meaning of 5 U.S.C. 6304(d)(1)(A).
In requesting reconsideration of the Claims Division determination,
the finance officer explains that the Air Force determination to
recredit the leave in question was made in accordance with para. 2-4 of
Book 550, Federal Personnel Manual Supplement 990-2, which provides in
pertinent part as follows:
a. General. * * * when a lump-sum payment has been made, and the
employee reenters the Federal service in a position subject to a formal
leave system, he is required to refund for the entire unexpired portion
of the period covered by the lump-sum payment, since all such unexpired
leave is subject to recredit * * * . It is within the discretion of the
administrative office to refuse to grant leave represented by the
required refund until the refund has been made in full (see 34 Comp.Gen.
17).
In our decision 34 Comp.Gen. 17(1954) we considered the manner of
recrediting of annual leave where an employee who received a lump-sum
leave payment upon his separation from Government service was reemployed
by the Government prior to the expiration of the period covered by the
lump-sum leave payment. We held that the act of December 21, 1944, 58
Stat. 845, now codified at sections 5551(a) and 6306(a) of title 5,
United States Code, contemplates an immediate refund of that part of the
lump-sum leave payment which is to be refunded and that such requirement
should be a condition precedent to reemployment.
Accordingly, we held therein that in instances where installment
payments are permitted an agency's refusal to recredit leave until the
final refund payment is proper even though reconstruction of the
employee's leave account at the time of final payment and as of the date
of reemployment results in a forfeiture of the leave covered by the
refund. See also 38 Comp.Gen. 91(1958).
The above rule pertaining to the refund requirement of 5 U.S.C.
6306(a) is not for application in this case where the employee was
reemployed by a Government agency the day following his separation.
Subsection 6306(a) of title 5 of the United States Code provides in
pertinent part as follows:
(a) When an individual who received a lump-sum payment for leave
under section 5551 of this title is reemployed before the end of the
period covered by the lump-sum payment in or under the Government of the
United States * * * he shall refund to the employing agency an amount
equal to the pay covering the period between the date of reemployment
and the expiration of the lump-sum period.
The law authorizing a lump-sum payment for leave upon separation from
Government service, 5 U.S.C. 5551, contemplates an actual separation
from Government service of one or more workdays and does not apply to a
transfer from one agency to another under the same leave system such as
a resignation or discharge from one agency and reemployment in another
agency the following day. See 24 Comp.Gen. 532(1945) and 26 id.
578(1947). As Mr. Louie was employed by the Air Force on the day
following his separation from the USIA, he did not receive a valid
lump-sum leave payment under 5 U.S.C. 5551, and accordingly, 5 U.S.C.
6306(a) which controls the refund of payments made pursuant to section
5551 is not applicable. Thus, there was no basis to withhold the
recrediting of Mr. Louie's annual leave until he completed his refund of
the erroneous lump-sum leave payment. Nothwithstanding Mr. Louie's debt
for the erroneous payment, his accrued annual leave should have been
credited to his leave account at the Department of the Air Force at the
time of his transfer in accordance with 5 C.F.R. 630.501(a).
Annual leave forfeited at the end of the leave year can be restored
under the circumstances set forth in 5 U.S.C. 6304(d)(1) which provides
in pertinent part as follows:
(d)(1) Annual leave which is lost by operation of this section
because of--
(A) administrative error when the error causes a loss of annual leave
otherwise accruable after June 30, 1960;
shall be restored to the employee.
Mr. Louie's forfeiture of annual leave was the result of the
erroneous lump-sum leave payment made by the USIA and the Air Force's
subsequent failure to recredit his leave at the time of his appointment.
The annual leave subject to forfeiture based on the Air Force's
reconstruction of Mr. Louie's leave account from July 1, 1974, is to be
regarded as forfeited as the result of administrative error and may be
restored to his leave account pursuant to 5 U.S.C. 6304(d)(1)(A).
In accordance with the above, the action of the Claims Division is
sustained.
B-196445, March 25, 1980, 59 Comp.Gen. 333
Mileage - Travel by Privately Owned Automobile - Taxicab Fare Cost
Limitation
Federal mine inspectors drive their privately owned vehicles to their
duty station and then use a Government vehicle to travel to various
inspection sites which take them away from the duty station and their
residences for one or more nights. Authorization for payment of mileage
in such circumstances from home to work and work to home is contingent
upon payment of taxi fares in similar circumstances and within the
agency's discretion to authorize or deny.
Matter of: Mine Safety and Health Administration, March 25, 1980:
The issue presented in this case is whether Federal mine inspectors
employed by the Mine Safety and Health Administration (MSHA) who drive
their privately owned vehicles (POV) to their duty station and then use
a Government vehicle to travel to various inspection sites may be paid
mileage for use of the POV from home when inspections require the
employee to remain away from his duty station for one or more nights.
Authorization for payment of mileage in such situations is contingent
upon whether the agency would have authorized payment of taxi fares in
the circumstances and is within the agency's discretion.
This matter is presented here by a letter from Mr. Robert B.
Lagather, Assistant Secretary for Mine Safety and Health Administration,
Department of Labor, as to the propriety of paying mileage claims of
certain Federal mine inspectors.
The MSHA is responsible for the inspection of mining operations in
accordance with the Federal Mine Safety and Health Act of 1977, 30
U.S.C. 801 et seq. (Supp. I, 1977). In the conduct of these inspections
Federal mine inspectors may drive their POV to the office, pick up a
Government vehicle and proceed to a mine site. At the end of the day,
the inspector returns to the office via the Government owned vehicle.
Commuting costs to the inspector's residence are at the inspector's own
expense. Apparently inspectors normally use their privately owned
vehicles for commuting. At other times, after picking up a Government
vehicle, the inspector's itinerary involves inspection of numerous
mining sites requiring one or more nights of lodging before the
inspector returns to the office.
We have consistently held that an employee must bear the cost of
transportation between his residence and his place of duty at his
official station, absent statutory or regulatory authority to the
contrary. 55 Comp.Gen. 1323, 1327(1976); 36 id. 450(1956); B-189061,
March 15, 1978; B-131810, January 3, 1978; and B-171969.42, January 9,
1976. However, on those days when travel is performed by the employee,
mileage expenses may be allowed in certain instances for travel between
the employee's residence and his official duty station.
In this regard, paragraph 1-2.3d of the Federal Travel Regulations
(FTR) (FPMR 101-7, May 1973), provides:
Between residence and office on day travel is performed.
Reimbursement may be authorized or approved for the usual taxicab fares,
plus tip, from the employee's home to his office on the day he departs
from his office on an official trip requiring at least 1 night's lodging
and from his office to his home on the day he returns to his office from
the trip, in addition to taxi fares for travel between office and
carrier terminal.
Paragraph 1-4.2c(2), FTR, states as follows:
Round trip when in lieu of taxicab between residence and office on
day of travel. In lieu of the use of taxicab under 1-2.3d, payment on a
mileage basis at the rate of 18.5 cents per mile (the current rate) and
other allowable costs as set forth in 1-4.1c shall be allowed for
round-trip mileage of a privately owned automobile used by an employee
going from his residence to his place of business or returning from
place of business to residence on a day travel is performed. However,
the amount of reimbursement for the round trip shall not exceed the
taxicab fare, including tip, allowable under 1-2.3d for a one-way trip
between the points involved.
The exception to the general rule that an employee must bear the cost
of transportation between his residence and his place of duty as
provided in paragraphs 1-2.3d and 1-4.c(2) of the FTR is in recognition
of the fact that an employee may incur additional expenses above the
ordinary commuting cost for which he should be reimbursed on days he
departs from his office on an official trip requiring at least one
night's lodging. Such expenses as transporting luggage and traveling to
a carrier terminal or use of a POV are comparable to the additional
expenses incurred when an employee travels directly to a carrier
terminal or travels by POV directly from his residence on an official
trip. See 36 Comp.Gen. 476(1956); 44 Comp.Gen. 505(1965); and 48
Comp.Gen. 447(1968).
In B-195421, February 21, 1980, in a case involving a civilian
employee of the Corps of Engineers, Department of the Army, under
similar circumstances, we determined that where the temporary duty
performed required at least one night's lodging, and the amount claimed
for use of a POV between home and duty station and return did not exceed
the one-way taxi fare reimbursement was authorized under the regulations
set forth above the implementing regulations of the Department of
Defense, paragraph C4657 of Volume 2, Joint Travel Regulations (2 JTR).
However, in that case use of POV in these circumstances is authorized by
2 JTR unless specifically restricted.
Further, in that case reimbursement had been specifically authorized by
the appropriate official. Since the authority for payment under para.
1-4.2c(2), FTR, is based upon an amount not to exceed the taxicab fare
allowable under para. 1-2.3d and since the reimbursement for taxicab
fare under that paragraph is a discretionary allowance, then the
allowance for reimbursement for use of a POV must also be discretionary
with the agency involved. In the circumstances of this case, since the
inspector incurs little or no additional costs than would have been
incurred had he remained at the office or performed local inspections
not involving overnight lodging, it would not appear to be an abuse of
discretion for MSHA to determine that taxi fares and mileage in lieu
thereof should not be paid to mine inspectors who travel away from the
duty station on overnight trips.
However, the final determination as to whether mileage should be
allowed in the circumstances is within the discretion of the agency, to
be exercised in light of all pertinent facts. The submission is
answered accordingly.
B-194928, March 25, 1980, 59 Comp.Gen. 316
Contracts - Negotiation - Changes, etc. - Reopening Negotiations - Wage
Determination Change
Where National Aeronautics and Space Administration (NASA) performed
detailed analysis of effect on proposals of Service Contract Act wage
determinations (received after Source Evaluation Board's (SEB)
evaluation and just prior to SEB presentation to Source Selection
Official) which demonstrated that wage determinations would not affect
award selection, another round of best and finals was not required.
Contracts - Negotiation - Evaluation Factors - Labor Costs - Upward
Adjustment
NASA's analysis of probable costs of doing business with offeror
correctly included costs of additional employees determined by NASA to
be necessary for offeror to adequately perform contract requirements.
There is no requirement to increase mission suitability score to reflect
additional employees. Contracts - Negotiation - Evaluation Factors -
Manning Requirements - Competitive Level of Costs
Various aspects of contracting agency's evaluation of competing cost
proposals (use of staffing ratios and average wage rates from proposals,
ceiling impact, and wage to be paid captured Service Contract Act
incumbents, inter alia) are not subject to legal objection. Contracts -
Negotiation - Cost, etc. Data - Escalation - Normalization
NASA's determination to normalize labor escalation costs based on
experience, number of Service Contract Act employees, and fact that
offerors' approaches were unrealistic in light of current economic
conditions will not be disturbed since it has not been shown to lack
reasonable basis. Contracts - Negotiation - Competition - Discussion
With All Offerors Requirement - Deficiencies in Proposals - Notice
NASA Procurement Regulation Directive does not impose duty on NASA to
point out every weakness in proposals. In any event, offeror was asked
during written discussions to explain area eventually evaluated as
weakness. Contracts - Negotiation - Offers or Proposals - Best and
Final - Notification of Offerors - Sufficiency
Agency's advice that common cutoff date for revised proposals was
February 5, 1979, is equivalent of requesting "best and final" offers.
Contracts - Negotiation - Evaluation Factors - Relative Importance
Where request for proposals advises that evaluation criteria--
personnel and management and technical operations-- "will bear almost
equal weight, with the former having the greater weight" and agency
assigns 700 points to former and 500 points to latter, offerors are
sufficiently informed of relative importance of evaluation criteria.
Contracts - Protests - Procedures - Bid Protest Procedures - Time for
Filing - Date Basis of Protest Made Known to Protestor
Protesters' objection to normalization of certain costs is untimely
since protest was not filed within 10 days of knowledge of basis. See 4
C.F.R. 20.2(b)(2)(1979). Contracts - Negotiation - Cost, etc. Data -
Labor Costs - Fringe Benefits
General Accounting Office (GAO) will not disagree with procuring
agency's Service Contract Act fringe benefit analysis resulting in
upward adjustment to offeror's cost where adjustment was confirmed by
Government auditing agency and neither agency could identify offeror's
alleged inclusion of such costs in proposal. Contracts - Negotiation -
Evaluation Factors - Cost Realism
Agency's failure to assess costs against selected contractor
involving risks associated with consolidated facilities contract,
independent of but related to instant contract, does not render cost
realism evaluation unreasonable. Contracts - Protests - Allegations -
Speculative
GAO will not interpose legal objection where protester merely alleges
agency will increase prospective awardee's award fee; GAO will not
substitute its judgment for that of agency where protester merely
speculates that successful offeror's proposed staffing will promote
labor unrest or strife and adversely affect minority enterprises.
Contracts - Successors - Service Contract Act of 1965 - "Wage Busting"
Successful offeror is not guilty of "wage busting" (practice of
lowering employee wages and fringe benefits by successor contractor to
become low offeror where incumbent contractor's employees are retained
to perform same jobs on successor contracts) since it agreed and
agency's evaluation of proposal confirmed that compensation offers to
incumbent employees would not be less than current wages and fringe
benefits paid by incumbent contractor. Contracts - Negotiation - Offers
or Proposals - Best and Final - Clarification, etc. v. Revision
Information requested and obtained from all offerors, including
protesters, after best and final offers-- essential to evaluation of
proposals-- constituted reopening of negotiations and discussions with
offerors. However, since discussions were limited in scope, were
conducted with all offerors, and agency did not permit material changes
in any proposals, no prejudice resulted to protester. Contracts -
Negotiation - Evaluation Factors - Method of Evaluation - Technical
Proposals - Cost-Type Contracts
Protester's allegation of internal inconsistency in NASA's technical
evaluation is based on misconception of evaluation results. Record
fails to show internal inconsistency and results of evaluation are
consistent with opinions of evaluators.
Matter of: Raytheon Service Company; Informatics Information
Systems Company Inc., March 25, 1980:
Raytheon Service Company (Raytheon) and Informatics Information
Systems Company, Inc. (Informatics), protest the National Aeronautics
and Space Administration's (NASA) selection of PRC Data Services Company
(PRC) for final negotiations pursuant to request for proposals (RFP) No.
W-10-20669/HWE-2.
The RFP solicited services in support of NASA's Scientific and
Technical Information Facility (Facility) at Linthicum Heights,
Maryland. Each proposal was to be on a cost-plus-award-fee basis for 1
year with two 1-year priced options. In addition, the RFP contemplated
two additional 1-year extensions beyond the second prepriced option
which might be negotiated at that time.
The date for receipt of initial proposals was October 17, 1978. On
December 22, 1978, PRC, Informatics (the incumbent) and Raytheon, the
only responding firms in the competitive range, were asked questions for
written response and were invited to oral discussions scheduled for
January 15, 16 and 18, 1979, respectively. At the completion of these
discussions, NASA reminded each offeror of the February 5, 1979, common
cutoff date for submission of revised proposals as set forth in the
December 22, 1979, letter. After the submission of revised proposals by
the common cut-off date, NASA did contact the three offerors. On May 1,
1979, NASA selected PRC for final negotiations.
NASA's evaluation of the proposals was conducted principally by a
Source Evaluation Board (SEB) which reported to the Source Selection
Official (SSO). The evaluation concluded that PRC's proposal was more
advantageous than Informatics' proposal primarily due to PRC's
significantly lower costs, both proposed and probable, and PRC's higher
rating in the personnel and management area, one of the two primary
mission suitability factors.
Although Informatics was slightly higher technically, NASA described
both as almost equal technically. Raytheon's proposal was rated
significantly lower technically than the others while its costs were
very close to PRC's.
Wage Determinations-- Raytheon and Informatics
The protesters contend that NASA should have amended the RFP to
include Service Contract Act (SCA) wage determinations issued by the
Department of Labor (DOL) and received by NASA between the receipt of
best and final offers and the selection of PRC. As Informatics asserts,
sufficient time existed to amend and it "would have appreciated its own
opportunity to use its unique management approaches to respond to the
revised Wage Determination." Both protesters essentially argue that NASA
contributed to the late timing of the effective issuance of the new wage
determinations.
Informatics' contract had a completion date of February 28, 1979.
The instant RFP was issued on July 18, 1978, with a wage determination
dated June 5, 1978. This wage determination was superseded on September
21, 1978, by new wage determinations, which were incorporated into the
RFP through amendment issued on September 22, 1978. The amendment
extended the date for receipt of proposals to allow offerors time to
submit proposals in light of the new wage determinations. In December
1978, NASA advises, it requested a new wage determination from DOL after
it was clear that an extension of Informatics' contract was inevitable.
(We note that Informatics' contract has been extended until May 31,
1980.) The new wage determinations were received by NASA on March 27,
1979. Upon initial review, it was discovered that the determinations
contained minor errors and, therefore, were retracted by DOL. The
corrected determinations were issued on April 13, 1979.
NASA contends that the timing and evaluated impact of the new wage
determinations made unnecessary and unreasonable any amendment to the
RFP. NASA states that, when the corrected determinations were received,
the SEB report had been "virtually completed" and the probable cost
calculations necessary to avoid wage busting had been performed. NASA
also states that the SSO and other senior management officials were
scheduled to meet with the SEB on April 25, 1979. This meeting was
held, but the SSO requested additional information. After this
information was provided, on May 1, 1979, another meeting took place
followed by the selection decision. Further, NASA advises that the SEB
made a contemporaneous analysis of the impact of the new wage
determination on the probable cost assessment of each proposal and
concluded that "a new round of revised proposals based strictly on the
wage rates (with no change to manning, skill mix or any other cost
element) would have no effect upon the relative cost position of the
offerors."
Moreover, NASA refers to NASA Procurement Regulation Sec. 12.1005-3, 41
C.F.R. Chapter 18, Sec. 12.1005-3 (1978), which states that wage
determination revisions received later than 10 days before initial
receipt of proposals shall not be effective except where the agency
finds that there is a reasonable time to notify offerors of the
revision.
Both NASA and the protesters argue that there is ample precedent in
our decisions to support their respective positions. For example, NASA
cites Management Services, Incorporated, 55 Comp.Gen. 715(1976), 76-1
CPD 74, for the position that a new wage determination received after
extensive SEB proceedings and prior to submission to the SSO did not
have to be incorporated into the RFP as long as NASA performed the
"appropriate and precise analysis in testing its effects on the
proposals remaining before the agency." The protesters cite, among
others, Dyneteria, Inc., 55 Comp.Gen. 97(1975), 75-2 CPD 36, affirmed in
Tombs & Sons, Inc., B-178701, November 20, 1975, 75-2 CPD 332. There,
we held that the proper way to determine the effect of a wage
determination issued between bid opening and award is to compete the
procurement under the new rates. Similarly, the firms cite High Voltage
Maintenance Corp., 56 Comp.Gen. 160(1976), 76-2 CPD 473, applying a
similar principle to negotiated procurements.
As a general rule, it is our position that an agency should not
assume that an SCA wage determination issued after proposals are
received but before award will affect all offerors equally. See
Management Services, Incorporated, supra. Further, we recognize that
the offerors, if given an opportunity to respond to the new wage
determination, may have specified different approaches rather than
maintain the approach in the proposals as NASA assumed in evaluating the
impact of the new wages. However, in the conduct of this negotiated
procurement, NASA did perform a detailed analysis of the perceived
effect of the wage determinations, which it concluded was minimal. The
protesters have not clearly shown that the minimal impact found by NASA
is unreasonable. In Minjares Building Maintenance Company, 55 Comp.Gen.
864(1976), 76-1 CPD 168, while we held that an agency should have
reopened negotiations for new wage rates, we pointed out that, unlike
here, the agency had not made any empirical study which clearly
demonstrated that the revised wage determination would not affect the
award selection. Further, our review of the record also does not show
that NASA's actions were improper with respect to the timing of the new
wage determinations.
These determinations were clearly received close to the selection after
the SEB had performed extensive evaluations just prior to the submission
of the SEB report to the SSO. In view of these circumstances, NASA's
handling was not legally objectionable.
The impact of a new wage determination issued recently is discussed
at the end of this decision.
Cost Evaluation-- Raytheon
During the evaluation, NASA increased the number of employees that
Raytheon would need to perform the contract. While NASA did not
increase the mission suitability score to reflect the additional
employees, NASA did include the additional costs involved for evaluation
purposes.
Raytheon takes exception to the NASA assumption that any increase in
the number of employees would be accomplished in the same ratio
(incumbent/in-house/new hires) as set forth in Raytheon's proposal. In
this regard, Raytheon argues that the use of the same ratio was unfair
since the firm would "obtain technically qualified personnel on the most
economical and advantageous basis possible to both the customer and the
contractor without regard to whether they were incumbents, new hires or
in-house." Raytheon also believes that the failure of NASA to increase
its mission suitability score to reflect this evaluated increase in
staff imposes a penalty. Further, Raytheon contends that NASA
compounded the adverse impact to its probable cost by using the average
wage rate in its proposal to calculate the increase.
We do not agree that NASA's procedures in this instance were
arbitrary or incorrect. Each proposer was advised in the RFP that the
cost realism assessment would include an evaluation of NASA's cost of
doing business with each, including projected future cost growth.
Therefore, NASA's evaluation properly included the cost impact of the
additional employees. See NASA Procurement Regulation Directive (PRD)
No. 70-15 (Revised). In these circumstances, we have held that there is
no reason to increase a firm's mission suitability score to reflect a
NASA deficiency correction. See B-178667, December 14, 1973; GTE/IS
Facilities Management Corporation, B-186391, September 7, 1977, 77-2 CPD
176. With respect to NASA's use of staffing ratios and average wage
rates taken from Raytheon's revised proposal, we find such was
reasonable and within the range of discretion possessed by a procuring
activity in the evaluation of proposals (see Dynatrend, Inc., B-192038,
January 3, 1979, 79-1 CPD 4), particularly where what was used
represented Raytheon's revised proposal following written and oral
discussions.
Raytheon further argues that NASA improperly assigned cost figures
above its proposal's specified ceiling. In its original proposal,
Raytheon proposed a ceiling on overhead and G&A dollars, but all mention
of a ceiling was deleted in its revised proposal. Raytheon argues that
its revised proposal accepted all the terms of the RFP which carried
forward the initial proposal's ceiling. We do not agree. It is clear
from the revised proposal that the ceiling was deleted and Raytheon's
blanket acceptance alone does not cure that fact. Accordingly, we can
interpose no legal objection to NASA's assignment of cost figures over
what Raytheon argues is its ceiling.
In addition, Raytheon contends that NASA only evaluated base fee
rather than award and base fee. Our review of the record indicates that
Raytheon's concern is unfounded as both award and base fee were assessed
by the SEB and presented to the SSO.
Raytheon (and Informatics) also objects to the NASA application of an
equal labor escalation percentage, 4 percent, for the second and third
year costs for each proposer. Raytheon contends that such application
"ignores the possibility that each offeror might have differently
evaluated probable escalations in pricing his offer." Raytheon advises
that it "had already escalated all non-wage determinated personnel
salaries in its proposal." NASA's position is:
* * * since the bulk of the personnel are SCA employees whose wages
are keyed to SCA Wage Determinations, it was considered most likely that
the escalation rate of those employees would be the same no matter which
management team was in place. Further, since the SCA employees are by
far the largest in number, their escalation will, in effect, control and
drive the overall contract escalation rate.
In addition, we note that each proposer treated labor escalation
costs differently.
Since the Government pursuant to a cost-reimbursement contract will
have to reimburse a contractor for allowable costs, the procuring
activity should exercise informed judgments as to whether proposals are
realistic with respect to proposed costs. Conducting a cost realism
evaluation is a function of the procuring activity and, therefore, we
will not disturb the agency's determination unless it clearly lacks a
reasonable basis.
NASA appears to have made the determination to treat offers equally
here by normalizing labor escalation (see Moshman Associates, Inc.,
B-192008, January 16, 1979, 79-1 CPD 23) for the second and third years
based on its experience, the number of SCA employees involved and the
fact that the approaches taken by the three proposers were unrealistic
in light of present economic conditions. Under these circumstances, and
absent any rebuttal other than generalities by the protesters, we do not
find that NASA's decision to normalize lacked a reasonable basis.
Raytheon's final objection concerning the cost evaluation is directed
at NASA's position that Raytheon agreed to pay captured incumbent
employees no less than their current salary even if that salary was more
than the SCA wage. Raytheon allegedly had no duty to pay an SCA
employee more than that specified by the wage determinations since there
is no applicable collective bargaining agreement. Therefore, Raytheon
contends NASA improperly increased the wages of those captured SCA
employees to the salary earned with Informatics.
NASA and Raytheon base their respective positions on statements made
during oral discussions. Our review of the oral discussions transcript
does not conclusively support either position. However, we note that
NASA treated Raytheon's and PRC's proposals in the same manner. NASA's
determination to increase the wages is what it views to be the cost of
doing business with any contractor. This projection of future costs is,
as noted above, a part of the cost realism assessment and within the
discretion of the procuring activity. See Dynatrend, Inc., supra.
Moreover, the difference between the wage determinations and the wages
paid by Informatics is negligible.
Compliance With Procurement Regulations-- Raytheon
Raytheon contends that "NASA mislead Raytheon into thinking that its
technical proposal was based on a full understanding of the RFP, thus
depriving Raytheon of the opportunity (during oral discussions) to
strengthen its offer as intended by NASA regulations." Raytheon argues
that NASA PRD 70-15 (Revised) III(e)(2)(ii) imposed a duty on NASA to
advise Raytheon during oral discussions that Raytheon's proposal
indicated a lack of understanding in the technical utilization area.
NASA PRD 70-15 (Revised) does not require NASA to point out every
weakness in a proposal. Section III(E)(2) contains an exception
applicable here which provides that where the meaning of a proposal is
clear and the SEB has enough information to assess its validity, and the
proposal contains a weakness which is inherent in the proposer's
management, engineering or scientific judgment, or is the result of its
own lack of competence or inventiveness in preparing its proposal, the
contracting officer shall not point out the weakness. We do not find
that NASA erred in determining that Raytheon's "technical utilization"
weakness came within the section III(E)(2) exception to the requirement
for discussions. In any event, Raytheon was specifically asked during
written discussions to explain the area, and we have no basis to
disagree with NASA's assessment that the response was inadequate.
Raytheon also argues that NASA never explicitly requested best and
final offers. We not that in NASA's December 22, 1978, letter to
Raytheon, which was also sent to the other proposers, NASA stated " * *
* please be advised that the common cutoff date for revised proposals
after orals is February 5, 1979 at 2:30 P.M."
In addition, instructions forwarded with the letter clearly advised
offerors that the revised proposal would be the final submission prior
to selection. NASA PRD 70-15 (Revised) III(E)(2) provides:
The contracting officer shall give each offeror a reasonable
opportunity (with a common cut-off date for all) to support and clarify
its proposal. An offeror may, on its own initiative, revise its
proposal and make corrections or improvements until the established
cut-off date.
In our view, NASA's conduct was the equivalent of requesting "best
and final" offers.
Amendment No. 3 Misleading-- Raytheon and Informatics
Raytheon and Informatics assert that amendment No. 3 to the RFP was
misleading since it advised that the two mission suitability evaluation
factors (personnel and management and technical operations) would bear
"almost equal weight" when the former was assigned 700 points and the
latter 500 points in the evaluation. Prior to the amendment, these
factors bore equal weight. The amendment stated, in pertinent part:
For evaluation purposes, the Personnel and Management Plan and the
Technical Operations Plan will bear almost equal weight, with the former
having the greater weight.
The protesters imply that they were unfairly eliminated from
consideration either under rules which were either known to NASA at the
time of the RFP or established after proposal submission or even after
selection to justify the PRC selection.
We have consistently held that while offerors should be informed of
the relative weight or importance attached to the evaluation criteria,
the disclosure of the precise numerical weights to be used in the
evaluation process is not required. Nevertheless, offerors should be
informed of "the broad scheme of scoring to be employed and given
reasonably definite information as to the degree of importance to be
accorded to particular factors in relation to each other." BDM Services
Company, B-180245, May 9, 1974, 74-1 CPD 237.
Here, NASA described in narrative the general relationship between
the mission suitability factors. While the protesters emphasize that
both "will bear almost equal weight," the latter portion of the
above-quoted sentence must not be overlooked. When read in its
entirety, the amendment adequately informs offerors of the relationship
between the two factors, and the weights assigned are relatively
compatible with the narrative and do not represent a material departure
from the narrative. See Aydin Corporation, B-188871, October 25, 1977,
77-2 CPD 322. In addition, there is nothing in the record to show that
the change in the degree of importance of the factors was done to
justify award to PRC because the amendment was issued and the points
established prior to the submission of any proposals.
Other Direct Costs-- Informatics
Informatics' objection to NASA's normalization of "other direct
costs" is untimely and not for consideration on the merits. On December
22, 1978, Informatics was given a set of questions to answer prior to
oral discussions. Question 9 specified the dollar amounts for the
"other direct costs" that NASA required each offeror to use in their
respective proposals. Therefore, since the basis for protest was known
by Informatics on or about December 27, 1978, allowing some time for
mailing, Informatics should have but did not protest within 10 working
days of receipt of NASA's letter or, at the latest, by the submission of
its revised proposal. See GAO Bid Protest Procedures, 4 C.F.R.
20.2(b)(1) and (b)(2)(1979).
SCA Fringe Benefits-- Informatics
Informatics believes that NASA improperly increased Informatics' SCA
fringe benefit costs.
NASA advises that its health and welfare fringe benefit analysis was
based on its interpretation of the latest wage determination which
stated: " * * * Employer contribution costing an average of $0.88 an
hour per employee computed on the basis of all employees employed on the
contract." The proposed costs for Informatics were adjusted upward to
bring the SCA employees' average to $0.88 per hour because NASA's
analysis showed that the firm had understated these benefits. These
costs details were confirmed by the Defense Contract Audit Agency, and
neither that agency nor NASA was able to identify Informatics' alleged
inclusion of a portion of these costs in its proposal.
In view of the foregoing, we cannot disagree with NASA's evaluation
of the fringe benefits.
Cost Realism-- Informatics
Informatics argues that phase-in costs should have been included in
NASA's cost realism evaluation. Informatics adds that an analysis of
the cost risks associated with the Consolidated Facilities Contract
should have been performed by NASA. Moreover, Informatics contends that
an effort to assess the cost impact of the loss of trained and
experienced personnel as a result of contractor changeover should have
been carried out.
As stated above, it is not our policy to disturb a cost realism
evaluation unless it clearly lacks a reasonable basis. See Moshman
Associates, Inc., supra.
For the reasons that follow, we find no reason to disturb NASA's
evaluation here.
The RFP required the submission by nonincumbent offerors of its
proposed phase-in costs, which PRC and Raytheon did. According to NASA,
this information was included in the SEB Report as a separate item to
give the SSO an opportunity to see each proposal with and without those
costs, and this is normal procedure for NASA. Further, the phase-in
plan was considered, as the RFP advised, under the "Other Factors"
evaluation of each proposal and was not point scored. It is clear that
the phase-in costs were considered in NASA's cost realism evaluation.
With respect to NASA's alleged failure to analyze the cost risks
associated with the Consolidated Facilities Contract, it is our view
that such analysis was not necessary. The purpose of the Consolidated
Facilities Contract, which is separate from this operations contract, is
the acquisition and control of the existing facilities. The facilities
contract is to be negotiated with the successful offeror.
NASA advises that during contract extension negotiations with
Informatics, subsequent to the submission of best and final offers, it
made an administrative change in Informatics' current facilities and
operations contracts. NASA reduced by $220,000 the "Other Direct Cost"
category of the operations contract which represented the lease of
automated data processing (ADP) equipment and placed it under the
facilities contract. We note that the operations contract contained
NASA-specified amounts, one being the leasing of ADP equipment, which
offerors were required to use in their cost proposals.
Informatics argues that this change will reduce the amount of G&A
dollars that Informatics could expect. Had it been aware of this, the
alteration of its proposal to recover those dollars would have been a
distinct possibility.
NASA asserts that the scope of work to be performed has not been
changed-- "The contractor will still be responsible for all day-to-day
information operations of the (Facility) together with the same ADP
operations and research tasks." NASA points out that any cost incurred
for the placement and administration of the lease will be reimbursable
pursuant to the operations contract. Further, the agency advises that
the amount of reduction in G&A dollars would be minimal, that all
offerors have been treated in the same manner and that the relative cost
position of each was not affected. In view of this, we are of the
opinion that the change was not prejudicial to Informatics.
NASA's cost realism evaluation did not assess the cost impact of the
loss of trained and experienced personnel due to contractor changeover.
Rather than assess costs, NASA evaluated how each offeror intended to
staff the Facility and the qualifications of the key personnel,
acknowledging that, during contractor changeover, some minimal loss of
production and quality is experienced.
Informatics contends that it intends to retain a significant percentage
of the total employees at the Facility and "virtually all of the
employees in the initial systems area * * * ." NASA indicates that, in
its experience, management personnel frequently are retained by the
unsuccessful incumbent contractor; however, PRC has proposed its own
management team. It is NASA's opinion with respect to the monkey
personnel that the staffing will be accomplished as proposed. Also,
NASA advises that it does not expect any long-term effect as a result of
contractor changeover.
We note that NASA determined that PRC's staffing plan was reasonable
as to how PRC could accomplish the proposed staffing. The analysis,
among other items, included a review of the ratios of incumbents to
in-house to new hires and a comparison to past history at the Facility
and other locations in the surrounding area. It is our view that the
record does not support the conclusion that NASA's evaluation by failing
to assess costs here clearly lacked a reasonable basis.
Award and Base Fee-- Informatics
Informatics expresses concern in the SEB's recommendation that PRC's
relatively low base and award fee arrangement should be changed in final
negotiations. The basis for the recommendation was the determination
that, since the award fee was "unusually low," NASA may not have
"sufficient leverage to motivate the contractor in controlling costs
and/or improving performance if necessary." Informatics suggests that,
since base fee is guaranteed, any reduction would result in not only the
corresponding increase in the award fee, which is contingent, but a
demand for an additional increase in the latter fee to compensate the
offeror for increased risks. This would mean that the total potential
fee would be increased by NASA and such increase should be assessed
against PRC. On the other hand, NASA "would not negotiate a shift in
the ratio if it meant an increase to overall fee." Moreover, NASA
advises, and the record confirms, that the SSO made his selection based
on PRC's proposed total fee. Therefore, since what has been presented
only speculates as to what might occur, there is no reason to interpose
legal objection.
PRC Staffing-- Informatics
Informatics questions how PRC can retain a high percentage of
incumbent employees, change the labor mix, lower salaries resulting in
lower costs and not engage in wage busting. "Wage busting" is the
practice of lowering employee wages and fringe benefits by a successor
contractor as a result of the contractor's effort to be a low bidder or
offeror on a Government service contract when the employees continue to
perform the same jobs on the successor contract.
A successor contractor is not wage busting when employees are
reclassified by the successor contractor to lower paying jobs with
different duties and responsibilities. Joule Technical Corp., 58
Comp.Gen. 550(1979), 79-1 CPD 364. NASA states that the source of
Informatics' question concerning wage busting came at Informatics'
debriefing when NASA compared the PRC proposal with that of Informatics.
NASA advised Informatics "that neither the rate of pay, nor the PRC
level of effort, significantly departed from that which Informatics had
proposed." Because of this, Informatics argues that the lower cost for
PRC as evaluated by NASA logically follows from this prohibited
practice.
NASA advises that each proposal was measured against the evaluation
criteria not against Informatics' plan. We note that the evaluation of
each staffing proposal included a determination as to whether adequate
personnel, in terms of quantity, experience and education, had been
provided. In addition, the proposals were reviewed to determine whether
performance at an acceptable level could be achieved within the confines
of each staffing plan. While each plan varied in points earned, NASA
concluded that each was acceptable.
We are aware that during oral discussions PRC agreed that salary and
wage offers to incumbent employees would not be less than current wages
and fringe benefits paid by Informatics. A review of PRC's proposal and
NASA's probable cost methodology, including the worksheets, indicates
that PRC complied with the wage determinations and the aforementioned
pledge. The lower cost here for PRC is apparently due, in part, to the
proposed use of fewer employees. Accordingly, we find no impropriety in
this regard.
In regard to the Informatics assertion that PRC's proposed staffing
will promote labor unrest or strife and adversely affect minority
enterprises, we do not find any basis in the record to agree.
The RFP advised each prospective proposer to provide information
concerning labor-management relations, experience, if any, with strikes
and other labor disruptions. The SEB report found no discriminators in
this portion of the "Other Factors" evaluation.
PRC, in the "Other Factors" portion of its proposal, states that
there will be an Equal Employment Opportunity (EEO) officer at the
Facility. That officer will work closely with the EEO coordinator who
will be located in McLean, Virginia. Both the officer and coordinator
will work with PRC's Professional Staffing Office in the area of
recruitment. In addition, PRC advises that it has not had a strike or
labor interruption throughout its corporate history. We also note that
PRC has proposed the subcontracting of 19 percent of the value of its
proposal to minority enterprises and approximately 32 percent is
proposed for small business enterprises.
The RFP requires subcontracting of 22 percent of the proposal's value
for small business and 15 percent for minority enterprises. Moreover,
PRC has established policies and procedures to insure continued
compliance with the RFP requirements and to keep employee morale high.
Here, again, we will not substitute our judgment for that of the
contracting agency since there have been merely speculative assertions
that NASA acted arbitrarily or capriciously in its evaluation. Even
though Informatics disagrees with NASA's judgment, this does not
invalidate it. See Honeywell, Inc., B-181170, August 8, 1974, 74-2 CPD
87.
Informatics also implies that NASA made improper assumptions that the
PRC proposal to retain a high percentage of Informatics' employees was
other than a "paper" proposal. The RFP requires the "company's plan to
acquire and retain personnel during the term of the contract." Also, the
proposer is to "Provide a statement that key personnel in the proposal
are available and will be assigned to (the) contract." PRC's proposal
included the resumes of the key personnel and a plan for the acquisition
of the nonkey personnel. Accordingly, PRC's proposal complied with the
RFP requirements. NASA was satisfied concerning the PRC staffing and
Informatics has pointed to no impropriety in the NASA evaluation.
Alleged Discussions After Common Cutoff Date-- Informatics
Informatics questions why, after receipt of best and finals (February
5, 1979), PRC was permitted to submit revised resumes for key employees
and both PRC and Raytheon were allowed to submit information concerning
the source of employees while Informatics was not also given an
opportunity to revise its proposal. Informatics' position is that the
contacts with PRC and Raytheon were not clarifications but discussions
and, as such, gave "PRC (and to a lesser degree (Raytheon)) the
opportunity to cure deficiencies in their proposals after the common cut
off date of February 5, 1979."
All offerors were contacted by NASA after February 5, 1979, as
follows:
1. February 9, 1979-- at the request of the contracting officer
Informatics submitted a revised summary chart of costs and fees
utilizing the required Government estimate for materials, supplies,
leased equipment, travel, postage and telephone, which had been given
the offerors prior to the written and oral discussions.
2. February 14, 1979-- Raytheon submitted, at NASA's request,
information which transferred computer operators and accounting clerks
from the professional categories into the Technical-Clerical and Other
category (TCO).
(NASA states that "(t)he total cost amount proposed was not affected,
since the rates didn't change due to the fact that they were already at
TCO rates.")
3. February 14, 1979-- the contracting officer, at the direction of
the SEB, made a request to Raytheon and PRC for " * * * a breakout of
the source (i.e., in-house, incumbent, and new hire) for proposed
employees in each labor category (i.e., manager, supervisor,
professional, technical, clerical, or other), along with proposed hours
and labor rates for each source and category."
4. February 21, 1979-- a. PRC submitted the requested information:
b. the contracting officer contacted Informatics to obtain a breakout of
the manager category by key and nonkey managers.
5. February 22, 1979-- a. Raytheon submitted the requested
information (see (3)) but, included a breakout by prime and
subcontractor; b. the contracting officer contacted Informatics for " *
* * a breakout of the average rate for all SCA employees"; c.
Informatics, by letter dated February 22, 1979, confirmed its February
21, 1979, telephone conversation with NASA. (Informatics alleges this
information was included in the proposal.)
6. April 27, 1979-- As a consequence of the SSO posing a question to
the SEB concerning probable cost assessment of all offerors, the
contracting officer requested a prime/subcontractor breakout for the
labor source information from PRC. By letter dated April 30, 1979, PRC
confirmed the breakout given to NASA over the telephone.
Informatics acknowledges the February 21 and 22 contacts but fails to
mention its February 9, 1979, submission. Informatics, at the
contracting officer's request, submitted a revised summary chart based
on the Government estimate for various items since Informatics did not
revise its contract pricing proposal as NASA had required. Informatics'
chart extended its fee percentage portions on the total revised cost.
NASA "decided to give Informatics the benefit of the fee initially
proposed since this would probably be the fee (NASA) would negotiate."
Informatics argues that the purpose of the NASA contacts with PRC and
Raytheon was to enhance their best and final offers with a detailed
breakdown of proposed employee sources. Informatics concedes that the
best and final offers contained the total number of employees within
each category, total hours to be worked, total dollars paid, and NASA
did not afford PRC and Raytheon the opportunity to change those totals
or costs. However, Informatics alleges that either one could have
refined or revised its proposal concerning how each category would be
staffed with the hope that a downward cost realism adjustment would
result. Informatics contends that neither PRC's nor Raytheon's proposal
included the requisite detailed manning breakouts required by the RFP.
Contrary to Informatics' assertion, a review of PRC's and Raytheon's
proposals discloses that both included the requisite manning breakouts
required by the RFP. However, during the cost realism analysis, the SEB
determined that a further breakout of the source of employees would be
needed to enable a more accurate cost realism assessment. In addition,
the record discloses that the SSO requested that further analysis be
performed by the SEB in this area. NASA advises that only one portion
of the analysis requested by the SSO required contact with an offeror.
That portion was a probable cost assessment of all three offerors with
all adjustments except for manning and skill mix adjustments. This
meant that the SEB needed a contractor/subcontractor breakout for the
source of employees from PRC. The SSO, in his Selection Statement,
stated that such analysis "was desirable before a selection decision
would be made." Further, NASA summarizes the effect of what occurred as
follows:
1) that the contacts made did not constitute unfair procedure by
REOPENING DISCUSSIONS WITH SOME OFFERORS AND NOT WITH ALL, 2) THAT there
was no information obtained from one or more offerors that was not
obtained from all, and 3) that IISC is totally incorrect in its
contention that the reason for the requests for additional information
was the SSO's concern over a lack of commitment of non-key incumbent
personnel proposed by PRC.
In our view, the record indicates that the information obtained from
all offerors (with the possible exception of the Informatics' February
21 and 22 contacts) was essential to the evaluation of the proposals.
Therefore, the contacts and submissions constituted a reopening of
negotiations and discussions with the offerors. See MAR, Incorporated,
B-194631, August 13, 1979, 79-2 CPD 116.
While this may have occurred, we do not find that Informatics was
prejudiced by NASA's post best and final contacts. The record shows
that, contrary to Informatics' contentions, the discussions were not
conducted only with its competitors, but with all firms in the
competitive range. Moreover, NASA limited the scope of information
requested and received and did not permit changes in any of the
proposals with respect to the key evaluation areas of cost, manning, or
skill mixes, except arguably for Informatics on February 9. Further, we
agree with NASA that the SSO was not concerned with PRC's staffing
commitments in requesting further analysis.
Technical Evaluation-- Informatics
Informatics contends that the technical evaluation of the proposals
indicates an internal inconsistency in NASA's evaluation procedures.
Also, Informatics argues that there is a significant discrepancy between
PRC's incumbent personnel retention rate in its technical proposal and
that in its cost proposal.
With respect to the former contention, Informatics states that, in
the technical operations area, Informatics significantly outscored PRC,
while in the personnel and management area, PRC prevailed by a
significant margin. The three evaluation methods utilized by NASA were
numerical, adjectival and strength/weakness. Under the adjectival
evaluation method for technical operations, Informatics received 4
excellent ratings and 3 good ratings, whereas PRC received 6 good and 1
fair. The results under the strength/weakness method were:
Informatic-- 4 strengths, 3 areas neither strength nor weakness and no
weaknesses, and PRC-6 areas neither strength nor weakness and 1
weakness.
Informatics argues that the technical operations results are a
correct reflection of the evaluation but this is not the case in
personnel and management and shows an internal inconsistency. The
scores in the latter area received under the adjectival method were:
Informatics-- 2 excellent and 3 good, and PRC-- 4 excellent and 1 good.
Those received under the strength/weakness method were: Informatics-- 2
strengths and 3 areas with neither a strength nor weakness, and PRC-- 4
strengths and 1 area with neither a strength nor weakness. Rather than
relative equality on a technical basis as found by NASA, Informatics
believes that the actual results should have given Informatics a
significantly higher score than PRC.
NASA's evaluation of the personnel and management area does not give
PRC a significantly higher numerical score than Informatics. Similarly,
in the technical operations area, Informatics was not given a
significantly higher score than PRC. NASA's conversion of the
adjectival ratings to numerical scores involved ranges; for example,
NASA can give an offeror from 90 to 100 points for an excellent rating.
It is apparent that NASA's strength/weakness evaluation method is
utilized in making the subjective determination of where within the
various ranges a proposal will fall. Once this conversion was
accomplished it ranges a proposal will fall. Once this conversion was
accomplished it was clear that the SSO had two options involving
Informatics vis-a-vis PRC: -- (1) select Informatics which earned a
slightly higher score, as noted above, but had a significantly higher
cost, or (2) select PRC with a slightly lower score and a significantly
lower cost. NASA decided to select PRC which it "judged to offer the
most advantageous combination of Mission Suitability and probable cost
factors."
We can appreciate Informatics' misconception here since it does not
have access to all of the evaluation documentation. However, the record
fails to show any internal inconsistency and the results are consistent
with the opinions of the evaluators.
Concerning Informatics' argument that PRC has two retention rates, a
review of PRC's cost and technical proposal does not reveal such a
discrepancy.
Conclusion
Based on the foregoing, Raytheon's and Informatics' protests are
denied.
Our Office has been advised a new wage determination was issued on
January 15, 1980. In this regard, we note that the competition is over
and the procurement is in a post-selection phase. Therefore, we would
not object if NASA proceeded with its award selection of PRC.
B-139703, March 21, 1980, 59 Comp.Gen. 313
Appropriations - Justice Department - Litigation Expenses - Justice
Department v. Administrative Office - Expert Witness Fees - Criminal
Proceedings
Compensation of expert witnesses, appointed by the Court under Rule
706, Federal Rules of Evidence (Public Law 93-595), in criminal
proceedings is payable from Justice Department appropriations as a
litigation expense. 39 Comp.Gen. 133, overruled in part.
Matter of: Payment of court-appointed expert witness - criminal
proceeding, March 21, 1980:
The Director, Administrative Office of the United States Courts
(Administrative Office), has requested our decision on the proper source
of funds for payment of a $24,200 fee of Mr. Reynolds Couch. Mr. Couch
was appointed by the court under Rule 706, Federal Rules of Evidence
(FRE) (Pub. L. No. 93-595, 88 Stat. 1938, 28 U.S.C. App.), to make an
appraisal of 15 properties subject to forfeiture under the provisions of
18 U.S.C. 1961-1968(1976) in a criminal proceeding, United States v.
Thevis (No. CR-78-180 A, N.D. Ga.). For reasons set forth below, we
conclude that Department of Justice appropriations should be used for
such payment.
Mr. Couch was appointed in June, 1978, by the Honorable Charles A
Moye, United States District Judge for the Northern District of Georgia,
to make an appraisal for the court of various properties subject to
forfeiture in the above-named criminal prosecution. 18 U.S.C. 1963. A
voucher for the appraisal services, totalling $24,200 was approved by
the court and submitted to the Administrative Office for payment.
However, payment was delayed because the Administrative Office and the
Department of Justice (Justice) disagreed over which agency should make
payment. To resolve this difference, the Administrative Office
requested this decision.
Subsequently, the District Court for the Northern District of Georgia
issued an order reciting that Mr. Couch was appointed pursuant to Rule
706 and directing Justice to pay the fee. In order to expedite payment
to Mr. Couch, Justice and the Administrative Office reached an agreement
under which (1) Justice paid the $24,200 fee and (2) the Administrative
Office will reimburse Justice if it should be decided that Judiciary
appropriations should have been used.
The relevant parts of Rule 706 read as follows:
(a) Appointment. The court may on its own motion or on the motion of
any party enter an order to show cause why expert witnesses should not
be appointed, and may request the parties to submit nominations. The
court may appoint any expert witnesses agreed upon by the parties, and
may appoint expert witnesses of its own selection. An expert witness
shall not be appointed by the court unless he consents to act. A
witness so appointed shall be informed of his duties by the court in
writing, a copy of which shall be filed with the clerk, or at a
conference in which the parties shall have opportunity to participate.
A witness so appointed shall advise the parties of his findings, if any;
his deposition may be taken by any party; and he may be called to
testify by the court or any party. He shall be subject to
cross-examination by each party, including a party calling him as a
witness.
(b) Compensation. Expert witnesses so appointed are entitled to
reasonable compensation in whatever sum the court may allow. The
compensation thus fixed is payable from funds which may be provided by
law in criminal cases and civil actions and proceedings involving just
compensation under the fifth amendment. In other civil actions and
proceedings the compensation shall be paid by the parties in such
proportion and at such time as the court directs, and thereafter charged
in like manner as other costs.
As a preliminary matter, Justice questions whether Mr. Couch is an
expert witness under the Rule. With regard to Mr. Couch's services.
Justice states--
* * * we do not believe that the services provided * * * are truly
within the scope of Rule 706. Mr. Reynolds Couch was appointed to
appraise 15 properties subject to forfeiture under the provisions of 18
U.S.C. 1961. The purpose of the appraisal was to establish a
performance bond.
As you know, the posting of a performance bond is the equivalent of
bail; the expenses of setting bail are clearly chargeable to the court
since such expenses are in no way related to the litigation. The
present value of the properties is not an issue in the case, and it is
not anticipated that Mr. Couch will testify. In our judgment, Mr. Couch
cannot be considered an expert witness in this case under Rule 706.
Whatever the merits of this argument, this Office may not question
the Court's invocation of Rule 706 as its authority to appoint Mr.
Couch. In its Order directing payments by Justice, the court cited Rule
706 and held that Mr. Couch's fee was an expense of litigation, not of
maintaining the court. The proper forum for Justice to challenge that
was an appeal from the Order.
Accepting the Court's determination that section 706 applies, and
that Mr. Couch's fee was an expense of litigation, we conclude that the
Justice Department appropriation should be charged.
As stated in 58 Comp.Gen. 259(1979), the compensation of
court-appointed expert witnesses under Rule 706 is treated generally as
a litigation expense, chargeable to any or all of the parties in such
proportion as the court may direct. With respect to condemnation cases,
we concluded that these costs could not be charged against the condemnee
but that under the Rule, they remained an expense of litigation, rather
than an expense of the Court. As a result, the compensation of
court-appointed expert witnesses in condemnation cases was held to be
chargeable to the litigating agency of the Government.
The language in Rule 706(b) for compensation in criminal cases is the
same as that for land condemnation cases; that is, the Rule provides
that compensation "is payable from funds which may be provided by law."
We see no reason why the same result should not be reached here; in
criminal cases also, the cost of court-appointed witnesses is to be
borne, as an expense of litigation, by Justice.
Justice has argued that there should be a distinction between the
treatment of court-appointed experts in condemnation cases and in
criminal cases. The language of Rule 706, making these expenses, in
both criminal and condemnation cases, "payable from funds which may be
provided by law," does not clearly support such a distinction.
Under the Rule, court-appointed experts in civil actions in general
are to be paid by the parties. Criminal and condemnation cases are
distinguished only in that the defendant or the condemnee, respectively,
are not required to bear any of these costs; the language of the Rule
does not otherwise distinguish between these two types of cases.
The effect of the Rule is thus not to shift these expenses to the court,
but merely to provide that, as between the parties, only the Government
should bear them.
While there is some support in the legislative history of Rule 706
for the position taken by Justice, it is not unequivocal. Under the
circumstances, we are persuaded that in criminal and condemnation cases,
where the Rule precludes assigning any of the cost of court-appointed
expert witnesses to the private litigant or defendant, these costs
should be borne by Justice.
There is, after all, no doubt that the expenses in question are to be
borne by public funds; the only issue is which of two appropriations
should be charged. Seen in that light, this result-- that all such
expenses should be borne by Justice, rather than some by Justice and
some by the courts-- while it may require some fiscal adjustments by
Justice, provides for payment of these expenses in a more uniform and
orderly manner than the alternative.
In 39 Comp.Gen. 133(1959) we held that, where an expert witness was
appointed by the court in a criminal case under former Rule 28 of the
Federal Rules of Criminal Procedure (the predecessor of Rule 706), the
associated expenses should be charged to the appropriation "for
necessary travel and miscellaneous expenses, not otherwise provided for,
incurred by the judiciary." The cited holding in 39 Comp.Gen. 133 will
no longer be followed.
The Administrative Office therefore need not reimburse the Department
of Justice for the $24,200 paid to Mr. Couch.
B-195924, March 14, 1980, 59 Comp.Gen. 311
Officers and Employees - Reemployment or Reinstatement - Rights - After
Higher Grade Appointment to Energy Agency - Higher Grade and Pay
Retention - Non-Entitlement
Employee who held GS-13 position with Department of Energy (DOE)
exercised statutory rights he had with former agency to reemployment in
the GS-12 position he held with that agency prior to appointment with
DOE, rather than undergo a transfer of function within DOE. He is not
entitled to grade and pay retention under 5 U.S.C. 5361 et seq. since he
was not placed in a lower grade position as a result of declining to
transfer with his function. He chose to exercise his statutory rights
of reemployment independent of any rights he may have had in connection
with the transfer of function.
Matter of: Richard J. Magner - Grade and Pay Retention, March 14,
1980:
This decision is in response to a claim for saved grade and pay
submitted by the Defense Contract Audit Agency (DCAA) on behalf of its
employee, Richard J. Magner. Mr. Magner, who has been reemployed by
DCAA as a result of his exercise of reemployment rights held while
employed by the Department of Energy (DOE), claims that he is entitled
to grade and pay retention under the retroactivity provisions of Title
VIII of the Civil Service Reform Act of 1978, Pub. L. No. 95-454, 92
Stat. 1218, October 13, 1978 (5 U.S.C. 5361 et seq.). Essentially, Mr.
Magner claims that, because he exercised his reemployment rights under
circumstances in which he claims he would otherwise have been reduced in
grade and relocated as a result of a transfer of function within DOE, he
is entitled to benefits under Title VIII.
The record shows that on April 20, 1974, Mr. Magner left his grade
GS-12, step 7 position with DCAA's Boston Region to accept a GS-13, step
4 position with the Federal Energy Administration (FEA) in Albany, New
York. His appointment with FEA was under circumstances that entitled
him to statutory reemployment rights under section 5(a)(1)(B) of the
Emergency Petroleum Allocation Act (EPAA) of 1973, Pub. L. No. 93-159,
87 Stat 627 15 U.S.C. 754(a)(1)(B). By applying the provisions of
Section 212 of the Economic Stabilization Act (ESA) of 1970 (12 U.S.C.
1904 note) to functions under the EPAA, section 5(a)(1)(B) of the EPAA
gave employees appointed without a break in service to any position for
carrying out its provisions the right "to reemployment in the position
for carrying out its provisions the right "to reemployment in the
position occupied at the time of appointment or in a position of
comparable grade and salary."
Under the Department of Energy Organization Act, Pub. L. No. 95-91,
42 U.S.C. 7101 et seq., all the functions of the FEA were transferred to
the new Department of Energy, effective October 1, 1977. Section 702(c)
of that Act (42 U.S.C. 7292(c)), in effect repealed reemployment rights
under section 212 of the ESA as incorporated by the EPAA effective 120
days from October 1, 1977, and expressly limited the privilege to
exercise those and other reemployment rights as follows:
(c) Employees transferred to the Department holding reemployment
rights acquired under section 28 of the Federal Energy Administration
Act of 1974 or any other provisions of law or regulation may exercise
such rights only within one hundred twenty days from the effective date
of this Act or within two years of acquiring such rights, whichever is
later. Reemployment rights may only be exercised at the request of the
employee.
In early January of 1978 regional enforcement personnel of the DOE,
including Mr. Magner, were notified that their employment rights would,
in most cases, expire on January 28, 1978, and that there would be some
reassignments of field personnel. Apparently Mr. Magner had earlier
learned that there was a distinct possibility that the Albany office to
which he was assigned would be closed and that he would be transferred
to New York City. Unwilling to relocate and aware that his reemployment
rights with DCAA would expire shortly, Mr. Magner chose to exercise
those rights on January 10, 1978. He reported for duty with DCAA's
Boston Region on February 12, 1978, where he was reemployed at grade 12,
step 8. Mr. Magner claims that, under the Civil Service Reform Act of
1978, he is entitled to retain the grade GS-13 that he held with DOE.
Title VIII of the Civil Service Reform Act amends 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. 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 to retain his
pay indefinitely thereafter, unless his entitlement ceases under
prescribed conditions.
These provisions apply retroactively to certain employees whose
demotions occurred on or after January 1, 1977, and prior to the first
pay period beginning on or after January 1, 1979, under circumstances
which would have entitled the employee to grade retention under 5 U.S.C.
5362.
The Office of Personnel Management (OPM) has issued interim
regulations on grade and pay retention. See title 5, Code of Federal
Regulations, Part 536, and Federal Personnel Manual Bulletin 536-1,
March 30, 1979. 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, OPM,
at 5 C.F.R. 536.202, has extended grade retention and pay retention to
individuals who decline to transfer with their functions and who, prior
to separation for declining to transfer, are placed in a lower graded
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 position in which placed.
Mr. Magner was not placed in a lower grade position as a result of
declining to transfer with his function, but chose to exercise the
statutory rights of reemployment he held independent of any rights he
may have had in connection with a transfer of function. While the
reemployment rights he held gave him additional flexibility in the face
of a potential separation or reduction in grade for declining to
transfer with his function, the statutory provisions that granted him
those rights define the extent of his former agency's obligation to
reemploy him. We are unable to find that the grade and pay retention
authority of 5 U.S.C. 5361 et seq., as amended by Title VIII of the
Civil Service Reform Act of 1978, was intended to expand upon his former
agency's statutory obligation of reemployment.
Accordingly, Mr. Magner is not entitled to retained grade and pay
under 5 U.S.C. 5361 et seq. in connection with his reemployment with the
Defense Contract Audit Agency.
B-195935, March 13, 1980, 59 Comp.Gen. 298
Contracts - Protests - Procedures - Bid Protest Procedures - Time for
Filing - "Court Interest" Exception
Although General Accounting Office (GAO) suspended action on protest
when protester filed suit in United States District Court raising
substantially same issues, protest will be considered where court by
endorsement has expressed interest in GAO decision. Contracts -
Negotiation - Justification
Determination to conduct negotiated rather than advertised
procurement for rifle sights containing tritium, a nuclear by-product,
was reasonable where based on procurement history of similar
promethium-based item and expectation that licensing requirements would
restrict competition. Contracts - Negotiation - Responsiveness -
Concept Not Applicable to Negotiated Procurements
Initial proposal which does not comply with Government-furnished
equipment requirement in request for proposals and which incorporates
engineering change proposal offering flat rather than spherical-ended
tritium beads on rifle sight may not be rejected as nonresponsive. The
rigid rules of bid responsiveness in advertised procurements do not
apply to negotiated procurements. Contracts - Negotiation - Competition
- Competitive Range Formula - Basis of Evaluation
Inclusion of initial proposal in competitive range was reasonable
where major defect, failure to include written permission for use of
Government-furnished equipment, is easily cured through discussions and
engineering change proposal submitted as part of proposal is still under
consideration. Contracts - Negotiation - Competition - Discussion With
All Offerors Requirement - Deficiencies in Proposal - Notice
Request for second round of best and final offers was proper where
offeror was not advised of deficiency in proposal which rendered offeror
ineligible for award. Also, accepted engineering change proposal was
provided to all offerors to equalize competition. Contracts - Buy
American Act - Defense Department Procurement - Waiver of Act -
Memorandum of Understanding - Implementation by Secretary
Exemption from Buy American Act differentials of offer by United
Kingdom firm to provide rifle sights for domestic use by Army was proper
under terms of Memorandum of Understanding (MOU) between United States
and United Kingdom. Secretarial Determination and Findings implementing
MOU exempts all United Kingdom produced or manufactured defense
equipment other than items excluded from MOU. Nothing in MOU excludes
rifle sights. Contracts - Buy American Act - Defense Department
Procurement - Waiver of Act - Memorandum of Understanding - Blanket
Exemption Authority
Blanket exemption from Buy American Act is authorized by
Determination and Finding of Secretary of Defense which applies to all
items of United Kingdom-produced defense materials under congressional
direction to Secretary to implement "to the maximum feasible extent"
policy of NATO standardization and interoperability. Furthermore,
Departments of Defense and Army have consistently interpreted
Secretary's determination as providing blanket exemption. Contracts -
Buy American Act - Defense Department Procurement - Waiver of Act -
Memorandum of Understanding - Notice in Individual Procurements
Incorporation of Notice of Potential Foreign Source Competition in
request for proposals is not prerequisite to application of exemption to
Buy American Act. Failure to include notice in solicitation does not
invalidate procurement. Requests for best and final offers are not
solicitations but merely continuing negotiations not requiring inclusion
of notice. Contractors - Responsibility - Foreign Contractor
License requirements are matters of responsibility, at heart of which
is question whether offeror can perform. We believe that requirement
for license from Nuclear Regulatory Commission (NRC) in procurement
involving nuclear by-products is satisfied by foreign offeror whose
local representative has qualifying license from State of North
Carolina, under State agreement with NRC, and which exempts
representative from requirement for obtaining NRC-issued import license.
Agents - Of Private Parties - Authority - Contracts - Signatures
Contracting officer's determination that signer of offer had
authority to bind offeror was not unreasonable where evidence before
contracting officer included (1) position of signer; (2) inclusion of
corporate drawings with proposal; and (3) confirmation from president
of corporation designated in offer as authorized to conduct
negotiations. Buy American Act - Waiver - Public Interest - Competitive
Advantage Consideration
Protester asserts that foreign offeror, exempted from Buy American
Act, enjoys competitive edge because not subject to United States laws
on equal opportunity, clean air, etc., resulting in unequal treatment of
domestic offerors. While there may be some validity to this argument,
the only mandated handicap enjoyed by American firms in competition with
foreign firms is Buy American Act. Since Secretary of Defense
determined that it would be inconsistent with public interest to apply
Buy American Act, these alleged competitive advantages are not for
consideration.
Matter of: Self-Powered Lighting, Ltd., March 13, 1980:
On August 31, 1979, Self-Powered Lighting, Ltd. (SPL), filed a
protest with our Office against the award of a contract by the United
States Army to Saunders-Roe Developments, Ltd. (SRDL), of the United
Kingdom (U.K.), for the furnishing of front-sight post assemblies for
the M16/M16A1 rifle. We suspended consideration of the protest because
on December 14, 1979, SPL filed suit in the United States District Court
for the Southern District of New York, Self-Powered Lighting, Ltd. v.
United States, Civil Action No. 79 Civ. 6795 (EW), seeking injunctive
and declaratory relief and raising substantially the same issues as
raised in the protest. By endorsement, the court has indicated its
interest in our decision. For the reasons stated below, we deny the
protest.
On July 20, 1978, the United States Army Armament Materiel Readiness
Command (the Army) issued a request for proposals (RFP) for the
acquisition of front-sight post assemblies for the M16/16A1 rifle in use
by the Army. To facilitate night-fire, the sights were to contain a
spherical-ended luminescent bead containing tritium, a nuclear
by-product, as a result of which the RFP required that offerors be
licensed to handle such materials. Offerors intending to use
Government-furnished property were required to submit written permission
from the contracting officer having cognizance over the property. The
solicitation did not contain a "Notice of Potential Foreign Source
Competition."
Ultimately, 47 solicitations were issued. Five proposals were
received by the date set for receipt of proposals. SPL's offer was low.
SRDL's offer was second low and was accompanied by an engineering
change proposal seeking approval for the provision of flat-ended rather
than spherical-ended beads. SRDL's initial proposal also indicated that
SRDL intended to use Government-furnished equipment (GFE) but did not
include the required written permission.
By letter dated September 18, SPL was advised of a suspected error in
its offer to which SPL responded by increasing its unit price by almost
50 percent, raising it above SRDL's offer.
However, although SRDL's offer was now low, SRDL could not be considered
for award because its initial proposal did not include the written
permission for use of GFE required by the RFP. As a result, SPL
remained the low offeror eligible for award.
Best and final offers were requested from each offeror on November
22, 1979. Although SPL remained the low, eligible offeror after
submission of best and final offers, action to award the contract to SPL
was halted because SRDL had been asked to submit its best and final
offer without being advised of its ineligibility for award.
Consequently, a new round of best and final offers was requested with
advice to offerors that the RFP's GFE requirements had to be strictly
complied with and that the tritium beta lights could have either
spherical ends, as originally specified in the RFP, or flat ends, as the
result of acceptance of SRDL's engineering change proposal. SRDL's new
best and final offer advised that it would not use GFE. With this
submission, SRDL displaced SPL as the low, eligible offeror. The
contracting officer verified the authority of the signer of SRDL's offer
to commit SRDL to a contract and awarded the contract to SRDL.
The protester alleges numerous deficiencies in the solicitation and
procedures leading to the award of this contract. We will treat each of
these in turn.
Use of Negotiated Procedures
The authority cited for the negotiation of this procurement is 10
U.S.C. 2304(a)(10)(1976), which provides an exemption to the statutory
preference for the use of advertised procedures where it is determined
that it is "impracticable to obtain competition." The contracting
officer's determination and findings (D&F) underlying the decision to
negotiate this procurement justifies use of the exemption on the basis
that there is only one known supplier for the radioactive material,
Minnesota Mining and Manufacturing Company (3M), and in view of the
improbability of competition, that the best interests of the Government
would be served by being able to obtain cost and pricing data.
(Information regarding an offeror's costs and pricing may be required
under the Truth in Negotiations Act, 10 U.S.C. 2306(f), in a negotiated
procurement.)
SPL contends that the D&F is erroneous, that the contracting officer
immediately became aware of the existence of potential competition, and
that, therefore, the basis for use of the exemption became invalid. SPL
argues that the contracting officer should have immediately canceled the
RFP and rewritten the requirement as an invitation for bids (IFB) under
advertised procedures. SPL contends that by proceeding further under a
pretense that competition was impracticable, the contracting officer was
violating the terms of 10 U.S.C. 2304.
We note at the outset that SPL's challenge to the use of negotiated
procedures in this procurement is untimely under our Bid Protest
Procedures, 4 C.F.R. part 20(1979), which require that allegations of
improprieties apparent on the face of a solicitation must be filed prior
to the date set for receipt of initial proposals. 4 C.F.R.
20.2(b)(1)(1979). Despite SPL's characterization of its argument as a
challenge to the D&F, SPL's real objection is to the use of negotiated
rather than advertised procedures in this procurement which was apparent
on the face of the solicitation. We note also that by its participation
in the procurement, SPL may be considered to have waived its objection.
Airco, Inc. v. Energy Research and Development Administration, 528 F.2d
1294 (7th Cir. 1975). Nonetheless, we will consider the question on the
merits since the court has expressed an interest in our decision. See,
e.g., Informatics, Inc., B-194734, August 22, 1979, 79-2 CPD 144.
Our review of contracting officers' determinations under 10 U.S.C.
2304(a)(10) to negotiate due to the impracticability of securing
competition is limited to ascertaining whether there is a reasonable
basis for the determination. Department of Commerce; International
Computaprint Corporation, 57 Comp.Gen. 615, 622(1978), 78-2 CPD 84; 41
id. 484(1962). The D&F here is based on the contracting officer's
assessment of two principal factors-- the history of similar prior
procurements and the licensing requirements applicable to the handling
of radioactive materials-- which the contracting officer believed would
limit competition. In this connection, the Army decided in this
procurement to substitute tritium for promethium, used as the
light-emitting element in past procurements of low-light front sights.
3M is the only domestic producer of promethium and, as a result, all
prior contracts for the promethium-based sight had been awarded to 3M.
Both tritium and promethium are low-level radioactive materials subject
to regulation and licensing as nuclear by-products. The contracting
officer was of the opinion that there was sufficient similarity between
the current and prior procurements so that negotiation was justified on
the same basis. While there may be room for disagreement with the
contracting officer's conclusion, we find no basis upon which we might
conclude that his assessment was not rationally based.
Responsiveness of SRDL's Offer
The protester contends that SRDL's failure to comply with the GFE
requirement and its offer of a flat, rather than spherical-ended, bead
rendered SRDL's offer, being nonresponsive initially, could not offer
nonresponsive to the terms of the solicitation.
SPL argues that SRDL's later be made responsive through discussions.
The rigid rules of bid responsiveness in formally advertised
procurements do not apply to negotiated procurements. TM Systems, Inc.,
56 Comp.Gen. 300(1977), 77-1 CPD 61. The fact that an initial proposal
may not be fully in accord with the requirements of the RFP is not
sufficient reason to reject the proposal if the deficiencies are
reasonably susceptible to being made acceptable through negotiations;
one of the basic purposes of a negotiated procurement is to determine
whether deficient proposals are reasonably susceptible to being made
acceptable through discussions. NCR Corporation, B-194633.2, September
4, 1979, 79-2 CPD 174. In such procurements, "nonresponsiveness" is
ordinarily considered to be a subject for negotiation. DPF
Incorporated, B-180292, June 5, 1974, 74-1 CPD 303; 51 Comp.Gen.
247(1971).
To the extent that SRDL's asserted "nonresponsiveness" is relevant,
it meant only that SRDL could not be awarded the contract on the basis
of its initial proposal. The real question here is whether SRDL's
proposal should have been included in the competitive range for the
conduct of negotiations.
The determination whether a proposal is in the competitive range is
primarily a matter of administrative discretion and ordinarily will be
accepted by this Office, absent a clear showing of unreasonableness.
Western Design Corporation, B-194561, August 17, 1979, 79-2 CPD 130;
RAI Research Corporation, B-184315, February 13, 1976, 76-1 CPD 99. To
be deemed unreasonable, it must be clear from the record that there was
no rational basis for the evaluation. Joanell Laboratories, Inc., 56
Comp.Gen. 291(1977), 77-1 CPD 51. An unacceptable initial proposal
should not be excluded from negotiations if it is reasonably subject to
being made acceptable through discussions. DPF Incorporated, supra; 51
Comp.Gen. 247(1971); 51 id. 431(1972).
We find nothing in SRDL's offer which might not have been cured
through negotiations. SRDL's failure to meet the GFE requirement could
easily be remedied by advising SRDL of the deficiency and requiring it
either to furnish the required written permission for the use of GFE or
forego its use. And, we find nothing wrong with including SRDL in the
competitive range while its engineering change proposal was under
consideration. Consequently, we find no merit in SPL's contention that
SDRL's offer should have been rejected as "nonresponsive" and we believe
it was proper to include SRDL in the competitive range.
Conduct of Discussions
The provisions of Defense Acquisition Regulation (DAR) Sec.
3-805.3(a) (1976 ed.) require that offerors be advised of deficiencies
in their proposals. Generally, once discussions are initiated with an
offeror, the procuring agency must point out all deficiencies in that
offeror's proposal where the applicable regulation so requires.
E-Systems, Inc., B-191346, March 20, 1979, 79-1 CPD 192; Checchi and
Company, 56 Comp.Gen. 473(1977), 77-1 CPD 232; Teledyne Inet, B-180252,
May 22, 1974, 74-1 CPD 279. The Army concedes that its initial request
to SRDL for a best and final offer made no mention of the GFE problem in
SRDL proposal. We believe, as did the Army, that this request fell
short of the requirement for meaningful discussions, necessistating a
second round of best and finals with advice to all offerors, including
SRDL, that the solicitation's GFE provisions required strict compliance.
SRDL's response confirmed its price and advised that its initial
proposal was in error and that SRDL did not actually intend to use GFE,
thereby making SRDL's offer consonant with the solicitation.
Buy American Act
SPL raises two questions concerning the application of the Buy
American Act to this procurement. SPL contends first that SRDL's offer
was improperly exempted from the application of the Buy American Act
differentials provided for in section VI of the Defense Acquisition
Regulation and, second, that the solicitation did not contain the
mandatory notice to domestic offerors of potential foreign competition;
SPL contends that absent such notice, the contracting officer had to
apply the Buy American Act differentials to SRDL's offer. We think SPL
is wrong on both counts.
The Buy American Act, 41 U.S.C. 10a(1976), requires that only
domestic source and end products be acquired for public use unless the
head of the department concerned determines it to be inconsistent with
the public interest or the cost to be unreasonable. The act is
implemented within the Department of Defense by section VI of the DAR,
which provides for a percentage additive factor to be applied to offers
of nondomestic source end products. DAR Sec. 6-104.4 (1976 ed.). The
Army states that the purchase of these defense materials from the U.K.
is exempt from application of the Buy American Act differentials under
the terms of a Memorandum of Understanding (MOU) between the United
States and the U.K. dated September 24, 1975, as implemented by a
Secretarial Determination and Finding (D&F) dated November 24, 1976.
SPL contends that application of the exemption to this transaction
conflicts with the first paragraph of the D&F which recites, in part,
section 814(a) of the Department of Defense (DOD) Appropriation
Authorization Act, 1976 (89 Stat. 544), as amended by section 802 of the
DOD Appropriation Authorization Act, 1977 (P.l. 94-261, 90 Stat. 930),
authorizing the Secretary of Defense to determine that waiver of the Buy
American Act would be in the public interest when it is necessary to
procure equipment manufactured outside the United States in order to
acquire NATO standardized or interoperable equipment for the use of
United States forces stationed in Europe and stating that the "Secretary
of Defense shall, to the maximum feasible extent, initiate and carry out
procurement policies to effect that policy."
SPL argues, in effect, that this paragraph limits the applicability of
the D&F to a specific class of transactions-- procurements for United
States forces in Europe-- and that the D&F therefore may not be used in
this purchase of parts for domestic use. We think SPL miscontrues the
Secretary's D&F.
We note at the outset that contrary to SPL's assertions, section 802
of the DOD Appropriation Authorization Act, 1977, supra, was drafted not
as a transaction limitation, but to insure that the Secretary of Defense
considered cost, function, quality and availability of the equipment to
be procured while carrying out the policy of NATO standardization and
interoperability. House-Senate Joint-Conference Report on H.R. 12438,
Authorizing Appropriations for FY 77 for Military Procurement, S. Rept.
94-1004, H. Rept. 94-1305, 94th Cong., 2d Sess. (1976), reprinted in 122
Cong.Rec. 20611, 20625 (1976). The Secretary's determination in the D&F
is based on the statutory authority conferred upon heads of departments
under the Buy American Act to exempt from the application of the act
those products for which the head of the department determines such
exemption would be in the public interest. The Secretary's
determination in the D&F, by its terms, applies to "the class of items
described" in the D&F. Paragraph 5 of the D&F identifies the articles
to which the D&F applies as " * * * all items of UK produces or
manufactured Defense equipment other than those items which have been
excluded under the MOU * * * ." We find nothing in the MOU which would
exclude these rifle sights.
In this connection, we note also that part of SPL's argument is based
on the premise that NATO standardization and interoperability is not a
consideration in this procurement. Contrary to SPL's assertion,
however, SRDL's engineering change proposal, accepted by the Army,
justifies the switch from spherical to flat-ended tritium beads on the
basis that the flat-ended beads are NATO standard.
Furthermore, both the Departments of Defense and the Army have
consistently interpreted the MOU and the Secretarial D&F to have created
a blanket exemption from the provisions of the Buy American Act for U.K.
defense products with the exception of those products excluded from the
MOU.
In a memorandum dated May 16, 1977, for the Secretaries of the Military
Departments and the directors of various defense agencies concerning the
MOU, the Secretary of Defense stated the applicability of the exemption
to be:
Except where restricted by (1) provisions of US National Disclosure
Policy (NDP); (2) U.S. laws or regulations; or (3) U.S. Defense
Mobilization Base Requirements; * * * this guidance shall apply to all
procurements of defense items and related services (to include
components, subsystems, and major systems at all technology levels, and
at any phase of the procurement cycle from concept definition through
production).
Procurement Information Letter (PIL) 79-1, issued by the Assistant
Secretary of the Army on January 2, 1979, echoes this interpretation.
We share this view. See Crockett Machine Company, B-189380, February 9,
1978, 78-1 CPD 109. The protester has pointed to no law or regulation
falling within the three exceptions cited in the D&F and we have found
none which would prohibit application of the exemption in this
procurement. Consequently, we think the contracting officer was correct
not to apply the Buy American Act differentials to SRDL's offer.
SPL's further argument that our holding ignores the first paragraph
of the Secretary's D&F does not persuade us that our interpretation is
incorrect. We agree with SPL that the entire document must be read
together and that meaning and effect should be given to all its parts.
We do not agree with SPL, however, that the first paragraph of the D&F
limits its applicability only to procurements for the benefit of United
States Forces in Europe. Rather, we view this paragraph, together with
paragraph 5 of the D&F, as reflecting the Secretary's efforts to
implement "to the maximum feasible extent" a congressionally recognized
policy by extending to the U.K. a blanket exemption from application of
the Buy American Act differentials unless the items being procured are
either expressly excluded or they fall within legal prohibitions against
procurement from a nonnational source.
SPL's second contention regarding the Buy American Act is based on
the premise that the Notice of Potential Foreign Source Competition
required to be in a solicitation when foreign competition is anticipated
is a condition precedent to waiver of the Buy American Act
differentials. We observe two problems with this argument. As stated
in Crockett, supra:
They are (1) the U.K. Defense items are already exempted under our
previous analysis from such application; and (2) an otherwise
unconditional exception to the application of the Buy American Act
differential would be conditioned on a given procuring activity within
the Department of Defense first having some reason to suspect that an
item manufactured in the U.K. might be offered.
In cases since Crockett, we have consistently held that the failure to
incorporate the notice in a solicitation does not invalidate the
procurement. Maryland Machine Tool Sales, B-192019, July 6, 1978, 78-2
CPD 14; Dosimeter Corp. of America, B-189733, July 14, 1978, 78-2 CPD
35; Watkins-Johnson Company, 59 Comp.Gen. 249(1980), 80-1 CPD 195.
We also find unpersuasive SPL's characterization of the Army's
requests for best and final offers as "solicitations" and the assertion
of a continuing duty on the part of the contracting officer to advise
the domestic competitors of the presence of U.K. competition in
connection with such "solicitations." We agree with the Army that these
requests were nothing more than continuing negotiations, rather than the
issuance of a sequence of solicitations. To the extent that the
contracting officer was supposed to incorporate the Notice provision,
his responsibility applied only to the initial solicitation if the
possibility of foreign competition were anticipated. On the record
before us, we cannot disagree with the contracting officer's assessment
that the possibility of such competition was remote. Consequently, we
find no fault with the decision not to incorporate the Notice.
License Requirement
SPL also challenges the award to SRDL on the basis that SRDL does not
possess a license issued by the Nuclear Regulatory Commission (NRC), as
required by the solicitation. SPL contends that since SRDL does not
have such a license, and since SRDL is a U.K. concern not subject to NRC
licensing requirements and could not obtain such a license, award of the
contract to SRDL directly conflicts with the terms of the solicitation.
We do not agree.
There are two separate provisions in the RFP dealing with the subject
of licenses. Clause C.44(1)(b) of the RFP advises that offerors must
have hazardous material licenses/authorizations prior to award, and the
last item in Clause C45A, referring to safety standards, states that the
"contractor shall be required to obtain and verify" an NRC license for
by-product materials. We believe that SRDL complied with these
requirements.
We have long considered license requirements to be matters of
responsibility, at the heart of which is the question whether the
prospective contractor can perform (is responsible). 39 Comp.Gen.
655(1960); 46 id. 326(1966); 51 id. 377(1971). We are of the view
that a contracting officer may determine a bidder to be responsible if
in his or her judgment the contractor will be able to perform and will
have all of the Federal licenses or authorities necessary to performance
at the time required for performance. Award of the contract prior to
the awardee obtaining the necessary Federal licenses is conditioned upon
the awardee obtaining the Federal license prior to performance, and, if
the condition is not met by the time of performance, the contract may be
defaulted.
46 Comp.Gen. 326, supra; see generally What-Mac Contractors, Inc., 58
Comp.Gen. 767(1979), 79-2 CPD 179.
Under the Atomic Energy Act of 1954, as amended, 42 U.S.C. 2011, et
seq. (1976), the NRC has the authority to regulate and license commerce
in nuclear materials, including by-products. We agree with the parties
that SRDL's U.K. operations are neither subject to nor required to be
licensed by the NRC, but we think that SRDL operations within the United
States would be subject to the act. In this connection, however, we
note that the NRC is authorized by the provisions of 42 U.S.C. 2021, as
amended, to execute an agreement with the Governor of any State to
provide for State regulation of commerce in nuclear materials within
that State, with certain exceptions, such as the importing of nuclear
materials, reserved to the NRC. North Carolina is a so-called
"agreement state" with the authority to regulate nuclear by-products. 1
Nuclear Regulation Reporter (CCH) Para 19001; North Carolina Radiation
Protection Act, Secs. 104E-1, et seq., General Statutes of North
Carolina. On June 29, 1977, the North Carolina State Board of Health
issued a radioactive material license to "Eric James
Paisley-Representative, Saunders-Roe Developments, Ltd.," to demonstrate
and distribute tritium capsules "manufactured by Saunders-Roe
Developments, Ltd.," and authorizing possession of these devices in
accordance with the terms of the license. Under the provisions of 10
C.F.R. 110.11(1979), this grant of a special license authorizing
possession of by-product materials would exempt SRDL from the
requirement for an NRC-GRANTED import license.
It is our view that SRDL has complied with the licensing requirements
of the solicitation. Furthermore, we are not dissuaded from this view
by SPL's somewhat strained contention that the North Carolina license is
personal to Mr. Paisley and may not be considered as complying with a
requirement for licensing of the contractor; we note in this connection
only that the license was issued to Mr. Paisley in what appears to be
his representative capacity and we find it difficult to imagine what
more could be expected of a foreign contractor in a regulated industry
than that its United States representative possess a qualifying license.
In these circumstances, we do not think that award of the contract to
SRDL contravenes the licensing requirements of the solicitation.
In a submission to our Office dated February 26, 1980, SPL raised a
new argument, contending that the license issued to SRDL by the State of
North Carolina is of no value in meeting the licensing requirements of
the solicitation because, as SPL states: "It must be equally clear that
one state (North Carolina, here) cannot authorize interstate transit of
nuclear material, so that even if such a state does issue
manufacturing-use-storage, etc., license it would be restricted to
intrastate application."
While we might agree with SPL's argument as a general proposition, we
believe that SPL misapprehends the impact of SRDL's license in this
case.
Summarizing very briefly, the interstate transportation of hazardous
materials, including radioactive materials, falls under the provisions
of the Hazardous Materials Transportation Act, Title I of Pub. L.
93-633, 49 U.S.C. 1801, et seq., which gives the authority to regulate
such commerce to the Secretary of Transportation. Regulations governing
the shipment of radioactive materials generally may be found at 49
C.F.R. 173.389, et seq. (1978). Properly packaged foreign-produced
radioactive materials may be introduced into the interstate
transportation system with the approval of the Department of
Transportation. 49 C.F.R. 173.393b(1978).
We believe it is a fair summary of the rather complicated regulatory
scheme governing the interstate transfer of these materials to state
that the end points in the transaction chain, the manufacturer or
distributor and the recipient or user, fall under the regulatory
authority of the NRC or their respective states, whereas carriers
performing the shipments fall under the authority of the Department of
Transportation (DOT). We believe that so long as both the distributor
and the recipient are either licensed or exempt from licensing by the
NRC or their respective states, and the carrier transferring the
materials between them complies with the Federal regulatory requirements
for carriage of these materials, the transaction is permissible.
Consequently, the question whether the NRC-recognized regulatory
authority of the State of North Carolina or any other State may or may
not be projected into interstate commerce is of no relevance.
Authority of Signer of SRDL's Offer
SPL challenges the contracting officer's determination that the
signer of SRDL's bid had the authority to bind SRDL. The record is
somewhat confused in this regard, at least partially as the result of
the involvement in this matter of two similarly named corporations:
Saunders-Roe Developments, Ltd. (SRDL), of the U.K., the offeror and
awardee; and Saunders-roe Developments, Inc. (SRDI) of North Carolina.
SRDL's offer is signed by "D. G. Guthrie, Managing Director." On July
24, 1979, 1 week prior to award, the contracting officer sought
confirmation of Mr. Guthrie's authority to bind SRDL by telephone
inquiry to SRDI. A return telegraphic message, signed by Mr. Eric
Paisley, as president of SRDI, confirmed Mr. Guthrie's authority to bind
SRDL.
We presume from the award of the contract that the contracting officer
considered this sufficient evidence of Mr. Guthrie's authority.
SPL challenges the contracting officer's determination on the basis
that SRDL and SRDI are separate corporate entities, that there is
nothing in the record to connect them, and that the contracting officer
erred in accepting conformation from an official of an unrelated
domestic concern of Mr. Guthrie's authority to bind the foreign offeror.
SPL, in effect, contests the basis of the contracting officer's
determination and argues that his decision was arbitrary. For the
reasons which follow, we think SPL is incorrect.
The burden rests on each offeror to establish the authority of the
signer, either by a form 129 filed prior to bid opening or receipt of
proposals (preferable), or by presentation of sufficient evidence
submitted when the signer's authority is questioned. The weight of
evidence required to establish the authority of the signer of an offer
is for the determination of the contracting officer. J. W. Bateson Co.,
Inc., B-189848, December 16, 1977, 77-2 CPD 472; General Ship and
Engine Work, Inc., 55 Comp.Gen. 422, 426(1975), 75-2 CPD 269; Atlantic
Maintenance Company, 54 Comp.Gen. 686, 692(1975), 75-1 CPD 108. The
evidence may be submitted at anytime prior to award, so long as it is
provided promptly when requested. Corbin Sales Corporation, B-182978,
June 9, 1975, 75-1 CPD 347; Forest Scientific, Inc., B-192827,
B-192796, B-193062, February 9, 1979, 79-1 CPD 188. "Evidence," in this
context, is not limited to documents; authority may be inferred from
the position held by the signer or by knowledge obtained by other means.
General Ship and Engine Works, Inc., supra.
We find no basis here for concluding that the contracting officer
acted incorrectly in determining that Mr. Guthrie had the authority to
bind SRDL. Initially, we note that, contrary to SPL's suggestion, the
contracting officer had clear evidence of a relationship between SRDL
and Mr. Paisley because he was designated in SRDL's proposal as one of
the parties authorized to conduct negotiations on behalf of SRDL.
Second, we note that in English parlance the title of "Managing
Director" commonly connotes a position akin to that of the president of
a United States corporation whom we would expect to have the authority
to bind the corporation. Third, we note that SRDL's initial proposal
included SRDL technical drawings as part of its engineering change
proposal. Fourth, and finally, we note that Mr. Paisley was president
of SRDI at the time he confirmed Mr. Guthrie's authority. We think
these factors, taken together, establish a reasonable basis for the
contracting officer's affirmative determination of Mr. Guthrie's
authority.
Unequal Treatment
Lastly, SPL asserts that because SRDL is not subject to United States
laws regarding equal opportunity, clean air, etc., SRDL enjoyed a
competitive advantage and that domestic bidders, therefore, were treated
unequally. The Secretary's D&F constitutes a determination that "it is
inconsistent with the public interest" to apply the Buy American Act
differentials to U.K. defense material, which is the only mandated
handicap enjoyed by American firms in competition with foreign firms.
We believe that the questions SPL raises in this regard, while possibly
valid, fall within the sphere of the Secretary's "public interest"
determination which is the product of an exercise of Secretarial
discretion requiring the balancing of conflicting policies and
considerations and foreclosed from our review. Keuffel & Esser Company,
B-192083, July 17, 1979, 79-2 CPD 35; Brown Boveri Corporation, 56
Comp.Gen. 596(1977), 77-1 CPD 328; Maremont Corporation, 55 Comp.Gen.
1362(1976), 76-2 CPD 181.
For the foregoing reasons, SPL's protest is denied.
B-196712, March 12, 1980, 59 Comp.Gen. 296
Contracts - Specifications - Deviations - Acceptance Not Prejudicial to
Other Bidders
Bid which offers larger quantity than specified in invitation is
responsive where bid does not limit Government's right to make award
consistent with needs at price below other bids received.
Matter of: Charles V. Clark Company, Inc., March 12, 1980:
Charles V. Clark Company, Inc. (CVC) protests the proposed award of a
contract to Fibreflex Packing & Manufacturing Co. (Fibreflex) for gasket
fiber paper under Invitation for Bids (IFB) DLA 500-79-B-2260, issued by
the Defense Industrial Supply Center (DISC). The IFB covers DISC
requirements for an aggregate quantity of 6,388 sq. yds. of paper
designated Lot I.
Lot I consists of 11 separate items (listed as line items 0001-0011) for
differing quantities of paper for delivery to various DISC depots in the
United States.
The thrust of the protest is that the Fibreflex bid is nonresponsive
because that firm bid 6,450 sq. yds. instead of the 6,388 sq. yds.
indicated in the solicitation. In this connection, CVC also points out
that if a contract is awarded to Fibreflex for 6,450 sq. yds. of
material, that firm could ship up to 5 percent additional material
pursuant to the terms of the "variation in quantity" clause, thus
exceeding the stated requirement by 385 sq. yds.
Bids were opened on September 14, 1979, with Fibreflex offering the
lowest price of $5 per sq. yd. for a total price of $32,250 for the
6,450 sq. yds. However, the bid was initially determined to be
nonresponsive because Fibreflex had bid on the larger quantity rather
than the amount specified in the IFB.
On October 23, 1979, the contracting officer mailed CVC the contract
award in the amount of $37,970.59 and advised Fibreflex by telephone
that its bid had been rejected because it had altered the solicitation
quantities.
At Fibreflex's request, the contracting officer reconsidered the
decision to reject Fibreflex's bid and reversed his position. In this
respect the agency points out that, among other things, nothing in the
Fibreflex bid precluded DISC from awarding Fibreflex a contract for the
exact quantity specified in the IFB, and that the Fibreflex bid, even
for the greater quantity, was $5,720 less than CVC's. DISC believes
that under this circumstance none of the other bidders would be
prejudiced by the award to Fibreflex. We agree.
According to Fibreflex, it bid in the manner indicated because it
intended to ship the supplies in uniform quantities of 25 sheets each
per carton and that it believed the "variation in quantity" clause
permitted it to bid the larger quantity. The increased quantity amounts
to less than 1 percent of the total quantity specified.
The test for determining the responsiveness of a bid is whether the
bidder has unequivocally offered to provide the requested items in total
conformance with the terms and specifications of the invitation.
Therefore, a bid which takes no exception to the material requirements
of the IFB is responsive. Thus, where the bidder has promised to
deliver exactly what was called for in the invitation, within the time
periods specified, and in accordance with the terms and conditions of
the invitation, the bid is responsive. J. Baranello & Sons, 58
Comp.Gen. 509(1979), 79-1 CPD 322. Where there has been some deviation
from the manner of bidding specified, we have held that the
determinative issue of whether a bid should be rejected is whether or
not the deviation worked to the prejudice of other bidders. Webfoot
Reforestation, B-194214, May 25, 1979, 79-1 CPD 378.
We believe that Fibreflex's bid is responsive.
Paragraph 10(c), Standard Form 33A (incorporated by reference into
the solicitation), provides that:
The Government may accept any item or group of items of any offer,
unless the offeror qualifies his offer by specific limitations. * * *
THE GOVERNMENT RESERVES THE RIGHT TO MAKE AN AWARD ON ANY ITEM FOR A
QUANTITY LESS THAN THE QUANTITY OFFERED AT THE UNIT PRICES OFFERED * * *
.
Fibreflex did not qualify its bid in any manner, and thus, pursuant
to the foregoing provision, the Government is free to award a contract
for the exact quantity specified in the invitation, i.e., 6,388 sq. yds.
rather than the 6,450 sq. yds. offered. We therefore do not believe
Fibreflex's "deviation" in any way affected the Government's right to
award a contract for the supplies in a manner which would be either
inconsistent with the terms of the IFB or prejudicial to the other
bidders. See Webfoot Reforestation, supra. In our view, a bid should
not be rejected as nonresponsive merely because it offers more than is
required so long as the Government is free to make an award which is
consistent with its needs at a price below other bids received, and we
do not perceive how other, higher bidders are prejudiced thereby. Cf.
EMI Medical, Inc., B-196470, February 21, 1980, 59 Comp.Gen. 269, 80-1
CPD 153, a case in which the bidder's descriptive literature indicated
bidder's equipment included technical features beyond those required by
the specification but was otherwise in accord with the specification.
In this respect we point out that even if an award were made for 6,450
sq. yds. and Fibreflex delivered an additional 5 percent pursuant to the
variation in quantity clause, the total cost to the Government would
still be less than CVC's price for the 6,388 sq. yds.
The protest is denied.
B-197541, March 10, 1980, 59 Comp.Gen. 294
Fees - Services to Public - Regular, Scheduled - Customs Services in
U.S. Airports - Additional Personnel Hiring and Reimbursement Propriety
While there are delays in clearing Customs at Miami International
Airport, there is no authority for Customs Service to accept funds from
airport, airlines, or Dade County, Florida, to hire and compensate
additional personnel for inspectional services during regular business
hours. In absence of clear congressional mandate to contrary, monies
for administering regular Customs services must come from Customs
appropriations. Reimbursement from outside sources for services on
behalf of general public would constitute augmentation of customs
appropriations.
Matter of: Customs Service - Reimbursement for Additional Personnel
at Miami International Airport, March 10, 1980:
This decision is rendered at the request dated January 18, 1980, of
the Honorable Lawton Chiles, Chairman, Subcommittee on Treasury, Postal
Service and General Government, Senate Committee on Appropriations. The
issue is whether current law permits the Customs Service to use funds
received from outside sources to provide for additional Customs
inspectors to perform clearance functions during regular business hours.
Our decision is that such funds may not be used for that purpose.
The request states that problems have existed for a number of years
at the Miami International Airport with regard to long delays in
clearing international passengers through the Immigration and Customs
area. An alternative that has been suggested by the Miami Airport
Authority as well as business and community leaders in Dade County,
Florida, is that the airport or airlines reimburse the Treasury in order
to permit Customs to hire additional staff. In this connection the
Chief Counsel, United States Customs Service, has expressed the view
that Customs may not accept reimbursement from Dade County for
additional personnel beginning in April when phase 1 of a new Customs
facility is opened until the second and final phase of the facility is
completed. However, other authorities have stated such reimbursement is
legal.
Title V of the Independent Offices Appropriation Act of 1952, 31
U.S.C. 483a, was enacted to allow Federal agencies to recoup costs from
identifiable "special beneficiaries" where the services rendered inured
to the benefit of special recipients, not the general public. New
England Power Co. v. Federal Power Commission, 467 F.2d 425(D.C. Cir.,
1972), affirmed 415 U.S. 345(1974). In 48 Comp.Gen. 24(1968) we held
that the statute, which is known as the "User Charges Statute," is very
broad and that Customs could recover costs from airlines for
preclearance of passengers in Canada. We held that such costs could be
recovered to the extent that they are in excess of costs that would be
incurred if all the Customs operations involved were performed in the
United States. We also stated that the charges collected from the
airlines for the services rendered could be deposited as a refund to the
Customs appropriation for pay of employees in accordance with the
provisions of 19 U.S.C. 1524 with the understanding that the
appropriation committees of the Congress be advised. In addition our
Office held in 48 Comp.Gen. 262(1968) that the Treasury could accept
reimbursement from a private carrier for services provided at a port of
entry on the Canadian border after regular hours of business. In the
first case the services were for the sole benefit and convenience of a
limited number of passengers and their carrier. In the second case the
services were for the sole benefit of a private carrier. In both cases
there were reimbursements which, in accordance with 19 U.S.C. 1524,
supra, could be deposited to the appropriation for pay of Customs
employees.
In the present case, however, the Secretary of the Treasury is
authorized to designate places in the United States as ports of entry
for aircraft arriving in the United States and to assign such Customs
personnel as he may deem necessary. 49 U.S.C. 1509(1976). Miami has
been designated as such a port. Therefore, the Secretary is required to
furnish Customs employees at Miami International Airport to serve the
general public to the same extent during regular business hours as he is
required to furnish employees to serve the general public at other
United States ports of entry for aircraft.
We note that Congress has specifically authorized Customs to collect
funds from the parties in interest for the additional expenses incurred
by Customs when its employees perform services for such parties at night
or on Sundays and holidays. 19 U.S.C. 1451(1976). We further note that
Customs is authorized to collect fees for specified special services
during normal working hours. An example of this would be the charge for
weighing, gauging, or measuring merchandise when that information is not
disclosed by an invoice. See 19 U.S.C. 1494(1976). However, in this
case there is nothing to indicate that any special services would be
performed for any individual passenger or airline. Also, we are not
aware of any statute that permits Customs to be reimbursed for the
compensation of additional personnel at crowded airports during regular
hours of business.
Since the Congress has appropriated monies to provide for the salary
of Customs inspectors to perform clearance functions during regular
business hours and has authorized the collection of fees only for
certain special services, as noted above, the collection of funds for
clearance services performed during regular business hours on behalf of
the general public would constitute an augmentation of the
appropriations made by the Congress for performing such services. See
55 Comp.Gen. 1293(1976), and the cases cited therein.
Accordingly, there is no authority to permit the Customs Service to
use reimbursable funds collected from the airport, the airlines, or Dade
County to provide for Customs inspectors to perform their clearance duty
at the Miami International Airport during regular business hours.
B-195602, March 10, 1980, 59 Comp.Gen. 293
Travel Expenses - Return to Official Station on Nonworkdays -
Reimbursement - Limitation
Customs Service employee who is on temporary duty assignment (TDY)
and receiving actual subsistence returned home for weekend. During time
away from TDY, he did not incur costs for 3 nights' lodging and 2 1/3
days of meals. Under Federal Travel Regulations (FPMR 101-7) para.
1-8.4f (May 1973), employee may receive reimbursement for travel up to
actual subsistence expenses which would have been allowable at TDY site.
Since employee's weekend round trip travel expense was less than the
average subsistence expenses at TDY site, employee may be reimbursed his
travel expense.
Matter of: Howard E. Johnson, March 10, 1980:
Mr. L. R. Byrne, Director, Financial Management Division, United
States Customs Service, Miami, Florida, requests our decision whether he
may certify for payment a voucher of $70 for travel expenses incurred by
an employee who voluntarily returned to his official duty station from
his temporary duty station for the weekend. Since the cost of the
employee's trip was less than the subsistence expenses that would have
been allowable had the employee remained at the temporary duty site,
payment may be authorized.
From April 30, 1979, through May 11, 1979, the employee, Howard E.
Johnson, was assigned to perform temporary duty (TDY) at Tampa, Florida,
a high rate geographic area in which employees on TDY are authorized
actual subsistence not to exceed $42 a day. Mr. Johnson reported to
duty on April 30 and remained at the TDY station until 8:20 p.m. Friday,
May 4, 1979, when he voluntarily returned to his home for the weekend.
He returned to his TDY station on Monday morning, May 7, 1979.
Mr. Johnson's expenses for the round-trip travel from his TDY station
to his home were $70 for taxicab and airplane fares. For the week prior
to this weekend travel, Mr. Johnson averaged $32.41 in lodging and meal
expenses for each full day at his TDY site. The $33 consisted of $19.08
for lodging and $13.33 for meals.
Federal Travel Regulations (FPMR 101-7) para. 1-8.4f (May 1973)
states in relevent part:
* * * In cases of voluntary return of a traveler for nonworkdays to
his official station or his place of abode from which he commutes daily
to his official station, the maximum reimbursement allowable for the
round-trip transportation and actual subsistence en route shall be the
necessary travel and subsistence expense which would have been allowable
had the traveler remained at his temporary duty station.
Mr. Johnson did not have lodging expenses for 3 nights and did not
have meal expenses for 2 1/3 days (he ate breakfast at home on the day
of his return). His travel expenses of $70 were less than the amount he
would have been entitled to claim had he remained at the temporary duty
station based on the average of actual subsistence expenses he was
allowed at that station. The travel expenses being less than the amount
that would have been allowed had he remained on TDY the claim may be
allowed.
Accordingly, the voucher may be certified for payment if otherwise
correct.
B-194795, March 6, 1980, 59 Comp.Gen. 291
Quarters Allowance - Dependents - Quarters Occupancy Prevented by
"Competent Authority" - Allowance Continuation Period - After
Authorization and Prior To Occupancy
Member is transferred overseas with deferred travel of dependents due
to unavailability of Government quarters. Upon arrival, member is
assigned Government quarters available for himself and dependents due to
administrative error. Under 37 U.S.C. 403(d), member is entitled to
basic allowance for quarters (BAQ) at the with dependent rate as orders
of competent authority prevent dependents from joining him and residing
in Government quarters. Upon authorization of dependents' travel,
member is entitled to continuation of BAQ until transportation is
available for dependents' travel, and arrangements are made for
household goods, plus normal travel time of dependents to member's
station. See 25 Comp.Gen. 220(1945).
Matter of: Basic allowance for quarters after issuance of travel
authorization for dependents, March 6, 1980:
The basic question on this case is when does a member's entitlement
to basic allowance for quarters (BAQ) at the with dependents rate cease
after assignment to family type quarters. The question arises in the
situation of a member who upon being transferred overseas is denied
concurrent travel of dependents because of lack of adequate quarters.
Upon arrival, the member is immediately assigned to adequate family type
quarters through administrative error. Based on this situation, we have
been specifically asked whether the member's entitlement to BAQ ceases
upon the authorization of his dependents' travel or at some later point
so as to allow the dependents time to arrange to ship household goods
and commence travel.
The question was submitted for an advance decision by the Principal
Deputy Assistant Secretary of the Army (Installations, Logistics and
Financial Management). The Military Pay and Allowance Committee has
approved the request and assigned it submission number SS-A-1318.
The statutory basis for a member's entitlement to BAQ is contained in
37 U.S.C. 403(1976). Under subsection (d), a member assigned to
Government quarters may not be denied BAQ "if, because of orders of
competent authority, his dependents are prevented from occupying those
quarters." Therefore, we have held that a member assigned to family
quarters may not have his entitlement to BAQ terminated if his
dependents are not authorized to travel to join him as an order of
competent authority prevented the dependents from occupying the
quarters. 25 Comp.Gen. 220(1945), citing 20 Comp.Gen. 720(1941); and
B-129805, January 14, 1957. Compare 50 Comp.Gen. 174(1970).
Thus, the question here is resolved by determining when orders of
competent authority no longer prevent the dependents from occupying the
Government quarters.
In 25 Comp.Gen. 220 we considered, among other things, the effect on
a member's entitlement to BAQ (then called rental allowance) when
restrictions against travel of dependents to the overseas station were
relaxed. We recognized that the relaxation of the restrictions placed
an affirmative duty on the member to apply for travel of his dependents
to his station so as to occupy quarters which had been assigned for the
member and his dependents. Upon prompt application, the member retained
his entitlement to BAQ, and even after approval of his dependents'
travel he retained his entitlement to BAQ until transportation to his
station was available, plus normal travel time to the station.
We reasoned that until the dependents' transportation was available,
plus the normal travel time, the member's dependents would be considered
as being prevented by order of competent authority from occupying the
Government quarters, See also B-129805, October 9, 1958, and B-122417,
August 31, 1955.
Since the situations in both the instant case and 25 Comp.Gen. 220
involve members awaiting authorization of dependents' travel to the
overseas station which travel had initially been precluded, we see no
reason for different treatment of the situations. Accordingly, the same
rule should be applied. That is, the member's BAQ continues until
transportation is arranged for the household goods and is available for
his dependents, plus the normal travel time for the dependents to the
member's station.
B-195915, March 4, 1980, 59 Comp.Gen. 290
Leaves of Absence - Court - Entitlement - Complaints Under Civil Rights
Act - Discrimination Alleged
Although not entitled to court leave authorized by 5 U.S.C. 6322
which is limited to jurors and certain summoned witnesses, prevailing
plaintiff in civil action in U.S. District Court against employing
Federal agency based on sex discrimination under the Civil Rights Act of
1964, as amended, is entitled to official time for attendance at trial
and should not be charged annual leave or leave without pay.
Matter of: Wilma Pasake - Court Leave - Plaintiff, March 4, 1980:
Mr. Bernard F. McCullough, Finance and Accounting Officer, U.S. Army
Armament Research and Development Command, has requested a decision as
to the entitlement of Mrs. Wilma Pasake, an employee of the Command, to
court leave.
Mrs. Pasake brought a civil action for sex discrimination against her
employing agency in a U.S. District Court under the provisions of
section 717(c) of the Civil Rights Act of 1964 (42 U.S.C. 2000e-16(c)).
Judgment was entered in her favor and she was awarded a retroactive
promotion with backpay and attorney fees.
Mrs. Pasake was charged annual leave for 6 days in February 1979
during which she attended the trial as the plaintiff in this action.
She has requested that this charge be changed to administrative or court
leave.
Court leave, as that term is generally used, refers to leave
authorized by subsection 6322(a) of title 5, United States Code. This
subsection provides that a Federal employee is entitled to leave,
without loss or reduction in pay or leave to which he is otherwise
entitled, when in response to a summons in connection with a judicial
proceeding he serves: (1) as a juror, or (2) except as provided in
subsection 6322(b), as a witness on behalf of any party when the United
States, the District of Columbia, or a state or local government is a
party to the proceeding. Subsection 6322(b) provides that an employee is
not on leave but is performing official duty when in response to a
summons or order of his agency he: (1) testifies or produces official
records on behalf of the United States or the District of Columbia, or
(2) testifies in his official capacity or produces official records on
behalf of any other party.
Mrs. Pasake's appearance in court as the plaintiff in a sex
discrimination action does not appear to be covered by any of the
foregoing provisions. However, in Coles v. Martin, Civil Action No.
1626-73 (D.D.C., November 30, 1978), the District Court, speaking of a
nonprevailing plaintiff in a discrimination action, said:
Plaintiff has finally alluded to the question of his status under 5
U.S.C. 6322. The Civil Service Commission has expressed the view that
when the employee is a plaintiff who is being deposed by the government
or otherwise summoned to testify, he is a "witness" within the meaning
of the statute, but when an employee is a plaintiff testifying in his
own behalf, he is not "summoned," and must therefore take annual leave
or leave without pay.
It is not necessary in this case, on this relatively meager record on
this question, to decide the matter. Accordingly, the Court will do
what it stated at the trial it would do-- to consider Mr. Coles to have
been called by the Court during the pendency of his trial and thus
"summoned" under any interpretation of 5 U.S.C. 6322.
While we have no similar statement by the court in this case, we
reach the same end result-- no charge to annual leave or leave without
pay-- by a slightly different route. One of the purposes of section
717(c) of the Civil Rights Act of 1964 is to "make whole" to the extent
feasible those who have been discriminated against in Federal
employment. To this end an employee is entitled to a reasonable amount
of official time to pursue his administrative remedy under this law. 29
CFR 1613.214(b). A holding that an employee is in a less advantageous
position when he continues to seek relief beyond the administrative
level and successfully pursues a judicial remedy specifically provided
by this Act would, in our view, be inconsistent and indefensible.
We also note that if Mrs. Pasake had been separated because of sex
discrimination, instead of being passed over for promotion, and the
court had ordered her retroactively restored with backpay, neither her
backpay nor her annual leave would have been reduced for the time she
was in attendance at her trial. This is so because the Back Pay Act 5
U.S.C. 5596(1976), provides that an employee who has been found to have
suffered an unjustified or unwarranted personnel action "for all
purposes, is deemed to have performed service for the agency" during the
period such action was in effect. Further, the implementing regulations
for the computation of backpay, 5 C.F.R. 550.804(d), provide that
backpay is to be granted for any period during which the employee was
unavailable for performance of his or her duties "for reasons related
to, or caused by, the unjustified or unwarranted personnel action."
For the foregoing reasons and to achieve the "make whole" objective
of the Civil Rights Act, it is our conclusion that Mrs. Pasake, as a
prevailing plaintiff who has been adjudged by the court to have in fact
been discriminated against, is entitled to official time for attendance
in court at her trial and should not be charged annual leave for that
period.
B-164031(3).154, March 4, 1980, 59 Comp.Gen. 286
Social Security - Medicare, Medicaid, etc. - Reduction in Federal Share
Department of Health, Education, and Welfare (HEW) is required to
reduce Medicaid payments to State under section 1903(g) of Social
Security Act, 42 U.S.C. 1396b(g) as amended, unless State makes
satisfactory and valid showing that it has program of control over
utilization of long term institutional services. In order to make valid
showing, State must comply with criteria listed in statute including
physician certification of need and plan for care in case of each long
term patient. Fact that State may have satisfied most of requirements
of statute does not permit HEW to find showing valid where any long term
patients are found not to have certification of need or plan of care.
Matter of: Medicaid-Utilization Control, March 4, 1980:
This decision is in response to a request from the former Secretary
of the Department of Health, Education, and Welfare (HEW) for our
opinion concerning the Secretary's authority with respect to the
reduction of Medicaid payments made to the States of Hawaii, Tennessee,
Colorado and Missouri.
The Secretary had determined that the payments must be reduced as a
result of the failure of these States to satisfy, for the quarter ending
March 31, 1978, the utilization control provisions of the Medicaid
program set forth in section 1903(g) of the Social Security Act, as
amended, 42 U.S.C. 1396(g) (1976 and Supp. I, 1977). Because these
States have satisfied the requirements with respect to all but a few
recipients of long term medical assistance, HEW feels that a full
reduction in payments in accordance with the statutory formula is "too
harsh in light of the limited defects found." If this situation should
occur again, HEW would like to know if it is authorized to find that a
State has satisfied the utilization control provision of the act if the
State has met the requirements in all except one or two instances. For
the reasons stated below, there is no authority for the Secretary of HEW
to make a finding of compliance under these circumstances.
Section 1903(g) of the Social Security Act requires HEW to reduce a
State's Federal Medicaid payment unless the State has made a showing
satisfactory to the Secretary of HEW that it had an adequate program of
control over the utilization of institutional long term care for the
quarter reported. According to section 1903(g)(1) of the Act, the
State's showing must include evidence that:
(A) in each case for which payment is made under the State plan, a
physician certifies at the time of admission, or, if later, the time the
individual applies for medical assistance under the State plan (and
recertifies, where such services are furnished over a period of time, in
such cases, at least every 60 days, and accompanied by such supporting
material, appropriate to the case involved, as may be provided in
regulations of the Secretary), that such services are or were required
to be given on an inpatient basis because the individual needs or needed
such services; and
(B) in each such case, such services were furnished under a plan
established and periodically reviewed and evaluated by a physician;
(C) such State has in effect a continuous program of review of
utilization pursuant to section 1396(a)(30) of this title whereby each
admission is reviewed or screened in accordance with criteria
established by medical and other professional personnel who are not
themselves directly responsible for the care of the patient involved,
and who do not have a significant financial interest in any such
institution, and are not, except in the case of a hospital, employed by
the institution providing the care involved; and the information
developed from such review or screening, along with the data obtained
from prior reviews of the necessity for admission and continued stay of
patients by such professional personnel, shall be used as the basis for
establishing the size and composition of the sample of admissions to be
subject to review and evaluation by such personnel, and any such sample
may be of any size up to 100 per centum of all admissions and must be of
sufficient size to serve the purpose of (i) identifying the patterns of
care being provided and the changes occurring over time in such patterns
so that the need for modification may be ascertained, and (ii)
subjecting admissions to early or more extensive review where
information indicates that such consideration is warranted; * * *
These criteria are required to be met by a State in order for it to
make a satisfactory showing to the Secretary of HEW. B-164031(3).118,
July 3, 1975.
If, in the course of HEW's validation survey, it is determined that
despite a certification by a State to the contrary, the requirements of
section 1903(g) have not been met "in each case," the Secretary of HEW
has no alternative but to classify the State's showing as invalid.
In his letter to us, the former Secretary of HEW described the recent
validation survey. He wrote:
The Department recently conducted a validation survey for the quarter
ending March 31, 1978 in intermediate care facilities in selected
states. The survey was intended to determine whether these states met
the provisions of section 1903(g)(1)(A) and (B), which require timely
physician certification of the need for institutional care and the
development of a plan of care in each long stay case for which Medicaid
payment is made. One state in each region was surveyed. Department
surveyors examined the medical records of 20 randomly chosen recipients
admitted or authorized to receive payment during the quarter in each of
the twenty facilities in the state having the greatest number of beds
certified for Medicaid. As a result of this survey, I have determined
that four states failed to make valid showings that there was in
operation an effective program for controlling utilization of services
in intermediate care facilities for the quarter, as required by section
1903(g). The states are Hawaii, Tennessee, Colorado, and Missouri.
These states have been notified of our intent to assess reductions in
FMAP in accordance with section 1903(g)(5).
In each of these states, the Department's determination that the
showing was invalid was based upon a survey finding that the
requirements contained in section 1903(g)(1)(A) and (B) were not met
with respect to only a few recipients in the state. In Hawaii, the
medical records of all Medicaid recipients admitted or authorized to
receive payment during the quarter were reviewed (104 recipients in 14
facilities). In Tennessee, surveyors examined 315 patient records in 20
facilities. Surveyors found that the requirements were not met with
respect to one recipient in one facility in each state. In Missouri,
228 records in 20 facilities were reviewed, and the requirements were
not met with respect to a single patient in each of two facilities in
the state. In Colorado, 180 records were surveyed, and deficiencies
were found in one patient record in each of three facilities. These
findings, however, resulted in substantial reductions in the Federal
medical assistance percentages. In the case of Hawaii, a penalty of
$47,107 was assessed; in Tennessee, $34,731; in Missouri, $40,354;
and in Colorado $21,377.
The reasonableness of the utilization control standards and reduction
formula were the subject of section 20 of the Medicare-Medicaid
Anti-Fraud and Abuse Amendments, Pub. L. No. 95-142, 91 Stat. 1205, Oct.
25, 1977. In revising the utilization control requirements, Congress
was aware that the utilization control standards it had established
covered every long term patient. The House Ways and Means Committee, H.
Rep. 95-393, Part II, at 84, outlined the utilization review
requirements as follows:
The program must include a showing that:
(1) The physician certifies at the time of admission and recertifies
every 60 days that the patient requires inpatient institutional
services.
(2) The services are furnished under a plan established and
periodically reviewed by a physician.
(3) The State has a continuous program of utilization review whereby
the necessity for admission and continued stay of patients is reviewed
by personnel not directly responsible for care of the patient, not
financially interested in a similar institution, or, except in the case
of a hospital, employed in the institution.
(4) The State has a program of independent medical review for SNF's,
ICF's, and mental hospitals whereby the professional management of each
case is subject to independent annual review.
Furthermore, based on representations from HEW that it was without
discretion in the area, Congress attempted in section 20 to provide
legislation to describe the circumstances where and the extent to which
HEW is to impose reductions for State failure to make a satisfactory or
valid showing. The Committee report says:
In the light of the Secretary's position that HEW has no discretion
in determining that the requirements of the law have been met, the
Committee has provided a standard of reasonableness in the bill. Id. at
85.
The standard of reasonableness that addresses the problem of less
than 100 percent patient coverage by the State's utilization control
program, however, changed only the requirement for independent medical
review of all patients. This was done in order to allow some exceptions
where medical review teams were unable to visit all facilities during a
year. As a result section 20 added section 1903(g)(4)(B) which
provides:
(B) The Secretary shall find a showing of a State, with respect to a
calendar quarter under paragraph (1), to be satisfactory under such
paragraph with respect to the requirement that the State conduct annual
on site inspections in mental hospitals, skilled nursing facilities, and
intermediate care facilities under paragraph (26) and (31) of section
1396a(a) of this title, if the showing demonstrates that the State has
conducted such an onsite inspection during the 12-month period ending on
the last date of the calendar quarter--
(i) in each of not less than 98 per centum of the number of such
hospitals and facilities requiring such inspection, and
(ii) in every such hospital or facility which has 200 or more beds.
and that, with respect to such hospitals and facilities not inspected
within such period, the State has exercised good faith and due diligence
in attempting to conduct such inspection, or if the State demonstrates
to the satisfaction of the Secretary that it would have made such a
showing but for failings of a technical nature only.
There is no indication in the legislative history that the Congress
had any intention of reducing the standard for facilities visited by
medical review teams. Indeed, given the closely circumscribed standards
for relief outlined in section 1903(g)(4)(B), it may be inferred that
Congress intended to leave the rest of the statutory standard intact.
Otherwise, it would have outlined as carefully the nature and extent of
discretion it intended for HEW.
The Congress did establish, in section 1903(g)(5) a modified
reduction formula to lessen the impact where States had achieved
substantial but incomplete compliance. HEW has applied this formula for
the States described in the submission. Based on the information
contained in the submission, HEW has applied the correct standard for
testing utilization review compliance and applied the reduction formula
as required. The fact that a State's noncompliance with these
requirements might be minimal does not alter this standard.
Thus, for the foregoing reasons the Secretary of HEW does not have
authority under the circumstances presented to find that a State has
satisfied the Medicaid utilization control provisions.
B-196221, March 3, 1980, 59 Comp.Gen. 283
Leases - Renewals - Competition Availability - Failure to Consider
Decision to lease automatic data processing equipment (ADPE) is not
justified where agency has not demonstrated reasonable basis for
sole-source decision after receipt of affirmative responses to Commerce
Business Daily notice of intention to procure, published pursuant to
Federal Procurement Regulations Temporary Regulation No. 46,
notwithstanding agency's prior expectation that no alternate sources
were available. Advertising - Commerce Business Daily - Affirmative
Responses - Agency Responsibility to Consider - Lease Renewal
No meaningful relief can be provided in best interest of Government
because of inadequately justified fiscal year 1980 sole source lease
where only abbreviated lease period is available for possible
competitive procurement. Recommendation is made that agency plan fiscal
year 1981 needs sufficiently in advance to allow competition for needed
ADPE.
Matter of: Federal Data Corporation, March 3, 1980:
Federal Data Corporation (FDC) protests the Office of Civilian Health
and Medical Program of the Uniformed Service's (OCHAMPUS) renewal of a
lease and maintenance contract with International Business Machine
Corporation (IBM) for automatic data processing equipment (ADPE). For
the reasons indicated below, the protest is sustained.
The protest concerns the OCHAMPUS decision to renew its contract with
IBM for the fiscal year 1980 for ADPE leased from IBM for the past 10
years. The specific equipment consists of six items:
IBM Model 1051 Mod 1 Control Unit
IBM Model 1052 Mod 8 Printer Keyboard
IBM Model 1404 Mod 2 Printer
IBM Model 2030 Mod F CPU
IBM Model 2921 Print/Read Control Unit
IBM Model 2540 Card Read Punch
As authority to renew its lease with IBM, OCHAMPUS cites Temporary
Regulation No. 46, 40 Fed.Reg. 40015-40018, September 8, 1978, which
does not require delegation of procurement authority from the General
Services Administration (GSA), where, as here, the acquisition price was
under $300,000 and a synopsis was published in the Commerce Business
Daily (CBD).
OCHAMPUS published the CBD announcement for informational purposes only,
without establishment of a solicitation package because of its belief
that alternate sources of supply were not expected to be available.
Temporary Regulation 46, supra, Sec. 1-4.1107-6(c)(i). Thus even though
the CBD notice elicited six inquiries concerning the synopsis including
one by FDC, OCHAMPUS proceeded with the sole source lease renewal
because of its prior decision not to seek competition. OCHAMPUS' belief
that no alternate sources of supply were expected to be available was
apparently based on its intention to acquire certain excess Government
owned ADPE to replace the equipment leased from IBM.
In this respect, OCHAMPUS asserts that the IBM lease extension was
merely an interim measure pending installation of certain Government
owned excess equipment; that partial installation was expected to
commence within 4 months of the expiration of the FY 79 IBM lease; and
that therefore it would be impractical, within the required time frames,
to solicit competitive bids.
FDC objects to the decision to sole source the lease and believes
OCHAMPUS violated the temporary regulations by refusing to consider the
affirmative responses to the CBD notice. FDC argues that the dates for
delivery of the Government replacements are uncertain and there is no
indication that the remaining leased items will be replaced during the
term of the renewed IBM lease. Therefore, it does not believe renewal
of the lease without competition is adequately justified.
Initially we note that the lease renewal with IBM is not for an
interim period, but is for 1 year. Furthermore, at the time the
decision was made to extend the lease on a sole source basis, the record
indicates that no Government excess equipment was requested to replace
the leased equipment. About 3 weeks after the publication of the CBD
notice, a request for an excess Government owned CPU (valued at about 50
percent of the total IBM lease) was initiated. The CPU was the item to
be installed on January 31, 1980. In addition, it appears that OCHAMPUS
was not aware of the availability of a Government owned printer
keyboard, control unit or card read punch until sometime in December.
The printer keyboard and the control unit are each worth about 1 percent
of the lease cost, and they will not be available until June 1980 or
later. The card read punch, worth about 10 percent, has no availability
date shown on the record. The remaining two equipment items for which
no replacements are apparently available are valued at about 37 percent
of the total lease.
We also note that OCHAMPUS justified the sole source renewal of the
prior fiscal year IBM lease after the receipt of inquiries in response
to a similar CBD notice essentially on the same basis, i.e., the
impracticality of obtaining competition within the required time frames.
That justification, however, alluded to the agency's intent to acquire
new equipment on a competitive basis rather than the acquisition of
Government owned excess equipment, and noted that it had "already
initiated action (presumably through GSA) to obtain new ADPE." Insofar
as we are able to discern, GSA has not yet acted on that request.
Sole source awards are authorized in circumstances when needed
supplies or services can be obtained from only one person or firm.
Because of the general requirement for competition to the maximum extent
practical, the determination to sole source is subject to close scrutiny
by this Office. Precision Dynamics Corporation, 54 Comp.Gen.
1114(1975), 75-1 CPD 402. The standard to be applied in determining the
propriety of a sole source procurement is one of reasonableness, i.e.,
unless it can be shown that the contracting agency acted without a
reasonable basis, our Office will not question the decision to procure
on a sole source basis. See Metal Art, Inc., B-192901, February 9,
1979, 79-1 CPD 91.
We have recognized the propriety of sole source awards where the
minimum needs of the Government can be satisfied only by items or
services which are unique; where time is of the essence and only one
known source can meet the Government's needs within the required time
frames; where data is unavailable for competitive procurement: or
where only a single source can provide an item which must be compatible
and interchangeable with existing equipment; but not where the
circumstances do not justify noncompetitive awards. Precision Dynamics
Corporation, supra. We think this case falls within the latter
category.
Here, while hindsight may now dictate a short term need for equipment
which will be replaced by Government owned equipment, no compelling
reason appears to exist for a continuing sole source lease renewal for
the two items where such is not the case. In this respect, we take note
of the fact that third party lessors often are able to furnish identical
equipment at rental rates which are competitive with those of the
original equipment manufacturer, and we see no reason why these firms
should not be given the opportunity to bid.
Under these circumstances, OCHAMPUS has not persuaded us that only
renewal of the IBM lease could satisfy its needs, Precision Dynamics
Corporation, supra, and OCHAMPUS' failure to consider the responses it
received to the CBD notice makes it impossible to ascertain whether
another company could have supplied the ADPE.
In this connection, it is our view that OCHAMPUS did not comply with
the Temporary Regulation 46, supra. For example, section 1-4.1107-6(a)
provides that "if affirmative response is received, . . . (to the CBD
synopsis), the procurement file shall be documented with evidence that
use of the . . . schedule contract including method of acquisition;
e.g., lease or purchase, is the lowest overall cost alternative
available to the agency, price and other factors considered." In this
case, although the synopsis was for informational purposes only due to
the Agency's expectation that no alternate sources of supply would be
available, affirmative responses were elicited and thus, the temporary
regulations required OCHAMPUS to demonstrate the lease renewal was the
lowest cost alternative.
Notwithstanding the foregoing, we do not believe that there is any
practical way we can recommend any meaningful relief which would be in
the best interest of the Government. Cohu, Inc., 57 Comp.Gen. 759, 78-2
CPD 175. For example, only slightly more than half of the 1980 fiscal
year remains, the IBM lease requires 30 days notice for termination, and
thus any competitive procurement at this time would result in only an
extremely abbreviated lease period. We do not believe that either the
cost of such competition, or the disruption to OCHAMPUS operations that
would necessarily result if IBM's equipment were replaced, can be
justified for the remainder of FY 80. We do, however, recommend that
OCHAMPUS plan its needs for FY 81 sufficiently in advance of the
expiration of the current lease so that competitive bids can be obtained
if the equipment will be required to meet the agency's needs.
The protest is sustained.
B-194528, March 3, 1980, 59 Comp.Gen. 279
Transportation - Cargo Preference Act - Nonapplicability - Cash Transfer
Program For Israel
General Accounting Office disagrees with Maritime Administration view
that Cargo Preference Act of 1954 applies to cash transfer program for
Israel managed by Agency for International Development.
Matter of: Applicability of Cargo Preference Act of 1954 to cash
transfer program, March 3, 1980:
The Assistant Secretary for Maritime Affairs of the United States
Department of Commerce requests that we concur in an opinion issued by
the General Counsel of the Maritime Administration (MarAd). The General
Counsel has concluded that section 901(b)(1) of the Merchant Marine Act,
1936, as amended, 46 U.S.C. 1241(b)(1)(1976) (Cargo Preference Act),
applies to cash grants and cash transfer programs of the Agency for
International Development (AID).
In section 10(a) of the International Security Assistance Act of
1978, codified at 22 U.S.C.A. 2346a(b)(2)(1979) (cash transfer program),
Congress authorized that, "The total amount of funds allocated for
Israel under this chapter for the fiscal year 1979 may be made available
as a cash transfer * * * " provided that, in exercising that authority,
" * * * the President shall ensure that the level of cash transfers made
to Israel does not cause an adverse impact on the total amount of
nonmilitary exports from the United States to Israel." Furthermore, the
statute provides that, "not less than two-thirds of the assistance
furnished to Israel . . . for the fiscal year 1979 shall be provided on
a grant basis." 22 U.S.C.A. 2346a(b)(3)(1979). The other third is
distributed as loans.
The cash transfer program represents a change in the method of
distributing foreign aid to Israel. From 1972 to 1978, assistance was
distributed to Israel under the Commodity Import Program (CIP). See 22
U.S.C. 2346a(1979). Under CIP, the United States reimbursed the
Government of Israel for the foreign exchange monies used to purchase
nonmilitary United States commodities. Commercial documents were
submitted to AID as evidence of purchases. The assistance was
distributed as CIP loans and CIP grants. AID applied the Cargo
Preference Act to the CIP because the money was tied to commodity
purchases. And we note that AID screened transactions to ensure
compliance with cargo preference requirements since the grant and loan
agreements contained a requirement subjecting them to the Cargo
Preference Act. U.S. Economic Assistance For Israel, ID-78-31,
B-125029, August 18, 1978 (Israeli Report).
From 1976 to 1979, AID also distributed some aid on a nonreimbursable
cash grant basis.
Israel Report, supra. The cash grant is essentially a form of
unrestricted aid which was limited in the case of Israel by a formal
agreement that it be expended on purchases of nonmilitary commodities
used within the pre-1967 boundaries of Israel. AID paid the Israeli
Government quarterly, and Israel was not required to account for funds
expended or to spend the aid in the United States. The Cargo Preference
Act was not applied to cash grant purchases since it was evidently not
conditioned on commodity purchases.
In 1977, Congress was advised that the Israeli Government was having
difficulty making timely use of CIP funds, because the release of the
aid was inhibited by documentation and managerial difficulties. As an
interim measure, Congress responded by authorizing the transfer of a
portion of the CIP funds ($150 million in fiscal year 1976) to a cash
grant program. The grant money was substantially increased by Congress
in fiscal year 1977 to not less than $300 million, and was maintained at
that funding level the following year. Israeli Report, supra.
In 1978, the cash transfer program was enacted for aid to Israel. It
replaced both the CIP and cash grant programs. The program involved
periodic disbursements of funds, two thirds cash grant and one third
loan (the ratio of type of aid is unchanged from CIP), requiring an
unspecified form of Israeli certification that a certain level of United
States nonmilitary products was imported by Israel. By use of cash
transfers, the need to document each purchase of goods made by Israel to
obtain reimbursement was obviated. Instead, the United States required
satisfactory assurances from the Israeli Government that civil imports
from the United States would be at least equal to the level of United
States assistance and that the competitive position of American
exporters would not be adversely affected. See 1978 U.S. Code Cong. &
Ad. News 1833, 1850; 22 U.S.C.A. 2346a(b)(2).
We understand that there are practical difficulties in applying the
Cargo Preference Act to the cash transfer program; specifically, that
the cash transferred is not tied to cargo flow upon transfer; that the
money can be spent anywhere; that it is not limited to purchases in the
United States; that it is in a practical sense not traceable, and that
there is no paperwork to insure compliance with the Cargo Preference
Act.
Although we do not casually dismiss the practical difficulties of
applying the Cargo Preference Act to the cash transfer program, the
question before us is a legal one, not administrative; it is whether
the Cargo Preference Act covers the cash transfer program for Israel.
And we cannot support MarAd's view that it does.
Consistent with our prior case law on the subject, we are limiting
this decision to the cash transfer program for Israel. 22 U.S.C.A.
2346a(b)(2). We prefer to resolve questions concerning cargo preference
laws on a specific case by case basis. See, for example, 55 Comp.Gen.
1097(1976).
The Cargo Preference Act, 46 U.S.C. 1241(b)(1)(1976) states that:
(1) Whenever the United States shall procure, contract for, or
otherwise obtain for its own account, or shall furnish to or for the
account of any foreign nation without provision for reimbursement, any
equipment, materials, or commodities, within or without the United
States or shall advance funds or credits or guarantee the convertibility
of foreign currencies in connection with the furnishing of such
equipment, materials, or commodities, the appropriate agency or agencies
shall take such steps as may be necessary and practicable to assure that
at least 50 per centum of the gross tonnage of such equipment,
materials, or commodities . . . , which may be transported on ocean
vessels shall be transported on privately owned United States-flag
commercial vessels * * * .
MarAd argues that the Cargo Preference Act applies to the cash
transfer program for Israel (as well as to other cash transfer
programs). It supports its position by examination of the statute
itself, the legislative history of the Cargo Preference Act and an
Attorney General's opinion which, it argues, states that where, as here,
the foreign aid program furthers substantial foreign assistance
objectives, the Cargo Preference law applies.
AID takes the contrary position that the Cargo Preference Act is
inapplicable to AID cash grant or transfer programs. It argues that the
legislative history which MarAd uses to support its contention of
applicability is taken out of context, that the cash transfers are not
subject to the language of the statute since the cash transfers are not
conditioned on purchases of commodities and are made without reference
to the type of purchase, and that the untied nature of cash transfers
authorized by Congress demonstrates that the transfers were not to be
encumbered by the Cargo Preference Act.
The Cargo Preference Act was enacted to assure that at least 50
percent of Government-sponsored cargoes transported on ocean vessels
would be moved on privately owned United States-flag ships. Congress
believes that this requirement is necessary to the maintenance of an
adequate merchant fleet. 55 Comp.Gen. 1097(1976); S. Report No. 1584,
83d Cong., 2nd Sess. 1 (1954); 100 Cong.Rec. 4158, 4159(1954); 39
Comp.Gen. 758, 760(1960). In a Presidential Directive in 1962,
President Kennedy stated that, "The statutes . . . are designed to
insure that U.S. Government-generated cargoes move in substantial volume
on American-flag vessels." S. Report No. 2286, 87th Cong., 2d Sess. 43,
44 (1962).
The legislative history of the Cargo Preference Act supports a broad
application of the Act to foreign aid programs which involve the use of
American money to finance the purchase commodities.
The Senate Report on the Cargo Preference Act stated that the Act is
applicable, "to programs financed in any way by Federal Funds." S. Rep.
No. 1584, 83d Cong., 2d Sess 5(1954). In discussing the Act's scope, a
House Committee Report on the Administration of the Cargo Preference Act
stated that Congress intended by this Act to express:
Our shipping policy in the clearest and most unequivocal terms for
application in all cases where normal channels of international trade
are disrupted by virtue of United States Government-controlled programs
financed by Federal funds in whatever form they might take. H.R. Rep.
No. 80 84th Cong., 2d Sess., 2(1955).
We also note that the 1954 Cargo Preference law was enacted to codify
and broaden existing law, not to derogate from it. 41 Op.Atty.Gen. 192,
196(1954); 42 Op.Atty.Gen. 203(1963).
Although we recognize the broad parameters of the Act, we do not
believe the Act covers this specific program. The language of the Cargo
Preference Act states that, "Whenever the United States . . . shall
advance funds . . . in connection with the furnishing of . . .
equipment, materials, or commodities . . . ," the cargo preference
applies. We agree with AID that the cash transfers are not advanced in
connection with the furnishing of equipment, materials or commodities.
As AID points out the crash transfer program in form is substantially
unrestricted aid and the funds are released to Israel without requiring
that purchases be made in the United States with this money. Under the
CIP in which AID did incorporate cargo preference, the funds were
directly linked to commodity purchases made in the United States by
Israel but no similar relationship between the funds advanced and
Israel's nonmilitary purchases in the United States exists under the
cash transfer program.
We note that congressional action was based on the recognition that
Israel would maintain previous purchasing levels and that the Act
providing for cash transfers states that the President shall ensure that
there is no adverse impact on our exports to Israel because of the shift
to cash transfers. See 1978 U.S. Code Cong. & Ad. News 1833, 1850; 22
U.S.C.A. 2346a(b)(2). And the Israeli Government has made assurances
that the United States should expect no change in the pattern or volume
of trade between the two countries as a result of the change in
procedures. See International Security Assistance Programs, Hearings on
S. 2846 before the Subcomm. on Foreign Assistance of the Senate Comm. on
Foreign Relations, 95th Cong., 2nd Sess. 21(1978) (statement of Mr.
Joseph C. Wheeler).
But the requirement that Israel maintain purchasing levels in the
United States does not, in itself, require a finding that cargo
preference should apply to such purchases since the purchases may not
necessarily be made with cash transfer funds. Cargo Preference most
often had been applied to shipments financed with United States funds.
See, for example, B-155185, November 17, 1969; 41 Op.Atty.Gen. 192,
supra; 42 Op.Atty.Gen., supra. Here, we are asked to support
application of cargo preference to shipments of nonmilitary exports
which cannot be identified as purchases made by Israel with American
funds. We believe that such an interpretation is not supported by the
language of the Act, the legislative history of the Act, or required by
our prior opinions concerning the Act.
In these circumstances, we believe that the cash transfer program for
Israel is not covered by the Cargo Preference Act. We therefore cannot
support MarAd's legal position that the Cargo Preference Act is
applicable to the cash transfer program for Israel.
B-195625, February 28, 1980, 59 Comp.Gen. 276
Pay - Retired - Survivor Benefit Plan - Missing Persons - Computation of
Annuity - After Date of Death Determination
Survivor Benefit Plan annuity for the surviving spouse of member who
dies while on active duty when otherwise eligible to retire, is computed
on grade and years of service as though member retired on the day he
died. Computation includes limitations on grade for retirement purposes
such as the 6-month in grade requirement. However, where a member who
was missing in action is determined to have been killed in action, the
6-month in grade requirement does not apply since promotions received
while in a missing status are "fully effective for all purposes," under
37 U.S.C. 552(a).
Matter of: Colonel Elton L. Perrine, USAF (Deceased), February 28,
1980:
This action is in response to a request for advance decision from the
Air Force Accounting and Finance Center concerning the computation of
annuity to be paid under the Survivor Benefit Plan (SBP), 10 U.S.C.
1447-1455, to Mrs. Joyce A. Perrine, as widow of the late Colonel Elton
L. Perrine, USAF. The matter has been assigned Control Number
DO-AF-1328, by the Department of Defense Military Pay and Allowance
Committee.
The reported facts are that the member, Elton L. Perrine, who was
serving on active duty in the Air Force as a commissioned officer, was
reported as missing in action (MIA) in Vietnam on May 22, 1967. While
in that status, he was promoted to the permanent grade of lieutenant
colonel (0-5), effective April 20, 1977, and to the temporary grade of
Colonel (0-6), effective November 1, 1978. On February 6, 1979, his
status was changed to killed in action for the purpose of terminating
pay and allowances, settlement of accounts and payment of death
gratuity.
As a result of that action, an SBP annuity account was opened in
favor of Mrs. Perrine under the provisions of 10 U.S.C. 1448(d),
effective February 7, 1979. The annuity payable to her was computed
based on Colonel Perrine's rate of basic pay as a Lieutenant Colonel
rather than that of Colonel because he had not held the grade of Colonel
for a minimum of 6 months as required by 10 U.S.C. 8963(a), prior to the
date he was declared dead.
In view of the foregoing and because of certain language in 37 U.S.C.
552(a) and its legislative history, uncertainty is indicated as to
whether the annuity authorized to be paid Mrs. Perrine under 10 U.S.C.
1448(d) should be computed on the rate of basic pay of a Lieutenant
Colonel or Colonel.
The provisions of the SBP authorizing payment of an annuity to
surviving spouses of service members who die while serving on active
duty are contained in 10 U.S.C. 1448(d). That subsection provides in
part:
(d) If a member of an armed force dies on active duty after he has *
* * qualified for * * * (retired or retainer) pay except that he has not
applied for or been granted that pay * * * the Secretary concerned shall
pay to the spouse an annuity equal to * * * 55 percent of the retired or
retainer pay to which the otherwise eligible spouse * * * would have
been entitled if the member had been entitled to that pay based upon his
years of active service when he died.
The basic concept of the SBP is to provide a means whereby a service
member may provide his spouse and dependent children with financial
protection in the form of an annuity in the event of his death. The
basic provisions of the SBP only authorize payment of an annuity to a
survivor of a member who dies while entitled to receive retired or
retainer pay. However, under 10 U.S.C. 1448(d) a member with over 20
years of service and who is otherwise eligible to retire is covered by
the SBP as if he had retired on the day he died.
As is indicated in the submission, the entitlement to an SBP annuity
in such cases depends generally on the provisions of law governing
retirement. As it relates to commissioned officers of the Air Force,
those provisions would be 10 U.S.C. 8911, with retired pay computed
under 10 U.S.C. 8991, based on years of service computed under 10 U.S.C.
8925, with grade on retirement established under 10 U.S.C. 8961 and
8963.
Section 8961 of title 10, United States Code, provides generally that
a Regular or Reserve of the Air Force retiring for other than physical
disability retires in the grade held at retirement. However, section
8963 of the same title restricts the use of a temporary grade to those
cases where the member had a minimum of 6 months satisfactory service in
that temporary grade at retirement.
In 53 Comp.Gen. 887(1974), we held that time spent in an MIA-status
was qualifying service time for 10 U.S.C. 1448(d) annuity computation
purposes so long as the date of determination of death occurred after
September 21, 1972, the date of enactment of the SBP.
In the process of so concluding, we recognized that among those members
who die while serving on active duty, those whose status came within the
purview of the provision of the Missing Persons Act, 37 U.S.C. 551-558,
occupy a special niche. That is, since it was not known if they were
actually dead or alive, it was congressionally mandated that for the
purpose of Federal benefits to the immediate families, continuation of
the life of the member was presumed to exist until that status was later
terminated for cause. Thus, the entitlement of survivors to receive
Federal benefits based upon that status and termination thereof is to be
established under those provisions.
Section 552 of title 37, United States Code, as amended by Public Law
93-26, approved April 27, 1973, 87 Stat. 26, provides in part:
(a) A member of a uniformed service who is on active duty * * * and
who is in a missing status, is--
(1) for the period he is in that status, entitled to receive or have
credited to his account the same pay and allowances, as defined in this
chapter, to which he was entitled at the beginning of that period or may
thereafter become entitled;
Notwithstanding section 1523 of title 10 or any other provision of
law, the promotion of a member while he is in a missing status is fully
effective for all purposes, even though the Secretary concerned
determines * * * that the member died before the promotion was made.
The legislative history of the underscored sentence shows that it was
originally added to section 552 by section 1 of Public Law 92-169,
November 24, 1971, 85 Stat. 489; inadvertently repealed by Public Law
92-428, October 13, 1972; and reenacted by section 1 of Public Law
93-26, April 27, 1973, 87 Stat. 26. The purpose was to "insure that
promotions * * * are valid for all purposes, including Federal benefits
to survivors," and to "assure that survivors of members * * * in a
missing status and promoted * * * will not be deprived of benefits based
on that promotion." See U.S. Code Cong. and Adm. News (1973), pages 1293
and 1294.
In light of the foregoing, survivor benefits under the SBP are
included in the package of survivor entitlements under 37 U.S.C.
551-558. Further, in view of the fact that promotions made under those
provisions are "fully effective for all purposes," it is our view that
the limitation contained in 10 U.S.C. 8963(a) restricting the use of a
promotion to a temporary grade for retired pay computation purposes is
not for application in establishing an SBP annuity under 10 U.S.C.
1448(d) to the surviving spouse of a member in cases covered by the
missing persons provisions.
Accordingly, the SBP annuity due in Mrs. Perrine's case is to be
computed based on the late Colonel Perrine's grade of Colonel (0-6),
effective February 7, 1979, and the voucher is being returned to the
finance and accounting officer for payment, if otherwise correct.
B-195839, February 25, 1980, 59 Comp.Gen. 273
General Accounting Office - Jurisdiction - Grants-In-Aid - Protests
Against Grant Awards - No Authority To Consider - Exceptions
Although General Accounting Office does not review questions
concerning agency decision denying grant award unless there is
allegation that agency used grant award process to avoid competitive
requirements of Federal procurement, where it appears that process of
selecting grantee might have been influenced by conflict of interest,
GAO will undertake review to determine whether process was tainted by
favoritism or fraud. Conflict of Interest Statutes - Violation
Determinations - Grant Award
Record does not indicate agency acted improperly in making grant
award to firm whose President had applied for agency's Regional Director
position where evaluation and grant selection were performed at agency's
centralized administrative office rather than by relevant regional
office.
Matter of: Burgos & Associates, Inc., February 25, 1980:
Burgos & Associates, Inc. (Burgos) objects to the decision of the
Department of Commerce's Minority Business Development Agency (MBDA) to
award grant No. 02-10-45080-00 to Capital Formation Management
Corporation (Capital Formation) to operate as a Business Development
Organization (BDO) providing management and technical services to
minority business firms in the New York City area.
Burgos maintains that MBDA improperly awarded the grant to Capital
Formation because its President was recently selected as Regional
Director of MBDA's New York Office. According to Burgos, the existence
of, or potential for, a conflict of interest requires that Capital
Formation's President remove himself from consideration of the MBDA
position. In the event Capital Formation's President were to accept the
position, Burgos contends this automatically should disqualify Capital
Formation from being eligible for award.
Burgos also challenges the adequacy of the process by which the grant
applications were evaluated. In particular, Burgos questions the large
discrepancy among the evaluators' scoring of its application and the
influence that one of the evaluation panel members had on the agency's
ultimate decision to award the grant to Capital Formation.
This Office, in response to increasing concern that recipients of
Federal grant funds were engaging in varied and perhaps inappropriate
practices and procedures involving the award of contracts in supposed
furtherance of grant purposes, has been considering complaints of
prospective contractors concerning those grantee awards pursuant to its
statutory obligation and authority under 31 U.S.C. 53(1976) to
investigate the receipt, disbursement, and application of public funds.
See Public Notice, 40 Fed.Reg. 42406(1975). We have not, however, held
ourselves out as a forum in which complaints concerning the actual award
of grants or other assistance-type instruments could be aired, see,
e.g., Washington State Department of Transportation, B-193600, January
16, 1979, 79-1 CPD 25, although we have considered the propriety of a
grant award when it was alleged that the agency was using the grant
award process to avoid the competition requirements of the Federal
procurement laws and regulations. Burgos & Associates, Inc., 58
Comp.Gen. 785(1979), 79-2 CPD 194; Bloomsbury West Inc., B-194229,
September 20, 1979, 79-2 CPD 205. See also Tri-County Metropolitan
Transportation District of Oregon, B-190706, July 21, 1978, 78-2 CPD 58,
where the grantor agency requested our decision as to whether it could
properly provide grant funding in the particular circumstances present.
As we stated in our Public Notice, supra, it is not the intent of
this Office to interfere with the functions and responsibilities of
grantor agencies in making and administering grants. Accordingly, we
decline to review Burgos' challenge as to the adequacy of MBDA's
evaluation process.
However, we believe it would be consistent with our statutory obligation
to investigate the receipt, disbursement, and application of public
funds to consider the conflict of interest allegation, as we believe the
grantor agency has an obligation to avoid making any grant awards which
may be tainted by the existence of such a conflict. See generally 55
Comp.Gen. 681(1976); Eglin Manor, Inc. v. United States, 279 F.2d
268(Ct.Cl. 1960). In this regard, it has been held that contracts and
other obligations between the United States and recipients of Federal
funding may be rendered void and unenforceable where there is evidence
that improper influence was used to secure award of a contract. See
Dougherty v. Aleutian Homes, Inc., 210 F.Supp. 658(D.Ore. 1962) citing
Providence Tool Co. v. Norris, 69 U.S. 45(1864). Accordingly, where, as
here, it appears that the process of selecting a grantee could have been
influenced by a conflict of interest, we think it appropriate to
consider the matter to determine whether the selection process was in
fact tainted by favoritism or fraud. Consequently, we will consider the
conflict of interest assertion.
The agency concedes that under the circumstances a potential for
conflict of interest existed. It therefore had MBDA headquarters
personnel in Washington, rather than its personnel in the New York
Regional Office, conduct the evaluation of applications received in
response to the grant solicitation and ultimately decide whether to
select Capital Formation as the grantee. The agency further advises us
that although Capital Formation's President was selected as the leading
candidate for the New York Regional Director position on July 12, 1979,
and Capital Formation received the grant award on August 1, 1979, the
individual in question has not as yet been formally offered the
position. Based on this information, we do not believe the individuals
who evaluated Capital Formation's offer were improperly influenced by
Capital Formation's President's being considered for the position of
MBDA New York Regional Director. See Iroquois Research Institute, 55
Comp.Gen. 787, 794(1976), 76-1 CPD 123.
Burgos nonetheless maintains that MBDA was obliged to require the
President of Capital Formation to cease his attempt to be selected the
New York Regional Director once his firm received the grant award.
However, we are aware of no requirement which precludes an individual
from seeking an award from a Federal agency for himself or his firm
concurrent with his seeking employment from that agency.
It is, or course, incumbent upon the agency to avoid even the
appearance of favoritism or preferential treatment by the Government
towards a firm competing for a contract or assistance award. See Scona,
Inc., B-191894, January 23, 1979, 79-1 CPD 43; Metro Electric, Inc., 58
Comp.Gen. 802(1979), 79-2 CPD 226. When a procurement is conducted, for
example, Federal Procurement Regulations Sec. 1-1.302-3 (1964 ed.)
prohibits contracting between the Government and its employees or
businesses substantially owned or controlled by its employees.
Although this regulation does not apply to the present case because the
competition was for the award of a grant, it nevertheless reflects well
established policy that such arrangements are undesirable and should be
avoided because such relationships are open to criticism as to alleged
favoritism and possible fraud. 55 Comp.Gen. 681, supra; 41 id.
569(1962).
We are satisfied that MBDA acted properly here. The agency took
adequate measures to shield the evaluators chosen to review the grant
applications from any undue influence that Capital Formation might have
had over MBDA personnel in the New York Regional Office by having MBDA
headquarters personnel in Washington conduct the evaluation. Moreover,
the agency states that if Capital Formation's President is eventually
hired, it will take appropriate measures to avoid any actual or apparent
conflicts of interest.
The complaint is denied in part and dismissed as to the remainder.
B-196470, February 21, 1980, 59 Comp.Gen. 269
Contracts - Specifications - Deviations - Descriptive Literature -
Conforming Clarification in Letter Accompanying Bid - Bid Responsive
No legal requirement exists which prohibits bidder from clarifying
printed descriptive literature with letter accompanying bid, and where
low bidder offers equipment which meets specification requirements plus
features which are not required, bid is acceptable. Contracts - Awards
- Erroneous - Evaluation Improper
Contracting officer's refusal to accept bidder's clarification of
preprinted descriptive literature was not reasonable where result was
rejection of bid for equipment which met agency's minimum needs and
award of contract at higher price. Contracts - Termination -
Convenience of Government - Erroneous Awards
Where contract is improperly awarded because of contracting officer's
interpretation of contract specifications, agency should explore
feasibility of such termination of contract for convenience of
Government, as is consistent with fair and reasonable treatment of
parties and in best interest of Government, i.e., at a reasonable cost
and compatible with agency's need for equipment.
Matter of: EMI Medical, Inc., February 21, 1980:
EMI Medical, Inc., protests the award of contract #V797P-6696 by the
Veterans Administration (VA) for six computerized tomography (CT) whole
body scanners to Pfizer, Inc. The award was made under invitation for
bids (IFB) No. M6-3-79. EMI's low bid was rejected as nonresponsive
after the contracting officer concluded that its equipment, as described
in the descriptive literature submitted in accordance with the
requirements of the IFB, did not meet the specification requirements.
The portion of the specification in issue requires that the equipment
"be capable of reconstructing absorption measurements and displaying the
computed image in 45 seconds or less;" IFB amendment 2 stated that "the
45 seconds * * * applies to all of manufacturers standard tomography
scan modes regardless of the quantity of data collected." The issue in
this case is the interpretation of the foregoing specification.
CT body scanning equipment combines low level x-ray imaging and data
processing so as to visualize cross sectional "slices" of the human body
for medical diagnostic purposes. The patient being "scanned" reposes on
a couch or table which is precisely moved through the x-ray source. The
x-ray source rotates around the patient in a full circle (360 degrees)
emitting controlled "beams" as it rotates. Unlike familiar x-ray
equipment, the "beams" do not expose film; rather they are received by
"receptors" or "detector arrays" which, depending on the manufacturer
either rotate with the x-ray source (rotate/rotate geometry) or are
fixed throughout the circle (rotate/stationary geometry). The equipment
views the patient at various points (which correspond to the angular
position of each degree or partial degree of the circle) throughout its
360 degrees of rotation, and the electronic data acquired by the
detector array is processed by a computer which ultimately
"reconstructs" the image for display on a video monitor. Without here
attempting to elaborate on the precise mathematics involved with each
scan "slice," the number of individual data elements to be processed by
the computer is a function of the number of views taken times the number
of individual elements in the detector array for each 360 degrees of
rotation, or close to 200,000 data elements for the EMI equipment in its
360 (one view per degree of rotation) scan mode. The reconstruction
time in question is the time necessary for the computer to process this
data to reconstruct the video image. The image is not transitory
because the data is stored in the computer and can be recalled; the
video image can be photographed; or the data can be printed as hard
copy. Finally, a technique used to increase picture resolution is to
increase the amount of data collected, i.e., resolution increases as the
number of views increases.
The EMI equipment proposed operates on the rotate/rotate geometry and
has the capability of scanning in 3 distinct scan modes, i.e., 360 (1
view per degree of rotation), 540 (1 view per 2/3 degree), and 1080 (1
view per 1/3 degree). For the EMI equipment complete scans can be
accomplished in 5, 10 or 20 seconds as selected by the equipment
operator. EMI claims that as a practical matter, picture resolution
does not improve beyond the 540 scan mode, and there is no evidence on
the record to contradict that assertion.
The Pfizer equipment offered operates on the rotate/stationary geometry
principle and as we understand it, the number of views is fixed by the
position of the stationary detectors, i.e., 600 in the case of the
Pfizer equipment. However, the IFB did not specify any particular data
collection geometry, and indeed the IFB's avowed purpose, according to
the contracting officer, was to maximize competition by not limiting
acceptable equipment to any specific design.
EMI's preprinted descriptive literature, submitted with its bid,
showed scan speeds as 5, 10 or 20 seconds; scan modes as 360, 540 or
1080; and reconstruction time as "40 seconds or less for 360 views."
However, accompanying the bid was a letter which stated that:
The "standard operating modes" of the EMI-6000 General Diagnostic CT
Scanner System are:
1. 360 views
2. 540 views
EMI certifies reconstruction time for both modes shall be 45 seconds
or less.
The third mode, 1080, views, is a specialized technique used only for
radiation therapy planning studies and not utilized in routine
diagnostic studies, in other words, an extra capability not required in
the specifications.
The contracting officer rejected the EMI bid as nonresponsive, on the
theory that any scan made available on the system is a "standard
feature;" the 1080 scan mode will not reconstruct in 45 seconds or less
and therefore the equipment does not comport with the specifications.
The contracting officer does not suggest that the EMI equipment
operating in its 360 or 540 modes does not meet its requirements, and at
a conference held on this protest, he admitted that the EMI equipment
would be acceptable if the 1080 scan mode were not included in the
equipment or the printed literature. In this respect, EMI suggests that
it could have deleted that capability if it thought that was necessary
to meet the specification requirements.
To be responsible, a bid must comply in all material respects with
the IFB, i.e., where a bidder has promised to deliver exactly what was
called for in the invitation, within the time periods specified, and in
accordance with the terms and conditions of the invitation, the bid is
responsive. J. Baranello and Sons, 58 Comp.Gen. 509(1979), 79-1 CPD
322. The purpose of a descriptive literature requirement is to
determine if the supplies offered comply with the requirements of the
specifications, and where such literature indicates a deviation from
such specifications, the bid is properly rejected as nonresponsive. See
E-M Southwest, Inc., B-193299, March 29, 1979, 79-1 CPD 217. We are
aware of no requirement, however, which prohibits a bidder from
clarifying its preprinted descriptive literature by a letter
accompanying the bid which obligates the bidder to contract performance
as required. Indeed Pfizer amplified its own printed literature for
that purpose.
As we have noted earlier, the contracting officer based his decision
to reject the EMI bid solely on the basis that the 1080 scan mode is
available on the system, with no consideration of the qualifying
language of the EMI letter.
Thus in his report on the protest, the contracting officer stated "there
is no alluding to radiation therapy planning application for any of the
views," and "if the 1080 view scan mode is available on the system, and
whether used or not, it is a standard feature and not a specialized
feature as cited in EMI's letter." We find the contracting officer's
conclusion unreasonable under the circumstances. For EXAMPLE, UNDER THE
IFB, THE EMI EQUIPMENT SANS THE 1080 MODE WAS acceptable according to
the VA's interpretation of its own specification.
Moreover, we believe it was reasonable for EMI, the manufacturer, to
conclude that "manufacturers standard tomography scan mode" meant scan
modes used for standard rather than specialized clinical applications;
that it was necessary to clarify what is essentially sales literature
prepared for other purpose so as not to run afoul of the language of the
specification; and that it was not called upon to eliminate an
equipment feature which was ordinarily included in its equipment to meet
what might otherwise be interpreted as the requirements of the
specifications. A bidder should not be prohibited from offering more
than is required, so long as the item is otherwise in accord with the
specifications and award is not based on the unsolicited features. To
interpret the specifications otherwise has the effect of restricting
rather than enhancing competition, the opposite effect desired by the
agency. The final result was that the agency awarded a contract for a
higher price, when from the record, it appears the lower priced unit
would meet the agency's avowed minimum needs.
Pfizer has also suggested that the EMI equipment, as described in its
literature, failed to meet Sec. 1.f.3 of the specifications requirements
that the physician's station provide for "independent manipulation of
image content separate from operator's console." Pfizer, however, relies
on its assertion of a generally understood "CT industry" standard and
the ordinary interpretation of "independent manipulation" for its
belief, but no evidence on our record is available to affirm or dispute
that claim. The VA has not raised such an objection either in its
original rejection of the EMI bid or after the matter was raised by
Pfizer, and the asserted deficiency is not apparent from the record. In
this respect, we point out that it is not generally the function of this
Office to determine the technical adequacy of equipment offered to the
Government, since that function is the primary responsibility of the
procuring agency, which enjoys a reasonable range of discretion in these
matters. Therefore, in the absence of a clear showing that the agency's
determination was arbitrary or unreasonable, it will not be disturbed by
GAO. Cf. ITEL Corporation, B-192139.7, October 18, 1979, 79-2 CPD 268
(a case involved with the determination of the technical adequacy of a
proposal under a negotiated procurement).
We believe the contracting officer's statement that but for the 1080
scan mode, EMI's equipment was acceptable, can be reasonably taken to
mean it disagrees with Pfizer in this respect.
As our discussion indicates, we believe the award should have been
made to EMI in this instance, and an appropriate remedy would ordinarily
be a recommendation that the contract awarded to Pfizer be terminated
for the convenience of the Government. However, there are many factors
involved in our consideration of whether such a recommendation would be
in the best interest of the Government, including the cost to the
Government, the extent of performance and the delays such a
recommendation might entail. See Cohu, Inc., 57 Comp.Gen. 759(1978),
78-2 CPD 175. In this respect, the procurement has been delayed for
several months, and termination and reaward may only enhance the delay
in the delivery of essential medical equipment further. Also, Pfizer
claims it has obligated itself to the extent of $1,686,000 for the parts
and components necessary to manufacture the equipment. The foregoing is
not wholly meaningful, however, because it does not take into
consideration the actual liability the Government would incur by a
termination of the Pfizer subcontracts, or the commercial value to
Pfizer of the components already delivered to it. Under these
circumstances, and in view of the $165,000 total difference in bid
prices between EMI and Pfizer, we recommend the agency explore the
feasibility of such termination of the Pfizer contract for the
convenience of the Government and award to EMI as would be consistent
with the fair and reasonable treatment of both EMI and Pfizer. We
emphasize that any agreement with the parties be made with the best
interest of the Government in mind, i.e., at a reasonable cost and
compatible with the VA's need for this equipment.
The protest is sustained.
B-195617, February 21, 1980, 59 Comp.Gen. 263
General Accounting Office - Jurisdiction - Contracts - In-House
Performance v. Contracting Out - Cost Comparison - Adequacy
General Accounting Office will consider protest from bidder alleging
arbitrary rejection of bid when contracting agency utilizes procurement
system to aid in determination of whether to contract out by spelling
out in solicitation circumstances under which contractor will or will
not be awarded contract. Contracts - Negotiation - Cost, etc. Data -
Cost Comparisons - Government Estimates - Timeliness
Provision in agency's cost comparison manual containing procedures to
determine whether to contract out-- that in-house cost estimate should
be submitted to contracting officer at least 2 days prior to "start of
negotiations"-- is unclear. Recommendation is made that agency clarify
manual with respect to when cost estimate should be submitted to
contracting officer. Contracts - Protests - Allegations - Not Supported
by Record - Disclosure of Pricing, Technical, etc. Data
Where protester's contentions-- that agency took advantage of
protesters proposal in preparing in-house cost estimate regarding
reduced staffing from the current level of 329 to 259 and other
matters-- and agency's directly conflicting explanation constitute only
evidence, protester has not met burden of proving its case by clear and
convincing evidence. Contracts - Negotiation - Cost, etc. Data - Cost
Comparisons - Government Estimates
Contention-- that cost comparison was incorrect because agency
assessed protester $2,139,290 representing personnel relocation-related
expenses associated with contracting out-- is without merit where
agency's explanation for assessment is reasonably based. Contracts -
Protests - Timeliness - Solicitation Improprieties - Apparent Prior to
Closing Date For Receipt of Proposals
Contention-- that request for proposals should not have contained
provision assessing contractor $750,000 for new equipment associated
with contracting out-- first raised after closing date for receipt of
initial proposals is untimely under GAO Bid Protest Procedures, 4 C.F.R.
20.2(b)(1)(1979), and will not be considered on merits. Contracts -
Negotiation - Evaluation Factors - Labor Costs - Fringe Benefits -
Contracting Out Cost Comparison
Contention-- that agency should have used fringe benefit factor of 38
percent instead of 8.44-percent factor used to assess cost of Government
of continuing to perform in-house-- is without merit where agency
explains that Public Law No. 95-485 required use of policies in effect
prior to June 30, 1976, and the factor then in effect was 8.44 percent.
Contracts - Negotiation - Offers and Proposals - Preparation - Costs -
Recovery
Claim for proposal preparation costs is denied where record shows
that protester was not arbitrarily treated, was not improperly induced
to submit proposal where no contract was contemplated, or was not denied
contract which it would have received.
Matter of: Jets, Inc., February 21, 1980:
Jets, Inc., protests an Air Force determination that base operating
support services at Newark Air Force Station, Ohio, would be performed
at a lower overall cost to the Government by continuing performance by
Government personnel rather than contracting with Jets. The Air Force
obtained the cost of contracting by evaluating Jets' proposal-- the only
proposal received in response to request for proposals (RFP) No.
F33600-79-R-0294. The cost of continued Government personnel
performance was estimated by a management engineering team (MET) based
on the 654-page statement of work contained in the RFP. Jets contends
that the procedures followed by the Air Force in reaching the
determination violated mandatory requirements and that the costs
comparison is incorrect and was not performed in good faith. Jets
claims that it should receive the award or that it is entitled to
proposal preparation costs.
Initially we point out that the underlying determination involved
here-- whether this work should be performed in-house by Government
personnel or performed by a contractor-- is one which is a matter of
executive branch policy not within our protest function. Local F76,
International Association of Firefighters, B-194084, March 28, 1979,
79-1 CPD 209. At the same time, preserving the integrity of the
procurement system is within our protest function. Recently, we stated
that where, as here, a contracting agency utilizes the procurement
system to aid in its determination of whether to contract out, by
spelling out in a solicitation the circumstances under which a
contractor will or will not be awarded a contract, a protest from a
bidder alleging that its bid has been arbitrarily rejected will be
considered by our Office. See Crown Laundry and Dry Cleaners, Inc.,
B-194505, July 18, 1979, 79-2 CPD 38; Locals 1857 and 987, American
Federation of Government Employees, B-195733, B-196117, February 4,
1980, 80-1 CPD 89. Hence, Jets' protest will be considered.
For the reasons stated herein, both the protest and claim are denied.
I. Was the In-House Estimate Timely Completed and Sealed?
Jets argues that applicable Air Force policy and procedures required
that the estimated cost to continue performance with Government
personnel should have been completed and sealed prior to the date for
receipt of initial proposals under the RFP, April 23, 1979.
That was not initially done until May 16, 1979. Jets contends that,
before the Government estimate was completed, personnel performing the
in-house estimate had knowledge of its proposed manning, proposed costs,
and the names and salaries of proposed supervisors. Jets concludes that
the Air Force's failure to follow the requirement to complete and seal
the Government estimate prior to receipt of initial proposals
compromised the integrity of the competitive procurement system.
Jets points to the following section of Air Force Manual (AFM) 26-1
as establishing the requirement that the in-house estimate must be
completed and sealed prior to the receipt of initial proposals:
1-20. Negotiated Procurement Procedures:
a. General. Under negotiated procurement, public disclosure of the
contract price cannot be made until after award. This is necessary to
preserve the integrity of the procurement process * * * . Additionally
the in-house cost estimate * * * must be submitted to the contracting
officer in a sealed envelope no earlier than seven days and no later
than two days before the start of negotiations. Under no circumstances
will the in-house cost estimate be provided to personnel involved in the
negotiation or evaluation of contractor proposals until the most
favorable offer to the Government has been determined.
Jets also points to a letter dated August 30, 1978, from
Headquarters, Department of the Air Force, regarding implementation of
the cost comparisons procedures of AFM 26-1, which contained examples of
required milestone charts. Both examples showed that the in-house
estimate was completed and sealed prior to receipt of initial proposals
or bid opening. Further, on the sample milestone chart, the receipt of
initial proposals and the start of negotiations were the same date.
In response, the Air Force essentially denies any improprieties in
the process and argues that (1) since the milestone schedule is a
sample, it cannot be assumed that this sample chart must be complied
with for each and every Air Force cost comparison, and (2) the Air Force
did not intend the "start of negotiations" to be interpreted as the
submittal of initial proposals; instead, the term negotiations as used
in AFM 26-1 clearly anticipates the start of "final negotiations."
It is not clear to us when the start of negotiations takes place
within the meaning of AFM 26-1. It could start, as Jets contends, when
the initial proposals are submitted. In any event, we believe the
pertinent question is whether a fair and reasonable cost comparison was
made, not whether the sealed in-house cost estimate was submitted late
to the contracting officer. Therefore, we need only consider Jets'
contention that the cost comparison was incorrect and not performed in
good faith, although by separate letter we are recommending that the Air
Force clarify AFM 26-1 with respect to when the cost estimate should be
submitted to the contracting officer.
II. Did the Air Force Use Jets' Ideas in Preparing the In-House
Estimate?
Jets contends that the Air Force took advantage of ideas and manning
structures that it proposed in making the in-house estimate. Jets
principally argues that the Air Force's in-house staffing estimate was
reduced from an authorized strength of 329 to 259 compared to Jets'
proposed 256; Jets believes that this similarity in staffing was not
coincidental. Jets also questions why the Government did not accomplish
this cost saving years ago. Jets also refers to a July 19, 1979, memo
from an Air Force commander stating that "(t)he following organizational
structure is the one I have concurred to as a counter PROPOSAL TO
CONTRACTING THE COMMUNICATIONS SUPPORT AT NEWARK AFS * * *." JETS ASKS
HOW DID HE KNOW THE DETAILS OF THE CONTRACTOR PROPOSAL. FURTHER, JETS
NOTES THAT ON JULY 25, 1979, SIGNS APPEARED ON BULLETIN BOARDS AT THE
AIR STATION READING "WE WON," "NO CONTRACTOR," ETC., AND YET IN ACCORD
WITH AFM 26-1 THE AMOUNT OF THE ESTIMATED CONTRACT COST WAS NOT TO BE
REVEALED AT THAT TIME.
In response, the Air Force explains that AFM 26-1 requires the Air
Force to base the in-house estimate on the number of civilian man-years
required to perform the same workload and standard of performance in the
RFP's statement of work. Management engineering techniques were used to
price the RFP's statement of work to determine the minimum manning
sufficient to perform the statement of work; that method is somewhat
analogous to zero-based budgeting and allows the Air Force to determine
where efficiencies can be achieved. The Air Force is not permitted by
AFM 26-1 to use the current manpower authorization or the actual people
employed to cost the in-house estimate. The Air Force also reports that
on August 3, 1979, Air Force Headquarters directed a reduction in the
manning level to 259 man-years and as of October 1, 1979, the onboard
civilian strength was less than 259 personnel; onboard strength as of
November 20, 1979, is below the 259 level and will remain at or below
the 259 man-year level unless validated workload changes dictate
otherwise.
Regarding the July 19 memo, the Air Force reports that the commander
had no knowledge of the contractor's proposal; instead, this message
was the culmination of discussions and correspondence started in
February 1979 concerning the manning and organizational configuration of
the communications operating location. The operating location chief
disagreed with the commander over the number of in-house people to be
used and the disagreement was resolved with the "counter-proposal"
message, which refers to comments of the operating location chief, and
was not intended to be a proposal to counter the Jets' offer.
Concerning the "we won" notices on the base, the Air Force
investigated and reports that it found no evidence that Air Force
personnel leaked information concerning the contractor's offer. Since
such posting took place after the Government's estimate was revealed,
the Air Force suggests that it was equally possible that contractor
personnel or their relatives who knew the amount of the contractor's
proposal and, after opening of the Government's estimate, knew that
their offer was higher than the estimate may have revealed in a public
place that the Government's estimate was low.
The record in each of the above three examples of alleged
improprieties consists of Jets' view of the circumstances and the Air
Force's conflicting view. In these matters, we have consistently stated
that the protester has the burden of proving its case. See Amex
Systems, Inc., B-195684, November 29, 1979, 79-2 CPD 379 (protest was
denied since we could not determine from the record that the Air Force's
cost comparison was either faulty or misleading, as alleged);
Tri-States Service Company, B-195642, January 8, 1980, 80-1 CPD 22
(protest was denied since we had no basis on the record to dispute the
Army's cost comparison). Here, in view of (1) the Air Force's firm
denial, that its personnel used information contained in Jets' proposal
to make the in-house estimate, and (2) the protester's failure to
produce clear and convincing evidence to support its position, this
aspect of the protest is denied.
III. Was the Cost Comparison Faulty?
Regarding the Air Force's estimate of the contracting costs with
Jets, Jets principally questions why it was charged with $2,139,290 in
relocation expense, severance pay and retained pay for the entire
present manning of 329 when, in fact, the contractor would hire some 70
percent of the incumbent personnel and no relocation nor retained pay
would be involved for them. Further, in Jets' view, the Government's
cost should have been increased accordingly for those 70 people for
relocation costs, severance pay and retained pay.
Jets also questions why the Government required in the RFP that the
contractor purchase some $750,000 worth of new equipment (vehicles,
forklifts, tractors, etc.) when this identical equipment was in place as
Government-owned equipment and then why the contractor was charged with
the cost of shipping the Government equipment to other installations.
Finally, Jets questions why the Government added only 8.44 percent to
its salary costs for fringe benefits such as retirement, health and
welfare, insurance, projected pay increases, when in actual fact these
fringe benefits total about 38 percent of salaries.
We note that Jets raised other questions relative to the cost
comparison but their resolution is unnecessary since they involve such a
small amount of money relative to the in-house, 3-year estimate,
$14,372,687, as compared with the estimated cost of contracting with
Jets, $20,937,335.
Similarly Jets' objection to the Air Force using revised in-house
estimate dated July 23, 1979, which reduced the in-house estimate by
about $200,000, need not be considered because the difference is not
determinative.
Regarding chargeable incumbent personnel expenses, the Air Force
reports that there is no assurance that Jets would offer employment to
70 percent of the incumbent employees, or that any would accept the
offer; experience shows that those higher graded employees involved
would want to remain on the Federal payroll until they are eligible to
retire; therefore, they would be willing to relocate. The data
automation personnel have a valuable skill which is needed elsewhere in
the Air Force to retain their current grade/pay and they, too, would be
willing to relocate. Other employees with retained pay entitlement want
to remain with the Air Force to retain the civil service retirement
benefits. Further, the Air Force states that no relocation costs or
severance pay expenses were charged to other than base operating support
personnel because other surplus actions generated no separations or
relocations; other surplus employees would be placed at or below their
current grade. In essence, the Air Force estimates that there are no
anticipated added costs chargeable to continued Government operation of
this project by reason of the proposed personnel reduction; all
personnel above the 259 figure will be absorbed by attrition,
retirement, or other assignments. Finally, the Air Force notes that the
base's capacity to absorb 47 people reduced the amount assessed against
Jets for this cost category.
We have carefully examined the Air Force's position and Jets'
contentions on incumbent personnel expenses and we have no basis to
conclude that the Air Force's position is without a reasonable basis.
Accordingly, this aspect of Jets' protest is denied.
Regarding the RFP's new equipment provisions, the Air Force reports
that the decision not to furnish the equipment to any contractor was
based upon requirements for the equipment at other Air Force bases to
fulfill shortages and is in accordance with AFM 26-1. The Air Force
notes, however, that Jets' protest on this issue is untimely since this
requirement to furnish equipment was apparent in the solicitation.
Therefore, Jets was required to file the protest prior to the date
established for receipt of proposals in order for the protest to be
timely under 4 C.F.R. 20.2(b)(1)(1979).
On the timeliness of this aspect Jets' protest, the Air Force is
correct. Accordingly, we will not consider the merits of this portion
of Jets' protest.
Regarding the fringe benefit factor, the Air Force reports that it
was required by section 814 of Public Law No. 95-485, October 20, 1978,
92 Stat. 1625, 10 U.S.Code 2304 note, to use its June 30, 1976
regulations and policies in conducting this contracting out cost
comparison.
The calculation in the Government in-house estimate of civilian
personnel costs for the Government's contribution for retirement and
disability, health insurance and life insurance prior to June 30, 1976,
was 8.44 percent. Whether or not the 8.44-percent factor is an accurate
estimate of actual costs, the Air Force explains that it was required to
use this factor.
Jets has provided no basis for use to take exception to the Air
Force's explanation. Therefore, this portion of Jets' protest is
denied.
IV. Conclusion and Proposal Preparation Cost Claim
In conclusion, we have no basis to find that the Air Force's in-house
and contractor cost estimates were faulty. Accordingly, based on the
record, since Jets was not subject to arbitrary treatment, not
improperly induced to submit a proposal where no contract was
contemplated, or not denied a contract which it would have received, it
is not entitled to proposal preparation costs. See Rand Information
Systems, B-192608, September 11, 1978, 78-2 CPD 189.
B-196859, February 19, 1980, 59 Comp.Gen. 261
Compensation - Removals, Suspensions, etc. - Back Pay - Back Pay Act of
1966 - Allowances - Overseas Employees
Civilian employee of Air Force stationed in Japan upon involuntary
dismissal returned to United States. She contested dismissal and was
reinstated to the position with backpay under 5 U.S.C. 5596. The
backpay award includes allowances for housing and cost of living which
are paid employees working in high cost areas overseas even though the
employee is not present in that area during period of wrongful
dismissal.
Matter of: Norma J. Raymond, February 19, 1980:
The question is whether an employee who is awarded backpay under the
Back Pay Act (Act), 5 U.S.C. 5596, for a wrongful dismissal is entitled
to receive allowances provided to compensate the employee for being
assigned to a high cost area when the employee is not present at the
high cost area during the period of wrongful dismissal. Since the Act
provides for payment of all allowances the employee would have earned if
the improper dismissal had not occurred, she is entitled to receive the
allowances in question.
The question is presented for an advance decision by Captain Ronald
M. Oberbillig, Accounting and Finance Officer, Kadena Air Base, Japan,
and concerns an award made to Norma J. Raymond, a civilian employee of
the Air Force.
Ms. Raymond was separated from her position of Supervisory Recreation
Specialist-- Service Club Activity, 18th Combat Support, Kadena Air
Base, Japan, based on unsatisfactory performance of duty. She returned
to the United States and appealed her dismissal to the Merit Systems
Protection Board and was awarded retroactive restoration and backpay
under the Act. The employee did not return to Japan but rather resigned
shortly after her reinstatement.
At the time of her dismissal, Ms. Raymond was receiving:
1. basic pay,
2. post differential,
3. premium pay,
4. living quarters allowance, and
5. post allowance (cost of living)
The Accounting and Finance Officer states that Ms. Raymond has
received an award in accordance with the provisions for backpay
computation as specified in Federal Personnel Manual (FPM) Supplement
990-2, Sec. 8-6 (June 16, 1977). However, he has withheld the computed
amounts for living quarters allowance and post allowance. While he
recognizes that FPM Supplement 990-2, Sec. 8 58-6.c(3) states that an
employee's award should include all allowances even if the employee does
not physically remain in the location giving rise to the allowance, he
questions whether the Comptroller General decisions and Court of Claims
decision referenced in the regulation are adequate authority to pay the
allowances in this case. Based on the cases cited in the regulation and
the authorities upon which they rely, the officer finds that the
implication is that presence in the foreign area is a requirement before
entitlement can be established.
In a Court of Claims' case involving a wrongfully dismissed civilian
employee of the Air Force stationed at an Air Base in Japan, the
question as to payment of living quarters allowances arose. The Court
held that the employee was entitled to receive the living quarters
allowance for his entire period of dismissal even though he was not
present in Japan for the entire period of his wrongful separation.
Urbina v. United States, 428 F.2d 1280(Ct.Cl. 1970). The Court reasoned
that the subsections of the Back Pay Act, which provide that an employee
is entitled to all allowances he would have earned but for the period of
wrongful dismissal and that for all purposes, the employee is deemed to
have performed services for the agency during this period, required this
result. Urbina v. United States, supra, at 1285 discussing 5 U.S.C.
5596(b)(1)(A) and (b)(1)(B).
On the basis of the Urbina case, the employee may receive payment of
the withheld living quarters allowance. Further, we find the reasoning
in that decision applicable to payment of post allowance and find that
that allowance is also payable.
Accordingly the voucher is being returned for payment if otherwise
correct.
B-193927, February 13, 1980, 59 Comp.Gen. 259
Courts - Judgments, Decrees, etc. - Interest - Delayed Payment of
Judgment - Government Appeal - Disposition Not On The Merits
The permanent indefinite appropriation for payment of judgments (31
U.S.C. 724a) is available to pay interest to a plaintiff whose judgment
payment was delayed solely because the United States appealed and lost.
Vaillancourt v. United States extended this principle to apply to
situations in which the United States withdrew its appeal without a
disposition of the case on its merits. Payment of interest will also be
permitted when Government appeals denial of motion under Federal Rule of
Civil Procedure (FRCP) 60(b) to reopen judgment on collateral issue and
not on merits of the underlying judgment, since plaintiff's delay in
receiving payment was caused by Government's unsuccessful appeal. 58
Comp.Gen. 67, modified (extended).
Matter of: Edmonds v. United States and Herbert v. United States;
Payment of Interest on Judgment, February 13, 1980:
This decision is in response to a request by the legal representative
of the classes of plaintiffs involved in Edmonds v. United States,
Switzer v. United States, Wood v. United States, and Herbert v. United
States, that interest be paid on judgments rendered for the plaintiffs
in the respective cases. For the reasons stated below, interest should
be paid on those judgments not paid prior to November 30, 1978, when the
Government's appeal was dismissed. The interest period would run from
the date the transcripts of the judgments were filed with the General
Accounting Office to November 30, 1978.
The plaintiffs were awarded judgments in their cases (the merits of
which are not relevant to this discussion) and duly filed transcripts of
the judgments with this Office in accordance with 31 U.S.C. 724a(1976).
The transcripts were filed with us between August 10 and September 25,
1978. The judgments directed that payment be made in a lump sum to the
Clerk of the District Court who would then distribute the money to the
individual plaintiffs. After the Clerk had received the six checks that
were involved from the Department of the Treasury but prior to
distribution of the funds, the Internal Revenue Service (IRS) asked that
taxes be withheld from the judgments. This request was not complied
with because the judgments directed payment of the gross amount without
providing that taxes be withheld. The United States then filed motions
to restrain distribution of the judgment money and to amend the
judgments to require withholding. The District Court denied these
motions. On November 9, 1978, the United States filed a notice of
appeal from the denial of these motions with the Court of Appeals for
the Fourth Circuit. On November 30, 1978, 3 weeks later, the parties
entered into a stipulation dismissing the appeal.
The plaintiffs contend that they are entitled to be paid interest on
their original judgments because of the delay they encountered in
receiving their money. They base this contention on a recent decision
rendered by this Office which held that interest could be paid on a
judgment against the United States, where the United States appealed the
judgment and the appeal was subsequently dismissed by stipulation of the
parties. Vaillancourt v. United States-- Payment of Interest on
Judgment, 58 Comp.Gen. 67(1978). The plaintiffs argue that Vaillancourt
is directly applicable to their situation.
In Vaillancourt, the appeal by the United States was dismissed by
stipulation of the parties, one year after it was taken, without any
Court review of the case on its merits. The judgment to which the
plaintiffs were entitled was thus tied up for almost 9 months, until the
Department of Justice certified to us that no further proceedings
reviewing the judgment would be taken. Our Claims Division originally
denied the plaintiffs' claim for interest because 31 U.S.C. 724a(1976),
governing the payment of interest on judgments, provides that interest
is payable only when the judgment has--
* * * become final after review on appeal or petition by the United
States, and then only from the date of the filing of the transcript
thereof in the General Accounting Office to the date of the mandate of
affirmance.
At that time, this statute had been interpreted as contemplating and
requiring a review of the case on its merits, since a mandate of
affirmance is used, procedurally, to rule on the merits. B-145389,
April 18, 1961.
In Vaillancourt, we held, on reconsideration, that a review of the
case on its merits is not necessary to the payment of interest under 31
U.S.C. 724a as long as the delay encountered by the plaintiff in
receiving his money was caused by the United States' appeal of the case.
This decision was reached after careful consideration of the
legislative history of the statutes involving the payment of interest,
including 31 U.S.C. 724a and 28 U.S.C. 2516(b). We stated our belief
that the Congress never contemplated a situation where an appeal would
be filed and eventually dismissed, without an actual review of the case
on its merits. When the interest statutes were enacted with language
requiring a "review on appeal or petition" and a "mandate of
affirmance," it was apparently assumed that this treatment would cover
any possible situation in which payment of a judgment was delayed by
further litigation by the United States. When we considered the problem
in Vaillancourt, we extended our interpretation of 31 U.S.C. 724a to
allow interest on a judgment which was delayed when the United States
appealed but failed to pursue the appeal, because the basic purpose of
the statute, as supported by the legislative history, is to compensate a
successful plaintiff for the delay in receiving his money judgment
attributable solely to Government action or inaction.
In the instant case, the appeal was not from the original judgment,
but from the denial of a motion filed under Rule 60(b)(6), Federal Rules
of Civil Procedure (FRCP), asking the District Court to reopen the
judgment so that taxes could be withheld from the payments. The FRCP
60(b) motion is used to ask the court for relief from a judgment on
grounds of mistake, inadvertence, excusable neglect, newly discovered
evidence, fraud, or for any other reasons justifying relief. This
motion is viewed as independent from the original proceeding. Shay v.
Agricultural Stabilization and Conservation State Committee for Arizona,
et al., 299 F.2d 516(9th Cir. 1962). Although the question raised on
this appeal has been regarded as a collateral issue, unrelated to the
merits of the underlying judgment, the appeal did delay the payment of
the judgment in the same manner as a direct appeal on the merits of the
judgment. Thus, we believe that the rule in Vaillancourt applies in
this situation too. Therefore, interest should be paid to all those
plaintiffs in this case, payment of whose judgments was delayed as a
result of the appeal under FRCP 60(b)(6), from the date the transcript
was filed with the GAO to November 30, 1978, the date the appeal was
dismissed.
B-195786, February 12, 1980, 59 Comp.Gen. 257
Contracts - Discounts - Price Adjustment Effect - Price Escalation
Clause - Interpretation
Prompt payment discount may be applied to increase in contract price
granted under price escalation clause where price is adjusted to reflect
change in wholesale price indexes. Contrary holding by Armed Services
Board of Contract Appeals applying discount only to original contract
price is distinguishable as escalation in that that decision was granted
only to adjust an increase in direct labor costs, and unlike instant
case, application of discount to such price increase would have been
inconsistent with purpose of escalation clause.
Matter of: Fermont Division of the Dynamics Corp. of America,
February 12, 1980:
The Chief, Accounting and Finance Division, Office of the
Comptroller, Defense Logistics Agency (DLA), requests an advance
decision as to the propriety of making payment to the Fermont Division
of the Dynamics Corporation of America (Fermont) for $452.58. Fermont
requests DLA reimburse it this amount on the grounds that DLA improperly
computed prompt payment discounts under contract number DAAG53-76-C-0225
on the adjusted invoice price instead of on the lower original bid
price. For the reasons stated below, we find Fermont is not entitled to
payment of the discount.
The record discloses that under the terms of the contract Fermont
offered a one-tenth of one percent discount for prompt payments by DLA
and that DLA, in computing the amount of the discount, applied the
discount against not only the original contract price but also against
$452,584.39 representing an amount by which the original contract price
was increased under the contract's Price Escalation clause.
Fermont contends DLA is prohibited from computing the prompt payment
discount on the adjusted contract price. It points out that the Armed
Services Board of Contract Appeals (ASBCA) decided in Jets Services,
Inc., ASBCA 19070, 74-1 BCA 10649 (1974), that under a contract with a
price adjustment clause a prompt payment discount should be taken on the
lower original contract price rather than on the contract price as
adjusted to compensate for a Department of Labor mandated wage increase
made pursuant to the Service Contract Act, 41 U.S.C. 351(1976).
DLA believes the Jets Services, Inc. decision is not dispositive of the
issue because the facts in that case are not similar to the facts here.
We agree with DLA.
In the Jets Services, Inc. decision, the Board found that the
contractor's usual procedure in constructing its bid or proposal prices
was to calculate its estimated direct and indirect costs, add the
desired profit, and add to the total 11.11 percent. The contractor
added 11.11 percent to its prices to offset the effect of the
Government's taking the offered 10 percent prompt payment discount and
so leave the contractor with receipts equalling its incurred costs plus
desired profit. The ASBCA then interpreted the contract's price
adjustment clause by which the contractor warranted that the contract
prices "do not include any allowance for any contingency to cover
increased costs for which adjustment is provided under the clause * * *
" and held:
In our view the quid pro quo for the warranty made by the appellant
under paragraph (a) was a guarantee that appellant would recover its
direct cost increases flowing from a revised wage determination. It is
clear that if the Government were permitted to take the prompt payment
discount on the basis of a contract price so increased, appellant would
not recover the full amount of its increased direct costs. Such a
result is inconsistent with the intent of the Price Adjustment clause
and would further penalize appellant for circumstances which it is not
entitled to take into account when it prepared its Proposal.
In this case, the price escalation clause does not contain a warranty
similar to the one that was dispositive of the holding in Jets Services,
Inc., supra. Nor does this clause indicate that Fermont would not be
compensated for both its increased costs and additional profit based on
those increased costs. The clause provides that the original contract
price shall be adjusted to reflect increases and decreased in the
Wholesale Prices and Price Indexes and has the effect of keeping the
unit prices-- including profit-- of those items listed in the contract
abreast of price increases for that industry. (In contrast, DLA now
uses a revised economic price adjustment clause which contains a
warranty that effectively is identical to the warranty in Jets Services,
Inc., supra, and which limits the amount of increase to increases in
labor and material costs.)
Where, as here, a contractor is compensated not only for its
increased costs but also is allowed to obtain additional profit based on
those increased costs, application of the prompt payment discount
against the adjusted contract price would not be inconsistent with the
price adjustment clause and would therefore appear not to be
inconsistent with the intention of the parties.
Fermont is not entitled to return of the discount.
B-195401.2, February 11, 1980, 59 Comp.Gen. 255
Contracts - Protests - Persons, etc. Qualified to Protest - Small
Business Set-Asides - Protester Nonresponsible
Bidder found to be nonresponsible is not "interested" party under Bid
Protest Procedures to protest against two bidders it contends submitted
nonresponsive bids where other apparently responsive, responsible bidder
exists and finding two bids to be nonresponsive would not lead to
cancellation of invitation with possibility that protesting bidder could
submit another bid under resolicitation.
Matter of: Therm-Air Mfg. Co., Inc., February 11, 1980:
Therm-Air Mfg. Co., Inc. (Therm-Air), protested any award to other
than itself under Navy Ships Parts Control Center invitation for bids
No. NOO104-79-B-0770. It contended that the bid of the low bidder was
nonresponsive to the "Additional Ordering Data" clause in the
invitation. It also contended that the bids of the third and fourth low
bidders were nonresponsive for the same reason, noting that its bid and
the bid of the high bidder (the Keco Corp.) were alone responsive to the
requirement.
The contracting activity agreed with Therm-Air regarding the
responsiveness of the low bid. However, the contracting activity
declined to make the award to Therm-Air in view of the fact that
Therm-Air was determined to be nonresponsible. The determination was
forwarded to the Small Business Administration (SBA) for the possible
issuance of a certificate of competency (COC). We learned on January
29, 1980, that the SBA declined to issue a COC because Therm-Air did
not, within the time permitted, rebut the nonresponsibility
determination of the activity. Therm-Air still wishes to maintain its
protest against any award to either of the two bidders whose bids are
allegedly nonresponsive to the above-noted clause.
Therm-Air is not eligible to maintain a protest under the instant
invitation. A party must be "interested" under our Bid Protest
Procedures, 4 C.F.R.part 20(1979), 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 (e.g., prospective bidder or offeror; bidder or offeror
eligible for award; bidder or offeror not eligible for award;
nonbidder or nonofferor) and the nature of the issues involved. See,
generally, American Satellite Corporation, B-189551, April 17, 1978,
78-1 CPD 289.
From the facts presented by Therm-Air, even assuming that the bids of
the third and fourth low bidders are nonresponsive, there is another
bidder to whom an award could be made under the invitation. The
contracting activity advises that this bidder is responsible, its bid is
considered responsive, and its bid price is not unreasonable. Thus, the
situation is analogous to where a non-8(a) firm or a nonsmall business
protests even though it cannot bid and expect to receive an award under
a solicitation limited in participation to 8(a) or small business firms,
respectively. There we have held these parties not to be interested
parties due to their lack of a substantial and direct interest in the
procurement. DoAll Iowa Company, B-187200, September 23, 1976, 76-2 CPD
276; Elec-Trol, Inc., 56 Comp.Gen. 730(1977), 77-1 CPD 441. Since
Therm-Air is ineligible to receive an award under the invitation in
question and since no apparent need will arise to resolicit the
procurement (thereby permitting Therm-Air to rebid), Therm-Air does not
have direct and substantial interest with regard to award under this
solicitation.
Die Mesh Corporation, 58 Comp.Gen. 111(1978), 78-2 CPD 374.
Accordingly, the protest is dismissed.
B-196444, February 8, 1980, 59 Comp.Gen. 253
Leaves of Absence - Compensatory Time - Set-Off - Against Excess Annual
Leave Taken - Administrative Error
Question arising from labor-management negotiations asks whether an
employee may use compensatory time to refund excess annual leave taken
because it had been credited to his account through administrative
error, if such compensatory time would have been available for use at
time that excess annual leave was taken. While payment for excess
annual leave generally must be recovered under 5 U.S.C. 6302(f),
alternatively, the employee's available compensatory time balance may be
charged for the excess annual leave taken through administrative error
as proposed in the submission. 58 Comp.Gen. 571(1979), modified; 45
Comp.Gen. 243(1965), distinguished.
Matter of: Use of compensatory time to refund excess annual leave,
February 8, 1980:
The question presented asks whether an employee may use compensatory
time to refund excess annual leave taken through administrative error,
if such compensatory time would have been available for use at the time
that the excess annual leave was taken. For the reasons stated below,
we hold that the proposed use of compensatory time is proper.
A request for an advance decision was submitted by Mr. Alfred M.
Zuck, Assistant Secretary for Administration and Management, Department
of Labor, representing a proposal agreed to during recent negotiations
with the Department's National Council of Field Labor Locals (NCFLL) on
absence and leave policy. The NCFLL has been served with a copy of this
request as required by our regulations governing Labor-Management cases,
4 C.F.R.Part 21(1979).
Agencies, under certain conditions, may grant compensatory time off
to an employee from his scheduled tour of duty instead of payment for
time spent in irregular or occasional overtime work. However, the rules
governing compensatory time are directed to the administration of
premium pay, not annual leave.
In the situation presented here, where an employee has used excess
annual leave which was credited to his account because of an
administrative error, 5 U.S.C. 6302(f)(1976) provides as follows:
An employee who uses excess annual leave credited because of
administrative error may elect to refund the amount received for the
days of excess leave by lump-sum or installment payments or to have the
excess leave carried forward as a charge against later-accruing annual
leave, unless repayment is waived under section 5584 of this title.
The Department of Labor believes that this section limits its
authority to permit the use of compensatory time to liquidate excess
leave charges as proposed by the union. Our decision, 45 Comp.Gen.
243(1965), is cited for the proposition that in the absence of statutory
authority, compensatory time may not be credited toward the balance of
advanced annual or sick leave owed by an employee. However, no element
of administrative error was involved in the advance of leave considered
in that decision, and no statutory provision providing for alternate
means of repaying the leave advanced existed at that time.
More recently, we have considered the import of 5 U.S.C. 6302(f) on
repayment of excess leave charges. This provision was added as a new
subsection to section 6302 by section 4 of the 1973 amendments to the
Annual and Sick Leave Act, Public Law 93-181, December 14, 1973, 87
Stat. 705, 706.
Our review of the legislative history indicates that the purpose of this
provision was to permit an employee the option of repaying an overcharge
of leave by lump-sum or installment cash payments or by a charge against
current or later accruing annual leave where formerly there was no
authority for repayment by charging future leave earnings. See S. Rep.
No. 93-491, 93d Cong., 1st Sess., November 9, 1973, 2, 4 (1973); and
H.R. Rep. No. 93-456, 93d Cong., 1st Sess., September 10, 1973, 3, 7, 9
(1973). See also Matter of Delores J. Copeland, B-187692, October 13,
1977. Nothing in the legislative history cited deals with the use of
existing compensatory time as a mode of repayment for an excess annual
leave charge. Since this section increases the options available to
employees to repay excess leave that was credited to their accounts
through administrative error, it is properly classified as remedial
legislation to be broadly interpreted to achieve its purpose.
We recognize that although compensatory time and annual leave are
authorized by different statutory provisions and are governed by
different regulations, in their use they are in many respects
equivalent. If an employee has both annual leave and compensatory time
to his credit and wishes to take time off from work, it does not matter,
within the limits imposed by the applicable regulations, whether the
employee charges his time off to annual leave or compensatory time. The
net effect is the same; the employee has time off with full pay. As an
example, in Matter of Edward W. Dorcheus, 58 Comp.Gen. 571(1979), we
held, in part, that an employee's annual leave balance could, with his
consent, be reduced by the amount of compensatory time erroneously
granted and used. While the situation is reversed here, the same
principle may be applied. Therefore, we believe that allowing excess
annual leave to be charged against compensatory time as proposed
comports with the intent of section 6302(f), and the proposal, if
finally agreed to by both parties, may be implemented.
B-195614, February 8, 1980, 59 Comp.Gen. 251
Contracts - Architect, Engineering, etc. Services - Grant-Funded
Procurements - Brooks Bill Not Applicable per se
Grantee's solicitation requiring all responding architectural and
engineering (A/E) professional services firms to furnish cost and
pricing data, to be considered along with statement of qualifications in
selection of A/E firm, is not shown to be contrary to terms of OMB
Circular A-102, Attachment O, or Ohio law. A/E procurement procedures
in 40 U.S.C. 541 (Brooks Bill), mandatory for Federal procurements for
A/E services, are not per se applicable to grantee procurements.
Matter of: Sieco, Inc., February 8, 1980:
This is a complaint by Sieco, Inc. (Sieco) concerning the propriety
of the procedures used for the procurement of architectural and
engineering (A/E) services under Request for Proposals (RFP) A-78-WFS
issued by the Licking County Regional Planning Commission, a grantee
under Community Development Block Grant B-78-DN-39-0259 awarded by the
U.S. Department of Housing and Urban Development (HUD).
Sieco complains that the grantee failed to comply with applicable
Federal statutes and regulations for obtaining A/E professional services
as required by Office of Management and Budget (OMB) Circular A-102,
Attachment O. Sieco alleges that section 11.c(5) of Attachment O
prescribes that selection of A/E professional services by competitive
negotiations shall be by the two-step method provided in the Brooks
Bill, 40 U.S.C. 541 et seq. (1976). This method restricts the
evaluation data that may be requested initially to the proposer's
qualifications and requires that price negotiation be conducted with the
highest ranked firm. If the procuring agency is unable to reach
agreement with the highest-ranked A/E firm on a fair and reasonable
price, negotiations are terminated and the second-ranked firm is invited
to submit its proposed fee.
Sieco does not argue that the Brooks Bill itself applies to the
grantee's procurement. Rather, it maintains that Brooks Bill type
procedures are made applicable here under HUD regulations which
incorporate OMB Circular A-102, Attachment O. Sieco submits that the
grantee's procurement is defective because the grantee's solicitation
required initial submission of both technical qualification data and
cost and pricing data by each proposer instead of only qualification
data.
Sieco also maintains the grantee improperly reserved the right to make
contract award on the basis of price alone without any subsequent
negotiation or not to award on the basis of price alone and to negotiate
simultaneously with all proposers.
We find that the Brooks Bill procedures do not apply to this
procurement and have no objection to the manner in which the procurement
was conducted.
HUD regulations require grantees of block grants to comply with the
requirements of Attachment O of OMB Circular A-102, "Procurement
Standards." 24 C.F.R. 570.507(1979). Attachment O was revised on August
15, 1979; see 44 Fed.Reg. 47874(1979). Sieco concedes that the grantee
was not required to conduct this procurement in accordance with Brooks
Bill type procedures under the superseded version of Attachment O but
maintains that the new version applies here because the contract was not
awarded by the grantee until October 1, 1979. Even under the new
version of the Attachment, however, the grantee, in our opinion, was not
required to conform to the Brooks Bill.
The current version of Attachment O states:
2. Grantee/Grantor Responsibility.
b. Grantees shall use their own procurement procedures which reflect
applicable State and local laws and regulations, provided that
procurements for Federal Assistance Programs conform to the standards
set forth in this attachment and applicable Federal law.
11. Method of Procurement.
Procurement under grants shall be made by one of the following
methods, as described herein: (a) small purchase procedures; (b)
competitive sealed bids (formal advertising); (c) competitive
negotiation; (d) noncompetitive negotiation.
c. In competitive negotiation, proposals are requested from a number
of sources and the Request for Proposal is publicized, negotiations are
normally conducted with more than one of the sources submitting offers,
and either a fixed-price or cost-reimbursable type contract is awarded,
as appropriate. Competitive negotiation may be used if conditions are
not appropriate for the use of formal advertising. If competitive
negotiation is used for a procurement under a grant, the following
requirements shall apply:
(5) Grantees may utilize competitive negotiation procedures for
procurement of Architectural/Engineering professional services, whereby
competitors' qualifications are evaluated and the most qualified
competitor selected subject to negotiation of fair and reasonable
compensation.
The crux of Sieco's argument is that paragraph 11.c, read in total
context, must be construed to mean that if the conditions for
competitive negotiations are satisfied and the grantee decides to use
that method, then the provisions of subparagraph (5) "shall" apply.
In other words, when selecting an Architect/Engineer by competitive
negotiation, Sieco maintains that the two-step Brooks Bill method must
be used.
We must reject this argument. While it is true that, as Sieco points
out, paragraph 11.c. states that if competitive negotiation is used for
a procurement under a grant, the "following" requirements "shall" apply,
this is not dispositive of the issue. Instead, reference must be made
to the more specific language of the individual subparagraphs. The
first three subparagraphs, dealing with obtaining adequate competition,
identifying the evaluation factors, and conducting the evaluation of
proposals, clearly are mandatory requirements. Subparagraphs (4) and
(5), however, by their own terms are permissive rather than mandatory,
with subparagraph (5) providing that grantees "may" use competitive
negotiation procedures for A/E professional services, which happen to
resemble those of the Brooks Bill. That language does not, in our view,
mandate the use of that procedure, but only allows it.
Moreover, our conclusion that the grantee was not required to employ
Brooks Bill type procurement procedures here is consistent with Ohio
law.
The record indicates that Ohio Rev. Code Ann. Sec. 307.86 (Page 1979)
constitutes the only state or local standard relevant to the procurement
of the professional services under examination. The provision requires
the use of competitive bidding except, in part, when A/E services are
being procured. In that event, however, the statute does not prohibit
the use of a process in which price competition is obtained. Rather,
the state or local contracting authority has the discretion to determine
what type of procurement it desires to conduct. We are unaware of any
Ohio law that prohibits Ohio procurement officials or other purchasers
from using a method of selecting an architect or engineer which requests
price or fee information for A/E services prior to the selection of an
A/E firm.
Based upon the above, the complaint is denied, as the grantee acted
consistent with state law and OMB Circular A-102, Attachment O.
B-195805, B-196036, February 7, 1980, 59 Comp.Gen. 249
Contracts - Buy American Act - Defense Department Procurement - Waiver
of Act - Memorandum of Understanding - Notice in Individual Procurements
Military department is not required to advise domestic offerors of
existence of Memorandum of Understanding between United States and
United Kingdom which provides basis for Secretary of Defense's
determination that Buy American Act is inapplicable to Defense items
manufactured in the United Kingdom. Buy American Act - Defense
Department Procurement - Validity of Award - Foreign Competition -
Absence of Notice to Potential Contractors
Military department's failure to notify potential competitors that
they may be in direct competition with United Kingdom firms does not
invalidate procurement.
Matter of: Watkins-Johnson Company, February 7, 1980:
Watkins-Johnson Company (WJC) protests the Air Force's award of a
contract to Rank Precision Industries, Inc. (RPI), under request for
proposals (RFP) No. F34601-79-R-1887 issued by Tinker Air Force Base,
Oklahoma.
WJC believes that the award to RPI is improper for two reasons: (1)
the Air Force failed in its duty to advise WJC of the existence of the
September 24, 1975, Memorandum of Understanding (MOU) between the United
States (US) and United Kingdom of Great Britain and Northern Ireland
(UK) Governments; and (2) the RFP did not contain a Notice of Potential
Foreign Source Competition (Notice), Defense Acquisition Regulation Sec.
7-2003.75 (1976 ed.).
We are denying the protest since in our opinion neither reason provides
a basis for invalidating the award.
The RFP restricted the procurement to three sources which the Air
Force had previously approved. WJC knew that its two potential
competitors had previously furnished goods which had been manufactured
outside the United States. WJC also knew that its status, as a firm
located in a surplus labor market area, together with imposition of the
Buy American Act (Act), 41 U.S.C. 10a-d(1976), price differentials would
increase by 12 percent the evaluated prices of its competitors. Since
the RFP did not contain the Notice, WJC concluded that it could increase
its price over and above that which it would have charged had there been
notice of possible foreign price competition. On July 23, 1979, 10 days
prior to award, WJC telegraphed the Air Force emphasizing that it had
furnished a certificate of compliance with the Act and that it was
located in a designated surplus labor market area.
WJC contends that the Air Force was under a duty to advise it of the
existence of the MOU. The MOU provides the basis for the Secretary of
Defense's November 25, 1976, determination that the Act is inapplicable
to Defense items manufactured in the UK. Crockett Machine Company,
B-189380, February 9, 1978, 78-1 CPD 109. WJC's contention is founded
on the following passage from the MOU:
Each government will be responsible for bringing to the attention of
the defense industries within its country, the basic understanding of
the MOU, together with appropriate guidance on its implementation.
In our view the intent of the MOU, taken as a whole, is to increase
the interchange of items of defense equipment between the two countries.
We do not find an intent to maintain current domestic sources of
supply, but rather an intent to increase the amount of defense equipment
furnished by nondomestic sources. We believe that each government is to
notify its own defense industry of the opportunity to trade, on an equal
footing, in the previously protected defense item market of the other
country. While the MOU states that each government will be responsible
for advising its own defense industry of the basic understanding of the
MOU and its application, we do not interpret this to require specific
advice to any particular offeror in any given procurement.
Consequently, we find no Air Force obligation to advise WJC of the
existence of the MOU.
Regarding WJC's second contention, that the RFP was deficient for
failure to include the Notice, we believe that it is good procurement
practice to advise, where practicable, domestic firms of a potential
waiver of the Act's application, since such warning can only heighten
the quality of competition offered by domestic firms.
However, we have held that a military department's failure to notify all
potential competitors that they may be in direct competition with UK
firms which are eligible for the waiver does not invalidate a
procurement. Maryland Machine Tool Sales, B-192019, July 6, 1978, 78-2
CPD 14.
Accordingly, the protest is denied.
B-195155, February 7, 1980, 59 Comp.Gen. 246
Leaves of Absence - Compensatory Time - Overtime Adjustment - Fair Labor
Standards Act - Nonexempt Employees
Nonexempt employee under Fair Labor Standards Act performed overtime
during summer in exchange for compensatory time. Civil Service
Commission made determination that employee is entitled to payment of
overtime under FLSA; payment is proper with offset of the value of
compensatory time granted. Since supervisor did not have authority to
order or approve overtime, there is no entitlement to compensatory time
under title 5, United States Code. Erroneous payments of compensatory
time not used as offset may be considered for waiver under 5 U.S.C.
5584.
Matter of: Marion D. Murray, February 7, 1980:
Mr. Arthur H. Nies, Acting Deputy Director, Administrative
Management, Science and Education Administration, United States
Department of Agriculture, requests a determination as to whether Mr.
Marion D. Murray, an Agricultural Research Technician with the
Department's Agricultural Research Service in Columbia, Missouri, is
entitled to the payment of overtime compensation for hours of work
performed during the period from 1966 to 1976. The submission involves
a review of the determination by the United States Civil Service
Commission (Commission) (now the Office of Personnel Management) that
Mr. Murray is entitled to overtime compensation under the Fair Labor
Standards Act (FLSA), 29 U.S.C. 201 et seq. (1976). The agency
questions the propriety of the Commission's findings.
The record shows that from 1966 to 1976 Mr. Murray was called upon by
his immediate supervisor to perform overtime work, as necessary, for
approximately 8 weeks each year during the summer growing season. Mr.
Murray and his immediate supervisor, Drs. Coe and Doyle, agreed that Mr.
Murray would be allowed an hour off as compensatory time for each hour
of overtime.
The agency states that neither Dr. Coe nor Dr. Doyle had the
authority to order or approve overtime work during the periods in
question. We have been informally advised that the administrative
officers, vested with the authority to order or approve hours of
overtime work, were not aware of the overtime work by Mr. Murray.
Neither the hours of overtime worked by Mr. Murray nor the hours of
compensatory time used were recorded in his official Time and Attendance
Reports until after 1976.
Mr. Murray claims overtime compensation on the basis that he was not
advised that he could have received overtime compensation, rather than
compensatory time, for each hour of overtime.
Sections 71a and 237 of title 31 of the United States Code (1976)
require that all claims cognizable by the General Accounting Office be
received in this Office within 6 years after the date such claim first
accrued or be forever barred. Mr. Murray's claim was received by our
Office on January 3, 1978, when the Claims Division received
correspondence from Mr. Murray concerning his claim. Thus, that portion
of Mr. Murray's claim for overtime compensation prior to January 3,
1972, may not be considered.
Overtime for Federal employees is authorized by title 5, United
States Code, and also by the FLSA for nonexempt employees. 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 has been officially ordered or approved in
writing or induced by an official having authority to order or approve
overtime work is compensable overtime. Joan J. Shapira, B-188023, July
1, 1977. Since Mr. Murray's overtime was not ordered, approved, or
induced by proper authority there is no entitlement to overtime
compensation under 5542. Mr. Murray would not be entitled to
compensatory time under 5 U.S.C. 5543(1976) since compensatory time may
be granted only where the employee would be entitled to overtime
compensation. Federal Personnel Manual, Chapter 550, Subchapter 1-3d, 5
C.F.R. 550.114(1978) and 56 Comp.Gen. 219 at 222, 223(1977).
The Fair Labor Standards Amendments of 1974, Public Law 93-259,
approved April 8, 1974, extended FLSA coverage to certain Federal
employees. Under 29 U.S.C. 504(f) the Civil Service Commission
(Commission) (now the Office of Personnel Management) 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 the Federal Personnel Manual (FPM) Letter
No. 551-1, May 15, 1974. There is no entitlement to compensatory time
off in lieu of overtime pay under the FLSA.
See para. A1 of Attachment 1 to Federal Personnel Manual Letter 551-6,
June 12, 1975.
The United States Civil Service Commission, St. Louis Region, on
February 23, 1978, determined that Mr. Murray, a nonexempt employee
under the FLSA, was entitled to overtime compensation in the amount of
$284.43 for overtime hours of work performed during the period July 1,
1976, to August 31, 1976.
The Commission considered that portion of Mr. Murray's claim dating
from December 29, 1975, 2 years prior to the date it accepted his
complaint, since court action to enforce FLSA payments must be brought
within 2 years of the date the cause of action accrues. Subsequent to
the Commission's determination regarding Mr. Murray's claim our Office
held, in concurrence with the views of the Commission, that the
applicable statute of limitations for the administrative consideration
of FLSA claims filed by Federal employees is the 6-year statute of
limitations under 31 U.S.C. 71a and 237(1976). 57 Comp.Gen. 441(1978).
Accordingly, Mr. Murray may submit his claim to the Office of Personnel
Management for its determination as to whether he is entitled to the
payment of any additional overtime under the FLSA for the period
retroactive to the effective date of the act's applicability to Federal
employees, May 1, 1974.
The Commission's determination was based on the finding that the
overtime was "suffered or permitted" as "management officials knew or
had reason to believe that the work was performed."
The Commission determined that it was agreed that the 91 3/4 overtime
hours which Mr. Murray worked during 1977 was representative of the
number of overtime hours performed in the prior years. Thus, he was
entitled to overtime compensation for 91 3/4 hours of work during the
period July 1, 1976, to August 31, 1976.
Since he took compensatory time off on a one-for-one basis, the
Commission offset the amount of overtime compensation he should have
received for 91 3/4 hours of work by the value of the compensatory time.
The Commission held that Mr. Murray was entitled to $284.43.
The agency questions the propriety of the award since Mr. Murray
received compensatory time.
Since Mr. Murray is not entitled to compensatory time under title 5
or under the FLSA in lieu of overtime pay, the Commission properly found
that the payment of compensatory time did not nullify his entitlement to
overtime compensation. See para. A1c of Attachment 1 to FPM Letter
551-6. Mr. Murray may receive payment under the FLSA for those hours of
overtime which the Commission determined he was suffered or permitted to
work.
The payment of compensatory time, however, was an erroneous payment.
The waiver act, 5 U.S.C. 5584(1976) provides that an erroneous payment
may be waived where collection of the overpayment would be against
equity and good conscience and not in the best interest of the United
States.
For those hours of work for which compensatory time was erroneously
granted and for which overtime compensation is found due under the FLSA,
the overtime payable under the FLSA would be greater than the value of
the compensatory time. In such a situation, collection of the value of
the compensatory time by way of offset would neither be against equity
or good conscience nor in the best interest of the United States. See
B-168323, December 22, 1969; see also 53 Comp.Gen. 264, 269(1973). The
Commission in determining Mr. Murray's overtime entitlement from July 1,
1976, to August 31, 1976, applied such an offset.
Those erroneous payments of compensatory time for hours of work which
are not compensable under the FLSA may be considered for waiver as there
is no indication of fraud, misrepresentation, or lack of good faith on
the part of Mr. Murray.
Mr. Murray's claim may be settled administratively in accordance with
the above.
B-194339, February 7, 1980, 59 Comp.Gen. 245
Subsistence - Per Diem - Military Personnel - Rates - Lodging Costs -
Double Occupancy
A military member traveling on temporary duty shared a lodging
accommodation with another person (his wife) who was not entitled to
lodging at Government expense. In the absence of regulations providing
otherwise, if he would have used the same accommodation at the single
occupancy rate had he not been accompanied, he may be reimbursed on the
basis of such single occupancy rate rather than at one-half of the
double occupancy rate. If the hotel makes no distinction in rates
between single and double occupancy, then the member may be reimbursed
on the basis of the full room cost.
Matter of: Lieutenant Commander Richard E. Tisdel, USN, February 7,
1980:
A certifying officer of the Defense Intelligence Agency requests our
decision as to whether Lieutenant Commander Richard E. Tisdel's per diem
may be computed by using the full cost of hotel accommodations he shared
with his wife while on temporary duty in France. Lieutenant Tisdel
objected to the initial processing of his travel voucher which limited
reimbursement to the single rate for hotel occupancy.
The general rules which have been applied in similar situations
involving civilian employees are as follows. The only travel expenses
the Government is obligated to pay are those of the individual employee.
Any additional expenses incurred because his family accompanies him are
personal expenses to be borne by him. B-158941, May 4, 1966. However,
if the cost of the hotel would have been the same if the employee had
been alone-- that is, in effect, if the hotel made no distinction in
rates between single and double occupancy-- then the employee is
entitled to reimbursement on the basis of the full room charge paid. In
the usual case in which the rates for single and double occupancy
differ, we have held that a traveler may be reimbursed on the basis of
the single occupancy rate rather than at one-half of the double
occupancy rate so long as he would have used the same accommodation had
he not been accompanied. B-187344, February 23, 1977. In the absence
of regulations prescribed under 37 U.S.C. 404 and 405(1976), providing a
method for determining allowable per diem for military members in such
cases, similar rules should be applied here.
From the record submitted, it is not clear which of these factual
situations applies; however, it appears that the hotel where Commander
Tisdel stayed did have a single occupancy rate which presumably would
have been charged had he been alone. If that is the case, that rate
should be used in computing his per diem. The certifying officer needs
to determine the facts and then certify the appropriate allowable
amount.
B-196075, February 6, 1980, 59 Comp.Gen. 243
Contracts - Awards - Federal Aid, Grants, etc. - By or For Grantee -
Review - Failure to Use Agency Protest Procedure Effect
Request to reinstate General Accounting Office (GAO) review of grant
related procurement complaint is denied where complainant voluntarily
did not first seek resolution of its complaint through established
Environmental Protection Agency (EPA) protest process which is part of
EPA grant administration function. Intent of GAO in conducting review
of complaints under Federal grants is not to interfere with grantor
agencies' grant administration function.
Matter of: Sanders Company Plumbing and Heating, February 6, 1980:
Sanders Company Plumbing and Heating (Sanders) complains that the
City of Kansas City, Missouri (grantee), improperly awarded a contract
substantially funded by a grant from the Environmental Protection Agency
(EPA) under title II of the Clean Water Act, 33 U.S.C. 1281 et seq.
(1976).
Sanders filed its complaint with our Office without first having
filed a protest with the grantee in accordance with the EPA protest
procedures pursuant to 40 C.F.R. 35.939(1979). We initially dismissed
the complaint without prejudice as we believed that a review of the
complaint was in process by the grantee and EPA under EPA's procedures.
However, Sanders subsequently informed us that its complaint was never
the subject of a formal administrative review by EPA and requested that
consideration of its complaint be reopened. Although a report was
initially requested from EPA regarding the merits of Sanders' complaint,
we have determined upon further review that we will not review this
complaint.
As reflected in the Public Notice published at 40 Fed.Reg. 42406
(September 12, 1975), our review of grant related contracting practices
stems from our recognition of the amount of money involved in federally
funded programs. Complaints such as Sanders' are reviewed because we
believe it is useful to "audit by exception," using specific complaints
as vehicles through which to review contracting practices and procedures
followed and compliance with requirements set out in grant instruments.
In this regard, we believe it is important to examine the method by
which the grantor reviews its grantees' procurement decisions in
discharge of the grantor's responsibilities to assure that the
requirements for competitive procurement have been met. Thomas
Construction Company, Incorporated, 55 Comp.Gen. 139, 142(1975), 75-2
CPD 101. Indirectly, of course, it is our hope that GAO review will
foster grantee compliance with grant terms, agency regulations, and
applicable statutory requirements.
In principle, we believe our objectives can be achieved most
effectively if prospective contractors seek meaningful relief available
at the grantee or grantor-agency level. The EPA protest process is an
established procedure for identifying and resolving problems concerning
grantee procurements. The agency attempts to use specific complaints as
a vehicle through which to review contracting practices and procedures
as part of EPA's primary responsibility in making and administering
grants. As stated in our Public Notice, supra, it is not our intention
in conducting our review to interfere with the functions and
responsibilities of grantor agencies in administering grants. Since
Sanders has chosen not to prosecute its complaint before the grantee
under the EPA protest procedures we now decline to consider the
complaint as such action would tend to undermine the effectiveness of
EPA's grant administration function.
We note, however, that another unsuccessful bidder on the subject
procurement who prosecuted its complaint under the EPA protest
procedures has requested our review. Consequently, although we decline
to consider Sanders' complaint, we nevertheless will be undertaking a
review of the grantee's procurement, thereby enabling us to meet our
objectives as outlined above.
Sanders' request to reopen the complaint is denied.
B-195785, February 6, 1980, 59 Comp.Gen. 240
Treasury Department - Bureau of Engraving and Printing - Prevailing Rate
Employees - Pay Increase Ceiling Applicability
Bureau of Engraving and Printing trade and craft employees whose pay
is set administratively under 5 U.S.C. 5349(a), "consistent with the
public interest," were properly limited to 5.5 percent wage increase in
fiscal year 1979. Although pay increase limitation in 1979
appropriation act did not apply to these Bureau employees, agency
officials properly exercised discretion to limit pay increases in the
public interest in accordance with the President's anti-inflation
program. See court cases cited. The fact that similar employees of
Government Printing Office received higher wage increases is not
controlling since they were not covered by appropriation act limitation
or President's determination.
Matter of: Bureau of Engraving and Printing - Limitation on Wage
Increase - Fiscal Year 1979, February 6, 1980:
The issue presented for our decision is whether certain trade and
craft employees of the Bureau of Engraving and Printing, Department of
the Treasury, are entitled to a 6.8 percent wage increase effective June
18, 1979, or whether that wage increase is subject to the 5.5 percent
pay limitation for fiscal year 1979 contained in an appropriation act
and a Presidential Memorandum. This decision is in response to requests
from the International Association of Machinist and Aerospace Workers
and the Graphic Arts International Union. The Bureau employees in
question received a 5.5 percent increase effective June 18, 1979, but
the remainder of the 6.8 percent increase was delayed until October 1,
1979.
The employees involved in the request are those trade and craft
employees of the Bureau whose positions are comparable to positions at
the Government Printing Office for which the pay is set by negotiations
under the Kiess Act, 44 U.S.C. 305. Historically these employees of the
Bureau have received the same wage increases as the comparable employees
of the Government Printing Office (GPO).
Pursuant to the Kiess Act, the GPO employees received a 6.8 percent wage
adjustment effective June 18, 1979. This increase for the specified GPO
employees was determined by a fact finder and approved by the Joint
Committee on Printing after the unions and the Public Printer had
reached a bargaining impasse. The Bureau of Engraving and Printing,
however, has refused to allow a raise of more than 5.5 percent during
fiscal year 1979. The unions argue that since the pay rates for Bureau
and GPO employees have always been identical, the Bureau is required to
grant the full increase, particularly since these Bureau employees are
excluded from the pay setting provisions of Public Law 92-392, 5 U.S.C.
5341 et seq.
The first question to be addressed is whether the pay increase of the
specified Bureau employees is subject to the pay increase ceiling of 5.5
percent for fiscal year 1979 contained in section 614(a) of the
Treasury, Postal Service, and General Government Appropriations Act,
1979, Pub. L. 95-429, 92 Stat. 1018, October 10, 1978. Section 614(a)
provides, in pertinent part, that:
No part of any 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 an amount
which exceeds the rate of salary or basic pay payable for such office or
position on September 30, 1978, by more than 5.5 percent, as a result of
any adjustments which take effect during such fiscal year under--
(3) section 5343 of title 5, United States Code, if such adjustment
is granted pursuant to a wage survey (but only with respect to
prevailing rate employees described in section 5342(a)(2)(A) of that
title).
We have held that section 614(a)(3) applies only to wage adjustments
made pursuant to wage surveys conducted under 5 U.S.C. 5343 and,
accordingly, that it is not applicable to pay adjustments made through
negotiation under section 9(b) of Public Law 92-392. See Department of
the Interior, 58 Comp.Gen. 251(1979), and Saint Lawrence Seaway,
B-193573, January 8, 1979. Similarly, we believe that section 614(a)(3)
is not applicable to the pay adjustments of these employees of the
Bureau provided under 5 U.S.C. 5349(a).
The pay of the trade and craft employees of the Bureau involved here
is determined under 5 U.S.C. 5349(a) which provides, in pertinent part,
that the pay shall be:
* * * fixed and adjusted from time to time as nearly as is consistent
with the public interest in accordance with prevailing rates and in
accordance with such provisions of this subchapter, including the
provisions of section 5344, relating to retroactive pay, and subchapter
VI of this chapter, relating to grade and pay retention, as the pay
fixing authority of such agency may determine * * * .
Section 5349 was enacted by Public Law 92-392, approved August 19,
1972, 86 Stat. 564, which provided a statutory basis for adjusting pay
rates for prevailing rate employees of the Federal Government and was
codified in subchapter IV of chapter 53, title 5, United States Code.
Trade and craft employees of the Bureau are clearly excluded from
coverage under subchapter IV except for the purposes of section 5349.
See 5 U.S.C. 5342(a)(1)(I) and (b)(2)(A). In addition, the legislative
history of Public Law 92-392 evidences a clear intent to exclude the
Bureau from coverage under this subchapter and to allow the Bureau to
follow its existing pay practices. See S. Rep. No. 92-791, 92d Cong.,
2d Sess., reprinted in (1972) U.S. Code Cong. & Ad. News 2980, 2985, and
H.R. Rep. 92-339, 92d Cong., 1st Sess. 19(1971).
Since the wage adjustments of the Bureau employees are determined
under an agency-controlled pay system pursuant to section 5349(a) and
are not based on wage surveys under section 5343, we conclude that these
wage adjustments are not subject to the pay limitation for fiscal year
1979 contained in section 614(a) of Public Law 95-429.
The second question to be addressed is whether the wage adjustment of
these Bureau employees is subject to the 5.5 percent limitation set
forth in the President's Anti-inflation Program. On January 4, 1979,
the President issued a memorandum to the Heads of Executive Departments
and Agencies on Federal Pay and the Anti-Inflation Program. He stated
that pay increases for most Federal employees-- those in the General
Schedule and related pay systems, members of the uniformed services, and
most of those in the Federal wage system-- had been limited by the
Administration and the Congress to 5.5 percent for fiscal year 1979.
However, since many nonappropriated fund employees and other groups of
workers were not covered by the same limitation, the President stated,
in pertinent part, that:
In order to ensure that proposed pay increases for other pay systems
do not exceed the maximums for Federal pay that the Congress and I have
set, the policy of this Administration is:
In the public interest to control inflation, each officer or employee
in the executive branch who has administrative authority, to the extent
permissible under law, treaty, or international agreement, in such a way
as to ensure that no rate of pay for any category of officers or
employees is increased more than 5.5 percent during fiscal year 1979. *
* *
Pursuant to the President's memorandum, the Treasury Department and
the Bureau of Engraving and Printing issued memorandums dated January 17
and February 2, 1979, respectively, stating that the President's policy
would cover Bureau employees paid under the Treasury approved system
(described above). The President's 5.5 percent ceiling policy was also
cited in the memorandum from the Under Secretary of the Treasury dated
October 9, 1979, denying the request from the Director of the Bureau for
higher wage increases for these Bureau employees retroactive to June 18,
1979.
As shown above, the pay of the employees in question is set
administratively in accordance with the prevailing rates and "consistent
with the public interest."
See 5 U.S.C. 5349(a). The President and Treasury officials have
determined it is in the public interest to limit pay increases to 5.5
percent and, as recent court decisions have held, this is a reasonable
exercise of agency discretion. See National Federation of Federal
Employees v. Brown, Civil Action No. 78-2252 (D.D.C. Nov. 20, 1979), and
American Federation of Government Employees v. Brown, Civil Action No.
78-2301 (D.D.C. Nov. 20, 1979). In these cases, the unions had argued
that nonappropriated fund activity employees, who were not covered by
the pay limitation contained in section 614(a) of Pub. L. 95-429, were
entitled to a wage increase in excess of 5.5 percent. However, the
District Court found that the wage increases were subject to the
Presidential memorandum and were therefore properly limited to 5.5
percent for fiscal year 1979.
As noted above, despite the tandem relationship between certain
employees of GPO and the Bureau, the GPO employees received a 6.8
percent wage increase effective June 18, 1979, while a similar increase
was delayed for comparable Bureau employees until October 1, 1979. As
was pointed out by the fact finder who recommended the 6.8 percent
increase for GPO employees, the wage adjustment for GPO employees is not
subject to the 5.5 percent ceiling contained in section 614(a) of Pub.
L. No. 95-429 since GPO wage adjustments are determined through
negotiation under 44 U.S.C. 305 and 5 U.S.C. 5349. In addition, since
GPO is not an executive department or agency, it is not subject to the
President's anti-inflation memorandum of January 4, 1979.
We find no basis upon which to overturn the "public interest"
determination made by the Department of the Treasury. Accordingly, we
hold that the specified employees of the Bureau of Engraving and
Printing are not entitled to a wage adjustment in excess of 5.5 percent
during fiscal year 1979.
B-194521, February 4, 1980, 59 Comp.Gen. 237
Compensation - Part-Time Employees - Overtime, Premium Pay, etc. -
Compensatory Time - Entitlement - Work Over 40 Hours
Except in limited circumstances where prohibited for nonexempt
employees under the FLSA, part-time employees may be granted
compensatory time off in lieu of overtime compensation for irregular or
occasional overtime work performed in excess of 40 hours in an
administrative workweek and 8 hours in a day. 5 U.S.C. 5542 and 5543.
A part-time employee may not be granted compensatory time off simply
because he works hours in excess of his regular part-time tour of duty.
Employment - Ceilings - Part-Time, etc. Employees - Computation Basis
Part-time employees, irrespective of nature of employment, currently
may be counted against full-time permanent and total employment ceilings
of agency. Effective October 1, 1980, under 5 U.S.C. 3404, part-time
employees will be counted fractionally based upon number of hours
worked.
Matter of: Evan J. Kemp, Jr. - Compensatory Time Off and Personnel
Ceilings for Part-Time Employees, February 4, 1980:
This action is in response to a request by Mr. James H. Schropp,
Assistant General Counsel, Office of the General Counsel, on behalf of
the Securities and Exchange Commission (SEC), for a written opinion by
the General Accounting Office in connection with a stipulation of
settlement entered into by the SEC with its employee, Mr. Evan J. Kemp,
Jr., in Civil Action No. 77-2014 in the United States District Court for
the District of Columbia. The settlement provides for the dismissal of
Mr. Kemp's suit against the Commission alleging discrimination on
account of sex and handicapping condition.
As part of the settlement agreement, the SEC agreed to request
written opinions from appropriate agencies of the Federal Government
regarding Government policy towards part-time workers. In particular,
the Commission agreed to request this Office:
to opine that agencies have the authority to provide compensatory
time to employees who normally are officially assigned to work fewer
than 40 hours per week but who are requested, on occasion, to work
beyond their normal part-time tour of duty.
In addition, the Commission agreed, "unless prohibited by law," to
issue a memorandum to all of its Division and Office Heads,
Administrative Officers and Aides, and all supervisory personnel,
indicating that:
* * * part-time employees will be counted fractionally (i.e., the
number of hours worked per week divided by 40 hours per week). For
example, if a part-time employee works 20 hours per week, he or she
would be counted as 1/2 of an employee, if 30 hours are worked, he or
she would be considered as 3/4 of an employee.
Mr. Schropp, on behalf of the SEC, also requests that this Office
provide a written opinion as to the legality and propriety of counting
part-time employees fractionally against an assigned manpower ceiling.
Section 5543, title 5, United States Code (1976), provides for
granting an employee compensatory time off from his scheduled tour of
duty in lieu of payment of overtime compensation for irregular or
occasional overtime work. Under this section the head of an agency may,
on request of an employee, grant compensatory time off in lieu of
overtime. However, as to employees whose rates of basic pay are in
excess of the maximum rate of basic pay for grade GS-10, section
5543(a)(2) gives the head of an agency authority to require that he be
granted compensatory time off from his scheduled tour of duty instead of
being paid overtime. The regulations implementing this statutory
provision are found in 5 C.F.R. 550.114(1979).
Although the cited regulatory and statutory provisions do not
explicitly state that compensatory time off is another form of premium
compensation for irregular or occasional overtime work, it is well
established that compensatory time takes the place of monetary premium
pay for irregular or occasional overtime. See 37 Com.Gen. 362(1957) and
Matter of Jacqueline Bailey, B-164689, March 26, 1976. Since
compensatory time off may be granted only in lieu of overtime
compensation for irregular or occasional overtime work, the question of
whether this benefit is available to employees for work beyond their
normal part-time tours of duty depends upon their entitlement to
overtime compensation for those hours of work.
The provisions of title 5 of the United States Code regarding payment
of overtime compensation are codified in 5 U.S.C. 5542(1976). Section
5542 was amended by Public Law 92-194, December 15, 1971, 85 Stat. 648,
to provide for payment of overtime compensation to employees with
"full-time, part-time, and intermittent tours of duty" for 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. Prior to
this amendment decisions of this Office held that part-time employees,
while entitled to overtime compensation for hours worked in excess of 8
per day, were not entitled to payment of overtime compensation for hours
worked in excess of 40 per week. 46 Comp.Gen. 337(1966). However,
since the enactment of Public Law 92-194, part-time as well as
intermittent employees are entitled to overtime compensation for work
they perform in excess of 40 hours in an administrative workweek or in
excess of 8 hours in a day. Therefore, part-time and intermittent
employees may be granted compensatory time off in lieu of overtime
compensation only for irregular or occasional overtime work performed in
excess of 40 hours in an administrative workweek or 8 hours in a day. A
part-time employee may not be granted compensatory time off simply
because he works hours in excess of his regular part-time tour of duty.
While a "nonexempt" employee may be granted compensatory time off in
limited circumstances based on his entitlement to overtime compensation
under title 5 of the United States Code, no provision is made under the
Fair Labor Standards Act (FLSA), 29 U.S.C. 201 et seq. (1976), for the
allowance of compensatory time off in lieu of FLSA overtime pay. With
regard to the granting of compensatory time off to nonexempt employees,
see Federal Personnel Manual Letter 551-6, June 12, 1975.
With respect to the legality and propriety of counting part-time
employees fractionally against an assigned manpower ceiling, we would
point out initially that two kinds of employment ceilings are
established for each Federal agency, namely, (1) full-time permanent
employment and (2) total employment. By subtracting the full-time
permanent employment ceiling from the total employment ceiling, the
difference, referred to as a "derived ceiling," becomes, in effect, a
limitation on the number of part-time, temporary, and intermittent
employees. All employment is subject either to the actual full-time
employment ceiling or to the derived ceiling. As to employment
ceilings, a part-time employee, regardless of the nature of his or her
employment, is one who works less than 40 hours a week. The employment
may be regular and recurring (permanent); for a temporary period; or
intermittent in that the person works only when called in. However,
irrespective of the nature of the employment, it is subject to the
derived ceiling.
Part-time employees can be hired against vacancies in the derived
ceiling as well as against vacancies in the full-time permanent ceiling.
In the event the derived ceiling is not high enough to meet an agency's
legitimate needs for part-time employment, an attempt should be made to
accommodate the part-time employee within the full-time permanent
ceiling. If this accommodation is not possible, the agency can make
application to the Office of Management and Budget for the conversion of
spaces from the full-time permanent ceiling to the derived ceiling to
permit the splitting or fractionalizing of full-time jobs. In other
words, under present law and regulations, application of the personnel
ceiling does not necessarily require an agency to count a part-time
employee as the equivalent of a full-time employee or reduce the total
man-hours of employment available to the agency. See Federal Personnel
Manual, chapter 312, appendix B, 1969 edition, as amended.
The Federal Employees Part-Time Career Employment Act of 1978, Public
Law 95-437, October 10, 1978, Stat. 1056, codified at 5 U.S.C.
3401-3408, narrows the definition of part-time career employment from a
scheduled tour of duty of less than 40 hours per week to a scheduled
tour of duty of between 16 and 32 hours per week.
Interim regulations implementing this Act were published at 5 C.F.R.
340.101-340.204(1979). Final regulations effective October 5, 1979,
were published in 44 Fed.Reg. 57379. In regard to personnel ceilings, 5
U.S.C. 3404 provides that, effective October 1, 1980, in administering
the personnel ceiling applicable to an agency, a part-time career
employee will be counted as a fraction which is determined by dividing
40 hours into the average number of hours of the employee's regularly
scheduled workweek. Thus, effective October 1, 1980, there would appear
to be no legal impediment to issuing the memorandum contemplated by the
settlement agreement.
The questions posed by the SEC under the stipulation of settlement
are answered accordingly.
B-195288, January 29, 1980, 59 Comp.Gen. 235
Quarters - Government Furnished - Rent Payments - Salary Deduction v.
Direct Payment - Special Account Reimbursement Propriety
Forest Service Certifying Officer may use amounts remaining in
appropriations as a result of payroll deduction for use of Government
quarters, for maintenance and operation expenses of such quarters. 5
U.S.C. 5911(c) allows such deductions to remain in applicable
appropriation and Forest Service's appropriations from which salaries
are paid are available for such expenses. Modified in part by 60
Comp.Gen.-- (B-199339, August 25, 1981).
Matter of: Payments for Quarters Maintenance and Operation Expenses
from Salary Deductions for Quarters, January 29, 1980:
The Unit Certifying Officer, Black Hills National Forest, Forest
Service, Department of Agriculture (Department), has requested an
advance decision on the propriety of using rent collected from Forest
Service employees for the use of Government quarters to pay for the
maintenance and operation expenses of such quarters. He also questions
the propriety of the Office of Management and Budget (OMB) determination
that salary deductions be treated as reimbursements rather than refunds.
The rental charges are collected from employees through salary
deductions pursuant to 5 U.S.C. 5911(c). The certifying officer
states--
The Office of Management and Budget has determined that employee
salary deductions for quarters must be treated as reimbursements rather
than appropriation refunds.
My instructions are to charge quarters maintenance and operational
expenses, up to the amount of salary deductions to the reimbursement
accounts.
The law authorizing the furnishing of quarters to employees (5 U.S.C.
5911) does not provide for applying the deduction for quarters to
maintenance of buildings.
Does the OMB determination supersede the law?
For reasons set forth below, we conclude that payroll deductions for
the use of Government quarters may be used to pay for quarters
maintenance and operation expenses since the Forest Service
appropriations out of which salaries are paid are available for such
purposes.
The statutory provision in question, 5 U.S.C. 5911, authorizes heads
of agencies to provide employees with quarters and facilities "when
conditions of employment or of availability of quarters warrant the
action." Under 5 U.S.C. 5911(c), rates for quarters and charges for
facilities--
. . . shall be paid by, or deducted from the pay of, the employee or
member of a uniformed service, or otherwise charged against him in
accordance with law. The amounts of payroll deductions for the rates
and charges shall remain in the applicable appropriation or fund. When
payment of the rates and charges is made by other than payroll
deductions, the amounts of payment shall be credited to the Government
as provided by law.
Under the above statutory provision, the amount of the rental charges
may be collected from employees either through payroll deductions or by
direct payment. If the amount is collected through a payroll deduction,
it remains in the appropriation or fund out of which salaries are paid.
If payment "is made by any other method, such as payment in cash, the
amounts of the payment shall be credited to the Government as otherwise
provided by law. In most cases such cash payments would go to the
general fund of the Treasury, or to a revolving fund or appropriation
from which the expenses of the operation involved are paid." H. Rep. No.
88-1459, 88 Cong.Sess., 12(1964).
The statute, 5 U.S.C. 5911(c), supra, specifically states that
payroll deductions "shall remain in the applicable appropriation or
fund." We understand that the Forest Service appropriation out of which
salaries are paid is available for the payment of operation and
maintenance expenses of Government quarters. Therefore, 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.
OMB's Assistant Director for Budget Review advised in a letter to us
that deductions from employees for quarters and subsistence should be
treated as reimbursements to be credited to the appropriation or fund
account that provides the service when there is legal authority-- such
as that contained in 5 U.S.C. 5911(c)-- to do so. In the absence of
specific statutory authority to return them to agency appropriations,
employee payments (as distinguished from salary deductions) for quarters
and subsistence must be deposited to miscellaneous receipts. We agree
with OMB's position.
B-195272, January 29, 1980, 59 Comp.Gen. 232
Claims - Settlement by General Accounting Office - "Contract Disputes
Act of 1978" Effect - Express v. Informal Contractual Commitments
Executive agencies should continue to refer demands for payment
arising under informal commitments to General Accounting Office for
settlement. Contract Disputes Act of 1978 does not conflict with
statutory authority of GAO to pass upon propriety of expenditures of
public funds.
Matter of: Contract Disputes Act of 1978, January 29, 1980:
The United States Army Finance and Accounting Center asks us to
reconsider the action of the Payment Branch of our Claims Division which
returned a voucher from that agency without settlement. The Finance
Center had asked us to concur that an invoice submitted by the Georgia
Lions Eye Bank to the Department of the Army should be paid and to
certify the Army's voucher for payment.
The Payment Branch returned the voucher to the Finance Center,
questioning whether the matter should be settled by our Office in light
of the Contract Disputes Act of 1978, P.L. 95-563, November 1, 1978, 41
U.S.Code 601 note. We are instructing the Payment Branch to determine
whether the voucher should be certified for payment.
The facts are these. An Army medical officer ordered a cornea from
the Georgia Lions Eye Bank for transplant to an eligible patient. The
doctor thought there would be no charge for the cornea. He believed
that eye donations from non-profit organizations were free of charge and
the procurement procedures were not used. In fact, the Georgia Lions
Eye Bank's practice is to charge a $200 processing fee. The Army,
believing the invoice should be paid, states that $200 is a reasonable
fee, that the corneal lens was received and used, and that if the fee
had been known in advance a purchase order would have been issued.
The Contract Disputes Act of 1978 provides that all claims by a
contractor against the Government relating to a contract shall be
submitted to the contracting officer for a decision. (Section 6(a) of
the Act, 41 U.S.C. 605.) Section 2 of the Act, 41 U.S.C. 601) defines
the contracts to which the Act applies as including "any express or
implied contract * * * entered into by an Executive agency for (the
procurement of property, services or construction work on real
property)."
The invoice of the Georgia Lions Eye Bank was forwarded here because
of the absence of an express contract underlying the request for
payment. Our Payment Branch advised the agency that claims arising from
an express or implied contract entered into by an Executive agency
should be settled by the agency under the provisions of the Contract
Disputes Act of 1978.
The threshold question, however, is whether the Georgia Lions Eye
Bank has submitted a claim which must be decided by the contracting
officer under the disputes provisions of the Act. We hold it has not,
and that this matter should be referred to our Office for settlement
under 31 U.S.C. 71, 74(1976).
The applicability of the Contract Disputes Act begins with the
contractor's filing of a "claim." The Act does not in any way define the
term "claim." While in its broadest sense, "claim" could be read to
include such routine matters as progress payment requests, price
proposals on formal changes and even invoices, the context of the Act
itself clearly indicates that "claim" as used in the Act is intended to
refer to situations where the entitlement to recovery or the amount of
recovery is disputed by the Government.
The Act states, as noted above, that: "All claims by a contractor
against the government shall be in writing and shall be submitted to the
contracting officer for a decision."
In practice, virtually all matters (whether or not denominated as
claims) are submitted to the contracting agency either for payment, as
in the case of simple progress payments, or for negotiation, as in the
case of complex changes. Customarily, these matters are not in the
first instance submitted to the contracting officer for a final
decision, thereby initiating the disputes-resolving procedures of the
Act. It is only after the settlement process fails that the contractor
seeks a decision by the contracting officer.
This has been recognized by the Office of Procurement Policy (OFPP)
which is empowered to issue guidelines under the Act. (Section 8(2)(h)
of the Act.) OFPP has proposed the following definition:
"Claim" means
(1) a written request submitted to the contracting officer
(2) for payment of money, adjustment of contract terms, or other
relief;
(3) which is in dispute or remains unresolved after a reasonable time
for its review and disposition by the government; and
(4) for which a contracting officer's final decision is demanded. 44
Fed.Reg. 12524, March 7, 1979.
The agency does not disagree with the Georgia Lions Eye Bank that the
invoice should be paid. In fact, the Army states it will pay the
invoice if authorized by our Office. Since there is no dispute between
the parties, either with regard to entitlement to payment or amount of
payment, the disputes-resolving procedures of the Act should not be
involved. That is to say, the invoice submitted is not a "claim" under
the Act for which a decision by the contracting officer is required.
Rather, the invoice here is simply a request for payment. Because there
is no express contract underlying this request, the agency has asked us
to certify its voucher.
Where proper procurement procedures are not used, such as this case,
certain steps must be taken before payments properly may be made. This
is because informal commitments, unlike express contracts which are
subject to various procedural safeguards to insure compliance with
appropriation and procurement requirements imposed by statute or
regulation, by their very nature are not subjected to the same
safeguards as express contracts. Thus, before an implied procurement
contract to which the United States is a party may be legally
recognized, questions must be resolved which concern not only the
authority of Government officials to enter into or ratify a contractual
arrangement, but also whether the purported contract is prohibited by a
statute or not within the agency's statutory authorization. Also, there
may be questions concerning the availability of funds to pay an invoice
resulting from an informal commitment, even if it is clear that there is
no legal impediment to recognizing an implied contractual relationship.
These are questions that we have traditionally decided under 31
U.S.C. 71, 74. We see no conflict between the disputes-resolving
procedures of the Act and our responsibility to settle and adjust
demands against the Government and to render binding decisions involving
the payment of appropriated funds.
In response to a situation such as this, a contracting agency should
refer the question regarding propriety of payment to this Office for
decision.
To hold otherwise would be inconsistent with the statutory authority
of our Office to pass upon the propriety of expenditures of public funds
and would result, in effect, in a repeal by implication of 31 U.S.C. 71,
74, a construction not favored by the law. 1A Sutherland, Statutes and
Statutory Construction, 23.10(4th Ed. C. Sands 1973). Moreover, our
interpretation provides for a harmonious reading of different statutes,
a result which is favored by the law. 2A Sutherland 51.02.
Accordingly, we are instructing the Payment Branch to consider the
matter in accordance with this decision. The contracting agency is
advised that requests for payment, based on informal commitments, should
continue to be referred to our Office in accordance with 4 GAO 5.1.
B-92288, January 25, 1980, 59 Comp.Gen. 228
Appropriations - Availability - Indigent Intervenors
Nuclear Regulatory Commission may use appropriated funds to provide
financial assistance to intervenors in its proceedings if it determines
that participation of party can reasonably be expected to contribute
substantially to a full and fair determination of the issues before it,
and if intervenor is indigent or otherwise unable to finance its own
participation. Statutory Construction - Legislative Intent -
Appropriation Act v. Committee Report
Nuclear Regulatory Commission may use fiscal year 1980 funds to
provide financial assistance to intervenors in its proceedings despite
appropriation committee statement that no funds are being provided for
this purpose. Limitations on spending contained in committee reports
are not binding on agency unless expressly stated in appropriation act.
Matter of: Financial Assistance to Intervenors in Proceedings of
Nuclear Regulatory Commission, January 25, 1980:
The General Counsel of the Nuclear Regulatory Commission has
requested our views on the Commission's authority to provide financial
assistance to participants in its proceedings. Specifically, the
General Counsel asks first whether the Commission may use appropriated
funds to assist intervenors in certain of its proceedings when the
Congress has neither expressly approved nor prohibited such assistance
by law. Second, he asks whether there are circumstances under which the
Commission may use fiscal year 1980 funds to assist intervenors although
the Committee on Appropriations of the House of Representatives has
indicated in its report that the appropriation act for 1980 does not
contain funds for intervenors.
For the reasons indicated below it is our opinion that the Nuclear
Regulatory Commission may legally expend appropriated funds to assist
intervenors in its proceedings if it wishes to do so and that it may
legally use fiscal year 1980 funds for this purpose despite the language
in the appropriations committee report.
In response to an earlier request of the Commission, we issued our
decision, Costs of intervention-Nuclear Regulatory Commission, B-92288,
February 19, 1976. We determined that the Commission could properly use
its appropriated funds to assist intervenors if it determined that it
could not make licensing determinations "unless it extends financial
assistance to certain interested parties who require it, and whose
participation is essential to dispose of the matters before it * * * ."
In reaching this conclusion we looked at section 189 of the Atomic
Energy Act of 1954, as amended, 42 U.S.C. 2239, which authorizes the
Commission to conduct hearings and to admit as a party to its
proceedings anyone who may be affected by its proceedings. We also
considered that the Commission generally receives a lump sum
appropriation for necessary expenses in carrying out the purposes of the
Energy Reorganization Act of 1974. We then stated:
While 31 U.S.C. 628(1970) prohibits agencies from using appropriated
funds except for the purposes for which the appropriation was made, we
have long held that where an appropriation is made for a particular
object, purpose, or program, it is available for expenses which are
reasonably necessary and proper or incidental to the execution of the
object, purpose or program for which the appropriation was made, except
as to expenditures in contravention of law or for some purpose for which
other appropriations are made specifically available. 6 Comp.Gen.
619(1927); 17 id., 636(1938); 29 id. 419(1950); 44 id. 312(1964); 50
id. 534(1971); 53 id. 351(1973).
We finally decided that only the Commission was able to determine
whether it was necessary to fund intervenors in order to carry out its
statutory responsibilities, and if it so determined, we would not object
to its use of appropriated funds for this purpose.
In a subsequent decision, Costs of intervention-Food and Drug
Administration, 56 Comp.Gen. 111(1976), we modified our Nuclear
Regulatory Commission decision. We stated:
While our decision to NRC did refer to participation being
"essential," we did not intend to imply that participation must be
absolutely indispensable. We would agree with Consumers Union that it
would be sufficient if an agency determines that a particular
expenditure for participation "can reasonably be expected to contribute
substantially to a full and fair determination of" the issue before it,
even though the expenditure may not be "essential" in the sense that the
issues cannot be decided at all without such participation. (Id. at
113.)
Subsequent to our most recent decision on this issue, the United
States Court of Appeals for the Second Circuit issued a decision which
held that it was not error for the Federal Power Commission to determine
that it lacked the statutory authority to reimburse intervenors for
their expenses. Greene County Planning Board v. FPC, 559 F.2d
1227(1977) (Rehearing en banc), cert. denied, 434 U.S. 1086(1978). In
so ruling, the court indicated its disagreement with our determinations
described above.
Although the Greene County case cast some doubt on the validity of
our previous decisions, it is our opinion that the court decision
applied only to the former Federal Power Commission (FPC), and does not
apply broadly to other Federal agencies or even to the agencies which
succeeded to the FPC's responsibilities. In Greene County, the Second
Circuit relied on three previous court decisions in reaching its result.
These were Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S.
240(1975); Turner v. FCC, 514 F.2d 1354(D.C.Cir. 1975); and Greene
County Planning Board v. FPC, 455 F.2d 412(2d Cir.), cert. denied, 409
U.S. 849(1972). However, none of these previous decisions dealt
directly with the authority of a Federal agency to expend its own funds
voluntarily to reimburse the expenses of intervenors before it. In
Alyeska and Turner, supra, the issue was whether a court or
administrative agency could order one party to its proceedings to pay
the expenses of another. In each case the court ruled that this could
not be done without specific statutory authority. In the first Greene
County case the question was whether a court could order either an
opposing party or the agency to pay the intervenor's expenses. The
court ruled that, in the absence of a statutory requirement that such
expenses be paid, it could not order that they be paid.
As we stated in distinguishing these three cases in our Nuclear
Regulatory Commission decision, supra:
In the matter before us, we are not considering whether NRC has the
authority to determine whether one participant in its proceedings should
pay the expenses of the other, nor are we concerned with whether the
persons to whom financial assistance is extended prevail. There is also
no question of compelling NRC to pay the expenses of any of the parties.
We hold only that NRC has the statutory authority to facilitate public
participation in its proceedings by using its own funds to reimburse
intervenors when (1) it believes that such participation is required by
statute or necessary to represent adequately opposing points of view on
a matter, and (2) when it finds that the intervenor is indigent or
otherwise unable to bear the financial costs of participation in the
proceedings.
We therefore do not believe that the second Greene County decision
applies to the Nuclear Regulatory Commission or to any other Federal
agency other than the former Federal Power Commission.
The United States District Court for the District of Columbia, in
Chamber of Commerce v. United States Department of Agriculture, 459
F.Supp. 216(1978), likewise determined that Greene County did not extend
generally to all Federal agencies. The Office of Legal Counsel of the
Department of Justice has taken a similar position on the effect of
Greene County.
Therefore, in response to the first question raised by the
Commission's General Counsel, we conclude that based on the authority
given it by its organic legislation, the Commission may use appropriated
funds to assist an intervenor in its proceedings if it determines that
the participation of that party can reasonably be expected to contribute
substantially to a full and fair determination of the issue before it,
and if the party is indigent or otherwise unable to finance its own
participation.
Concerning the General Counsel's second question, the Energy and
Water Development Appropriation Act, 1980, Pub. L. No. 96-69, 93 Stat.
437, 449, provides with respect to the Commission:
For necessary expenses of the Commission in carrying out the purposes
of the Energy Reorganization Act of 1974, as amended * * * $363,340,000,
to remain available until expended * * * .
This appropriation is a lump-sum amount for necessary expenses of the
Commission and contains no prohibition on the use of these funds to
assist intervenors in the Commission's proceedings.
However, in reporting the bill which later became the Energy and
Water Development Appropriation Act, the House Committee on
Appropriations stated:
* * * The Budget request and the Committee Recommendation do not
include funds for intervenors. (H.R. Rept. No. 96-243, 96th Cong., 1st
Sess. 139(1979)).
Although there was no similar language in the Senate Appropriation
Committee Report, the report of the Conference Committee incorporated by
reference the House Committee language. See H. R. Rept. No. 96-388,
96th Cong., 1 Sess. 1(1978). We might note that there is no statutory
requirement that the Commission specifically request funds to assist
intervenors.
This Office has frequently expressed the view that expressions of
intent as to spending, contained either in an agency's budget submission
or in appropriation committee reports, are not legally binding upon the
agency unless they are specified in the text of the appropriation act
itself or in some other legislation. E.g. B-114833, July 21, 1978;
Newport News Ship Building and Dry Dock Company, 55 Comp.Gen. 812,
820(1976); LTV Aerospace Corporation, 55 Comp.Gen. 307, 319(1975). Our
position is based on the recognition that a certain amount of
flexibility is necessary in the financial operations of Federal
departments and agencies, and that if the Congress desires to restrict
that flexibility with respect to a specific item, it may do so by
inserting a limitation in the text of the appropriation act or in some
other enactment. As we stated in LTV Aerospace Corp., supra:
* * * it is our view that when Congress merely appropriates lump-sum
amounts without statutorily restricting what can be done with those
funds, a clear inference arises that it does not intend to impose
legally binding restrictions, and indicia in committee reports and other
legislative history as to how the funds should or are expected to be
spent do not establish any legal requirements on Federal agencies. (55
Comp.Gen.at 319.)
In Soil Conservation Service's Standard Level User Charge Payments.
B-177610, September 3, 1976, the reports of the appropriation committees
in both Houses indicated that they desired to reduce the appropriation
requested by the agency for a specific line item purpose. The
appropriation act, however, contained a lump-sum amount without any
limitations.
We determined that the reduction indicated in the reports was not a
legal limit on the agency's spending because it was not expressly stated
in the appropriation act.
Similarly, in the present case, although the appropriation committee
indicated that it was not including any funds for intervenors, the
appropriation act itself contains no such provision. In other instances
in which the Congress desired to prohibit funding of intervenors, it has
specifically indicated this intent in the appropriation act itself. See
Department of the Interior and Related Agencies Appropriation Act, 1980,
P.L. 96-126, 93 Stat. 954, 972 (Appropriation for Economic Regulatory
Administration, Department of Energy). Therefore, in the absence of an
express statutory prohibition on spending appropriated funds for
assisting intervenors, the Commission may legally use fiscal year 1980
funds for that purpose if it makes the determinations we have indicated
above.
We wish to make it clear that we are not directing or in any way
suggesting that the Commission should fund intervenors solely because it
is possible to make these determinations. As we said in LTV Aerospace
Corp., supra:
* * * This does not mean agencies are free to ignore clearly
expressed legislative history applicable to the use of appropriated
funds. They ignore such expressions of intent at the peril of strained
relations with the Congress.
The Commission may be well advised to postpone further implementation
of the pilot intervenor's program mentioned in its submission in the
light of the 1980 House Appropriations Committee report. This decision
addresses only the question of whether its fiscal year 1980 funds are
legally available to fund intervenors should it choose to do so. We
hold that if the Commission does decide to initiate the pilot
intervenor's program, in accordance with our criteria, we would not be
required to object.
B-192470, January 24, 1980, 59 Comp.Gen. 225
Pay - Retired - Waiver For Civilian Retirement Benefits - Survivor
Benefit Plan Coverage - Effect
A retired service member who elected survivor benefit plan (SBP)
coverage and who later retires as a Civil Service employee may waive
receipt of military retired pay in order to combine military with
civilian service for purposes of computing his Civil Service annuity.
It was held in B-192470, January 3, 1979, that an individual who waives
military retired pay in those circumstances and accepts survivor
coverage under Civil Service Retirement is not covered by SBP and upon
his death no payment under SBP either to his widow or his surviving
children may be allowed. This is true even where the individual had
"child only" coverage under the SBP. On reconsideration that decision
is sustained.
Matter of: Chief Master Sergeant Allen J. Gallagher, USAF Retired
(Deceased), January 24, 1980:
This action is in response to a request from the Director of
Accounting and Finance, Headquarters United States Air Force, for
reconsideration of our decision B-192470, January 3, 1979. The case
involved the question of entitlement of Peggy A. Gallagher, a minor, to
receive a Survivor Benefit Plan (SBP) annuity as the surviving dependent
child of the late Chief Master Sergeant Allen J. Gallagher, USAF.
The request for reconsideration has been assigned Submission No.
DO-AF-1300 by the Department of Defense Military Pay and Allowance
Committee.
The reported facts are that the member retired from the United States
Air Force effective August 1, 1965, and elected dependent children
coverage under the Retired Serviceman's Family Protection Plan (RSFPP).
Thereafter, he was employed by the Federal Government in a civilian
capacity. On May 21, 1973, he elected supplemental coverage under the
SBP for his children only. On January 21, 1978, the member, preparatory
to retirement from the Civil Service, waived receipt of military retired
pay for the purpose of using his years of military service to increase
his Civil Service annuity. Additionally, he elected a survivor annuity
under the Civil Service retirement system. Sergeant Gallagher died
April 23, 1978. For survivor annuity purposes, he was survived by his
spouse, Mary, and one dependent child, Peggy, born April 23, 1961.
Mrs. Gallagher indicates that a Civil Service survivor annuity
account was established in her favor effective April 24, 1978, but
payments were reduced because she was entitled to receive Social
Security benefits on behalf of Peggy, who at that time was under age 18.
Effective the same date, Peggy became entitled to and apparently did
receive an annuity under the RSFPP, which annuity continued through
April 1979, the month of her 18th birthday. No SBP annuity payments
were made to Peggy.
The question which was the subject of decision B-192470, January 3,
1979, was whether the language of 10 U.S.C. 1450(d) and 1452(e) was
intended to bar payment of an SBP annuity only to a spouse or whether it
applies equally to dependent children.
We concluded in that decision that 10 U.S.C. 1450(d) and 1452(e) bar
payment of an SBP annuity to both spouse and dependent children in cases
such as Sergeant Gallagher's. That is, a retired military member who
has elected SBP coverage, but retires from the Civil Service and waives
military retired pay for the purpose of counting military time for Civil
Service retirement purposes, has survivor benefits under Civil Service
Retirement (unless that protection has been declined) and upon his death
there is no spouse or child protection under SBP.
The arguments presented by Mrs. Gallagher are that Sergeant Gallagher
elected child only coverage under the SBP; that the language of 10
U.S.C. 1450(d) and 1452(e) refers only to declination of spouse coverage
under the Civil Service survivor system; and that amendments made to
the SBP by Public Law 94-496, provide for child coverage even if there
is no spouse coverage. Further, she indicates we did not consider the
importance of the amendment made by Public Law 94-496 in our decision.
For these reasons she argues that Peggy is not barred from receiving an
SBP annuity although Sergeant Gallagher provided coverage under the
Civil Service survivor system based on both his civilian and military
service.
Section 1 of Public Law 94-496 amended 10 U.S.C. 1448(a), 1450(a),
and 1452(b) to permit a member to bypass his spouse for SBP annuity
purposes and elect children only coverage. On page 6 of H.R. Rept.
94-458, Part 1, 94th Cong., 2d Sess., which accompanied H.R. 14773, and
which became Public Law 94-496, the following statement regarding that
amendment was made:
Under the RSFPP which the Survivor Benefit Plan replaced a military
member could elect to provide an annuity for "children only" even though
there was an eligible spouse. The Department of Defense directive which
implemented the SBP provided procedures for such elections under the
plan. The Comptroller General ruled that the language of Public Law
92-425 did not clearly authorize such elections but advised the
Department of Defense that no objection would be interposed to continue
such election pending submission of appropriate clarifying legislation
to the Congress. H.R. 14773 contains appropriate language clearly
authorizing such elections.
Thus, it is to be observed that the law was amended to clarify an
ambiguity in the basic provisions authorizing elections of an SBP
annuity. Notwithstanding that fact, we do not view the amendment as
altering the scope and thrust of either 10 U.S.C. 1450(d) or 1452(e).
Subsection 1450(d) of title 10, United States Code, provides:
(d) If, upon the death of a person to whom section 1448 of this title
applies, that person had in effect a waiver of his retired or retainer
pay for the purposes of subchapter III of chapter 83 of title 5, an
annuity under this section shall not be payable unless, in accordance
with section 8339(j) of title 5, he notified the Civil Service
Commission that he did not desire any spouse surviving him to receive an
annuity under section 8341(b) of that title.
And subsection 1452(e) provides:
(e) When a person who has elected to participate in the Plan waives
his retired or retainer pay for the purposes of subchapter III of
chapter 83 of title 5, he shall not be required to make the deposit
otherwise required by subsection (d) as long as that waiver is in effect
unless * * * he has notified the Civil Service Commission that he does
not desire any spouse surviving him to receive an annuity under section
8341(b) of title 5.
The language at issue in those subsections is notification to the
Civil Service Commission that the member does not desire "any spouse
surviving him to receive an annuity under section 8341(b) of title 5."
Under the Civil Service survivor annuity plan, children coverage is
not optional. Unlike the SBP, Civil Service survivor annuity coverage
is an all or nothing proposition. The employee may not elect coverage
for dependent children and exclude his spouse nor may he have spouse
coverage and exclude dependent children. If the employee accepts Civil
Service survivor coverage, both his spouse, if he has one, and dependent
children, if any, are automatically included in the coverage. The
amount deducted from his Civil Service annuity as a cost charge for
survivor coverage is for the combined coverage. Therefore, since the
retiring employee cannot elect spouse coverage and reject children
coverage, to permit continued children coverage under the SBP after the
employee waives receipt of military retired pay for Civil Service
purposes would be tantamount to providing children with a double
benefit.
The argument has been also raised that within the SBP an annuity
payment to children is not diminished by payments of Dependency and
Indemnity Compensation (DIC). Therefore, such other entitlement as they
may have should not diminish that entitlement either. The point of the
matter is that the provisions of law governing SBP annuities recognize
and take into account that DIC payments which might be payable to a
survivor of a military member are part of the package of benefits
payable under the SBP program. The SBP and the Civil Service retirement
and survivor annuity plan, however, are separate and distinct.
Subsection 1450(d) of title 10, United States Code, requires the
transfer from the SBP to the Civil Service survivor annuity plan where
an individual waives receipt of military retired pay for Civil Service
retirement computation and accepts survivor coverage under the latter
plan.
So long as that waiver is in effect and the individual is providing
survivor coverage under the Civil Service plan, that transfer is
complete. We are not aware of any provision of law whereby a surviving
spouse or dependent children of a Civil Service annuitant in these
circumstances may receive or be put in the position to receive survivor
benefits under both plans at the same time.
Regarding the reduction in Civil Service retirement benefits required
by 5 U.S.C. 8332(j) when the beneficiary is receiving Social Security
benefits, payments of Civil Service Retirement annuities and survivor
benefits thereunder are for determination by the Office of Personnel
Management and not by this Office. Accordingly it would be
inappropriate for us to comment on the appropriateness of reductions in
survivor benefits made under that provision.
Accordingly, on reconsideration, our decision B-192470, January 3,
1979, is sustained.
B-194375, January 23, 1980, 59 Comp.Gen. 223
Travel Expenses - Air Travel - Fly America Act - Employees Liability -
Travel By Noncertificated Air Carriers - Involuntary Re-Routing
Employee was scheduled to travel on certificated U.S. air carrier
and, upon arrival at airport, was informed by carrier that it could not
accommodate him and carrier re-routed him on foreign air carrier. U.S.
air carrier service is considered unavailable and traveler is not
subject to penalty for use of noncertificated carrier. 56 Comp.Gen. 216
modified (amplified).
Matter of: James A. Norberg - Fly America Act - involuntary
re-routing, January 23, 1980:
The Nuclear Regulatory Commission (NRC) requests an advance decision
concerning a specific claim by James A. Norberg, one of its employees,
involving use of a foreign air carrier.
Mr. Norberg was on official travel in Austria. When he went to the
airport he was told that because his scheduled Pan American flight had
developed mechanical difficulties a smaller plane would be used for the
flight from Austria to the United States. There was no room for Mr.
Norberg on the smaller replacement aircraft and he was involuntarily
re-routed by Pan American to a British Airlines flight to London where
he transferred to a Pan American flight to the United States.
In connection with Mr. Norberg's claim for the airfare from Vienna to
the United States without assessment of a penalty for his use of a
foreign air carrier between Vienna and London, the NRC asks:
1. Is a traveler required to wait up to the 48 hours specified in 56
C.G. 216, when he is informed upon arrival at the airport, that his
scheduled flight cannot accommodate him for some reason?
2. Should a traveler be assessed a penalty for the involuntary use
of a foreign carrier when an American carrier, for some reason, provides
alternate transportation on a foreign carrier?
The controlling statute is the Fly America Act, 49 U.S.C. 1517. The
Act's purpose is to ensure that Government revenues not benefit
noncertificated foreign air carriers when certificated service by United
States carriers is available.
56 Comp.Gen. 209(1977). The Act requires the Comptroller General to
disallow any expenditure from appropriated funds for transportation on a
foreign air carrier in the absence of proof that such service was
necessary.
The Comptroller General's guidelines for implementation of the Fly
America Act, B-138942, March 12, 1976, provide that a foreign air
carrier may be used only when United States air carrier service is
unavailable. These guidelines contain criteria for determining when
service is considered unavailable but do not expressly address the
situation in which a traveler is involuntarily re-routed by a United
States carrier onto a foreign carrier at the initiation of his travel.
In 56 Comp.Gen. 216(1977) we noted that the unavailability criteria set
forth in the guidelines are addressed to en route travel or elapsed
traveltime and provide no guidance in determining the length of time an
employee should delay his departure from point of origin to facilitate
use of certificated United States air carrier service. We there held
that if the total delay, including delay in initiation of travel, in en
route travel and additional time at destination involves more than 48
hours additional per diem costs in excess of the per diem that would be
incurred in connection with the use of noncertificated service,
certificated service may be considered unavailable.
Our holding in 56 Comp.Gen. 216 places a high degree of
responsibility on the Government traveler to schedule his travel for the
benefit of United States air carriers. While that decision could be
read as controlling in Mr. Norberg's and similar situations, we believe
that where the employee has properly scheduled his travel and relied
upon that scheduling and where his efforts are frustrated through no
fault of his own but by the air carrier, there is adequate justification
to consider that he has discharged that responsibility. We, therefore,
find that Mr. Norberg was not obliged to further delay his travel in
accordance with 56 Comp.Gen. 216 to make use of United States air
carrier service.
Where, because of mechanical or other difficulties, a United States
air carrier reroutes an employee's travel aboard a foreign air carrier,
United States air carrier service may be considered unavailable.
Insofar as the traveler is given a choice as to substitute service, he
should of course reschedule his travel by United States air carrier if
to do so will not unduly delay his travel. These principles apply to
involuntary re-routings that occur enroute as well as upon initiation of
travel.
At the date of Mr. Norberg's travel, Pan American was the only United
States air carrier serving Vienna and the afternoon flight on which he
had reservations was the last United States air carrier departing that
day.
Because connecting service by way of Frankfurt, Germany, similarly was
not available that day, Mr. Norberg's travel by foreign air carrier to
London was proper even if he was provided a choice as to substitute
service. Under the circumstances, London was the nearest practicable
interchange point to connect with United States air carrier service.
Accordingly, Mr. Norberg is not subject to penalty under the Fly
America Act for his use of a foreign air carrier between Vienna and
London under the circumstances described above.
B-195204, January 22, 1980, 59 Comp.Gen. 221
Vessels - Crews - Two-Crew Nuclear-Powered Submarines - Dislocation
Allowance - Initial Unavailability of Assigned Quarters
A dislocation allowance may be paid to members without dependents of
both the on-ship and off-ship crews of nuclear submarines incident to a
change of home port of the submarine, when they initially occupy
permanent non-Government quarters at the new home port although the
submarine is the permanent station for both crews. This is based on the
view that Congress did not intend to preclude payment of the allowance
when a member is not able to occupy quarters assigned to him and does
incur the expense of moving into non-Government quarters. 57 Comp.Gen.
178 modified (extended).
Matter of: Dislocation allowance - Two-Crew submarines, January 22,
1980:
May a dislocation allowance be paid members without dependents of
both the on-crew and off-crew of a two-crew nuclear submarine when the
home port of the vessel is changed? As will be explained, the answer is
yes.
This question was presented by the Officer in Charge, Navy Finance
Office, New London, and has been assigned PDTATAC Control No. 79-18, by
the Per Diem, Travel and Transportation Allowance Committee.
Two-Crew nuclear powered submarines are assigned two autonomous
crews. While one crew is on the submarine, the other crew is ashore
performing training and rehabilitation duty. Thus, while the submarine,
itself, is the permanent station for both crews, only one crew can
occupy the quarters aboard the submarine and the other crew must occupy
quarters ashore. In our decision 57 Comp.Gen. 178(1977), we concluded
that a member without dependents who is ordered to make a permanent
change of station and is assigned to a two-crew submarine is entitled to
a dislocation allowance on reporting to the home port of the vessel when
he occupies permanent non-Government quarters. Doubt has arisen in this
case, since the members involved have already been assigned to the
vessel prior to the change of home port. As a result the finance
officer requests a decision as to whether the allowance may be paid to
members without dependents assigned to the submarine, when they occupy
permanent non-Government quarters at the new home port of the submarine.
Under the provisions of 37 U.S.C. 407(a)(3) a member without
dependents who is transferred to a permanent station where he is not
assigned to quarters of the United States is entitled to a dislocation
allowance. Thus, a member without dependents assigned to a vessel is
ordinarily not entitled to a basic allowance for quarters or a
dislocation allowance since he is assigned quarters on the ship. Due to
the unusual circumstances involved in duty on two-crew submarines,
however, exceptions have been made.
Subparagraph M9003-7 of 1 Joint Travel Regulations (1 JTR) provides
that a member without dependents assigned to a two-crew nuclear
submarine will be entitled to a dislocation allowance upon arrival at
the vessel's home port providing the member is not assigned to
Government quarters and he occupies non-Government quarters for a period
of more than 15 days prior to reporting aboard the vessel.
Appendix J of 1 JTR defines permanent change of station as including
a change in the home port of a vessel or a mobile unit.
In the past we have held that since the submarine was the permanent
station of both crews assigned to it, entitlement to a dislocation
allowance was for determination on that basis. See 48 Comp.Gen.
480(1969). However, this decision was modified to the extent that it
was inconsistent with our decision 57 Comp.Gen. 178(1977). In the later
decision, we concluded that, while 37 U.S.C. 407(a)(3) authorizes
payment of a dislocation allowance to a member when he is not assigned
to quarters of the United States at his permanent station, the payment
of the allowance is authorized when a member is not able to occupy the
assigned quarters aboard the submarine and is in fact incurring the
expense of moving into non-Government quarters.
Since the change of home port of a vessel is considered a permanent
change of station for the crew members, a dislocation allowance may be
paid to the members without dependents of both crews when they initially
occupy permanent non-Government quarters at the home port for more than
15 days. This, of course, is subject to any restrictions contained in
37 U.S.C. 407.
The question is answered in the affirmative.
B-193772, January 22, 1980, 59 Comp.Gen. 219
Pay - Retired - Advance Payment
Retired pay is included within the definition of pay in 37 U.S.C.
101(21). Therefore, authority in 37 U.S.C. 1006(h) to make payments up
to 3 days in advance of a regular payday, of pay and allowances to
individuals under the jurisdiction of the Secretaries of the military
departments includes payments of retired pay. Payments - Advance -
Survivor Annuities - Prohibition
Payments such as survivor annuities to dependents not included within
the definitions of pay and allowances contained in title 37, United
States Code, may not be made in advance under the authority of 37 U.S.C.
1006(h).
Matter of: Advance payments of retired pay and survivor annuities,
January 22, 1980:
The question presented in this case is:
Can advance payments authorized by 37 U.S.C. 1006(h)(1970) be made to
military retirees and surviving military dependent annuitants on the
same basis as is now done for active duty members under the provisions
of 37 U.S.C. 1006(h)?
Advance payments to military retirees may be made under the authority
of 37 U.S.C. 1006(h)(1976). However, advance survivor annuity payments
may not be made under this authority.
The question and discussion thereof are contained in Department of
Defense Military Pay and Allowance Committee Action Number 543,
transmitted to this Office by the Assistant Secretary of Defense
(Comptroller).
Subsection 1006(h) of title 37, United States Code, provides as
follows:
Notwithstanding section 529 of title 31, the Secretary concerned may,
when the last day of the pay period falls on a Saturday, Sunday, or
legal holiday, authorize the payment of pay and allowances to members of
an armed force under his jurisdiction on the preceding workday but not
more than three days before the last day of that pay period. If a
member dies after he has received an advance payment under this
subsection, but before the last day of the pay period for which the
payment is made, no part of the amount so advanced is recoverable by the
United States.
Section 529 of title 31, United States Code, prohibits the advance of
public money unless authorized by appropriation or other law.
Subsection 1006(h) provides an exception.
In the Committee Action, it is noted that monthly annuity payments to
military retirees and surviving military dependents are mailed or
otherwise transmitted to arrive at their destination on the last day of
the month. When the regular delivery date falls on a Saturday, the
check is difficult to cash or deposit; and if it falls on a Sunday, or
on a Monday holiday, the payment is delivered on the next business day.
In extreme cases this means a delay of 3 days in cashing or depositing
the payment. In many cases the delay constitutes an inconvenience and
hardship to retired members or annuitants and their dependents.
The Department of Defense Military Pay and Allowance Committee is of
the view that the language of 37 U.S.C. 1006(h) is sufficient to
authorize advance payment to retirees and that as a matter of equity
this policy should be extended to survivor annuities paid to dependents
since both types of payments come within the jurisdiction of the
Secretary concerned as provided in the statute.
The question, however, has been presented to this Office since the
legislative history indicates that 37 U.S.C. 1006(h) was probably
intended to apply to pay and allowances of active duty personnel.
The legislative history of 37 U.S.C. 1006(h) does indeed indicate
that at the time the Senate was considering the legislation it seemed to
be referring to only pay and allowances of active duty personnel. See
S. Rep. No. 685, 89th Cong., 1st Sess. (1965). However, 37 U.S.C.
101(21) includes in the definitions of terms used in title 37, the
following:
(21) "pay" includes basic pay, special pay, retainer pay, incentive
pay, retired pay, and equivalent pay, but does not include allowances;
In view of this, we must assume that in using the term "pay" in 37
U.S.C. 1006(h) the Congress was aware that such term included retired
pay. Accordingly, it is our view that payments of retired pay may be
included within the advance payment authorization of 37 U.S.C. 1006(h).
Thus, as to retired pay, the question presented is answered yes.
Survivor annuities paid to dependents of members of the uniformed
services are paid under chapter 73, title 10, United States Code.
Neither 37 U.S.C. 101(21) nor the similar definition in 10 U.S.C.
101(27)(1976) includes such annuities in the definition of "pay," nor
are such annuities defined as "allowances." In addition we are not aware
of any other authority for the advance payment of survivor annuity
payments to dependents or any other payments not defined in title 37,
United States Code. Therefore, as to such payments, the question
presented is answered no.
B-196794, January 17, 1980, 59 Comp.Gen. 218
States - Federal Aid, Grants, etc. - Interest on Federal Funds -
Intergovernmental Cooperation Act of 1968 Effect - Applicability to
Non-Governmental Subgrantees
Non-governmental subgrantees of Federal grants to States are entitled
to keep interest earned on advances from the States. Section 203 of the
Intergovernmental Cooperation Act, 42 U.S.C. 4213, which exempts State
grantees from accounting to the Federal Government for interest earned
on grant advances, serves to exempt subgrantees as well.
Matter of: Department of Labor - Interest on State Advances to
Subgrantees, January 17, 1980:
This decision responds to an inquiry from the Acting Director of the
Office of Grants, Procurement and ADP Management Policy. Department of
Labor (DOL) on whether non-governmental subgrantees of State recipients
of Federal grants are accountable to the Federal Government for interest
earned on advances made by the States from grant funds. The inquiry
grows out of questions raised by non-governmental subgrantees concerning
the application of DOL regulations, 41 C.F.R. 29-70.205-2. We conclude,
for the reasons given below, that the same rationale that justifies
exempting governmental subgrantees from remitting to the Federal grantor
agency interest earned on Federal grant funds received from the States,
applies equally to non-governmental subgrantees.
As a general rule, interest earned by grantees on grant funds
advanced by the Federal Government must be paid over to the United
States unless earned as part of the authorized program or otherwise
specifically excepted. 42 Comp.Gen. 289(1962) and cases cited therein.
The major exception to this long established rule is contained in
section 203 of the Intergovernmental Cooperation Act of 1968, 42 U.S.C.
4213(1976). That section provides:
Heads of Federal departments and agencies responsible for
administering grant-in-aid programs shall schedule the transfer of
grant-in-aid funds consistent with program purposes and applicable
Treasury regulations, so as to minimize the time elapsing between the
transfer of such funds from the United States Treasury and the
disbursement thereof by a State, whether such disbursement occurs prior
to or subsequent to such transfer of funds, or subsequent to such
transfer of funds. /1/ States shall not be held accountable for
interest earned on grant-in-aid funds, pending their disbursement for
program purposes.
As recognized in the DOL inquiry, our decision, B-171019, October 16,
1973, concluded that:
Section 203 exempts States from accountability for interest earned on
grant-in-aid funds received by them and makes no differentiation between
grants which the States will disburse themselves and grants involving
funds which will be subgranted by the States. Moreover, we have found
nothing in the legislative history of Section 203 or in subsequent
hearings which makes such a differentiation. Thus, it seems clear to us
that States are not to be held accountable for interest earned on any
grant-in-aid funds pending their disbursement, whether or not the States
intend, or are required by the terms of the grant, to subgrant these
funds. To hold otherwise would, of course, require the States to assume
the burden of accounting for the presumably relatively small amounts of
interest which would be earned on these funds in contravention of the
legislative intent behind the last sentence in Section 203.
Accordingly, we believe political subdivisions receiving Federal
grants-in-aid through State governments are entitled to retain monies
received as interest earned on such Federal funds.
A governmental grantee must qualify as a State or State
instrumentality in order to qualify directly for the section 203
exception. All other grantees, including local governments, remain
subject to the general rule requiring the return of interest earned on
advances of grant funds by the Federal Government. As indicated in our
1973 decision, the question of subgrantees is not addressed in the
legislation and was not expressly considered in the legislative history.
However, in that decision, we concluded that the subgrantee of a State
grantee was exempt. We are unable to see any basis for distinguishing
between governmental and non-governmental subgrantees in this regard.
Accordingly, we conclude that non-governmental subgrantees of Federal
grants to the States are entitled to keep any interest they may earn on
advances from the States. We note that under section 203 of the
Intergovernmental Cooperation Act of 1968 and Treasury Circular No.
1075, Federal Departments and Agencies must control the flow of advances
to the States at the State level in order to prevent grant funds from
being advanced before they are needed.
/1/ So in original.
B-197292, January 15, 1980, 59 Comp.Gen. 215
Appropriations - Permanent Indefinite - Mobile Home Inspection Program
Section 620 of National Mobile Home Construction and Safety Standards
Act of 1974, as amended by Housing and Community Development Act of
1979, constitutes permanent indefinite appropriation of mobile home
inspection fees collected by Secretary of Housing and Urban Development.
Funds will be available to pay costs of inspection program without any
further action by Congress. B-114808, August 7, 1979, distinguished.
Matter of: Permanent Appropriation of Mobile Home Inspection Fees,
January 15, 1980:
The Assistant Director, Accounting Operations, Bureau of Government
Financial Operations, Department of the Treasury, has requested our
decision on whether language in the Housing and Community Development
Act of 1979, Pub. L. No. 96-153, 93 Stat. 1011, 42 U.S.Code 5301 note,
constitutes a permanent indefinite appropriation of fees collected by
the Secretary of Housing and Urban Development (HUD) under a mobile home
inspection program. The legislation authorizes the Secretary of HUD to
use the inspection fees to pay the expenses incurred in carrying out the
inspections. Specifically, the Treasury letter asks whether this
language can be interpreted as providing a permanent indefinite
appropriation in light of our recent decision, B-114808, August 7, 1979,
in which we stated that a statute cannot be interpreted as a permanent
appropriation unless the intent of the Congress to make an appropriation
is clear in the language of the legislation.
For the reasons indicated below, it is our opinion that the language
in question does constitute a permanent indefinite appropriation of the
fees, to be used for offsetting the costs of the mobile home inspection
program.
The program of inspection of mobile homes is mandated by the National
Mobile Home Construction and Safety Standards Act of 1974, 42 U.S.C.
5401 et seq.(1976). The authority for the Secretary of Housing and
Urban Development to charge fees for these inspections is contained in
section 620 of the act, 42 U.S.C. 5419, which provides:
In carrying out the inspections required under this chapter, the
Secretary may establish and impose on mobile home manufacturers,
distributors, and dealers such reasonable fees as may be necessary to
offset the expenses incurred by him in conducting such inspections. * *
*
The 1979 amendment adds the following language to this authorization:
and the Secretary may use any fees so collected to pay expenses
incurred in connection with such inspections.
Section 620 of the act, as amended, therefore authorizes the
Secretary to impose fees for inspections and to use these fees to pay
the expenses of the inspections. The question posed by the Treasury
inquiry is whether section 620 as amended constitutes a permanent
indefinite appropriation.
This Office has consistently viewed statutes which authorize the
collection of fees and their deposit into a particular fund, and which
make the fund available for expenditure for a specified purpose, as
constituting continuing or permanent appropriations without further
action by the Congress.
See, e.g., 57 Comp.Gen. 311, 313(1978); 50 id. 323, 324(1970); 35 id.
615, 618(1956).
In the present case, amended section 620 authorizes the Secretary to
collect fees and to use them for a specific purpose. Although the
statute does not expressly authorize the establishment of a special fund
or the deposit of the receipts into such a fund, we interpret it as
authorizing such a fund as a necessary implementation procedure.
We conclude that the statute, which authorizes the collection of
fees, their deposit in a special fund, and their availability for a
specific purpose, constitutes a permanent indefinite appropriation of
these fees.
Our decision in B-114808, August 7, 1979, referred to in the Treasury
letter, is distinguishable from the current case. In that decision we
were interpreting a statute which directed the Secretary of the
Treasury, at the beginning of a fiscal year, to remit to the government
of Guam an amount equal to the duties, taxes, and fees estimated to be
collected in Guam during the coming year. The statute did not specify
the source of the funds for these prepayments, but it was clear that at
least the payment for the first year would have to come from the general
fund of the United States Treasury. Under these circumstances, we
looked at Article I, section 9, clause 7 of the United States
Constitution, which requires "appropriations made by law" before money
can be drawn from the Treasury, and 31 U.S.C. 627, which states that an
act of Congress shall not be interpreted as making an appropriation out
of the United States Treasury "unless such Act shall in specific terms
declare an appropriation to be made." Applying these standards to the
statutory language in question, we determined that although the statute
constituted a permanent authorization, it did not establish a permanent
indefinite appropriation.
In the present case, we are not concerned with the payment of monies
out of the general fund of the Treasury. Rather, the statute authorizes
the Secretary of HUD to assess fees, to retain those fees, and to expend
those fees for a specific purpose. In this instance, where it is clear
from the statute that the Congress intended to make these fees available
for expenditure, and where the legislative history indicates that the
very purpose of the 1979 amendment was to make it clear that these funds
were to be available without further action of the Congress (see 125
Cong.Rec. S9383 (daily ed., July 13, 1979)), our rationale in B-114808
does not apply.
We therefore conclude that section 620 of the National Mobile Home
Construction and Safety Standards Act of 1974, as amended by the
language in Public Law 96-153, constitutes a permanent indefinite
appropriation of the mobile home inspection fees collected by the
Secretary of HUD, and that these funds are available to pay the costs of
the inspections without any further action by the Congress.
B-193037, January 15, 1980, 59 Comp.Gen. 213
Miscellaneous Receipts - Telephone Commissions
Commissions received by the Bureau of Prisons, based on collections
from pay telephones provided for the exclusive use of inmates at penal
and correctional institutions of the Bureau must be deposited into the
general fund of the Treasury as miscellaneous receipts. No substantial
outlay from Bureau appropriations is made for installation and
provisions of pay telephone service. Therefore, 18 U.S.C. 4011,
providing an exception to 31 U.S.C. 484, is not applicable.
Matter of: Disposition of Commissions From Pay Telephones at Federal
Prisons, January 15, 1980:
This decision is in response to a request for an opinion from the
Assistant Attorney General for Administration (AAGA), Department of
Justice, on whether commissions received from telephone companies based
on their receipts from pay telephones provided for the exclusive use of
inmates at institutions of the Bureau of Prisons (Bureau) must continue
to be deposited in the miscellaneous receipts account of the United
States Treasury (Treasury), or whether they may be used by the Bureau
for any of the following alternative dispositions:
(1) For deposit in the various prison Inmate Welfare Funds;
(2) For credit against Bureau telephone bills, to offset maintenance
and operating costs incurred in providing telephones for inmates; or
(3) For reimbursement to Bureau appropriations for the care and
well-being of prisoners.
For the reasons discussed below, we believe that the Bureau must
continue to deposit the commissions into the miscellaneous receipts
account of the Treasury. The Bureau has arranged for the provision of
telephone services to inmates pursuant to its general responsibility to
provide suitable quarters and to provide for the care and subsistence of
all inmates in Federal penal and correctional institutions. 18 U.S.C.
4001, 4042(1976). Bureau Policy Statement 7300.79A (August 4, 1978),
setting forth telephone regulations for inmates, states that
"Constructive, wholesome contact with the community, particularly with
family members, is a valuable tool in the overall correctional process,"
and provides that "Ordinarily, an inmate shall make collect calls or,
where pay telephones are available, shall assume the cost of all calls."
The pay telephones are designated for local calls only. Inmates pay
for their own calls at the same rate as with any other pay telephone.
The Bureau does not pay a service charge to the telephone company for
the installation or use of the pay telephones.
Commissions are paid to the Bureau by the telephone company, based on
receipts from pay telephone calls.
Bureau expenses for telephone services arise from the installation
and maintenance within each institution of lines which connect with the
pay phones and which also connect with separate phones that provide
inmates with long distance telephone service. There are additional
costs associated with the provision of long distance telephone service
(such as maintenance of a switchboard, a monthly service charge,
administrative expenses, etc.) which are paid from Bureau
appropriations. However, no commissions are paid by the telephone
company for long distance calls and it is therefore not appropriate to
consider the local pay phone commissions as reimbursements for expenses
incurred in providing long distance service.
Where monies are paid to a Government agency or department for the
use of the United States, the disposition of such monies-- from whatever
source they are received-- is governed by 31 U.S.C. 484(1976), which
provides, in essence, that such receipts shall be paid into the United
States Treasury as miscellaneous receipts, with an exception not
relevant here.
The applicability of this statute to commissions from pay telephones
in public buildings has been considered in the past. Since such
commissions are received "in return for a privilege incident to the
operation of a public building," the funds must be deposited "into the
general fund of the Treasury as miscellaneous receipts, unless otherwise
specifically provided by law." 14 Comp.Gen. 203, 204(1934); 5 id.
354(1925). Accord, 44 id. 449(1965); 23 id. 873, 874(1944).
In his letter to us, the AAGA recognized the general rule but
suggests that an exception may exist for the particular commissions at
issue here:
In the case of the Bureau of Prisons, the operation of pay phone
stations for inmates is an integral part of the Bureau's mission. * * *
It is the position of the Attorney General that providing telephone
SERVICE TO INMATES IS A BONA FIDE RESPONSIBILITY AND FUNCTION OF THE
Bureau of Prisons in accordance with 18 U.S.C. 4001.
Our decision at 44 Comp.Gen. 449, supra, enunciated an exception to
the general rule in terms similar to this but that case is easily
distinguished. The Bureau of Old Age and Survivors Insurance, a
division of the Department of Health, Education, and Welfare, occupied a
building, the construction of which was financed solely with monies
derived from a trust fund. The cost of operating the building,
including electricity for lighting the pay telephone stations and
maintenance costs, was also being financed by trust fund monies. At
issue was whether the pay telephone commissions could be deposited to
the credit of the trust fund. We stated:
The test as to whether such commissions may be otherwise deposited
(i.e. not in miscellaneous receipts) is * * * whether the operation of
telephone pay stations may be considered as an activity prescribed by
statute for the agency involved. 44 Comp.Gen.at 450.
This test, however, must be read in light of the fact that the
expenses were financed by a trust fund which, by virtue of its organic
legislation, was authorized to retain revenues arising from its
prescribed statutory activities. Similarily, in 14 Comp.Gen. 203,
supra, the argument for retaining the telephone commissions was that
they were postal revenues which the Post Office Department was
authorized by law to retain. The same test does not apply when the
agency does not operate on a trust or revolving fund basis and lacks any
other authority to retain receipts from its operations. Hence, even if
operation of pay telephones was considered an activity prescribed by
statute for the Bureau, the commissions could not be deposited into
Bureau appropriations since we are not aware of any provision in the
Bureau's authorizing legislation that permits it to credit to its
appropriation revenues resulting from such services for inmates.
We are aware that section 4011 of title 18, United States Code,
allows deposit to the credit of the Bureau's appropriation of
"(c)ollections in cash for meals, laundry, barber service, uniform
equipment, and other items for which payment is made originally from
appropriations * * * ." However, this covers reimbursements for outlays
by the Bureau. As noted earlier, most of the expenses paid from Bureau
appropriations were incurred for provision of long distance telephone
services on separate phones. The costs for the pay phone service,
according to informal advice from the Bureau, consists of bringing trunk
lines (which the telephone company has brought to the institution)
inside the institution walls, after which the telephone company
completes all the hookups at no charge to the Government. Therefore,
the outlays are negligible and the commissions in question should not be
considered to be reimbursements but rather as fees for the privilege of
installing a profitable device on Government property.
We conclude that commissions received by the Bureau from telephone
companies based on inmate payments for pay telephone calls must continue
to be deposited into the general fund of the Treasury as miscellaneous
receipts.
B-170675, January 15, 1980, 59 Comp.Gen. 209
Compensation - Wage Board Employees - Conversion v. Promotion/Transfer
to Classified Positions - Highest Previous Rate
Federal Aviation Administration and Federal Aviation Science and
Technological Association seek our approval of averaging method for
computation of highest previous rate upon promotion from Wage Grade
position to General Schedule position where employee has worked rotating
shifts and has received night differential. The averaging method was
arrived at in order to complete action on United States District Court's
Consent Order of Remand requiring the agency to include night
differential in computing the highest previous rate. We have no
objection to proposed method since pay rates under that method would not
exceed those authorized under 5 C.F.R.Part 531.
Matter of: Ralph G. Nail, et al. - Computation of Highest Previous
Rate, January 15, 1980:
The Federal Aviation Administration (FAA) requests our guidance in
the implementation of our decision in Ralph G. Nail, et al., B-170675,
August 8, 1979. That decision authorized the FAA to recompute certain
employees' pay rates in the General Schedule positions to which they
were promoted on the basis of their highest previous rates, determined
by their wage board rates of pay, including night differential.
The FAA says that our decision in the Nail case does not address
situations where the employees received night differential while working
on rotating shifts. The agency refers to its letter to us dated
September 15, 1977, requesting an advance decision on several questions
pertaining to promotions under 5 C.F.R.Part 531 when night differentials
are involved.
This Office did not answer the questions presented by the FAA at that
time due to ongoing litigation instituted by certain FAA employees,
including Mr. Nail, in the United States District Court for the Northern
District of Georgia. See Ralph G. Nail v. United States, CA No.
C77-1497A and related cases. The employees' cases were remanded by the
District Court to our Office for a decision authorizing administrative
settlement. Our decision of August 8, 1979, was then issued. The FAA
now asks how to compute the rate of basic pay pursuant to Part 531 for
employees who received night differential while working rotating shifts
in Wage Grade positions.
The background of the case is as follows. During the period from
1969 to 1977, a number of FAA employees moved from Wage Grade positions
to General Schedule positions under merit promotion plan announcements.
Although all of the actions were governed by 5 C.F.R.Part 531, entitled
"Pay under the General Schedule," the various FAA regional offices did
not treat the actions uniformly. While the majority of the regions
excluded the night differential from the computation of basic pay, a few
regions included the night differential based on an averaging method.
Eventually, several FAA employees filed the Court cases involved herein.
The District Court issued a Consent Order of Remand on May 10, 1979, to
our Office. We then issued our decision holding that the FAA may
administratively settle claims not barred by the statute of limitations
consistent with our decision in Matter of Terry Ray Ashbaugh, B-189852,
February 14, 1979.
In Ashbaugh, we referred to B-175430, June 1, 1972, and December 19,
1973, in which we held that night differential should be included as
part of the rate of basic pay of a basic pay of a former Wage Board
employee for the purpose of determining his highest previous rate in
settling his rate of pay upon transfer to a General Schedule position.
Neither our Ashbaugh nor our Nail decision specifically addressed the
problems that arise in situations involving night differential earned on
rotating shifts. Accordingly, prior to administratively settling these
claims, the FAA has requested our decision concerning the method to be
used in computing these employees' rates of basic pay.
The FAA reports that it prefers a method whereby the night
differential earned over a period of time is averaged and added to an
employee's scheduled rate to arrive at his rate of basic pay for the
purpose of Part 531. The FAA further states that it does not favor the
method used in conversion actions under 5 C.F.R.Part 539 where the
employee's rate earned in the last hour in a pay status is used to
determine his rate of basic pay.
In this connection the FAA refers to its letter of September 15, 1977.
In that letter it points out that in a situation involving a promotion
from a Wage Grade to a General Schedule position under 5 C.R.R.Part 531
and a retroactive pay adjustment, it could not determine an employee's
highest previous rate if it had to be based on the rate that he was
receiving immediately prior to the effective date of the personnel
action. This inability would arise because the FAA has no records
showing the shifts on which employees served in prior years when they
were promoted. We believe that it is necessary to distinguish between
the situation where an employee's position is converted from the Wage
Grade to the General Schedule and the situation where a Wage Grade
employee is transferred or promoted to a position in the General
Schedule. The former action is controlled by 5 C.F.R.Part 539 and the
latter is controlled by C.F.R.Part 531. Because of the particular
language of 5 C.F.R. 539.203, this Office has held that under Part 539
an employee's rate of basic pay is determined at the time of conversion.
See 51 Comp.Gen. 641 at 643(1972). Part 531 does not contain similar
language. Rather, section 531.203 clearly does not contemplate
computing the highest previous rate on the basis of the rate of basic
pay received immediately prior to the personnel action. Thus, in 26
Comp.Gen. 601(1947), we stated that the highest previous rate rule
permits:
An initial salary rate to be based upon the salary rate attained in
any prior Government position rather than being limited to the maximum
salary rate attained in the position last occupied.
The record contains many arguments on behalf of both the employees
and the FAA arguing against the use of Part 539 or the "last hour in a
pay status" rule. In view of the above discussion concerning the
inapplicability of that rule, we will not specifically address those
arguments or the questions presented in the September 15, 1977, letter
from the FAA.
The issue remaining is whether the averaging method is a proper
method for setting these employees' rates of basic pay under 5
C.F.R.Part 531. Mr. Paul E. Trayers, Assistant General Counsel, Federal
Aviation Science and Technological Association (FASTA), has submitted a
proposed averaging method. The FAA has concurred in the proposed
method. That method submitted by FASTA is as follows:
* * * when a wage grade employee works a rotating shift and his shift
cannot be administratively discerned, * * * (the FAA) used an averaging
basis utilizing 75 midnight shifts (0000-0800 A.M.) and 75 evening
shifts (1600-2400 A.M.) per year.
Wage grade employees are paid a night differential of 7 1/2% of their
scheduled rate (per hour) for 8 hours of work during the evening shift.
They are also paid a night differential of 10% of their scheduled rate
(per hour) for 8 hours of work during the midnight shift. (5 USC, 5343,
(f)).
(TABLE OMITTED)
This rate of basic pay would be the rate used in determining the new
step rate when that employee was promoted to the General Schedule.
The figures representing the number of shifts worked in the above
example are estimates that will vary with the particular facts of each
employee's work schedule.
The regulations contained in 5 C.F.R.Part 531 govern the
determination of an employee's rate of basic pay for certain specified
personnel actions. Section 531.203(c) states that:
* * * when an employee is reemployed, transferred, reassigned,
promoted, or demoted, the agency may pay the employee at any rate of the
grade which does not exceed his or her highest previous rate * * * .
While we have been unable to find any decisions dealing with the
legality of permitting averaging to arrive at a rate of basic pay for
the purposes of Part 531, in interpreting the regulations governing the
highest previous rate rule we have held that an employee's salary:
could be fixed at any rate in the salary range of the grade in which
the position to which transferred or reappointed has been allocated not
to exceed the maximum rate of compensation attained * * * . 26
Comp.Gen. 601, 603(1947).
Thus, agencies have authority under 531.203(c) to set an employee's
salary at any step in the grade which does not exceed the employee's
highest previous rate. There is no requirement that it be set at the
highest previous rate attained. It is self evident that any rate
attained by means of an averaging formula would not exceed the maximum
rate authorized under Part 531. Accordingly, for the purposes of
permitting the FAA to implement the Consent Order of Remand issued by
the District Court in the Nail case, we have no objection to the
averaging method agreed to by both parties.
B-194799, January 14, 1980, 59 Comp.Gen. 207
Highways - Forest - State, etc. Roads in National Forests - Cooperative
Agreements - Provisions for cost, etc. Reimbursement - Absence Effect
No basis is seen to conclude that one Government agency is liable to
second agency for cost of latter's disputes clause claim settlement with
contractor, even where first agency's error was basis for settlement,
since record does not disclose any agreement or mutual understanding
between agencies covering situation.
Matter of: Department of Transportation, Federal Highway
Administration - request for opinion, January 14, 1980:
THE DEPARTMENT OF TRANSPORTATION, FEDERAL HIGHWAY ADMINISTRATION
(FHWA), requests our opinion on the propriety of the Department of
Agriculture, United States Forest Service (Forest Service), reimbursing
FHWA for costs ($53,925.49) incurred by FHWA in settling the highway
construction claim of the Fred H. Slate Company (Slate). Since a Forest
Service error generated the Slate claim, FHWA believes the Forest
Service takes the position that FHWA improperly settled the claim and
that it should not have to reimburse FHWA for the erroneous settlement.
We are presented with two issues: (1) whether the Forest Service
should reimburse FHWA; and (2) whether FHWA properly settled Slate's
claim. Regarding the first issue, we see no basis on this record for
concluding that the Forest Service is required to reimburse FHWA. This
renders moot the second issue.
FHWA's request involved the FHWA/Forest Service practice of
cooperating in the construction of forest highways. 23 U.S.C.
204(1976). Under this practice, road contractors operating within
national forests are contractually required to purchase, for a fixed
sum, the merchantable timber found on the road right-of-ways. The fixed
sum the contractor must pay is determined by a Forest Service appraisal
of the right-of-way timber. The collateral details of the timber sale
are covered by a separate timber settlement agreement (TSA) between the
Forest Service and the road contractor. The practice embodies a
longstanding Government policy of disposing of Government timber at its
appraised value. See 16 U.S.C. 476(1976). Forest Service regulations,
36 C.F.R. 223.1(h)(1978), require payment for right-of-way timber,
except in certain circumstances not applicable here, at its appraised
value.
The Slate claim arose when Slate discovered that it had paid more for
the timber than it was currently worth. The discrepancy between
purchase price and the resale value of the timber is attributable to the
Forest Service's inclusion of an "overbid factor" in its appraisal. The
factor inflates the current appraisal value for the purpose of
reflecting the future estimated worth of the timber.
Use of the factor is normally restricted to long duration timber sales
(2 to 6 years) where it increases the probability that the Government
will receive full market value for its timber in an inflationary market.
The Forest Service reports that it does not normally apply the factor
where, as here, Federal funds are paying for the road construction since
contractors include the fixed cost of purchasing the timber in the price
bid for the total project.
Slate's claim was submitted to FHWA under the disputes clause of the
construction contract. We have sanctioned this approach since, in our
view, the TSA is not an independent instrument, but merely an adjunct to
the construction contract. B-171131, March 17, 1971.
FHWA took the view that the inflated appraisal constituted a mutual
mistake of fact justifying reformation of Slate's contract to reflect
the true intent of the parties. Underlying the FHWA position is its
admitted lack of expertise in timber appraisals. FHWA contends that
both Slate and FHWA relied upon the Forest Service to use its timber
appraisal expertise to establish the lump-sum price of the right-of-way
timber. FHWA therefore effectively reformed the erroneous payment made
to the Forest Service to the intent of both Slate and FHWA that the
contractor not pay the amount included in the appraisal for the "overbid
factor."
The Forest Service, which advised FHWA that the claim would not be
paid, contends: (1) that the claim should not have been honored, and
(2) that, even if it is assumed that it should have been, the claimant
was overpaid. Because of this, the Forest Service believes that it
should not have to reimburse FHWA for the cost of settling Slate's
claim. The Forest Service reports that the proceeds of the timber sale
have been deposited in the United States Treasury's National Forest Fund
Account.
In reviewing the claims of one Federal agency against another, we
examine the record for evidence that the Federal agencies have arrived
at a mutual understanding which governs the subject matter of the claim.
For example, in Soil Conservation Service and Small Business
Administration Contract No. AG188CS-00100, B-185427, September 21, 1977,
77-2 CPD 208, where one Federal agency was asserting a claim for excess
costs of reprocurement against another, the mutual understanding was
expressed in a "section 8(a)" contract. Because the contract contained
a clause, we deferred consideration of the claim until the agencies had
attempted to resolve the claim under the clause. When that was
accomplished, we reviewed the terms of the "section 8(a)" contract and
determined that the one agency was not liable to the other since it had
met its obligations under the contract.
Similarly, in Transfer of Power Plant by Department of the Army to
Panama Canal Company, B-114839, April 27, 1979, we examined the terms of
a use agreement between the Army and the company in order to determine
whether there was a basis for the Army's reimbursement of the company
for certain costs it had incurred. Since the company had incurred the
costs in order to meet third-party contractual obligations and not to
meet its obligations under the use agreement, we decided that there was
no basis for Army reimbursement of the company.
We do not believe that the Forest Service is required to reimburse
FHWA for the cost of settling Slate's claim. The record does not
indicate the existence of any agreement or mutual understanding between
FHWA and the Forest Service concerning what occurred here. Both the
FHWA and the Forest Service appear to have performed their respective
statutory duties. Therefore, despite the Forest Service error, in the
absence of any understanding on this matter there is no basis for FHWA's
claim against the Forest Service.
B-194252, January 14, 1980, 59 Comp.Gen. 203
Travel Expenses - Air Travel - Reservation Penalties v. Voluntary Space
Release - Compensation - Employee v. Government's Entitlement
Employee, while traveling on official business, received $150 from
airline for voluntarily vacating his seat on overbooked flight and
taking next scheduled flight. Airline payments to volunteers are
distinguishable from denied boarding compensation which is due the
Government. Employee may retain payment received as volunteer reduced
by any additional expense incurred by Government.
Matter of: Charles E. Armer - Payment to Employee for Voluntarily
Vacating Seat on Overbooked Airplane, January 14, 1980:
This decision is in response to a request from the National
Association of Government Employees (union) concerning the entitlement
of Mr. Charles E. Armer, an employee of the Department of the Army, to
retain a $150 payment he received from an airline in consideration of
his vacating his seat on an overbooked flight and taking a later flight.
The issue presented for our decision is whether this payment may be
distinguished from denied boarding compensation which, when paid by the
airline to a Federal employee traveling on official business, must be
turned over to the Government.
Mr. Armer performed temporary duty in Chicago, Illinois, and was
scheduled to return to his official duty station in Watervliet, New
York, on the evening of September 14, 1978. Mr. Armer was seated on
board American Airlines Flight 402 on that date when the airline asked
for volunteers who would vacate their seats in return for meals,
overnight lodgings, and guaranteed reservations the next morning.
The airline first offered $87.50, then $100, and finally $150 as an
incentive to such volunteers, and Mr. Armer accepted the airline's offer
of $150. Mr. Armer returned to his duty station the following morning
at the same time he had originally planned, and he did not claim any
additional per diem incident to the delay in his return travel. The
Army ordered the employee to pay the $150 to the Government on the basis
of provisions in the Federal Travel Regulations and decisions of our
Office holding that denied boarding compensation must be paid to the
Government. See FTR para. 1-3.5b; 41 Comp.Gen. 806(1962); John B.
Currier, 59 Comp.Gen. 95(1979); and Tyrone Brown, B-192841, February 5,
1979.
The union contends that this type of payment differs from denied
boarding compensation and should be retained by the employee. The union
argues that the Government suffered no harm in this situation, that the
employee entered into a bilateral contract with the airline which was
outside the scope of his relationship to the Government, and that the
Government would receive a financial windfall by claiming this payment
from the airline. In addition, the union argues that turning over this
payment to the Government would frustrate the intent of the Civil
Aeronautics Board (CAB) regulation governing such payments.
We requested comments from the CAB on this matter, and we received a
report from Mr. Gary J. Edles, Deputy General Counsel of the CAB,
stating that, in our effort to minimize the involuntary bumping of
passengers on overbooking flights, the CAB had increased the amount of
denied boarding compensation and required the airlines to ask for
volunteers to give up their reserved seats before the airline denied
boarding to any passenger with a reservation. See 14 C.F.R.Part
250(1979). The airlines are free to determine the amount to be paid to
the volunteers, but the CAB made no determination whether the employer
or the employee should retain this payment. Mr. Edles' letter also
states: "If the Government employee is not permitted to keep the
voluntary payment, though, the incentive to volunteer would plainly be
decreased. If a sufficient number of volunteers is not available, the
carrier must use alternate means to minimize involuntary denied
boarding, or resort to involuntary bumping. Purely from the perspective
of the Board's regulatory program, therefore, allowing the employee to
accept the denied boarding payment would seem to further the overall
goal of reducing the number of travelers involuntarily denied boarding."
We also requested comments from the General Services Administration
(GSA), the agency vested with the authority to issue regulations
governing the travel of Federal employees (5 U.S.C. 5707), and GSA
responded that they would not distinguish this payment from denied
boarding compensation which, under the Federal Travel Regulations (FTR)
(FPMR 101-7), para. 1-3.5b, is due the Government. GSA argues that the
employee would receive a "windfall" in accepting this payment due to
circumstances within his control. In addition, GSA points out that
official travel is to be performed by the most expeditious means of
transportation practicable. See 5 U.S.C. 5733. The only exception to
this policy which GSA would recognize would be instances where the
employee is on leave and personal expense.
Our Office has long held that where a Federal employee travels on
official business and is denied boarding on a scheduled airline flight,
it is the Government that stands to be damaged by the airline's default
in overbooking the flight and this payment must be turned over to the
Government. See 41 Comp.Gen. 806, supra; John B. Currier, supra;
Tyrone Brown, supra; B-148879, August 28 and July 20, 1970; and
B-151525, June 18, 1963. See also FTR para. 1-3.5b. No distinctions
have been made under the FTR provision or our decisions where the
employee has been denied boarding during official duty hours, on a
nonworkday, or during a period of leave. Likewise, no exceptions have
been permitted where the Government incurs no additional subsistence
expense or the employee reports for duty at the same time as originally
intended.
The Federal Travel Regulations, however, are silent on the question
of employees receiving payments in consideration for voluntarily
vacating their reserved airline seats. Although GSA believes such
payments should be treated the same as denied boarding compensation, we
believe these payments to volunteers are distinguishable from denied
boarding compensation and, therefore, may be retained by the employee
under the following circumstances.
As noted by the letter from CAB, the purpose of seeking volunteers to
give up their seats is to reduce to the smallest number possible those
who would be denied boarding on an oversold airline flight. It is
obvious that if Government employees are not permitted to retain
voluntary payments, there will be no incentive for them to give up their
seats under circumstances where to do so would not unduly inconvenience
the employee or the Government. Thus, the purpose of the CAB regulation
would be partly frustrated by denying this voluntary payment to
Government employees.
We believe voluntary payments are distinguishable from denied
boarding compensation, the latter being liquidated damages for the
airline's failure to furnish accommodations for confirmed reserved space
due the Government. Where an airline denies accommodations to an
employee traveling on official business, the employee has no choice but
to wait for the next available flight. However, where the airline asks
for volunteers to give up their reserved seats, a Government employee
need not volunteer if to do so would impinge upon the performance of
official business or cause the employee to suffer an unreasonable delay
in his travel.
Our decisions holding that denied boarding compensation must be
remitted to the Government are also based upon the principle that
Federal employees may not be reimbursed from private sources for
expenses incident to the performance of official duty, and any payments
tendered to the employee are viewed as having been received on behalf of
the Government. See 46 Comp.Gen. 689(1967); 41 id. 806, supra; 36 id.
268(1956); Currier, supra; and Brown, supra. This prohibition is
intended to prevent double reimbursement to the employee for the same
travel as well as avoid any conflict of interest. We do not believe the
acceptance of voluntary payments under the circumstances set forth below
would involve double reimbursement or a conflict of interest.
Payments to volunteers are also distinguishable from half-fare
coupons or other gifts distributed by the airlines as incentives to the
public. These bonuses or gifts are issued incident to the Government's
purchase of the ticket and are not dependent upon the traveler taking
any action for the benefit of the airlines. Therefore, such bonuses or
gifts are properly considered to be due the Government and may not be
retained by employee.
Employees who voluntarily give up their seats may retain these
payments only under the following conditions. If the employee
voluntarily gives up his seat and thereby incurs additional travel
expenses beyond that which he would have normally incurred, these
additional expenses must be offset against the payment received by the
employee. Also, Government employees are not expected to voluntarily
give up their reserved seats if it would impinge upon the performance of
official duties. Finally, to the extent the employee's travel is
delayed during official duty hours, the employee would be charged annual
leave for the additional hours. See also our decision of today, Edmundo
Rede, Jr., B-196145.
Accordingly, we conclude that under the circumstances present Mr.
Armer may retain the $150 payment he received from the airline in
consideration for his vacating his reserved seat.
B-196652, January 11, 1980, 59 Comp.Gen. 200
National Guard - Civilian Employees - Technicians - Extended Details -
Retroactive Promotion
National Guard technicians, whose positions as Aircraft Mechanics,
WG-10, were prevailing rate positions in excepted service, filed claims
for retroactive temporary promotion and backpay under Turner-Caldwell
line of decisions alleging improperly extended details to positions as
Aircraft Mechanics (Crew Chief), WG-12. Although the positions in
question are beyond the scope of coverage set forth in section 8-2,
subchapter 8, chapter 300, Federal Personnel Manual, claims may be
independently evaluated and adjudicated where nondiscretionary agency
regulation extends coverage of FPM detail provisions to National Guard
technicians in hourly wage pay plan positions.
Matter of: Jose Lujan, et al. - retroactive temporary promotion and
backpay, January 11, 1980:
This decision is in response to the request of Mr. Jose Lujan, and 17
additional claimants who are similarly situated, for reconsideration of
their claims for retroactive temporary promotion and backpay which were
disallowed by our Claims Division on November 22, 1978.
Although the specifics of individual claims vary, in general the 17
technicians claim that while occupying the positions of Aircraft
Mechanic, WG-10, in the New Mexico Air National Guard, they were
detailed to positions as Aircraft Mechanic (Crew Chief), WG-12, without
prior approval of the Civil Service Commission (CSC) (now Office of
Personnel Management) for an extended period in excess of 120 days.
Thus they contend that they are entitled to retroactive temporary
promotions with backpay under our Turner-Caldwell decisions, 55
Comp.Gen. 539(1975), affirmed at 56 id. 427(1977).
Our Claims Division found that the position of Aircraft Mechanic,
WG-10, was a prevailing rate position in the excepted service. Since
the position was neither competitive service nor under the General
Schedule, the Settlement Certificate issued to the individual claimants
typically concluded as follows:
Decisions authorizing retroactive temporary promotions for employees
detailed in excess of 120 days are based on the requirement, found in
the Federal Personnel Manual, chapter 300, subchapter 8, paragraph 8-4f,
that agencies must obtain prior approval from the CSC for any detail
that will exceed 120 days. An agency's failure to follow this
nondiscretionary regulation is considered an unjustified or unwarranted
personnel action under the Back Pay Act (5 U.S.C. 5596), and thus
warrants the remedy of a retroactive temporary promotion. However,
section 8-2 of subchapter 8 specifies that the material in that
subchapter applies only to details within the same agency of employees
serving in competitive positions or in positions under the General
Schedule.
Since the position in which you were serving was neither in the
competitive service nor under the General Schedule, the provisions of
subchapter 8 do not apply to your situation, and we may not grant the
remedy of a retroactive temporary promotion.
The claimants base their requests for reconsideration on the
following provision in para. 300.8-2 of the National Guard Bureau's
Technician Personnel Manual as amended September 18, 1972:
The material covered in this subchapter will apply to all National
Guard technicians in positions under the General Schedule and hourly
wage pay plans.
THEY CONTEND THAT THIS PROVISION EXPANDS THE APPLICABLE AUTHORITY OF
section 8-2 of subchapter 8, chapter 300, of the Federal Personnel
Manual (FPM) to include National Guard technicians in positions under
hourly wage pay plans, notwithstanding that those positions may be
excepted from the competitive service. On this basis they argue that
their claims for retroactive temporary promotion and backpay should have
been considered on their merits by our Claims Division. In accordance
with the following analysis we concur with this view.
The Technician Personnel Manual (TPM) is the National Guard Bureau's
official publication on matters of National Guard technician personnel
management. Pursuant to authority provided in the National Guard
Technicians Act of 1968, Public Law 90-486, August 13, 1968, 82 Stat.
755(32 U.S.C. 709), this publication is prescribed by the Secretary of
the Army and the Secretary of the Air Force and approved by the
Secretary of Defense for the administration of National Guard
technicians. The purpose of the directive is to supplement the FPM in
lieu of Army and Air Force civilian personnel regulations that are
generally not applicable to National Guard technicians. Thus, as
Federal employees, technicians are subject to Civil Service laws and CSC
and Department of Defense civilian personnel rules and regulations,
except as modified by the Technician Personnel Manual.
Although the remedy of retroactive temporary promotion recognized by
the Turner-Caldwell line of decisions is based on the CSC'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 more
restrictive circumstances under which it becomes mandatory to promote an
employee detailed to a higher-grade position. In Kenneth Fenner,
B-183937, June 23, 1977, we noted that under 5 U.S.C. 301 and as
specifically provided for at FPM chapter 171 an agency may promulgate
supplemental personnel regulations and policies for its employees within
the general framework of and consistent with CSC regulations. That case
involved a Customs Service regulation requiring the temporary promotion
of an employee detailed beyond 60 rather than 120 days. Also see 56
Comp.Gen. 786(1977) and 57 id. 536(1978).
As indicated by the above-quoted statement from our Claims Division's
settlements, the CSC's instructions at FPM chapter 300, subchapter 8 are
not applicable to employees who, like the 18 claimants, were detailed
between prevailing rate positions in the excepted service. See Israel
Warshaw, B-194484, September 21, 1979. However, as the claimants have
pointed out, para. 300.8-2 of the TPM was amended September 18, 1972, to
extend the detail provisions of that subchapter of the FPM to National
Guard technicians employed under hourly wage pay plans, including those
in the excepted service.
As to technicians under the General Schedule as well as those under
hourly wage plans, TPM para. 300.8-4 requires the preparation and
submission of a Standard Form 59 to the Chief of the National Guard
Bureau requesting extension of the detail beyond 120 days and provides
insofar as required, that the request will be forwarded to the
appropriate Area Office of the CSC. Thus, the National Guard Bureau's
instructions recognize that requests to extend the details of
individuals not covered by the FPM provisions need not be forwarded to
the CSC for approval, but contemplate, subject to the National Guard
Bureau's own authority to approve extensions, that technicians employed
in the excepted service under hourly wage plans not be detailed for
periods in excess of 120 days.
In view of these findings we conclude that effective September 18,
1972, the provisions of para. 300.8-2 of the TPM extended the scope of
section 8-2 of subchapter 8, chapter 300 of the FPM to include all
National Guard technicians in hourly wage pay plan positions. This
nondiscretionary agency policy is binding upon the agency in the
evaluation of claims for retroactive temporary promotion and backpay.
However, in concluding that the 18 claims for retroactive temporary
promotion and backpay for specified periods subsequent to September 18,
1972, are properly subject to adjudication on their merits by our Claims
Division, we are not rendering a decision on the actual settlement of
any individual claim. Our Turner-Caldwell line of decisions holds that
employees detailed to higher-grade positions for more than 120 days,
without Civil Service Commission approval, are entitled to retroactive
temporary promotions with backpay for the period beginning with the
121st day of the detail until the detail is terminated. As our Claims
Division noted in the Settlement Certificate, the rationale of those
decisions is that an agency has no discretion to continue employees'
details beyond 120 days without the Civil Service Commission's approval.
In the cases of the 18 National GUARD BUREAU TECHNICIANS, DISCRETION TO
EXTEND DETAILS BEYOND 120 DAYS was constrained by the requirement to
obtain approval within the Bureau. When an agency continues a detail
without authority, corrective action in the form of a retroactive
temporary promotion with backpay is required as of the 121st day of the
detail, for the employee, provided the employee was otherwise qualified
and could have been temporarily promoted into the position at that time.
56 Comp.Gen. 982(1977).
As a result, our decisions following Turner-Caldwell have held that
the employee must first satisfy the statutory and regulatory
requirements for a temporary promotion or there will be no remedy for an
improperly extended detail.
See 58 Comp.Gen. 88(1978) and 56 id. 432(1977). Among these
requirements are time-in-grade specifications and the qualification
standards for the position to which the employee is detailed. See FPM
Bulletin 300-40, paragraph 8C, May 25, 1977. In addition, as in all
claims adjudications, the burden of proof is on the claimant to
establish the liability of the United States and the claimant's right to
payment. 4 C.F.R. 31.7(1979). Thus, before any settlement awarding
retroactive temporary promotion and backpay may be certified, the
claimant must present competent evidence establishing that he was
officially detailed to an existing, classified, higher-grade position,
and that he did in fact perform the full range of duties of the
higher-grade position during those periods specified in his claim which
are not barred and which are subsequent to September 18, 1972. See John
R. Figard, B-181700, January 18, 1978.
Accordingly, we are returning Mr. Lujan's claim, along with the
claims of the 17 similarly situated individuals, to our Claims Division
with instructions to evaluate and adjudicate each claim on a
case-by-case basis consistent with this decision.
B-193552, January 11, 1980, 59 Comp.Gen. 195
Contracts - Mistakes - Subcontractor's Error
Relief for mistake in bid alleged after award can be granted where
supplier quoted bidder erroneous price if contracting officer should
have been on notice of possibility of mistake in bid. Contracts -
Awards - Validity - Failure to Verity Bid Mistake
Contracting officer is on constructive notice of probability of error
in bid which is more than 25 percent below next lowest bid, 42 percent
below average of the next three bids which are within close range, and
more than 28 percent below Government estimate. Therefore, contracting
officer's acceptance of bid without seeking verification in bid does not
result in valid and binding contract. Contracts - Default -
Reprocurement - Defaulted Contractor Low Bidder - Price Higher Than on
Defaulted Contract
Where agency rejects bid from defaulted contractor on reprocurement
contract because bid price exceeds defaulted contract price, subsequent
finding by General Accounting Office that initial contract was not
binding on contractor because of contracting officer's failure to seek
verification of bid price does not render improper rejection of
reprocurement bid since at time of rejection agency had reasonable basis
for its action.
Matter of: MKB Manufacturing Corporation, January 11, 1980:
MKB Manufacturing Corporation (MKB), a defaulted contractor under
contract number N60921-77-C-0206 (-0206) issued by the Naval Surface
Weapons Center, White Oak (Weapons Center), protests the award of a
reprocurement contract to any other bidder under invitation for bids
(IFB) number N60921-79-B-0002 (-0002). The procurements involve the
purchase of base couplings which are essential components of a firing
device. MKB also claims a mistake in bid under the defaulted contract.
We allow MKB's mistake in bid claim and deny its protest for the reasons
stated below.
The solicitations for both contracts provided that a single award
would be made for the entire quantity being procured. For contract
-0206, MKB submitted a bid of $50,037.70. In addition to an amount for
item 1 (10 first articles), MKB bid $8.23 for each of the 5,990
production units. The other bids, in total and for the production
quantity, were as follows: (TABLE OMITTED)
The Government estimate for the entire quantity was $70,000. On
September 9, 1977, the contracting officer awarded contract -0206 to MKB
without requesting verification of MKB's bid.
MKB, through counsel, first alleged a mistake in bid in a telephone
conversation with the contracting officer on September 26, 1977,
confirmed by a letter dated October 29, 1977. MKB alleged that prior to
submitting its bid it received from a subcontractor an erroneous oral
quotation. MKB used the quote, $0.175 per unit for gold plating, in
calculating its price for item 2. After the award, the subcontractor
sent MKB a written confirmation of its oral quotation dated September
14, 1977, indicating a unit price of $1.75, not $0.175. Pursuant to
Defense Acquisition Regulation (DAR) Sec. 2-406.4(b) (1976 ed.),
pertaining to corrections of mistakes in bids, MKB requested that the
contract be reformed and the contract price increased by $9,420.00 to
reflect MKB's increased costs.
Because MKB encountered difficulties in performing the contract, the
contracting officer, under the default provisions of the contract, sent
MKB a show cause letter on October 18, 1977. See DAR Sec. 7-103.11.
Therefore, on October 28, 1977, MKB withdrew its request for reformation
and requested rescission under DAR Sec. 2-406.4. MKB later indicated
its willingness to withdraw the request for rescission if the Navy would
agree to reform the contract.
The contracting officer recommended reformation of the contract based
upon the contractor's mistake in bid and the contracting officer's
failure to notice a significant deviation between MKB's bid and the
prices offered by other bidders. However, the final determination
reached by the Deputy Commander, Procurement Management, Naval Supply
Systems Command, on July 28, 1978, denied MKB's mistake in bid claim on
the basis that the disparity between oral and written quotations
discovered after award is outside the scope of its existing remedies for
mistakes in bids.
On three occasions, MKB delivered first articles which failed to meet
first article approval under the contract, and on October 5, 1978, its
contract was terminated for default. MKB appealed the default
termination to the Armed Services Board of Contract Appeals (ASBCA) and
claimed the costs of constructive changes in the contract resulting from
allegedly defective specifications. The appeal is still before the
ASBCA.
After the default determination, the contracting officer decided to
formally advertise the reprocurement and issued IFB -0002 on October 26,
1978. Although MKB was the low bidder, at $77,091.30, the contracting
officer determined that award to MKB would be improper. This
determination was based on our decision in PRB Uniforms, Inc., 56
Comp.Gen. 976(1977), 77-2 CPD 213, in which we held that:
* * * a repurchase contract may not be awarded to the defaulted
contractor at a price greater than the terminated contract price,
because this would be tantamount to modification of the existing
contract without consideration. 56 Comp.Gen.at 978.
The Navy awarded a contract to the second low bidder, Hamilton
Associates, Inc. (Hamilton), on March 23, 1979.
MKB requests that we " * * * review a determination by the Naval
Supply Systems Command regarding a mistake in bid claimed by MKB in the
previously terminated contract." MKB's attempt to recover the cost of
changes due to allegedly defective specifications does not preclude it
from filing this mistake in bid claim. Bromley Contracting Co., Inc.,
B-189972, February 8, 1978, 78-1 CPD 106. Neither does the pendency of
the appeal before the ASBCA 53 Comp.Gen. 167(1973).
In denying MKB's request for relief, the Navy concluded that there
was not clear and convincing evidence of a mistake for which relief
could be granted under the mistake in bid rules. The Navy found "that
MKB (did not intend) to bid anything other than what was bid" and that
MKB would have confirmed its bid had it been requested to do so, so that
MKB "cannot reasonably contend that the contracting officer should have
been on notice of a possible mistake." We do not agree.
Errors made by a bidder's supplier or subcontractor are cognizable
under the mistake in bid procedures even though, in a technical sense,
the bid initially submitted to the contracting agency is what the bidder
intended to submit since at the time the bidder was unaware of the
supplier's error.
See Finast Metal Products, Inc., B-179915, May 3, 1974, 74-1 CPD 224;
see also Robert E. McKee, Inc., B-181872, November 5, 1974, 74-2 CPD
237; B-169901, June 19, 1970. As we said in Robert E. McKee, Inc.,
supra, "the fact that the mistake in bid is found in erroneous
quotations from suppliers is not a bar to relief." Recognizing this, we
believe there is clear and convincing evidence that the claimed mistake
was made, since MKB's bid worksheet shows gold plating computed at
$0.175 unit while the confirming written subcontractor quotation was
$1.75 per unit.
The general rule, of course, is that the responsibility for the
PREPARATION OF A BID RESTS WITH THE BIDDER. THEREFORE, A BIDDER WHO
makes a mistake in a bid which has been accepted in good faith by the
Government must bear the consequences of it unless the mistake was
mutual or the contracting officer had either actual or constructive
notice (the contracting officer either knew or should have known) of the
mistake prior to award. J.B.L. Construction Co., Inc., B-191011, April
18, 1978, 78-1 CPD 301.
Since in this case the mistake was not mutual and the contracting
officer did not have actual knowledge of it prior to award, the question
is whether the contracting officer was on constructive notice of the
mistake prior to award. DAR Sec. 2-406.1 provides that where the
contracting officer has reason to believe a mistake may have been made,
he must request verification of the bid from the bidder. Our Office has
held that not valid and binding contract is consummated if the
contracting officer should have known of the probability of error, and
neglected to seek verification of the bid prior to award. Cargill,
Inc., B-190924, January 17, 1978, 78-1 CPD 43.
The contracting officer believes that she was on constructive notice
of MKB's mistake because of the more than a 25 percent difference
between MKB's low bid and the next lowest bid. Her superiors do not
agree, arguing that bids 25 percent lower than the next low bids are
often accepted without verification and that the resulting contracts are
not legally objectionable on that basis.
It is true that bid disparities ranging from 5 to 38 percent may be
insufficient, standing alone, to charge a contracting officer with
constructive notice of a possible mistake. See, e.g., Paul Holm Co.,
B-193911, May 2, 1979, 79-1 CPD 306. Here, however, there are
additional factors which when considered with the 25 percent difference,
should have placed the contracting officer on notice of a possible error
in MKB's bid. Those factors include an approximately 42 percent
difference between MKB's bid and the average of the next three low bids
which were within a narrow range. The second and third bids were within
a very narrow range of less than 4 percent, and the second through
fourth bids were in a range of less than 14 percent.
(After the fourth bid there was a sharp departure from the reasonable
progression of bids.) We have recognized that such a bidding range is a
factor in determining whether a contracting officer was on constructive
notice of an error. Philadelphia Corrugated Container Co., B-194662,
May 24, 1979, 79-1 CPD 375.
In addition, there was a significant disparity between the Government
estimate and the prices bid. MKB's bid was 28 percent below the
Government estimate while all other bids were within 5 percent of the
estimate or exceeded it. This too is indicative of constructive notice.
See Williams & Co., 57 Comp.Gen. 159(1977), 77-2 CPD 506; Charles E.
Weber & Assoc., B-186267, May 12, 1976, 76-1 CPD 319.
Although the Navy suggests that even if the contracting officer had
asked MKB to verify its bid, the mistake would not have been detected
and MKB would have verified its bid, this possibility does not excuse
the contracting officer's duty to seek verification of the bid once she
was on notice of a possible error. See, e.g., Y. T. Huang and
Associates, Inc., B-192169, December 22, 1978, 78-2 CPD 430 (where we
allowed a post-award mistake claim even though it appears that the bid
there too might well have been verified had the contracting officer made
a proper verification request). Moreover, while here MKB might have
verified its bid had it been asked, it also might have checked with its
supplier and learned of the error. In short, the validity of a
post-award mistake in bid claim is based not on what the bidder might
have done upon receipt of a verification request, but on the contracting
officer adequately discharged the verification duty.
Here, we agree with the contracting officer that she failed in her
verification duty. Consequently, MKB is entitled to appropriate relief.
See Vogard Printing Corp., B-186126, April 20, 1976, 76-1 CPD 268.
MKB protests rejection of its bid on the reprocurement contract on
the basis that defective specifications in the defaulted contract should
excuse its nonperformance. The Navy rejected MKB's bid because it was
higher than the defaulted contract price. Although we hold that MKB is
entitled to relief in light of the contracting officer's error, we
believe that at the time the reprocurement contract was awarded the Navy
had a reasonable basis to consider MKB's bid ineligible for award under
PRB Uniforms, supra. Therefore, we will not legally object to the
rejection of MKB's bid.
B-195691, January 8, 1980, 59 Comp.Gen. 192
Quarters Allowance - Basic Allowance for Quarters (BAQ) - Assigned to
Government Quarters - Member On Sea Duty - Regulation Requirements -
Coast Guard
An amendment to Executive Order 11157 by Executive Order 12094
redefined sea duty for basic allowance for quarters (BAQ) purposes;
however, the amendment did not affect the Secretaries of the armed
services' authority to issue supplemental regulations not inconsistent
with the Executive orders. A Coast Guard member contends that he is
entitled to receive BAQ in light of the new definition, while on sea
duty for over 3 months, during which he spent a few days on shore.
Since the claimant would not be entitled to receive BAQ under the
supplemental regulations issued by the Coast Guard since those
regulations rationally effectuate 37 U.S.C. 403(c), which prohibits
payment of BAQ to member without dependents who is on sea duty for 3
months or more, and the Executive orders, the claim is denied.
Amplified by 60 Comp.Gen. - (B-199758, July 15, 1981).
Matter of: Lieutenant William R. Miller, USCGR, January 8, 1980:
The issue is whether a member of the United States Coast Guard is
entitled to receive payment of basic allowance for quarters (BAQ) as a
member without dependents for the period he was deployed from his
permanent duty station and was assigned to temporary additional duty
(TAD) on board a United States vessel. For the reasons stated below BAQ
at the without dependent rate may not be authorized for the period in
question.
The question was presented by letter from Mr. E. J. Rowe, Authorized
Certifying Officer, United States Coast Guard, and was assigned Control
No. ACO-CG-1330, by the Department of Defense Military Pay and Allowance
Committee.
Lieutenant William R. Miller, United States Coast Guard Reserve, is
attached to the Polar Operations Division permanently stationed at the
Coast Guard Aviation Training Center, Mobile, Alabama. As part of his
duties with the Polar Operations Division he is routinely deployed on
TAD to a vessel for extended periods of time. In the present situation,
he was deployed, as a member of a helicopter detachment, on TAD to the
United States Coast Guard Cutter Glacier and any such place as directed
by the Commanding Officer of the Glacier.
While the Glacier was operating in Antarctica, Lieutenant Miller
received further TAD orders to McMurdo Station, Antarctica. Except for
the travel time to and from Mobile, during the period in question
(November 8, 1978-- April 11, 1979) Lieutenant Miller served on board
the Glacier except for three short periods of 2 to 4 days at McMurdo
Station. During the period of his duty on board the Glacier and at
McMurdo station he was furnished Government quarters.
While Lieutenant Miller is at his permanent duty station, Mobile, he
is entitled to receive BAQ at the without dependent rate since suitable
Government quarters are not available for him there. 37 U.S.C.
403(1976). Every time he leaves Mobile on this type of TAD assignment,
however, his BAQ is terminated pursuant to 37 U.S.C. 403(c), since he is
then considered to be on sea duty for a period of 3 months or more.
Lieutenant Miller argues that this is a hardship on him, a member
without dependents, since he is purchasing a house at his permanent
station which he bears the expense of maintaining whether or not he is
on TAD. The financial burden on him increases when his BAQ is reduced
to the partial rate during his TAD (sea duty) periods.
However that may be, BAQ is an allowance which is ordinarily only
paid in lieu of furnishing a member Government quarters and may not be
paid to a member without dependents who is on sea duty for 3 months or
more.
Section 403(c) of title 37, United States Code, provides in part that
a member of a uniformed service without dependents is not entitled to
BAQ while he is on sea duty. It further provides that duty for a period
of less than 3 months is not considered to be sea duty. Section 403(g)
of that title authorizes the President to prescribe regulations for the
administration of section 403, including of the words "sea duty."
Pursuant to that authority, the President, in section 401(c) of
Executive Order No. 12094, 3 C.F.R. 251, 252(1979), amending section
401(c) of Executive Order No. 11157, 29 Fed.Reg. 973(1964), defined the
term sea duty for BAQ purposes as meaning service performed by either an
officer or enlisted member in a self-propelled vessel that is in an
active status, in commission or in service and is equipped with berthing
and messing facilities.
Thus, the underlying issue is whether Lieutenant Miller was on sea
duty during the entire time period in question. Lieutenant Miller
contends that he was not and is therefore entitled to receive BAQ for
this time period.
His argument is based on the reasoning that he was not on sea duty, as
defined in the above Executive order, for more than 3 continuous months.
In other words, he contends every time he left the Glacier to perform
duty ashore at McMurdo station the 3-month period in 37 U.S.C. 403(c)
was broken since he was no longer performing service in a self-propelled
vessel. To complete the argument, Lieutenant Miller contends that a new
3-month period commenced every time he returned to temporary duty aboard
the vessel.
As indicated above, Executive Order No. 12094 amended Executive Order
No. 11157 with regard to the payment of BAQ and the definition of sea
duty. Section 407 of Executive Order No. 11157, however, authorizes the
Secretaries of the uniformed services to prescribe such supplementary
regulations not inconsistent with the Executive Order as may be deemed
desirable and necessary for carrying out the regulations. While
Executive Order No. 12094 amended Executive Order No. 11157, it did not
affect the Secretaries' authority to issue regulations.
Supplemental regulations of the Coast Guard are contained in Volume
2, Section B, of the Coast Guard Comptroller Manual. Table 2B0130-2,
rule 5 of the Manual, provides that when a member is on sea duty and
during such period his permanent duty station remains sea duty and
during such period his permanent duty station remains unchanged then BAQ
accrues if such duty is TAD or less than 3 months and the member was
entitled to BAQ at his permanent station prior to departure for such
duty. Note 4 to rule 5 provides, however, that if the TAD extends for a
period of 3 months or more then BAQ is not payable for any portion of
such period. Under the above regulation Lieutenant Miller would not be
entitled to BAQ since he was on sea duty and such duty was TAD which
extended for a period of more than 3 months.
In order for Lieutenant Miller to be entitled to receive BAQ,
therefore, it must be found that the above regulation is inconsistent
with either 37 U.S.C. 403(c) or Executive Order No. 12094. The
regulation cannot be said to be inconsistent with either 37 U.S.C.
403(c) or Executive Order No. 12094. The regulation cannot be said to
be inconsistent with the statute since it is implementing the 3-month
rule laid down by the statute. Nor is the regulation inconsistent with
the new definition of sea duty found in Executive Order No. 12094, which
no longer ties sea duty for BAQ purposes to payment of sea duty pay.
See: Executive Order No. 11157, section 401(c). Absent any indication
to the contrary, it cannot be said that the amendment was intended to
allow the payment of BAQ in the present situation. This is especially
true in light of the fact that Congress, in passing 37 U.S.C. 403(c),
intended that BAQ not be paid to any member assigned to sea duty for
more than 3 months. While during his approximately 5-month assignment
to the Glacier Lieutenant Miller performed duties for a few days on
shore, the vast preponderance of his duty was performed in the Glacier.
We believe the Coast Guard has properly classified his TAD during this
period as sea duty for over 3 months. Compare 27 Comp.Gen. 432,
436(1948).
In our view the Coast Guard regulation is in accord with the language
of and rationally effectuates 37 U.S.C. 403(c) and Executive Orders Nos.
11157 and 12094. Accordingly, we conclude that Lieutenant Miller is not
entitled to BAQ for the time period he claims.
If payment of BAQ to members in the described situation is considered
desirable by the Coast Guard, the matter should be presented to Congress
for enactment of authorizing legislation.
B-195589, January 4, 1980, 59 Comp.Gen. 189
Bids - Late - Evidence of Late Receipt - Time/Date Stamp - Conflict With
Other Evidence
Bid was not late because evidence clearly shows it arrived by
certified mail at the Government office designated in solicitation for
receipt of bids (bid opening room) before bid opening but was not
time/date stamped until after bid opening. Exemption in late bid clause
for bid arriving late because of Government mishandling after receipt of
bid at Government installation has no application to case. Bids - Late
- Time of Receipt Determination - Evidence To Establish
Where issue involves whether bid arrived on time in designated office
before bid opening, all evidence in the record, aside from that
furnished by bidder, may be considered.
Matter of: Lockley Manufacturing Co., Inc., January 4, 1980:
Lockley Manufacturing Co., Inc. (Lockley), protests the consideration
of Gayston Corporation's (Gayston) lower bid under invitation for bids
(IFB) N00104-79-B-0631, issued by the Navy Ships Parts Control Center,
Mechanicsburg, Pennsylvania (SPCC). For the following reason, we deny
the protest.
Gayston's bid was stamped as received in the bid opening room at
11:56 a.m. June 25, while bid opening was scheduled for 11:15 a.m. on
that date. Lockley argues that, under the Defense Acquisition
Regulation (DAR), the time/date stamp is the only acceptable evidence to
establish the time of receipt at the installation or bid opening room.
Lockley maintains that there is no other documentary evidence
establishing that the Gayston bid arrived at the installation before bid
opening and, therefore, Gayston's bid is late and cannot be considered
for award.
The Navy submits that the evidence in the record conclusively shows
that the Gayston bid was physically in the designated office before bid
opening and, therefore, is not a late bid. Thus, the Navy maintains
that our inquiry is not confined to documentary evidence such as the
time/date stamp but that all other evidence may be considered to show
that the Gayston bid was not late. We agree.
Defense Acquisition Regulation (DAR) Sec. 7-2002.2 (1976 ed.)
delineates the conditions for consideration of late bids. It provides:
(a) Any bid received at the office designated in the solicitation
after the exact time specified for receipt will not be considered unless
it is received before award is made an either:
(ii) it was sent by mail (or telegram if authorized) and it is
determined by the Government that the late receipt was due solely to
mishandling by the Government after receipt at the Government
installation.
(c) The only acceptable evidence to establish
(ii) the time of receipt at the Government installation is the
time/date stamp of such installation on the bid wrapper or other
documentary evidence of receipt maintained by the installation.
Where a bid arrives in the office designated in the IFB for receipt
after bid opening, before we can consider the question of Government
mishandling, the time of receipt at the installation must be
established. B. E. Wilson Contracting Corp., 55 Comp.Gen. 220(1975),
75-2 CPD 145. The regulation provides and we have consistently held
that the only acceptable evidence of receipt at the Government
installation is the time/date stamp or other documentary evidence of
receipt maintained by the installation. See, e.g., B. E. Wilson
Contracting Corp., supra; Lambert Construction Company, B-181794,
August 29, 1974, 74-2 CPD 131.
In this case, however, the question is not whether a late bid was
mishandled after its receipt at the Government installation. (The Navy
states that the Gayston bid was not mishandled prior to its receipt in
the bid opening room.) The issue here is whether or not Gayston's bid
was received late in the designated office. See Building Maintenance
Corporation, B-196081, November 27, 1979, 79-2 CPD 374; Daymar, Inc.,
B-188701, August 8, 1977, 77-2 CPD 88; B-171322, December 23, 1970.
In this situation, therefore, we are not constrained, as the
protestor maintains, by the strict evidentiary requirements of the DAR
provision quoted above, i.e., "time/date stamp or other documentary
evidence." See Building Maintenance Corporation, supra. Our primary
objective, however, is to maintain the integrity of the competitive
bidding system "to prevent opportunities for fraud or undue advantage
which might be obtained if bidders could submit their bids after the
time set for bid opening." 40 Comp.Gen. 709, 710-711(1961). We believe,
therefore, that we may consider all of the evidence in the record, aside
from that furnished by the bidder, to establish whether the Gayston bid
was in the designated office before bid opening. See Building
Maintenance Corporation, supra; Adrian L. Merton, Inc., B-190982, May
9, 1978, 78-1 CPD 351; Free State Builders, Inc., B-184155, February
26, 1976, 76-1 CPD 133.
In Adrian L. Merton, Inc., supra, a case analogous to the situation
here, a mailed bid not sent registered or certified was discovered in
the designated office one-half hour after bid opening. We concluded
that the evidence failed to show conclusively how and when the bid was
placed in the unsorted mail delivered to bid opening, because no
individual at the installation could personally attest to these facts.
The clerk who sorted this mail left the designated office (procurement
branch) shortly before bid opening, leaving the mail unattended until
she returned from the bid opening. Thus, we held that the bid was late
and could not be considered for award under the DAR mishandling
exception.
In this case, the IFB designated the bid opening room at the place
for receipt of bids. In a sworn affidavit, the bid opening clerk states
that she was in the bid room (office designated in the IFB) from the
time it opened until the close of business, the registered and certified
mail was delivered to the bid opening room at approximately 11 a.m.,
that no other registered or certified mail was delivered to the bid room
on June 25, that she signed the mail receipt form and began to
time/stamp the mail. At 11:15 a.m., the time scheduled for bid opening,
the clerk put this mail aside in order to conduct formal bid opening.
Subsequent to the bid opening, the remaining registered and certified
mail, including the Gayston bid and the protester's acknowledgment of
amendment 3 was time/date stamped as received at 11:56 a.m. The clerk
affirmatively states that the Gayston bid was in the bid room before bid
opening.
We believe that the facts of this case are distinguishable from those
in Adrian L. Merton, Inc., supra, and clearly establish that Gayston's
bid arrived in the designated office/bid opening room before bid opening
with other mail and remained in the exclusive control of the Government.
Gayston's bid was sent by certified mail only 4 rather than 5 days
before big opening and therefore could not, in any event, be considered
under an exemption in the late bid clause for certified mail sent 5 days
prior to bid opening. The statement of the bid opening clerk
establishes that all certified and registered mail received on June 25,
including the Gayston bid, was delivered to the bid/designated office
before the 11:15 bid opening and that no other delivery of such mail was
made after that time on that date. In this connection, a record and
receipt form prepared by the installation mail clerk prior to delivery
to the bid room was signed by the bid opening clerk. This log lists the
registered number of each piece of mail received and the sender. In
this case, it shows the certified mail number of the Gayston bid and
therefore proves that the bid was received along with other mail
delivered to the bid room on the bid opening date. Precisely at 11:15
a.m. the door to the bid opening room was locked and access to the bid
room was restricted. The mail in the bid room was not removed from the
clerk's sight, although Gayston's bid was not identified as such before
11:15 because the clerk had to stop sorting and stamping the mail in
order to proceed with the 11:15 bid opening.
As a result, Gayston's bid and the protester's acknowledgement of an
amendment were time/date stamped in the bid room at 11:56 a.m.
It is clear that Gayston's bid was received in the bid room prior to
bid opening time and that the time/date stamp on the bid envelope as
well as the time/date stamp on the protester's amendment acknowledgment
do not reflect the time of actual receipt in the bid room.
The protest is therefore denied.
B-195646, December 27, 1979, 59 Comp.Gen. 185
Compensation - Removals, Suspensions, etc. - Back Pay - Entitlement -
Unjustified or Unwarranted Personnel Action - Not Affecting Pay or
Allowances
Employee's reassignment and reduction in rank from GS-12 supervisory
position to GS-12 nonsupervisory position was determined to be erroneous
personnel action.
However, such erroneous personnel action creates no entitlement to
retroactive temporary promotion and backpay because it did not affect
his pay and allowances as to constitute "an unjustified or unwarranted
personnel action" remediable pursuant to the Back Pay Act, 5 U.S.C.
5596(1976). Compensation - Removals, Suspensions, etc. - Back Pay -
Unjustified Personnel Action Requirement - What Constitutes -
Termination of Detail Status
Although action on March 6, 1977, reducing employee in rank from a
supervisory GS-12 to a nonsupervisory GS-12 position was erroneous,
correction of that action does not entitle employee to retroactive
temporary promotion with backpay based on earlier action on October 30,
1976, terminating his detail to a GS-13 supervisory position and
returning him to his GS-12 supervisory position. Termination of detail
was within agency discretion and after October 30, 1976, employee no
longer performed higher grade duties, which were assigned to another
individual.
Matter of: Samuel Freiberg - Retroactive Temporary Promotion and
Backpay, December 27, 1979:
Mr. Samuel Freiberg requests reconsideration of his claim for
retroactive temporary promotion and backpay which was denied by our
Claims Division's settlement dated June 12, 1979. Consistent with the
following analysis we are sustaining our Claims Division's adjudication.
The record shows that Mr. Freiberg served in a GS-13, Supervisory
General Supply Specialist position under temporary promotion and
informal details during the period March 1 to October 30, 1976. He was
then returned to his official position as a GS-12, Supervisory General
Supply Specialist. Subsequently, Mr. Freiberg was advised by letters
dated January 7 and February 18, 1977, that he would be reassigned to a
nonsupervisory GS-12, General Supply Specialist position. That
reassignment and reduction in rank took place effective March 6, 1977.
When Mr. Freiberg successfully appealed his reduction in rank, the
Civil Service Commission (now Office of Personnel Management) directed
his employing agency to cancel the action, retroactively restoring him
to his GS-12, Supervisory General Supply Specialist position effective
March 6, 1977, and continuing until his retirement on April 15, 1977.
In a separate action based on these facts. Mr. Freiberg filed a
claim with his agency for a retroactive temporary promotion and backpay
in connection with his service in the GS-13, Supervisory General Supply
Specialist position. The claim was allowed by the agency and Mr.
Freiberg received a retroactive temporary promotion and backpay for the
period form August 28, 1976 (the 121st day of the improper detail),
through October 30, 1976, the last day of his detail based on the
Turner-Caldwell decisions, 55 Comp.Gen. 539(1975) and 56 id. 427(1977).
Mr. Freiberg subsequently filed a claim for retroactive temporary
promotion and backpay for the period October 31, 1976, to his retirement
on April 15, 1977, on the basis of his erroneous reassignment and
reduction in rank.
Entitlement to backpay is governed by 5 U.S.C. 5596(b)(1976) which
provides in pertinent part as follows:
(b)(1) An employee of an agency who, on the basis of a timely appeal
of an administrative determination (including a decision relating to an
unfair labor practice or a grievance) is found by 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--
(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 any 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, less any amounts earned by the employee through other
employment during that period * * * .
The Back Pay Act was intended to provide a monetary remedy for
wrongful reductions in grade, removals, suspensions, and other
unjustified or unwarranted actions affecting pay and allowances that
could occur in the course of reassignments and change from full-time to
part-time work. United States v. Testan, 424 U.S. 392, 405(1976).
Although Mr. Freiberg's reassignment and reduction in rank from a GS-12
supervisory position, to a GS-12 nonsupervisory position was later
determined to be an erroneous personnel action, it is clear that the
erroneous personnel action did not result in the reduction or withdrawal
of all or a part of his pay allowances, or differentials, and is
therefore not an "unjustified or unwarranted personnel action"
remediable pursuant to the Back Pay Act.
Mr. Freiberg further contends that although his erroneous reduction
in rank was effective on March 6, 1977, the erroneous personnel action
was actually commenced on September 1976 when agency officials asked him
to accept a reduction in rank. He claims that he was adversely affected
as early as October 30, 1976, when his detail to the GS-13, Supervisory
General Supply Specialist position was terminated and a new employee
assumed the GS-13, supervisory position. Mr. Freiberg asks that the
effective date of his erroneous reduction in rank be established as
October 31, 1976, and contends that but for the alleged adverse
personnel action on October 31, 1976, he would have continued to fill
the GS-13, supervisory position - either by permanent promotion OR
THROUGH A CONTINUED DETAIL-- FROM OCTOBER 31, 1976, THROUGH APRIL 15,
1977. On this basis Mr. Freiberg contends that he is entitled to a
retroactive temporary promotion with backpay for this additional period.
Since, the Civil Service Commission corrected Mr. Freiberg's improper
reassignment and reduction in rank by directing that he be restored to
his GS-12 Supervisory General Supply Specialist and since he in fact
held that position prior to March 6, 1977, there is no personnel action
subject to correction on the basis of the Civil Service Commission's
findings for the period from October 31, to March 5, 1976.
In the Turner-Caldwell decisions, supra, we held that employees
officially detailed to established higher level positions for more than
120 days are entitled to retroactive temporary promotions with backpay
beginning with the 121st day of the detail until the detail is
terminated. Since the record clearly indicates that Mr. Freiberg no
longer performed the duties of the GS-13 position after October 30,
1976, the Turner-Caldwell line of decisions provides no basis to
retroactively promote him to the GS-13 position and award him backpay
for the period after October 30th.
The personnel action which returned Mr. Freiberg to his appointed
position as a GS-12 Supervisory General Supply Specialist at the end of
his detail to the GS-15 Supervisory General Supply Specialist position,
cannot be considered an adverse action under 5 C.F.R. Part 752 and
creates no entitlement to continued receipt of the higher rate of pay.
In the circumstances presented, the detail action was properly subject
to the agency's discretion and Mr. Freiberg obtained no vested right
under law or regulation to have the detail continued or to be
permanently promoted to the higher graded position.
Mr. Freiberg received a retroactive temporary promotion and backpay
in connection with his extended detail for the period from August 28
through October 30, 1976, when the detail was terminated and Mr.
Freiberg returned to his regular duties. As indicated by our Claims
Division's determination, from October 31, 1976, until he retired
effective April 15, 1977, Mr. Freiberg was entitled to and properly
received the salary of the GS-12 Supervisory General Supply Specialist
position in which he was employed.
In regard to Mr. Freiberg's inquiry as to his right of appeal,
decisions of the Comptroller General are binding on executive agencies
of the United States. 54 Comp.Gen. 921, 926(1975). However,
independent of the jurisdiction of this Office, the United States Court
of Claims and District Courts have jurisdiction to consider certain
claims against the Government if suit is filed within 6 years after the
claim first accrued. See 28 U.S.C. 1346(a)(2), 1491, 2401, and
2501(1976).
B-194421.3, December 27, 1979, 59 Comp.Gen. 184
Contracts - Awards - Delayed Awards - Cancellation Propriety - Lower
Price On Subsequent Procurement - Military Regulation Applicability
Protest that prior solicitation should be canceled and items added to
protester's current contract because of lower prices and resultant
savings to Government is denied as contracting officer has determined
prior prices to be reasonable and, therefore, DAR 2-404.1(b)(vi),
permitting cancellation for unreasonable prices, is inapplicable.
Contractors - Responsibility - Contracting Officer's Affirmative
Determination Accepted
Contention that there would be less risk of delivery delay by
purchasing items under protester's (established producer) contract
rather than from proposed awardee (new producer) is denied since
contracting officer has determined awardee to be responsible bidder.
Matter of: Century Metal Parts Corporation, December 27, 1979:
Century Metal Parts Corporation (Century) has protested the proposed
award of a contract to Howe Machine and Tool Corporation (Howe) under
invitation for bids (IFB) No. DAAB07-79-B-2832 issued by the U.S. Army
Communications and Electronics Material Readiness Command.
Howe was the low bidder under IFB No. -2832, which was opened on
January 22, 1979, for a quantity of antenna elements. No award has been
made under the solicitation because of various protests and court
actions filed by Century, of which this protest is the final action
still pending.
The Army, in July 1979, issued IFB No. DAAB07-79-B-2460 for
additional quantities of the antenna element. Century was the low
bidder on this IFB and contends that because its price on IFB-2460 is
lower than Howe's price on IFB -2832, the Army should cancel the prior
solicitation and include those items under its current award. Such
action would result in a 5-percent savings to the Government.
Before deciding the merits of the protest, the Army's contention that
the protest was untimely filed must be answered. IFB -2460 was opened
on August 23, 1979, and Century's protest was filed with our Office on
September 10, 1979. The Army argues that Century knew of the basis for
its protest at bid opening and, therefore, the protest was untimely
filed.
Section 20.2(b)(2) of our Bid Protest Procedures (4 C.F.R. part 20
(1979) requires protest be filed within 10 working days after the basis
of protest was known or should have been known. However, Century argues
that it was not at bid opening and notwithstanding a phone call to the
agency the afternoon of bid opening, did not learn the results of the
bidding until 2 days later. Therefore, Century's protest was filed on
the 10th working day following its knowledge of the basis for its
protest and is timely.
Regarding Century's contention that the prior solicitation should be
canceled, Century argues that its lower bid on the second solicitation
shows that Howe's price on January 1979 was unreasonable and that under
Defense Acquisition Regulation (DAR) Sec. 2-404.1(b)(vi), the
cancellation would be justified.
The contracting officer has advised our Office that he feels Howe's
price is reasonable in view of the adequate price competition under IFB
No. -2832 and the past procurement history of the item.
The determination of price reasonableness is a matter within the
discretion of the contracting officer which our Office will not question
absent a showing of unreasonableness, which has not been made here.
North American Signal Company - Reconsideration, B-190972, August 4,
1978, 78-2 CPD 87. Therefore, since the contracting officer has
determined the price of Howe to be reasonable, DAR Sec. 2-404.1(b)(vi),
which permits cancellation where prices are unreasonable, is not for
application.
We believe DAR Sec. 2-404.1(1) is the controlling regulation in the
instant factual situation. The regulation reads, in pertinent part, as
follows:
* * * As a general rule, after opening, an invitation for bids should
not be canceled and readvertised due solely to increased requirements
for the items being procured; award should be made on the initial
invitation for bids and the additional quantity required should be
treated as a new procurement.
The above action is what the Army has done here and as our Office has
stated numerous times in the past, the maintenance of the integrity of
the competitive bidding system is more in the public interest than the
pecuniary advantage to be gained in a particular case. A. D. Roe
Company, Inc., 54 Comp.Gen. 271, 275(1974), 74-2 CPD 194.
Century also contends that there would be less risk of delivery delay
if the earlier quantity were purchased from Century, an established
producer of the item, rather than Howe, which has never manufactured the
item. The contracting officer has found Howe to be a responsible bidder
based on a preaward survey which noted a satisfactory rating for its
ability to meet the required delivery schedule. Therefore, this basis
of protest is denied.
The protest is denied.
B-195268, December 21, 1979, 59 Comp.Gen. 158
Contracts - Buy American Act - Foreign Products - End Product v.
Components
Airframe manufactured, tested and certified in France and
disassembled for shipment to offeror in United States is
foreign-manufactured component and, if airframe's cost is more than 50
percent of costs of all components of helicopter end product, helicopter
is foreign source end product, and 6-percent differential required by
Buy American Act, 41 U.S.C. 10a-d(1976), and implementing regulations,
should have been added to foreign offer before offers were evaluated
according to technical/cost basis procedure in request for proposals.
However, addition of differential would not have changed order in which
offerors stand. Contracts - Specifications - Tests - Aircraft -
Proposed v. Testing Model
Although solicitation required that proposed helicopter be directly
derived from helicopter submitted for flight evaluation, provision in
which requirement is included, when read as whole, indicates that
intention was that flight-tested aircraft have potential to meet
agency's mission and performance requirements. Contracts - Negotiation
- Evaluation Factors - Administrative Determination
Protest against agency's technical evaluation of proposals is
reviewed against General Accounting Office (GAO) standard that judgment
of procuring agency officials, based on solicitation's evaluation
criteria as to technical adequacy of proposals, will not be questioned
unless shown to be unreasonable, an abuse of discretion or in violation
of procurement statutes and regulations. Standard is not found to have
been violated. Contractors - Responsibility - Contracting Officer's
Affirmative Determination Accepted - Exceptions - Not Supported By
Record
Ordinarily GAO does not review protests against affirmative
determinations of responsibility unless fraud is alleged on the part of
procuring officials or solicitation contains definitive responsibility
criteria which have not been met. Standard is much the same as that
followed by courts which view responsibility as discretionary matter not
subject to judicial review absent fraud or bad faith. Since protester
does not allege fraud, protester had failed to meet standard for review
by GAO courts.
Contracts - Prices - Adjustment - Latest Available Indices - Domestic v.
Foreign - Foreign Article Procurement
Fact that price adjustment percentages to be used in economic price
adjustment clauses are to be based on domestic indexes, instead of
French economy where some costs will be incurred, is determined to be
irrelevant.
Matter of: Bell Helicopter Textron, December 21, 1979:
Bell Helicopter Textron (Bell) protests the Department of
Transportation, United States Coast Guard (DOT), award of contract No.
DOT-CG-80513-A on a firm fixed-price basis to Aerospatiale Helicopter
Corporation (AHC) for 90 short range recovery (SRR) helicopters,
logistics support, training and warranties. The award was made under
request for proposals (RFP) No. CG-80513-A, issued on March 17, 1978,
which contemplated the award of a multiyear contract to replace Sikorsky
HH-52A helicopters currently used to perform the Coast Guard's SRR
responsibilities, missions executed within the maritime region extending
the 150 nautical miles seaward of the shoreline.
As part of the evaluation of proposals submitted in response to the
RFP, DOT conducted a flight evaluation program under a separate
contract. The flight evaluation program and the solicitation for it
were included in the RFP as Attachment VIII. Each offeror which
intended to submit a written proposal in response to the RFP was
required to provide a helicopter for the flight evaluation program. DOT
awarded flight evaluation contracts to Bell, AHC and Sikorsky Aircraft,
Division of United Technologies Corporation (Sikorsky), and flight
evaluations were conducted in May and June 1978.
Initial technical and cost proposals under the subject RFP were
received on June 19 and July 31, 1978, respectively. DOT conducted
technical discussions with the offerors from October 25 to October 30,
1978, and cost discussions from November 27 to November 30, 1978. The
offerors submitted their revised technical proposals on December 7,
1978, and revised cost proposals on March 5, 1979. Sikorsky, however,
withdrew its proposal from the competition on March 26, 1979. Bell and
AHC submitted their best and final offers on May 25, 1979, and the
contract was awarded to AHC on June 14, 1979.
Bell was given a debriefing on June 20, 1979, and filed its protest
with our Office on June 22, 1979. The protester essentially contends
that DOT improperly evaluated the firms' proposals, that the contract
awarded to AHC is invalid, and that DOT should resolicit its
requirements. More specifically, Bell asserts that:
1. DOT erroneously determined that AHC offered only domestic source
end products and therefore failed to evaluate the firm's proposal in
accordance with the Buy American Act.
2. The award to AHC contravened the requirement of the RFP and the
Flight Evaluation Program under contract No. DOT-CG-828572-A that the
flight-tested helicopter "must be one from which the proposed SRR
helicopter is directly derived.
3. DOT erred in its technical evaluation of the firms' proposals,
failed to apply evaluation criteria consistently, and thus erroneously
determined that AHC's proposal and proposed helicopter were technically
superior.
4. DOT had no reasonable basis to determine AHC was a responsible
prospective contractor: considering the firm's limited net worth,
facilities and workforce, the determination constituted as abuse of
discretion and the award was made in violation of Federal procurement
law and regulations.
5. To the extent AHC's helicopter components are of foreign origin,
Economic Price Adjustment Clauses which were included in the firm's
contract bear no relation to the cost AHC will actually incur, will
result in an improper expenditure of appropriated funds and invalidate
the contract.
On July 6, 1979, Bell filed suit in the United States District Court
for the District of Columbia (Textron Inc., Bell Helicopter Textron
Division v. Adams, Civil Action No. 79-1749) seeking an order setting
aside the contract, requiring reevaluation of the proposals, and
requesting that our decision on the protest be transmitted to the court.
By order dated July 27, 1979, the court requested our decision "with
respect to the merits of all issues set forth in the plaintiff's
protest." See 4 C.F.R. 20.10(1979).
AHC contends that Bell's protest on grounds 2 and 3 above are
untimely. Assuming that is correct, we will still consider those
grounds because of the court's request for our decision on the issues.
Sound Refining Inc., B-193863, May 3, 1979, 79-1 CPD 308.
Upon consideration of the issues, we deny the protest for the reasons
which follow.
DOT and AHC point out that AHC certified in its offer that it will
furnish a domestic source end product and contend that whether AHC will
comply with the certification is a matter of contract administration for
resolution by the procuring activity and the contractor rather than this
Office. See, e.g., Lanier Business Products, Inc., B-193204, December
12, 1978, 78-2 CPD 407; Thorsen Tool Company B-188271, March 1, 1977,
77-1 CPD 154. However, since notwithstanding the certification, DOT
requested information from AHC to determine whether a domestic source
end product is being offered, the question is whether DOT properly
evaluated the proposal in light of the information received.
Where prior to award an offeror furnishes information to a contracting
agency bearing upon whether the offered product is domestic, we have
considered the matter. New Britain Hand Tools Division, Litton
Industrial Products, Inc., 58 Comp.Gen. 49(1978), 78-2 CPD 312. We
conclude that the issue properly is before us.
The application of the 6-percent Buy American Act differential to
AHC's offer would not change the order in which the offerors stand in
this case. This is because, even though the addition of the
differential would make AHC's cost proposal higher than Bell's cost
proposal, the technical advantage in AHC's proposal under the evaluation
provided in the request for proposals outweighed the cost advantage.
However, in order that an understanding will exist as to how the Buy
American Act must be applied in a procurement like this, we are
providing our analysis, first, as to the way in which the differential
is to be applied where a technical factor is a dominant criterion and,
second, as to the articles, materials and supplies to which the Buy
American Act differential is to be applied.
The Buy American Act requires that only such manufactured articles,
materials and supplies as have been manufactured in the United States
substantially all from articles, materials or supplies mined, produced
or manufactured in the United States shall be acquired for public use,
unless the head of the agency concerned determines it to be inconsistent
with the public interest or the cost to be unreasonable. 41 U.S.C.
10a(1976). Executive Order No. 10582, December 17, 1954, as amended,
which establishes uniform procedures for determinations, as provides
that materials (including articles and supplies) shall be considered to
be of foreign origin if the cost of the foreign products used in such
materials constitutes 50 percent or more of the cost of all the products
used therein. The order further provides that the price of domestic
articles is unreasonable if it exceeds the cost of like foreign articles
plus a differential. The differential prescribed for the instant
situation is 6 percent.
The act as implemented by Executive Order and Federal Procurement
Regulations (FPR) Sec. 1-6.104 (1964 ed. circ. 1) imposes two
determinative requirements: that manufactured articles, materials or
supplies must be manufactured both (1) in the United States and (2)
substantially all from "components" mined, produced or manufactured in
the United States. If these requirements are not met, the end product
is considered foreign and a specified percentage factor or differential
(generally 6 percent) must be added to offers of foreign end products
for the purpose of proposal evaluation in order to give the required
preference to domestic offers. FPR Sec. 1-6.104-4(b)(1964 ed. circ. 1);
Cincinnati Electronics Corporation, et al., 55 Comp.Gen. 1479,
1494(1976), 76-2 CPD 286.
Bell's first assertion is that DOT failed to implement the
requirements of the Buy American Act. We agree that DOT erred in its
determination that AHC was supplying a "domestic" item. But for the
reasons set forth below, we do not consider DOT's error to have been
prejudicial to Bell in terms of ultimate entitlement to award. DOT's
failure to implement the Buy American Act, therefore, is not critical to
resolution of Bell's protest.
Ordinarily, in a procurement against precisely stated specifications
where all offerors are offering the "same" product, the reasonableness
of domestic product cost is determined by comparing it with foreign
product cost after the addition of a differential, a rather
straightforward procedure where price is the sole determining factor in
making the award. If the cost of the foreign product plus the added
differential remains lower, the domestic product cost is considered
unreasonable and foreign purchase is authorized. FPR Sec.
1-6.104-4(1964 ed. circ. 1).
A different situation is involved, however, where the procurement is
negotiated on the basis of technical merit as well as cost and each
proposer offers a different product. In that circumstance, if the
foreign offer is evaluated as the higher priced offer that application
of the differential, but is determined to be the best offer considering
the combination of price, differential and technical approach, then an
award based on the foreign offer should be made.
The reason for this is best explained by example. Assume a situation
where there are three offers as follows, technical proposals are rated
on a scale of 100 points, and cost is evaluated equal to technical
merit: (TABLE OMITTED)
If the Buy American differential of 6 percent were applied to A's
offer, it would clearly be out of contention with regard to B's offer if
price were the sole criterion. Yet if A's foreign offer is not
considered, C's domestic offer, not B's would clearly win the
competition considering both price and technical scoring.
But, closing the circle, C's proposal would not win over A's with the
differential added. The dilemma posed by the example shows that the
only way to properly evaluate foreign offers where both price and
technical merit are to be evaluated is to apply the Buy American
differential to the price portion and evaluate the total proposal on the
basis of the price as thus adjusted. In other words, the foreign
product offered by A as evaluated with the differential added. The
dilemma posed by the example shows that the only way to properly
evaluate foreign offers where both price and technical merit are to be
evaluated is to apply the Buy American differential to the price portion
and evaluate the total proposal on the basis of the price as thus
adjusted. In other words, the foreign product offered by A as evaluated
with the differential is more advantageous considering the technical
superiority over the domestic product offered by B and the technical
equality of the domestic product offered by C.
Keeping this in mind, let us examine the evaluation procedures set
forth in DOT's RFP. Clause D-1 of the RFP advised prospective offerors
that award would be made on the basis of the proposal most advantageous
to the Government, price and other factors considered, and cautioned
that, because factors other than price would be given paramount
consideration, neither the lowest fixed-price proposal nor a proposal
meeting minimum requirements with the lowest price would necessarily be
chosen if a higher priced proposal contained sufficiently greater
technical merit to justify the additional expenditure. Clause D-2
listed the following three principal evaluation factors and their
subfactors in descending order of importance: a) Technical/Program
SUITABILITY (MISSION CAPABILITY, DESIGN QUALITY, LOGISTIC SUPPORT Test,
Demonstration and Qualification Program), b) Cost (Contract Price,
Relative Life Cycle Cost) and c) Management.
DOT's Source Evaluation Board (SEB) verbally rated the offerors'
technical proposals for the evaluation criteria listed above and made an
oral and written report of its findings to the Source Selection Advisory
Council (SSAC), which applied numerical weighting factors to evaluate
the offerors' proposals according to the evaluation criteria and
subcriteria. Although the SEB and SSAC final reports and the SSAC
members' evaluation scores were furnished to us in camera, we feel it
necessary to state that in the SSAC evaluations the maximum possible
score for "Contract Price" was 20 percent of the entire evaluation score
possible. In other words, technical merit was accorded significantly
greater importance than proposal price under the evaluation procedure
established in the RFP.
"Contract Price" was scored by the SSAC members in a subjective
manner. The assignment of numerical scores or ratings to proposals is
an attempt to quantify what is essentially a subjective judgment.
Didactic Systems, Inc., B-190507, June 7, 1978, 78-1 CPD 418; 52
Comp.Gen. 198, 209(1972). Neither of the offerors was accorded the
maximum points possible for the "Contract Price" subcriterion by the
entire SSAC, although AHC whose proposal cost was lower was consistently
awarded a higher score than Bell and several of the members gave AHC the
maximum points.
However, to insure that the 6-percent differential required to be
assessed against a foreign offer carries its due weight in the
consideration of proposals, we believe that an objective evaluation of
cost with differential is required. Usually the "normalization" value
system is the method used in the price evaluation process. Under this
method, the lowest price proposal is assigned the maximum point rating
and the remaining price proposals are converted to normalized point
ratings by a formula in which the lowest price is divided by the other
offeror's price and the quotient is multiplied by the maximum possible
points. See, e.g., 52 Comp.Gen. 382, 387(1972); Francis & Jackson,
Associates, 57 id. 245(1978), 78-1 CPD 79. If the offerors' prices in
this case are normalized after the application of the Buy American
differential, Bell's net increase of 2 points is not enough to change
the standing of the offerors in view of the difference between the AHC
and Bell total evaluation scores.
Stated another way, the addition of the 6-percent differential for a
subcriterion worth 20 percent of the entire evaluation range would not
be difficult to overcome the difference in scores largely attributable
to technical considerations.
Now we turn to the "end product" question. Bell contends that the
helicopters, not the entire contract, are the "end products" and they
are manufactured in France.
We agree with the protester that the entire contract is not the
appropriate end product for the purpose of the determinations required
by the act. The process of training personnel to operate and maintain
aircraft cannot in our opinion be considered "manufacturing;" although
materials and supplies may be used in providing training, they are
merely tools used in performing training services rather than a result
or product which can be directly incorporated into an end product.
Acquisition of maintenance training, instructor pilot training and the
services of the contractor's employees constitutes the procurement of
services which is not subject to the Buy American Act. Blodgett
Keypunching Company, 56 Comp.Gen. 18 19-20(1976), 76-2 CPD 331.
Similarly, a reliability assurance warranty, the contractor's guarantee
of the reliability of the products and responsibility for repair or
replacement of parts, is basically an agreement to furnish necessary
maintenance and repair services. See Curtiss-Wright Corporation v.
McLucas, 381 F.Supp. 657(D.N.J. 1974); B. B. Saxon Company, Inc., 57
Comp.Gen. 501(1978), 78-1 CPD 410; 53 Comp.Gen. 412(1973) (Department
of Labor determinations that contracts for aircraft engine overhaul and
maintenance and aircraft modification and depot maintenance were
contracts principally for the purpose of furnishing services).
Because services are not subject to the act, the SRR helicopter system
or entire contract, comprised of the SRR helicopter and these services
line items, cannot be considered the "end product" for purposes of the
Buy American Act and the cost of these items must be excluded from
consideration in determining whether AHC is offering a foreign or
domestic end product.
DOT and AHC rely in their further analyses on the Contract Work
Breakdown Structure (CWBS) (RFP, Attachment 11 "Cost Proposal
Instructions," Appendix 1), a table breaking down 5 levels of items,
tasks and services to be produced or performed with reference to the
proposed contract line items, from which the offerors cost proposals
were to be derived. DOT argues alternatively that if the CWBS level 1
SRR helicopter is the relevant "end product," its components are the
CWBS level 2 items: the air vehicle, system test and evaluation, data
and integrated logistics support (ILS). The "end product," DOT
concludes, is domestic because the cost of the air vehicle, which will
be manufactured in Texas, will exceed 50 percent of the cost of all
components.
We cannot concur in DOT's position that CWBS level 2 items are
manufactured or directly incorporated in the SRR helicopter. First,
"system test and evaluation," as defined in the CWBS Appendix, refers to
the use of hardware to gather or validate engineering data on the
performance of the air vehicle. Although the data generated from such
operations is eventually reduced and reports exclusive of those required
under "data" may be delivered to DOT, neither the testing operations nor
any reports resulting from them are directly incorporated in or made a
part of the helicopter. Second, "data" summarizes the preparation,
assembly and delivery of non-ILS management and engineering data; the
former includes data required for configuration management, cost and
schedule control, data management and SRR helicopter planning and
control, while the latter refers to engineering drawings, associated
lists, specifications and documentation. Although the data constitutes
a product, it is not directly incorporated into the SRR helicopter and
cannot therefore be considered a component of the helicopter.
"Integrated Logistics Support" refers to the tasks and associated costs
involved in determining and integrating all support considerations
necessary to assure effective, economical support of the SRR air vehicle
for its entire life cycle. The "support" involved consists mainly of
services necessary to identify and determine the needs of the
maintenance and provisioning programs required for the helicopters and
includes the reliability assurance warranty program. Again, any
products resulting from ILS activities will not be directly incorporated
into the SRR helicopter.
We note that the procuring activity did not list "system
engineering/management (non-ILS)," another CWBS level 2 item, among the
"components;" we believe the item refers to management and engineering
services which cannot properly be considered as a component. We
conclude, therefore, that the "SRR helicopter" defined by DOT to include
the CWBS level 2 items set forth above is not the appropriate end
product upon which to base the required Buy American analysis because
the level 2 items are not directly incorporated in and consequently not
"components" of the helicopter.
Finally, DOT asserts that, if the CWBS level 2 "air vehicle" is the
relevant "end product," the components are the CWBS level 3 items: the
airframe, the propulsion system, the avionics integration/installation
and the avionics software programs. DOT states that the airframe is the
only component which will include substantial foreign articles,
materials and supplies, but concludes that the airframe is domestically
manufactured. The airframes will be assembled at Aerospatiale Division
Helicopter (A/DH) in France with "slave" equipment for initial
certification. Following certification, the airframe is partially
disassembled for shipment and the "slave" equipment is removed and
retained for use on subsequent airframes. AHC terms the airframe
shipped to Texas a "green" airframe, which consists of the aircraft
structure and flight systems separated into cabin, tail boom, rotor
head, rotor blades and other equipment detached from the airframe in
France. In DOT's judgment the integration, modification and assembly
work to be done on the "green" airframe by AHC in Texas to manufacture a
deliverable aircraft constitutes manufacturing for the purpose of the
act, citing Hamilton Watch Company, Incorporated, B-179939, June 4,
1974, 74-1 CPD 306; and Dubie-Clark Company, et al., B-189642, February
28, 1978, 78-1 CPD 161. DOT concludes that the air vehicle is a
"domestic source end product" because the cost of the airframe
represents more than 50 percent of the cost of all other CWBS level 3
components.
It is our opinion that the "air vehicle" (helicopter in common
parlance) is the "end product" being procured under the RFP in question.
We agree that the airframe is a manufactured article which is directly
incorporated into and properly a component of the air vehicle. We have
not dealt with whether any of the other level 3 components are part of
the end product.
For reasons which follow, the airframe is a foreign product.
Paragraph 6.3.1.2 of AHC's manufacturing plan contained in Volume 20 of
the firm's proposal provides the following summary of the
responsibilities of A/DH with regard to the airframe:
A/DH-Airframe Manufacturer
A/DH will be the subcontractor for the SRR "green" airframe and will
perform primary flight testing of the air vehicle in Marignane, France.
These tests will be conducted using slave engines, gear, and other
equipment supplied by AHC. After tests are completed for each aircraft,
A/DH will remove the slave items for use on subsequent airframes. The
"green" airframe will be separated into two sections (cabin and tail
boom) and shipped with the rotor head and blades to AHC for completion
of the manufacturing process. The SRR airframe is basically the same as
the production model parent SA 365N airframe. Accordingly, A/DH will
manufacture both SA 365N and SA 366 airframes with only minor
differences in tooling or manufacturing lines.
Similarly, paragraph 6.3.3.1 provides in pertinent part:
After the ground test and flight test are completed and standard FAA
airworthiness obtained for the "green" aircraft as discussed in para.
6.3.1.1, all slave units are removed. The slave units are U.S.
manufactured systems (including engines, main gear box, landing gear)
which must be installed for issuance of the Export Airworthiness
Certification and are then removed before the SA 366 is shipped to AHC.
The "green" airframe is then separated in two major airframe sections *
* * , crated and shipped with the blades, rotor head and other
miscellaneous equipment to AHC for manufacture of the air vehicle.
Notwithstanding DOT's position to the contrary, materials furnished
to us in camera by the agency also indicated that it was the DOT SEB's
opinion that the air vehicle was to be manufactured, tested and
certified at A/DH in Marignane, France. We note, too, that the term
"airworthy" means that an aircraft is fit to be flown.
Nevertheless, we find that the aircraft sections delivered to AHC's
Texas facility, without more, do not constitute a deliverable
helicopter. If we follow the CWBS as both DOT and AHC have suggested,
we note that CWBS level 4 does not list the "green" airframe. Instead,
CWBS level 4 items include the fuselage, landing gear, drive system
(transmission), rotor system, engine, communications system, engine/fuel
management system, navigation subsystem, flight guidance subsystem
equipment and radar.
We believe it sufficient, however, for the purpose of the analysis
required by the act to concentrate upon the airframe. Although we have
held that assembly in the United States of articles from
foreign-manufactured articles or components may constitute domestic
manufacture of "components" or "end products," the meaning and
application of those terms are considered in light of the particular
facts of each case. Cincinnati Electronics Corporation, et al., supra,
at 1495. While many separate processes or operations may be used to
manufacture an item, each manufacturing operation does not necessarily
manufacture a basically new or different article, material or supply.
B-166613, May 26, 1969. In this case, the airframe is manufactured,
tested and certified in France. The "slave" equipment that is used for
testing and certification of the airframe is removed and the airframe is
disassembled for the purpose of shipment to Texas. The airframe is
reassembled by AHC in Texas in the process of completing manufacture of
the "air vehicle."
The reassembly in Texas is no more than that and the operation cannot
detract from the fact that the airframe is manufactured in France.
Therefore, the airframe is a foreign-manufactured component of the "air
vehicle."
As noted above, DOT reported to us that the cost of the airframe
represented more than 50 percent of the cost of all components of the
air vehicle. DOT's statement, presumably, was based on its view that
the airframe was manufactured in Texas. As pointed out above, we
conclude that the airframe was manufactured in France, not in Texas.
Our reliance on DOT's conclusion that the cost of the airframe
represents more than 50 percent of the cost of all components would not
be altered by the consideration of any costs of assembly in Texas.
Labor, administration and overhead, and other costs incurred after
delivery of the airframe to AHC's Texas facility must be deducted from
the proposal price in computing the component's. Similarly, costs
related to combining the airframe with domestic components or testing
combinations thereof must be excluded from the proposal price in
determining whether the offer is foreign or domestic. 35 Comp.Gen.
7.9(1955). We do not know what cost DOT considered to arrive at the
50-percent determination.
Bell contends that the SA 366 SRR helicopter offered by AHC was not a
direct derivative of the SA 365c helicopter which the firm offered for
flight testing as required by the RFP, citing our decision in System
Development Corporation, 58 Comp.Gen. 475(1979), 79-1 CPD 303. The
protester's argument is twofold: 1) that AHC did not comply with the
requirements of the RFP and 2) that data obtained from the flight
evaluation was an inadequate and unreliable basis from which to project
the performance capabilities of AHC's SRR candidate.
Section 1.1, Attachment VIII, "Flight Evaluation Specification," of
the RFP explains the scope of the Flight Evaluation Program in pertinent
part as follows:
* * * The helicopter made available (for flight evaluation) must be
one from which the proposed SRR helicopter is directly derived. This
evaluation helicopter need not be configured so as to be capable of
meeting the stated Coast Guard mission and performance requirements, but
must be judged as having the potential to meet those mission and design
requirements listed as required in the SRR Helicopter Type Specification
(Attachment III). Each offeror offering a helicopter which is judged as
having the potential to meet required mission and design requirements
will be required to enter into a contract for the conduct of a flight
evaluation program.
The data and evaluations resulting from this flight program will be
incorporated directly into the formal SRR helicopter proposal evaluation
system. * * * .
Paragraph 2(a) of the Forward to Attachment III further provides:
The U.S. Coast Guard intends to procure an SRR helicopter that will
be in production in time to meet the delivery schedule requirements of
(the) RFP. The Coast Guard recognizes that the helicopter offered must
be well beyond a preliminary design stage, at the time of SRR helicopter
proposal submittal, * * * and, therefore, * * * does not expect that the
basic design of the aircraft offered will be significantly changed
except to meet those requirements designated as "Required" in this Type
Specification.
On the basis of these provisions, Bell contends that the RFP
established a requirement that the helicopter furnished to DOT under the
contract be directly derived from a model in commercial production,
flight-tested by the procuring activity, and modified only as necessary
to meet the Coast Guard's special requirements. Bell believes that
AHC's Model SA 365C was flight-tested, but that the Model SA 366 offered
under the contract is directly derived from the firm's Model SA 365N
which is a newly designed model that differs in major respects from the
flight-tested SA 365C. These differences, Bell asserts, undermine the
purpose of the flight evaluation, contravene the terms of the RFP,
render the test data on which DOT based its proposal evaluation
significantly less reliable than the RFP contemplated and result in
disparate treatment of the offerors.
DOT argues that pursuant to paragraph 1.1 of the Flight Evaluation
Specification, quoted above, the agency entered into flight evaluation
contracts with the three potential offerors after having judged that the
helicopters they offered for evaluation had the potential to meet the
SRR helicopter specifications. None of the flight-tested helicopters
was the same as the offeror's proposed SRR candidate nor were they
required to be; there were numerous changes between all flight-tested
and proposed helicopters and the evaluators considered those changes for
both Bell and AHC. The adequacy and utility of the flight-test data
from which performance of the proposed helicopters were predicted were
corroborated by the close correlation between the Government's and the
offeror's performance estimates. DOT concludes that assessment of the
flight-tested helicopters' potential adaptability to meet the RFP
specifications was a technical matter for its evaluators to decide, that
their determination that the offerors' helicopters were aircraft from
which their proposed helicopters could be "directly derived" was
reasonable and should not be disturbed, citing our decisions in John M.
Cockerham & Associates, Inc., et al., B-193124, March 14, 1979, 79-1 CPD
180, and Struthers Electronics Corporation, B-186002, September 10,
1976, 76-2 CPD 231.
AHC takes the position that Bell's reliance on System Development
Corporation, supra, is misplaced because the RFP in that case, unlike
DOT's solicitation, expressly required the testing of a production model
or an operational prototype to establish the ability of the offerors'
equipment to satisfy the specifications and did not contemplate that the
equipment tested would require any modification in order to meet the
specifications.
Because the solicitation was significantly more restrictive than DOT's
RFP, AHC concludes that the case is not applicable to the facts of this
protest.
Although AHC's management plan, quoted beginning p. 13, supra, states
that the SA 365N is the parent of the SA 366, the RFP does not require
that the "parent" of the proposed helicopter be flight tested. We
believe that the language of the above-quoted Flight Evaluation
Specification provision must be taken as a whole and, when so read,
states that the purpose for flight evaluation is the agency's need to
assess the proffered aircraft potential to meet the Coast Guard's
mission and performance requirements.
Clearly the SRR helicopters were not expected to be identical to
those flight tested. Rather DOT was to project the changes required in
THE FLIGHT-TESTED AIRCRAFT TO RENDER ITS POTENTIAL A REALITY IN THE
proposed SRR helicopter. The fact that those changes may have been
developed or perfected via an intermediary aircraft should not have
affected the agency's ability to predict the effect of changes between
the flight-tested and proposed SRR helicopters, provided that DOT first
assured itself that the flight-tested aircraft had the requisite
potential.
The Forward of the Type Specification to which the protester refers
clearly pertains to the proposed SRR helicopters rather than to the
helicopters submitted for flight evaluation. Contrary to Bell's
interpretation, we believe it indicates that, while DOT did not desire a
major design and development effort, the proposed SRR helicopter might
be a preproduction model at the time proposals were submitted as long as
it would be in production in sufficient time to comply with the RFP
delivery schedule.
We believe that the determination that AHC's SA 365C had the
potential to meet the agency's needs, like the evaluation of proposals
is the responsibility of the procuring activity. We will not substitute
our judgment for that of the contracting officials or question their
expert technical determination absent a clear showing that it was
unreasonable. See RAI Research Corporation, B-184315, February 13,
1976, 76-1 CPD 99; 46 Comp.Gen. 606, 608(1967). Bell has not made such
a showing and the fact that it disagrees with the judgment of the
contracting agency does not make it unreasonable. See John M. Cockerham
& Associates, Inc., et al., supra; Honeywell, Inc., B-181170, August 8,
1974, 74-2 CPD 87.
Bell takes the position that the data which the SEB developed to rate
the technical qualifications of the proposed helicopters was neither
adequate to define true differences between the helicopters nor
sufficiently reliable for the selection process.
However, DOT states that the data was obtained and correlated under
procedures developed and refined over many years and that the procedures
provided satisfactory results in the past. Moreover, DOT states that
the accuracy of the evaluation data was corroborated by the close
correlation between the agency's and the offerors' performance
estimates. Thus, it was reasonable for DOT to use the same procedures
for the immediate procurement as it used before and to rely upon the
data generated.
Bell disagrees with DOT's evaluation of the Bell and AHC helicopter
proposals.
The overall determination of the relative desirability and technical
adequacy of proposals is primarily a function of the procuring agency
which enjoys a reasonable range of discretion in the evaluation of
proposals. Since determinations as to the needs of the Government are
the responsibility of the procuring activity concerned, the judgment of
such activity's specialists and technicians as to the technical adequacy
of proposals submitted in response to the agency's statement of its
needs ordinarily will be accepted by our Office. Such determinations
will be questioned by our Office only upon a clear showing of
unreasonableness, an arbitrary abuse of discretion or a violation of the
procurement statutes and regulations. Struthers Electronics
Corporation, supra.
With these ground rules in mind, we will review each of Bell's
contentions against the technical evaluations.
Bell contends that DOT failed to consider that the AHC helicopter is
not suitable for shipboard use in rough seas. There is agreement that
the AHC helicopter can operate from ships at sea. The disagreement
between Bell and DOT centers around the amount of time the AHC
helicopter will be able to be used under rough sea conditions. However,
the RFP does not specify that the helicopter must operate under any
particular sea condition. Moreover, DOT had indicated that it
recognized in its evaluations that the Bell helicopter was more
compatible to heavy sea conditions than the AHC helicopter. We are
unable to conclude in the circumstances that DOT acted unreasonably in
its consideration of the AHC helicopter for sea operations.
Paragraph 3.1.2.1 of the Type Specification requires guaranteed
performance for the Short Range Search and Rescue Mission (paragraph
1.2.1.1), the helicopter's primary mission, of a radius of action (ROA)
of not less than 150 nautical miles and an ROA of not less than 300
nautical miles (400 desired) for the Maximum Range Mission (paragraph
1.2.2.1.2). DOT states that the Bell 222C's ROA for the primary and
maximum range missions were 151 and 371 nautical miles, respectively,
and those for AHC's SA 366 were 165 and 421 nautical miles,
respectively.
Bell takes exception to DOT's ROA calculations contending that the
agency failed to consider the effects of a harpoon or similar device
which Bell alleges must be added to the SA 366 to enable it to operate
aboard ships during the heavy winter seas. The protester asserts that
in order for performance comparisons to be meaningful 50 pounds must be
added to the SA 366's weight or deducted from its fuel load to
compensate for the addition of the mechanism to the aircraft. Such a
reduction in fuel would, in Bell's opinion, reduce the helicopter's
primary mission ROA by 5 nautical miles. Bell also asserts that the
cost of the harpoon must be added to AHC's proposal price.
As indicated above, the RFP did not provide for the helicopter being
evaluated under special sea conditions. Furthermore, most of the flying
is from shore bases where sea state is not a consideration. Therefore,
it was not unreasonable for DOT to evaluate AHC's ROA without the
addition of the harpoon mechanism which Bell indicates is necessary only
under shipboard use in rough sea conditions.
Bell states that AHC did not provide a margin of power and hover
thrust to ensure the operational capability and safety of the
helicopter. The protester asserts that evaluation of the SA 366 using
the hover-thrust margin provided in the 222C would reduce AHC's primary
mission ROA to 154 nautical miles. However, the RFP did not require the
offerors to allow such a margin at takeoff and DOT was not required to
evaluate the SA 366 as if the RFP did.
The Bell 222C and the AHC SA 366 provided fuel expansion space of 3.6
percent and 2 percent, respectively. The RFP only required the offerors
to describe the fuel expansion space design; the minimum requirement
was compliance with FAA certification requirements, a 2-percent fuel
expansion space.
Bell contends that the SA 366 ROA should be computed using the same fuel
expansion space proposed by Bell with a resultant 3-nautical mile
reduction in the SA 366 primary mission ROA. However, the 2-percent
fuel expansion proposed by AHC met the RFP requirements. Therefore, it
was reasonable to evaluate the SA 366 on the basis proposed.
DOT assigned the SA 366 a maximum fuel quantity of 1,976 pounds,
which the protester argues can only be achieved by gravity rather than
pressure refueling. Bell believes that the Coast Guard ships use
pressure refueling, that hover in-flight refueling (HIFR) from ships
requires pressure refueling, and that the Coast Guard may operate at
other locations where only pressure refueling is available. Bell
therefore concludes that because the SA 366 will be able to load only
1,922 pounds of fuel with pressure refueling (a 54-pound reduction)
during many operations, its primary mission ROA should have been
determined on the basis of the minimum fuel load it may carry, reducing
the ROA by 6 nautical miles. DOT and AHC, in contrast, assert that the
RFP did not require ROA calculation on the basis of pressure refueling
and that gravity refueling is the normal method used by the Coast Guard
aboard ship and at most land bases.
While paragraph 3.13.9.13.3, "Off-Deck Refueling," of the Type
Specification requires that offerors provide an HIFR system capable of
receiving fuel at a rate to completely refuel the aircraft within 5
minutes at 55 PSIG (pounds per square inch gauge) at the aircraft HIFR
nozzle (indicating pressure refueling), the HIFR operation was not
included in the primary mission. We note that section 5.3 of AHC's
proposal (Vol. 17, p. 5-16) summarizing ship based fueling, states that
gravity, pressure and HIFR refueling are provided but that "(g)ravity
refueling on USCG cutters is not planned because (sic) the risk of fuel
spillage on the deck." However, notwithstanding the statement in AHC's
proposal, it appears to be the intention of the Coast Guard to make
gravity fueling the usual method of fueling. While there may be
conditions under which the Coast Guard may have to use pressure fueling,
it is apparent from its statement that it does not contemplate that will
be the normal situation. Thus, it was reasonable for DOT to make its
evaluation on the gravity fueling basis.
The protester states that due to limited power the SA 366's
environmental control unit (ECU) (air conditioning) must be turned off
during critical hover operations and while the door is open and that the
engine-activated automatic ECU shutoff AHC proposed is a safety hazard.
Bell asserts that AHC's proposal must be evaluated in accordance with
paragraph 3.1.2.1, Note 8, of the Type Specification which requires that
the helicopter's fuel consumption be determined with the air
conditioning operating.
DOT responds that, contrary to the protester's assertions, the SA 366
ECU does not have to be shut off when the door is open, the aircraft
door is open during the hover portion of rescue missions and largely
negates ECU cooling effect, AHC's ROA was computed on the basis that the
ECU was operating as the RFP required and AHC's automatic ECU shutoff
device and proposal were judged acceptable. Therefore, no basis exists
for us to object to the evaluation of the item.
Bell alleges that DOT assessed inconsistent and unreasonable weight
penalties in evaluating changes between the offerors' flight-tested and
proposed SRR helicopters. Fuselage changes for AHC affected 5,168
pounds and those for Bell affected only 2,506 pounds, yet AHC was
penalized only 26 pounds (0.5 percent of the weight affected) while Bell
was penalized 54 pounds (2.2 percent of the affected weight). The
protester states that not only were actual weights used for the 79.4
percent of the parts common to its flight-tested and proposed models,
but that during the course of proposal revisions the firm added a total
of 185 pounds as a contingency factor to its weight estimate.
DOT explains that the weight increases in excess of the protester's
estimate are attributable to changes made from the Model 222 to the
Model 222C, and that the reason for the greater percentage weight
increase in Bell's case was because Bell's weight estimates were
inadequate for its design-- the avionics system, for example, was
underestimated by 50 pounds. As Bell indicates, any change in weight
affects a helicopter's ROA. Because DOT considered Bell's weight
estimate inadequate, it increased the empty weight estimate. The
evaluation result about which the protester complains, however, arose
because Bell's original mission gross weight (the empty weight plus that
of the crew, fuel and equipment) was also the FAA certification weight.
The mission gross weight therefore could not be increased because it
would exceed the certification weight so DOT had to reduce the 222C's
estimated fuel load, which reduced the helicopter's ROA for the various
missions. The action of DOT appears to have been reasonable in the
circumstances.
In Bell's opinion, the basic structural load factor of the SA 366 is
2.59 g's at a gross weight of 8,400 pounds, which means that the
helicopter was designed for a vertical limit load of 21,756 pounds with
an ultimate design load of 32,634 pounds (limit load x 1.5). In
contrast, Bell states that the 222C design has a structural load factor
of 3.14 g's at a gross weight of 8,260 pounds, a limit load of 25,936
pounds and an ultimate design load of 38,904 pounds. Bell concludes
therefore that the 222C is capable of withstanding more thrust load than
the SA 366, has greater structural integrity than AHC's design, and
DOT's conclusion to the contrary is incorrect.
DOT states that in its calculations Bell has used structural and
design load data from Volume 7 of the proposals which was not included
in the SRR contract and was not contractually binding on the offerors.
DOT relied upon the Detail Specification, Volume 2 of the proposal,
because it was contractually binding on the offerors. Paragraph 3.4.1
of Bell's Detail Specification provides a structural load factor of 2.40
(0.19 lower than AHC's 2.59 factor), which DOT used in its structural
integrity determination. Finally, DOT states that the load factor alone
was not the sole structural characteristic considered; in determining
the helicopter's structural integrity, the agency included many other
factors, a few of which were fatigue criteria and life, component and
landing gear strength and vibration and damage tolerance, and AHC was
equal or better than Bell in all those areas.
Bell, however, argues that the 2.40 load factor used by DOT is the
load factor for the 222C rotor and that paragraph 3.4.1.1.11.1 of the
protester's Detail Specification clearly states that the airframe design
load factor is 3.5 at a gross weight of 7,415 pounds. Bell states that
when the airframe design load factor is used to calculate the structural
load factor at the FAA certification weight (8,260 pounds) the
structural load factor is 3.14. However, even if the correct load
factor should be 3.5 or 3.14, we cannot conclude that DOT's
determination based on the totality of factors considered in assessing
the helicopters' relative structural integrity was unreasonable.
Bell objects to the procuring activity's conclusion that the SA 366
design was safer and more crashworthy than that of the 222C, contending
that crash load factors do not suffice to define or evaluate the
crashworthiness of an aircraft and that DOT failed to consider the
helicopter's ability to absorb the energy of a crash, egress during a
crash at sea and the location of the helicopter's pressure refueling
receptacle.
Contrary to the protester's assertions, DOT states that it considered
not only load factors but also other factors including energy
absorption, emergency evacuation and fuel system safety in assessing the
crashworthiness of the offerors' designs. DOT notes that the evacuation
design proposed by AHC, incorporated in prior Coast Guard helicopters,
provides acceptable egress even when the aircraft is under water, but to
its knowledge Bell's design system has not been tested under water or
credited by the FAA for commercial helicopter use. DOT observes that,
while the SA 366 pressure refueling receptacle for HIFR from a ship is
located inside the cabin, its ground refueling receptacle is externally
located on the fuselage. DOT recognized Bell's HIFR design advantage.
However, notwithstanding the fact that the protester's design was judged
superior in some respects, we do not find DOT's conclusion based on the
overall crashworthiness of the designs unreasonable.
DOT concluded that the AHC design provided larger cabin volume and a
better field of view (visibility range from inside the helicopter).
Bell states that the former conclusion is contrary to the opinion of
Coast Guard personnel whose consensus was that the Model 222's smaller
size would not impede performance of SRR missions. We agree with DOT
that Bell's survey results are irrelevant to the agency's evaluation.
The protester's survey solicited information about the firm's Model 222
rather than the 222C from DOT personnel other than the evaluators prior
to the issuance of the RFP and the comparison was made in relation to
the Sikorsky HH-52A helicopter rather than to the design features of the
SA 366. DOT found the cabin volume which Bell proposed was acceptable,
but determined that the larger cabin volume afforded by AHC's design was
better. We find DOT's conclusion reasonable particularly in light of
the mission demands on cabin space.
On the basis of field-of-view plots included in the offeror's
proposals and Bell's use of bubble windows which allegedly provide
greater aft and downward visibility, Bell also contends that DOT erred
in concluding that the SA 366 design affords better visibility than the
222C DOT states that its visibility determination was based primarily on
pilot and crew observations during flight evaluations and review of the
SRR airframe mockups rather than the field-of-view diagrams. Although
we agree with the protester that observations made during the flight
test pertained to visibility from the flight-tested aircraft rather than
the SRR helicopters, DOT asserts that fields of view of the SA 365C and
the SA 366 do not differ significantly.
We believe that the agency's conclusion based on flight evaluations,
mockups and diagrams that the SA 366 provides better overall visibility
from the cabin and cockpit was not unreasonable.
The protester objects to DOT's determination that the SA 366 design
providing excess electrical power was superior to Bell's design which
provided the minimum electrical power required. Bell asserts that AHC's
electrical capacity which exceeds the minimum power requirement by 700
percent constitutes an excessive cost design and that Bell's design
which meets the mission power requirements with all necessary margins is
cost efficient and therefore superior.
DOT states that AHC offered more electrical capacity for the money
and therefore presented a better electrical power design than Bell.
While we agree that reserve electrical power appears to be more
advantageous to the Government, we cannot agree that an excessive
reserve would necessarily indicate a superior design. AHC, however,
notes that the size of the reserve is attributable to electrical power
necessary in the event of an alternator failure pursuant to paragraph
3.16.2.3 of the RFP Type Specification and to operate equipment which
DOT intends to add to the aircraft at a later date. We cannot conclude
therefore that DOT's evaluation in this regard was unreasonable.
DOT found the hoist offered by AHC superior to Bell's because it is
capable of handling a full load (600 pounds) at a speed of 200 feet per
minute (f.p.m.) while Bell's hoist speed is 100 f.p.m. The protester,
however, asserts that cable speeds in excess of 100 f.p.m. could cause
the rescue basket to spin, injuring the rescuee; thus its design
resulted in and weight savings while meeting all RFP requirements. Bell
states that its hoist can operate at the 200 f.p.m. speed with loads up
to 300 pounds.
Bell's contentions, DOT suggests, overlook the fact that there are
situations other than rescue operations in which higher hoist speed will
be advantageous and that AHC's infinitely variable hoist speed control
allows the operator to select any speed up to 200 f.p.m. appropriate for
the particular operation. AHC's higher powered hoist also provides a
design margin which the agency expects will reduce the frequency of
breakdown and repairs.
Although the protester states that it also provides infinitely
variable hoist control, Bell's hoist speed with the maximum load is
still limited to 100 f.p.m. We are unable to conclude in the
circumstances that DOT's evaluation was unreasonable.
Bell complains that it design was deemed to involve greater risk than
AHC's because its avionics system included a number of new technology
items and the SA 366 uses state-of-the-art components. Bell asserts
that the facts are actually reversed, that AHC proposed advanced
composite materials for the rotor blades, horizontal stabilizer and
lateral fins and that DOT's evaluation was inconsistent. Bell states
that the technology used in the Flight Management System Computer,
Control Display Units and Altitude Reference System included in the 222C
avionics system has been developed and is in current use on the F-14,
F-15, F-16 and F-18 fixed-wing aircraft and the AH-64 attack helicopter.
According to Bell, the only difference between these elements and those
proposed for the 222C are the additional features necessary to meet the
SRR mission requirements, which the protester contends would be
necessary for any existing avionics system.
DOT responds that AHC's state-of-the-art avionics components
minimized the risk of developing and integrating the system in the SRR
helicopter, that despite the protester's assertions to the contrary the
procuring activity remains of the opinion that the system Bell proposed
incorporated fundamental design concepts which have not been tried in
service use, and that its evaluation of the relative risk involved in
the avionics system designs was substantiated by the differences between
the two systems. DOT did consider the risk associated with the
composite materials AHC proposed to use in the aircraft structure, as
well as those Bell proposed to use for the rotor blades, fuel cell
cavities and transmission cowling, and determined that these uses were
consistent with the state-of-the-art and did not pose a risk. We are
unable to conclude that the procuring activity's assessment of the risks
involved in the offeror's designs was either inconsistent or
unreasonable.
Bell pointed to a portion of AHC's proposal as indicating that the
AHC helicopter will not meet the required sideward flight speed of 35
knots (RFP, Attachment IV, Table 3).
However, DOT assessed the yaw control of both offerors' designs and
concluded that AHC offered acceptable yaw control on the basis of design
assessment including the flight evaluation and AHC's contractual
commitment to meet the RFP requirement.
We believe the agency's determination on these bases was not
unreasonable.
The protester asserts, and DOT agrees, that the SA 366 tail bumper
was designed to a sink speed of 8 feet per second (f.p.s.) while DOT
required Bell's to be designed for sink speeds of 10 f.p.s. DOT,
however, explains that the disparate sink speeds required were due to
differences in the helicopters' landing approach attitudes. AHC's tail
bumper is higher off the ground than Bell's so a lower sink speed was
appropriate for the SA 366 design. We believe that application of the
same requirement to the offerors' different designs would have been
unreasonable and that the use of ostensibly inconsistent sink speeds was
appropriate.
In Bell's opinion, the autorotation (power-off landing) of the 222C
is much better than that of the SA 366. Bell notes that the SA 365C
handbook prohibits intentional autorotation to a full landing and
concludes that based on disc loading factors the SA 366 will have worse
autorotation characteristics than the SA 365C. Bell states that the
222C permits pilots to practice full touch down emergency procedures,
enhancing aircraft safety. Bell therefore believes that DOT failed to
consider autorotation characteristics in its evaluation.
Unlike the SA 365C handbook prohibition, DOT states that there is no
such restriction in the contract specifications for the SA 366. Full
autorotations were made during the SA 365C flight evaluation and DOT's
autorotation design evaluation was based in part on the flight
evaluation data. Moreover, the procuring activity explains that the
Coast Guard has not previously considered it necessary to practice
autorotations to a full landing in two-engine helicopters. We cannot
conclude that DOT's design evaluation in this regard was unreasonable.
The RFP requires that rotor stopping be demonstrated under the
contract in headwinds of 60 knots and in winds from any other direction
of 45 knots. Bell points out that AHC did not cover the 45-knot
requirement in its proposal. However, DOT has indicated that compliance
with the 60-knot requirement provides a high probability of assurance of
satisfactory capability in winds from any other direction. Bell says
there is no assurance that there will be 60 knot winds during the
demonstration period, since AHC has offered to demonstrate under natural
wind conditions, but DOT apparently believes the condition will exist.
In the circumstances, it is not apparent that the AHC deviation is
material and the determination to permit it does not appear to be
unreasonable.
Bell states that AHC has an advantage in being able to certify its
aircraft in France. However, no advantage is apparent, since AHC also
is required to obtain certification in the United States.
Ordinarily, we do not review protests against affirmative
determinations of responsibility unless fraud is alleged on the part of
procuring officials or the solicitation contains definitive
responsibility criteria which have not been met. New Haven Ambulance
Service, Inc., 57 Comp.Gen. 361(1978), 78-1 CPD 225. Our standard is
much the same as that followed by the courts. They have taken the view
that responsibility is a matter of discretion not subject to judicial
review absent fraud or bad faith. Keco Industries, Inc. v. United
States, 492 F.2d 1200(Ct. Cl. 1974); Friend v. Lee, 221 F.2d 96(D.C.
Cir. 1955); O'Brien v. Carney, 6 F.Supp. 761(D. Mass. 1934). Since
Bell does not allege fraud and essentially what is involved is a
difference of opinion between Bell and DOT as to whether AHC is a
responsible contractor, Bell has failed to meet the standard for review
by us or the courts. Accordingly, notwithstanding the court's
involvement in this case, we find it unnecessary to engage in any
further consideration of the responsibility matter because of the
limited judicial standard of review.
Section J of AHC's contract provides for contract price adjustments,
regardless of the actual changes in the cost of labor and materials
during performance of the contract, based solely on changes in
prescribed labor and material indexes furnished by the Department of
Labor (DOL). DOT will determine the semiannual upward or downward
adjustments in the contract price depending on whether the net
difference in the labor and material adjustments is a plus or minus
factor, and will modify the contract accordingly. Sections J-1(d) and
J-1(g) provide for contract price adjustment due to changes in airframe
labor and material costs based, respectively, upon changes in the DOL
"Gross Average Hourly Earnings of Production or Non-Supervisory Workers
in the Aircraft Industry (SIC Code 3721)" and "Producer Price Index for
Industrial Commodities."
Similarly, section J-4 provides for adjustments in the prices of spare
parts based on changes in DOL's "Producer Price Index for Industrial
Commodities." The contract also contains price adjustment clauses
pertaining to changes in the costs of labor and materials involved in
the avionics, engines, reliability assurance warranty, and training.
Bell believes that at least the AHC airframe and related spare parts
will be produced in France and that components subject to other price
adjustment clauses may also be foreign produced. The protester
therefore contends that application of price indexes based upon United
States labor and material costs to determine contract price adjustments
bears not rational relationship to costs that AHC may actually incur,
will result in improper expenditure of appropriated funds and renders
the contract invalid.
The fixed-price contract with escalation is appropriate for use
"where serious doubt exists as to the stability of market and labor
conditions which will exist during an extended period of production and
where contingencies which would otherwise be included in a firm
fixed-price contract are identifiable and can be covered separately by
escalation." FPR Sec 1-3.404-3(b) (1964 ed. circ. 1). DOT asserts that
the use of the economic price adjustment clauses in AHC's contract was
reasonable and lawful since it was needed for flexibility in assuring
contract performance over a 7 1/2 year period. The clause used in AHC's
contract was based on industry-wide indexes and was identical to the
clause which would have been required in Bell's contract had Bell
obtained the award.
Bell, however, contends that the escalation clauses would properly be
included in AHC's contract only if DOT made the required findings with
respect to the stability of market and labor conditions in France. Bell
states that there is no evidence that DOT considered French market and
labor conditions and the fact that American indexes were used in the
contract demonstrates that no such findings were made. Furthermore, DOT
does not indicate that domestic indexes would be appropriate for
forecasting conditions in France.
DOT states that the economic price adjustment provisions used in the
AHC contract are based on industry-wide indexes applied to the contract
price according to the provisions of Armed Services Procurement
Regulations (ASPR) (now Defense Acquisition Regulation) Sec.
3-404.3(c)(3) (Defense Acquisition Circular No. 76-18, March 12, 1979).
Although the Coast Guard derives its basic procurement authority from
the Armed Services Procurement Act, 10 U.S.C. 2303(a)(4), over the years
it has relied primarily on the FPR and the procurement regulations of
the departments of which it has been a component, but where those
regulations have not covered a particular situation it has followed
ASPR.
Because the actual material and labor costs of all the offerors in this
procurement were unknown, DOT decided to use an expenditure profile
based on a predetermined rate of expenditure (expressed as the
percentage of material or labor usage as it related to total contract
price) in lieu of an actual cost method. The expenditure profile was
developed from information solicited from all offerors in order that all
companies would compete on an equal basis according to the applicable
ASPR provisions. Based upon the fact that DOT wanted to treat all
offerors equally, it decided to employ domestic labor and material
indexes and the same escalation provisions were included in all
solicitations. Finally, DOT takes the position that Bell cannot argue
that its proposal was evaluated any differently or that it was adversely
affected in any way by the inclusion of the escalation clauses used in
AHC's contract. Because AHC contracted to provide and must provide a
"domestic source end product," DOT concludes that its determination to
use an escalation clause based on industry-wide price indexes and to
treat offerors equally was reasonable.
AHC concurs in the application of a clause relating domestic costs to
a domestic end product and characterizes Bell's argument as requiring
that DOT tailor escalation clauses to take into account economic
conditions in every foreign country in which a potential prime or
subcontractor might be located. AHC states that there is no statutory
or regulatory basis for such a proposition which would impose a
ludicrously untenable administrative burden on the Government.
Selection of the type of contract to be used is, pursuant to FPR Sec.
1-3.403(a), a matter for negotiation and requires the exercise of
judgment. AHC asserts that because the escalation clauses in question
were included in the RFP to all prospective offerors, including the
protester, all offerors were therefore treated equally with respect to
potential fluctuations in labor and material costs and possible
disparities in the impact on individual offerors were not considered
during source selection, citing Lockheed Propulsion Company et al., 53
Comp.Gen. 982(1974), 74-1 CPD 339. AHC concludes that it is clear that
there was no abuse of discretion in DOT's selection of the clauses and
that, because the clauses had no impact on DOT's award decision, it is
nonsensical to argue that the clauses somehow tainted the award process
or injured the protester in any way.
Our Office has held agreements entered into by the Government
providing for an adjustment of material and labor costs unobjectionable
where it was administratively determined to be necessary or desirable in
the interests of the Government because the evident purpose of the
adjustment provision is to protect the Government in case of a decrease
in the cost of labor or material and the contractor in the event of cost
increases.
22 Comp.Gen. 95, 98(1942); 20 id. 695, 697(1941).
Bell, however, asserts that the purpose cannot be satisfied here
because the contract clauses bear no rational relationship to protection
of the contractor. The protester suggests that French costs and United
States indexes may fluctuate in opposing manner, resulting in the
escalation clauses providing a windfall to or inadequately protecting
AHC; the result will be wholly fortuitous, not predictable. Contrary
to DOT's characterization, if AHC's proposal included escalation clauses
based on French inflation, the two companies would have been treated
comparably because neither offeror would have been advantaged by the
clauses as compared to the other. Bell suggests rather that, as
actually implemented, the clauses may create a windfall for AHC, that
AHC may have set its proposal price with that outcome in mind to Bell's
obvious detriment, and that this potential handicap plainly constitutes
inequitable treatment. Regardless of the legal status of AHC's
helicopters for the purpose of the Buy American Act, Bell takes the
position that they will be manufactured in France where the labor and
material costs governed by the price escalation clauses will be incurred
and that AHC's certificate is therefore irrelevant to the propriety of
the clauses used in the contract. Bell concludes that DOT has not
responded to its argument that use of domestic price escalation clauses
in the RFP and contract implies a requirement that American labor and
materials be used to manufacture the helicopters.
In our opinion, it is irrelevant that price adjustment percentages
are to be based on domestic factors. Although Bell contends that these
percentages will not be based on the French economy and may therefore
produce results in AHC's contract inconsistent with the intention of the
economic adjustment clause, that is purely speculative as there is no
evidence to establish that will be the case. In the circumstances, it
is not apparent that the clause has resulted in dissimilar treatment to
the offerors. Rather, the application of a consistent factor to both
offerors virtually insures that the low offeror will remain low during
the term of the contract, since both offers will vary by the same
proportion. Moreover, while Bell complains that AHC stands to make a
windfall or to be inadequately protected by an escalation based on
United States inflation rates, the same result could occur under the
escalation provision if Bell were the contractor since the escalation
clause provides for a price adjustment for changes in the economy
without any regard for the actual cost a contractor experiences in
performing the contract. Thus, AHC is in no different position than
Bell.
As indicated above, the protest is denied.
B-194445.3, December 21, 1979, 59 Comp.Gen. 146
Contracts - Negotiation - Sole-Source Basis - Parts, etc. - Competition
Availability
Even though protesting firm with considerable experience in
maintaining C-130 aircraft could perform many tasks under contract
involving replacement of parts to extend service life of aircraft with
data and tooling available under its maintenance contract, procuring
agency did not act arbitrarily in determining that specifications could
not be provided to achieve competition. Consequently, determination to
make sole-source award to original manufacturer is not legally
objectionable. Contracts - Negotiation - Sole-Source Basis -
Justification - Initial v. Follow-On Contracts or Option Exercise
Where agency's choice of procurement method reflects its own
uncertainty as to technical risks which may be overcome during
contractor's performance of work on initial quantity of aircraft to be
serviced, sole-source determination should be reviewed before exercise
of option for increased quantity or award of follow-on contract.
Contracts - Awards - Small Business Concerns - Certifications - Failure
To Request - Exclusion On Basis Other Than Contractor's Responsibility
Referral to Small Business Administration for Certificate of
Competency (COC) is inappropriate where small business was excluded
because agency was not in position to provide specification believed
necessary for performance and is required to make sole-source award to
original manufacturer in the absence of such specifications.
COC procedure does not affect agency's determination of its technical
needs, e.g., the extent to which specifications are considered necessary
to reduce risk to acceptable level.
Matter of: Aero Corporation, December 21, 1979:
This case concerns the propriety of the Navy's decision to award a
sole-source contract for extending the service life of its C-130
aircraft. The Navy believes that the highly complex and technical work
required in the circumstances must be performed only by the original
aircraft manufacturer, and that award to another firm would involve
unacceptable risks. The decision is challenged by a company which has
long performed maintenance on the Navy's C-130 fleet and which believes
it can do the service life extension work. We find the Navy's position
to be reasonable.
The case arises as a protest filed by Aero Corporation of the award
of a letter contract to Lockheed-Georgia Corporation (Lockheed) to
perform the C-130 aircraft Service Life Extention Program (SLEP). Aero,
a current contractor for performance of Standard Depot Level Maintenance
(SDLM) for the C-130 aircraft, believe it can perform the life extension
in the United States District Court for the District of Columbia (Aero
Corporation v. Department of the Navy, Civil Action No. 79-2944.)
On November 21, 1979, the Court entered a declaratory judgment for
Aero, permitting the Navy to proceed with the award at its own risk
while preserving Aero's right to have its complaint decided as though
award had not been made. Noting that planning for SLEP had been
underway for several years, that the Navy anticipated making a
sole-source award to Lockheed for at least four months, and that the
Navy was fully aware that a protest or litigation was likely, the court
concluded that the Navy in the circumstances had breached a duty to
facilitate preaward GAO and court review and to maintain the status quo
pending review. Aero's request for a preliminary injunction against
award was denied because the first aircraft will not be inducted into
SLEP at Lockheed until May 1980, and because the award can be terminated
for convenience earlier, if required. However, the court's order
enjoined the Navy from inducting any aircraft into SLEP prior to January
1, 1980, and in effect, estops the Navy from asserting post-award status
or partial performance as a basis for refusing to terminate the
contract, should termination be appropriate. We are deciding this
matter because the court had requested our opinion. See 4 C.F.R.
20.10(1979).
The SLEP program (or more completely, SLEP/CILOP, i.e. Service Life
Extention Program/Convertion in Lieu of Procurement) consists of a
series of tasks affecting major structural areas of
Lockheed-manufactured C-130 aircraft. SLEP is defined by the Navy as
"the restoration and/or replacement of primary aircraft structure that
has reached (its) fatigue life limit."
CILOP involves improving the capabilities of the aircraft.
Accomplishment of these objectives, according to the Navy,
entails the production and incorporation of components/subcomponents
into the airframe to the extent of remanufacturing portions of the
airframe structure, such that the service life of the aircraft is
extended by approximately 10,000 flight hours.
The envisioned program anticipates replacing a number of components
with parts of current design, and in the case of certain series
aircraft, increasing permissible gross weight. SLEP also encompasses
several miscellaneous tasks, including upgrading field manuals and
related functions, to assure that logistical needs are met.
Three aircraft series are included in the program: the C-130 itself,
as well as KC-130s (tankers used primarily by the Marine Corps), and
EC-130s. The Navy views SLEP on at least three EC-130s as a matter of
immediate urgency due to the role planned for these aircraft which are
to be used to provide airborne communications to the Trident fleet under
the TACAMO program. The Navy plans to induct these aircraft into SLEP
so that special communications equipment will be removed prior to SLEP
and replaced upon completion of SLEP. This schedule is considered
inflexible because of the limited number of aircraft available and the
operational demands of the TACAMO mission.
SLEP as proposed here also includes SDLM. SDLM is defined by the
Navy as "rework performed at a military rework facility or commercial
contractor's facility at specific intervals during the service life of
an aircraft." Normally, SDLM includes a comprehensive inspection of an
aircraft, focusing on specific aircraft structures and materials.
Critical defects are corrected when found and required preventive
maintenance is performed. SDLM routinely includes any other work which
must be performed to assure that the aircraft complies with all
outstanding technical directives before it is returned to service.
The Lockheed letter contract for SLEP calls for negotiation of a
formal contract providing for a modification of 13 aircraft, with an
option to increase the total number inducted to 20 aircraft. The Navy
proposes to induct 29 additional aircraft under contracts it would award
Lockheed in the future. The numbers of various series aircraft are
summarized in Table 1. (TABLE OMITTED)
All of the aircraft listed in Table 1 have met, or are close to meeting,
their original 15,000 hour service life limit.
The C-130 SLEP was initiated in 1975. At that time, NAVAIR projected
a need for SLEP on 61 aircraft which it expected to perform over a
seven-year period, from 1976 through 1982. In 1977 the Navy initiated a
study "to assess the current aircraft fuselage and empennage condition
(of C-130 aircraft); determine service life extension requirements and
consider appropriate modification, logistics and maintenance
alternatives." The Naval Air Rework Facility at Cherry Point (NARF) was
designated to manage and staff the project, and in that regard to:
Conduct an evaluation utilizing all available data * * * to determine
cost effective modifications and/or replacement components to provide
the desired aircraft service extension. Evaluation shall be conducted
on the fuselage and empennage structure and their components * * * .
Lockheed was asked to perform a fuselage and empennage fatigue study.
By the fall of 1977, Lockheed had been asked under an existing contract
to submit an engineering change proposal (ECP) to identify long lead
items which would be needed. In early 1978, the Navy also asked
Lockheed to submit an ECP regarding performance of the C-130 SLEP,
incorporating the results of its earlier fatigue study and reflecting
its own studies of SDLM and other maintenance records. Lockheed did so,
eventually preparing two proposals assuming: (1) that all of the work
would be performed at Lockheed, and (2) alternatively, that Lockheed
would prepare a so-called Military Specification kit (Mil. Spec. kit)
for installation of SLEP replacement parts by another contractor.
The record shows that a work requirements specification was developed
by the Navy which merely identifies the structural and system components
which require replacement to achieve the desired service life extension.
The Navy believes the specification is not suitable for competitive
procurement because it does not describe how the work is to be done,
e.g., provide installation procedures (technical directives) and the
tools and parts necessary to accomplish the replacements.
Essentially, the Navy contends it would be forced to assume an
unacceptable degree of technical risk unless: (1) Lockheed performs the
work, or (2) the work is performed by a contractor using a Mil. Spec.
kit prepared by Lockheed. It believes that sound practice requires use
of a Mil. Spec. kit to assure that the airworthiness of the aircraft is
not affected over the proposed extended service life. The Navy believes
that it did what it could to complete its requirement. Indeed, in July
1979 NAVAIR had approved a draft procurement plan (the "July plan")
which envisioned competition for a portion of the work. As proposed,
NAVAIR would have made an initial sole-source award to Lockheed,
because: (1) award to Lockheed was the most expeditious means of
satisfying SLEP, (2) Lockheed was believed to be the only firm which
could satisfy SLEP using a modification program without kits, and (3)
Lockheed in any event would have to accomplish non-recurring
engineering, manufacture parts, and produce any kits that would be used
for competitive procurement.
Significantly, the plan provided that kits would be procured to
facilitate future modifications by a firm or firms other than Lockheed.
Nevertheless, the Navy says it now has concluded that the kit
preparation process cannot be completed in less than four to five years,
because the process includes various requirements, including leadtime
needed to obtain parts as well as difficulties which concurrent
performance of SLEP and Mil. Spec. kit contracts would place on
Lockheed's resources. The time required to complete kit preparation and
validation of the kits would permit, the Navy's view, a SLEP induction
and delivery schedule which would meet Navy requirements. (Validation
is defined by the Navy as the process by which kits and technical
directives are tested for accuracy and adequacy. Essentially,
validation entails performance under Navy observation of all required
tasks using the materials furnished with a kit.)
Aero has approximately 10 years experience working on Navy C-130
series aircraft as a contractor. During that period it has performed a
variety of so-called "over-and-above" work, i.e. work which was required
to correct deficiencies discovered in performing SDLM. Pointing out
that SDLM contract work has included aircraft modifications as well as
crash damage, Aero maintains that it has accomplished at one time or
another all but parts of two of the 39 SLEP tasks. It also argues that
some of the work it has done was of equal or greater difficulty than is
required for the two tasks which it has not completely performed.
Aero believes it does not need kits. In its view, the Navy should
have, but failed to, recognize that at least a limited group of
experienced SDLM contractors are capable of performing SLEP without
kits. Aero says it could be ready to induct the first aircraft six
weeks after award to it, that it can perform SLEP within 130 days after
each aircraft is inducted, and that it can meet the Navy's projected
delivery schedule over the life of the contract.
Indeed, Aero believes it is actually in a better position to perform
SLEP than is Lockheed due to its SDLM experience. It can begin
performance sooner than can Lockheed, it says because it does not need
to set up tooling, draft planning sheets, and prepare plant space--
tasks it has done in performing related SDLM functions. It states it
would accept liquidated damages to guarantee its proposed performance
schedule.
In addition to taking exception to the Navy's belief that up to five
years is needed to produce kits, Aero states it is willing to serve as
the contractor for any kit validation. On June 20, 1979, Aero submitted
an unsolicited proposal to perform SLEP based upon Aero's then current
understanding of the Navy's plans. Through the proposal Aero offered to
perform verification of the technical directives which would be included
with kits on three aircraft to perform SLEP/SDLM on 10 additional
aircraft, and to perform logistics-related data requirements, developing
necessary drawings, engineering notices, technical directive and C-130
manual revisions required.
Aero maintains that it is a small business and that Navy should not
procure its requirements without referral to the Small Business
Administration (SBA) for a Certificate of Competency (COC). Aero's
argument is twofold. It suggests that the rejection of its unsolicited
proposal was founded in the Navy's believe that Aero is incapable of
performing SLEP and further, that the Navy's decision to "direct" an
award to Lockheed was based on its conclusion that only Lockheed is
"capable" of performing the work in question.
As provided in 10 U.S.C. 2304(g)(1976), unless exigency or other
special (and here, inapplicable) circumstances require, when a
procurement is negotiated:
proposals, including price, shall be solicited from the maximum
number of qualified sources consistent with the nature and requirements
of the supplies of services to be procured, and written or oral
discussions shall be conducted with all responsible offerors who submit
proposals within a competitive range, price, and other factors
considered * * * .
Thus, the question here is whether the Navy, in light of the
statutory preference for maximum practical competition, had a reasonable
basis for directing award to Lockheed on a sole-source basis.
While presumably no contracting activity will make a sole-source ward
in good faith without believing that the action taken is in the
Government's best interest, a sole-source award may not be justified on
that basis or on the basis that the awardee is the best qualified firm.
Precision Dynamics Corporation, 54 Comp.Gen. 1114(1975), 75-1 CPD 402.
The agency must show that it reasonably believed that there could be no
competition. Control Data Corporation, 55 Comp.Gen. 1019, 1024(1976),
76-1 CPD 276; cf. Constantine N. Polites & Co., B-189214, December 27,
1978, 78-2 CPD 437.
We recognize, as the Navy and Lockheed contend, that the magnitude of
work required at one time with SLEP is substantially greater than that
which is typically required to perform SDLM on a single airplane. If
SLEP involves completion of some 39 tasks, a resulting 10,000 hour
service life extension, and an increase gross weight of affected KC-130F
aircraft, it requires, according to Lockheed, removal of parts totaling
45 percent of the basic empty weight of the aircraft, replacement of
parts weighing a total of 2,000 pounds, and reassembly of the remainder
(totaling some 32,000 pounds).
Although there is some disagreement as to the exact percentage, the
parties concur that a significant portion of the total effort will be
absorbed by three tasks, involving replacement of (1) the wheel well
side panels in affected aircraft, (2) the sloping longerons, and (3) the
cab frame reinforcement doublers.
The parties agree that wheel well side panel replacement is the
largest single task, albeit one which does not apply to the three TACAMO
aircraft initially scheduled for SLEP. These panels-- carry bearing
loads from the fuselage, wings and landing gear. The task involves
removal and reinstallation of hundred of parts.
Replacement of the aft fuselage sloping longerons (two per aircraft)
constitutes the second largest operation. Lockheed anticipates that
this will require disconnecting the entire aft fuselage structure,
involving removal of approximately 100 parts. It views reassembly as a
critical task, because the fit of the ramp and cargo door and improper
alignment of the aft fuselage structure affect aerodynamic performance.
Windshield and cab frame doubler replacement, the third significant
task, requires removal of outside skins in the cockpit area and careful
reassembly to insure against air leaks (the area is pressurized) and
windshield cracking over the extended service life.
Lockheed's perception of the work is illustrated by its comment in an
early submission to our Office:
Even assuming Aero's ability to perform these work items, the
comparison it has drawn (to SDLM) is inappropriate. This is because of
the difference between SDLM and SLEP: in the former, work is done on an
as-needed basis, with only a limited amount of structural work being
performed at any one time. SLEP, however, is a systematic program
whereby all work items are to be done simultaneously, and a majority of
the work involves replacement of major structural members. Furthermore,
there is a synergistic effect of the SLEP requirement for simultaneous
work (i.e., the sum of the parts does not equal the whole because one
work task affects the way another task is to be done.) For example, to
remove the sloping longerons in SDLM, a rather simple support system is
all that is needed to hold the aircraft stable. In SLEP, however,
because of the other work being performed at the same time, a far more
complex support system must be used.
Viewing SLEP as addressing aircraft structure as an integrated whole,
Lockheed argues that SLEP can be completed successfully only if proper
physical support, location tooling and methodology is used--
capabilities which it asserts are available only if the work is done by
the original manufacturer. Location tooling refers to jigs and other
devices used to position parts during assembly to assure that they are
properly aligned.
Specifically, Lockheed focuses on three wheel well replacement
related tasks and four additional work items (two related to the
longeron and windshield doubler replacement tasks and two others) which
it believes are critical, requiring use of location tooling if
tolerances and interchangeability of parts and assemblies are to be
maintained. These are as follows:
1. The wheel well side panels must be installed to tolerances of
0.030 inches (approximately 1/32 of an inch). Otherwise, at minimum,
the main landing gear operation may be disrupted or excessive stress
placed on components of the panel or adjoining structure.
2. Installation of so-called "porkchop fittings" (furnished as blank
parts and mated together at the fuselage floor) and related wheel well
attachments must be held in proper position to assure that excessive
loads are not imposed.
3. Installation of wheel well beams (on EC-130 aircraft only) which
support the landing gear tracks must be held to an accuracy of 0.25
degrees vertically and 0.005 degrees laterally to assure proper
operation.
4. Lockheed sees installation of the longeron end fitting as
critical because it not only controls the position of the sloping
longeron but also affects the horizontal stabilizer attach fittings.
Unless the position and hold dimensions of the vertical stabilizer
attach fittings are maintained, the stabilizer will not match the aft
fuselage fittings. (Lockheed admits that it does not have the tool
required to assure that this match will be maintained, but intends to
borrow it from a subcontractor.)
5. Accuracy of installation of the longeron is considered critical,
as indicated, to assure interchangeability of the aft cargo door
attachment and ramp.
6. Lockheed also points out that windshield and column frame
openings must be held to prescribed dimensions to insure
interchangeability of window and windshield components.
7. Likewise, Lockheed notes, replacement of two of the nacelle
engine truss mounts is critical to assure interchangeability of other
parts.
On the other hand, the Navy recognizes that the difference between
SDLM and SLEP is in part one of degree, as indicated in the deposition
taken of Navy Captain Russell E. Davis, the Program Manager for SLEP:
Q. * * * Is it correct that for a SDLM contract, the contractor
inspects the airplane? He then makes a determination or a judgment as
to what portions of parts of the airplane need to be replaced.
He confers possibly with Navy representatives on the question of
WHETHER REPLACEMENT IS IN ORDER. AN AGREEMENT IS REACHED AS TO whether
the part ought to be replaced. When that agreement is reached, then the
contractor proceeds to make the replacement and he does that for every
part that agreement has been reached upon.
Then the aircraft is completed. You have a flight inspection and the
SDLM task is performed for that particular aircraft. * * *
A. That is a fair description. However, I would like to believe that
a tooling requirement determination is made somewhere in the evaluation
process, either as a recommendation by the SDLM contractor or as a
determination by DCAS and the Navy engineers, and in some cases I
believe that tooling is required on an extra order basis for SDLM
contractors.
Q. So SDLM contractors have a certain amount of tooling available to
do these replacement tasks?
A. You have a depot level outfit for tooling.
Q. Assume that is a C-130 aircraft that comes into the SDLM
contractor's plant. The inspection is done and for each and every
(item) identified in the SLEP work statement, there is a deficiency
found * * * .
A. If he were to replace all of the parts at that particular time in
whatever sequence is deemed appropriate by either his engineering group
or the Navy engineers and the appropriate tooling is there to do the job
and the quality assurance folks buy off on it and the airplane flies,
then I think you could probably assume that a like operation to SLEP
will (have been) done on that airplane.
This close relationship between SDLM and SLEP is also indicated by
the Assistant Deputy Chief of Naval Material's memorandum approving the
final procurement plan. At that time he directed that:
C-130 series aircraft scheduled for SLEP * * * at Lockheed will be
considered for induction at the then current SDLM contractor's facility
in the event a substantial delay occurs in the scheduled SLEP (if) a
SDLM is determined (to be) necessary to sustain the material condition
of the aircraft.
The significance of this statement is disclosed by the deposition of
Mr. Herman, the C-130 project engineer at Naval Air Research Facility,
and OPNAV Instruction 3110.11M regarding "policies and peacetime
planning factors governing the use of naval aircraft." The Navy admits
that most if not all aircraft which reach the end of their original
service life are not taken out of service permanently. Rather, the Navy
has various procedures, including SDLM, to keep them in service, albeit
possibly with increased operating cost and downtime.
Also, Aero does not agree that the magnitude of the total job is
quite what Lockheed sets out. As explained by Aero, "The need for * * *
simultaneous replacement of all SLEP items is the lynchpin of the Navy's
argument that only Lockheed is currently able to perform the SLEP
tasks." However, Aero states that it:
* * * will not perform the SLEP tasks "simultaneously," as Lockheed
proposes to do, Aero will perform the SLEP tasks in a sequenced group of
tasks as it presently performs SDLM, and Aero has all of the tools
available to do so. Moreover, Aero has the required technical
directives or work instructions for 37 of the 39 tasks and the
capability to develop this data for the remaining two tasks.
In Aero's view, Lockheed's "simultaneous" approach is neither
required nor desirable. Indeed, Aero views its sequential approach as
superior because "it permits the aircraft to be (used as) its own master
tool and eliminates the dangers of structural impairment and (residual)
stress" which it argues otherwise would be a problem even if Lockheed's
approach were used. Aero's proposed technique involves making the parts
fit by finishing them in place, e.g., by "backdrilling" holes using
adjacent parts as guides.
It argues, and Lockheed concedes, that aircraft which have been flown
15,000 hours have been subjected to stresses in flight and on landing
that affect the alignment of parts throughout the airframe. The Navy
assumes that every one of the affected aircraft has been operated beyond
designed gross load limits. This means, Aero explains, that use of
original tooling to "force" parts to conform to original manufacturing
tolerances of itself introduces residual stresses and potential damage.
For just the same reasons, Lockheed characterizes the aircraft as an
inaccurate locating tool, claiming that backdrilling techniques cannot
replace proper location tooling in SLEP because the accuracy and
position obtained using such methods "can be no greater than that of the
existing parts and holes." It emphasizes that:
Where such parts and holes are deformed or out of alignment due to
stress and wear, previous maintenance and repair work, or the process of
dissembly, they will definitely not provide reliable guides or templates
for the sort of work required by SLEP. The age and condition of the
aircraft in question, as well as their broad exposure to several
generations of depot level maintenance and repair work * * * strongly
suggest the imprudence of using the backdrilling expedient in SLEP.
It seems clear from the preceding that the Navy believed that there
was significant risk involved in a firm other than Lockheed was to
perform the work. The record shows, however, some disagreement among
responsible Navy personnel regarding the extent of that risk and the
course which should be pursued as a result. NAVAIR contracting
personnel believed that competition could be introduced, while
throughout, Lockheed was favored by NARF personnel and others.
The minutes of the NAVAIR September 28, 1979 meeting approving
sole-source procurement reflect this dichotomy of views:
In recommending (sole-source to Lockheed), (Captain) Davis pointed
out that it is the most responsive to Fleet needs and had the lowest
cost, technical, and schedule risks, although it does preclude
competition. * * * (Captain) C. M. Rigsbee, AIR-03, felt that NAVAIR
should make a hard decision as to which option best serves the Navy's
needs regardless of any potential protests. (Captain) N. P. Ferraro
recommended that we get a firmer hold on the impact a competitive
procurement with its prolonged schedule may have on the Fleet. (Rear
Admiral) L. R. Sarosdy, AIR-04, and (Captain) W. J. Finnernan, AIR-05A,
agreed that the prime contractor was the only plausible place to perform
the SLEP, even if other contractors had installation kits.
As indicated earlier, the Navy considered the use of kits in order to
have a competitive procurement and while it found the kits to be an
acceptable approach, it also determined that the time frame involved for
development and validation of the kits was unacceptable.
We find that the Navy had a reasonable basis for its belief that
award to any firm other than Lockheed would involve unacceptable risk,
even though we believe the Navy's reluctance may result in part from its
inability to assess fully the risks taken.
First, as indicated above, there are significant differences between
SLEP and SDLM and the risks involved in each. Although we are convinced
that there are good faith differences of opinion regarding the amount of
risk, nevertheless we find no abuse of discretion regarding the Navy's
higher estimation of the risk in SLEP. Obviously, it is reasonable to
expect greater risks in achieving the desired 10,000 hour service life
extension for SLEP as opposed to the 3,000 hour extension obtained by
SDLM, particularly in view of the greater structural work which Navy
categorized as a remanufacturing process.
Second, we are not convinced that SLEP can be performed without some
form of kit. Even though Aero has performed most of the tasks during
SDLM, its methodology envisions less disassembling of the aircraft using
more of the aircraft as its own locating tool. Lockheed, on the other
hand, would provide more disassembling of the aircraft and use original
manufacturer's tooling. While we believe SLEP might be performed using
something less than a Mil. Spec. kit, we are not persuaded that the work
can be accomplished entirely as Aero envisions. It is likely, in our
opinion, that some "backdrilling" of holes using adjacent parts as
guides, as proposed by Aero, would not be acceptable and that use of
specialized tooling may be required where original manufacturing
tolerances are considered necessary. Moreover, it is logical for the
Navy to want to maintain greater control of the remanufacturing process
it envisions so as to insure the higher quality of workmanship
considered necessary for SLEP but not required for SDLM.
Third, we are aware of no legal requirement for the Navy to provide
kits specially tailored to a limited group of maintenance contractors,
such as Aero, regardless of whether Navy could have or should have
arranged for kits earlier. The Navy is required to seek competition
where it can find it. However, in our opinion, the statutory preference
for maximum practical competition is not disregarded where, as here,
consideration is given to the feasibility of providing Mil. Spec. kits
to facilitate competition on a broader basis which included maintenance
contractors.
The question remaining is whether the Navy reasonably concluded that
the development of kits is not feasible in the time frame for performing
SLEP. In this connection, Aero argues that the development of kits does
not require five years primarily because it believes kits covering all
39 SLEP tasks are unnecessary, having accomplished replacement of parts
during SDLM for 37 out of 39 SLEP tasks. Moreover, Aero argues, the
Navy should exercise its discretion to cut short the kit preparation
process, e.g., by waving the trial and validation phases. As explained
above, we believe the Navy has not abused its discretion by seeking to
control SLEP performance by firms other than the original manufacturer
by requiring performance in accordance with Mil. Spec. kits.
We base this conclusion on the Navy's efforts to obtain competition
using kits, and on its uncertainty as to how technical risks otherwise
should be contained, even though many of the tasks previously may have
been performed by others during SDLM. Similarly, whether certain phases
of the kit preparation process can be cut short or condensed is largely
discretionary with the Navy and because of the technical risks involved
we are not in a position to take issue with what may be the Navy's
conservative views in this regard.
Aero also argues that the projected operating service life of the
C-130 aircraft does not preclude competition because it is merely a
projection of the minimum expected service life and the Navy has in fact
extended the operating service life of a number of C-130 aircraft.
However, as indicated above, the Navy has not sought to justify its
sole-source award to Lockheed because of exigency precisely because it
cannot certify that aircraft will be grounded after a predetermined
number of hours without inspection.
Moreover, we disagree with Aero that the record is inadequate to
support Lockheed's time frame for furnishing Mil. Spec. kits and the
Navy's conclusion that the kits cannot be designed, developed and
produced in the required time frame. The Air Force Plant Representative
Office at Lockheed was requested to evaluate Lockheed's schedules based
on first hand knowledge on Lockheed's capabilities and performance on
similar programs. Apparently, aerospace contractors are experiencing
substantial increases in material leadtime and the Air Force plant
representative considers Lockheed's schedules to be realistic, although
somewhat conservative.
Nevertheless, it is possible that initial SLEP experience will allay
much of the Navy's concern. Consequently, we believe, the Navy should
continue to evaluate the necessity for the course of action chosen and
in this regard: (1) should include in any contract with Lockheed
provisions which will afford the Government access to technical data
which it may find necessary, and (2) should closely monitor Lockheed's
initial performance and evaluate the methods used to determine whether
an experienced maintenance contractor's performance would be acceptable.
We recommend that the Navy review the sole-source determination before
exercising any option or awarding a follow-on contract for all or part
of the 29 remaining aircraft to Lockheed.
We conclude that a limited award to Lockheed on a sole-source basis
is justified in the circumstances. Aero necessarily has been excluded
from competing for this requirement because the Navy, in determining its
technical requirements, refused to permit firms other than the original
manufacturer to perform SLEP without Mil. Spec. kits.
In these circumstances Aero had no basis for insisting that Navy must
first refer the question of Aero's competency to perform SLEP without
Mil. Spec. kits to the SBA for certification. The COC procedure does
not affect a procuring agency's determination of what are its technical
requirements, e.g., the extent to which specifications are considered
necessary to reduce risk to an acceptable level. The COC procedure is
inappropriate where an agency is not in a position to provide
specifications believed necessary for performance and is required to
make sole-source award to the original manufacturer. Applied Devices
Corporation, B-187902, May 24, 1977, 77-1 CPD 362.
The protest therefore is denied.
B-194932, December 18, 1979, 59 Comp.Gen. 144
Purchases - Small - Small Business Concerns - Certificate of Competency
Procedures Under SBA - Applicability
Contracting officer's determination that low small business quoter
was not responsible without referral to Small Business Administration
(SBA) under Certificate of Competency (COC) procedures was improper as
contracting officer is required by regulation to refer all matters of
responsibility to SBA and no exception exists in Federal Procurement
Regulations where procurement is made under small purchase procedures
for contracts up to $10,000.
Matter of: J. L. Butler, December 18, 1979:
J. L. Butler (Butler) protests the award of a contract to James M.
Mahoney (Mahoney) for trail maintenance and clearing awarded by the
Stanislaus National Forest, United States Forest Service (Forest
Service) under request for quotations (RFQ) R5-16-79-26.
Butler alleges that his quotation was lower priced than Mahoney's,
that he has the financial ability and experience to perform the work
required, that he has successfully completed other contracts for the
contracting agency in the past, and that he is intimately familiar with
the work to be done and the area involved. Butler requests that the
contract to Mahoney be terminated and award made to him. We sustain the
protest because the Forest Service should not have rejected Butler, a
small Business concern, without referring the question of Butler's
responsibility to the Small Business Administration (SBA) under the
Certificate of Competency (COC) procedures.
The RFQ required each quoter to complete a "Qualification
Questionnaire" which requested information concerning prior work
experience, present work commitments and other outstanding bids,
personnel and equipment, and whether the work area covered by the RFQ
had been examined. Butler completed the questionnaire, indicating in
part that the work area had not been examined.
In its report to this Office the Forest Service states that the basic
reason the low quotation of Butler was not selected for award was that
Butler's questionnaire showed that he had not visited the work site and
gave no indication of prior experience in the type of work required. In
addition, the contracting officer also considered the Forest Service's
"strained relationship" with the two sons of Butler on other contracts.
The contracting officer believed Butler was acting for one of his sons
in submitting his quotation. It appears that this perceived
relationship between Butler and one of his sons, while denied by Butler,
did in fact have a bearing upon the decision of the contracting officer
to reject Butler.
This case does not appear to involve a question regarding the
contracting officer's judgment of the advantages and disadvantages of
the proposed performance as related to price in which case the
contracting officer is permitted broad discretion. See Tagg Associates,
B-191677, July 27, 1978, 78-2 CPD 76. In our opinion, the record
clearly establishes that the contracting officer rejected Butler because
he believed Butler did not have the capability and capacity to
accomplish the promised work in a timely manner and thus was not
responsible.
Under the provisions of the Small Business Act, 15 U.S.C.
637(b)(7)(Supp. I, 1977), no small business concern may be precluded
from award because of nonresponsibility, including but not limited to, a
lack of capability, competency, capacity, credit, integrity,
perseverence and tenacity, without referral of the matter to the SBA for
a final disposition regardless of the amount of the procurement.
The Forestry Account, B-193089, January 30, 1979, 79-1 CPD 68. The SBA
is empowered to certify conclusively to Government procurement officials
with respect to all elements of responsibility. See Com-Data, Inc.,
B-191289, June 23, 1978, 78-1 CPD 459. In this case the agency procured
its requirements under the small purchase procedures for procurements
not exceeding $10,000. Federal Procurement Regulations (FPR) 1-3.6
(1964 ed. amend. 153). While the FPR provisions which implement the
above provisions of the Small Business Act speaks in terms of "bids" and
"proposals," we believe the COC procedures are equally applicable to
awards made pursuant to quotations under small purchase RFQs. FPR
1-1.708-2 (1964 ed. amend. 192). The FPR does not exempt small
purchases from the COC procedures otherwise required.
The protest is sustained; however, we cannot recommend relief as we
have been advised by the Forest Service that performance under the
reprocurement contract is nearly complete and no useful purpose would be
served in referring the matter of Butler's responsibility to the SBA for
possible issuance of a COC. We are, nevertheless, bringing this matter
to the attention of the Secretary of Agriculture by letter of today
recommending that appropriate action be taken to preclude a recurrence
of this error.
B-114817, December 18, 1979, 59 Comp.Gen. 143
Railroads - Railroad Retirement Board - "Protective Account" - Set-Off
Availability - Insurance Account Indebtedness
The Railroad Retirement Board may set off reimbursements due to
railroads from the Regional Rail Transportation Protective Account
described in 45 U.S.C. 779(1976) against amounts owed to the Board by
the railroads under the Railroad Unemployment Insurance Act. Board's
right of setoff derives from common law right of the Government to
retain moneys otherwise due debtors in satisfaction of their debts.
Although the withheld protective account reimbursements will be
transferred to Board's insurance funds, this does not constitute
violation of Protective Account statutory authority forbidding
protective account funds to be used for insurance payments. Protective
funds are being used for proper purposes but merely being withheld to
satisfy independent debt.
Matter of: Railroad Retirement Board's authority to make setoffs
from the Regional Rail Transportation Protective Account, December 18,
1979:
The Railroad Retirement Board (Board) has asked whether it may
withhold reimbursements due to the National Railroad Passenger
Corporation (Amtrak) and payable from the Regional Rail Transportation
Protective Account (Protective Account) pursuant to 45 U.S.C. 779(1976),
to offset unpaid claims of the Board against Amtrak under section 12(o)
of the Railroad Unemployment Insurance Act (RUIA), 45 U.S.C.
362(o)(1976). The Board plans to transfer the withheld reimbursements
from the Protective Account to its Railroad Unemployment Insurance
Account. We conclude the Board can make those setoffs.
The question arose when the Board paid sickness benefits for
work-related injuries to an employee of Amtrak and then served notice
upon Amtrak of its right of reimbursement. For various reasons, Amtrak
refused to make full reimbursement but eventually, the Board and Amtrak
settled the matter. However, in the expectation that the issue may be
raised again, the Board still seeks a decision on the propriety of
offsetting amounts due to various railroads and payable from the
protective account to discharge debts owed by the same railroads to the
Board as reimbursement for sickness benefits. The problem, as both
Amtrak and the Consolidated Rail Corporation (ConRail) see it (both
railroads submitted comments at our request), is that section 509 of the
Regional Rail Reorganization Act of 1973 (3R Act), supra, which
established the Protective Account, provides specifically that:
* * * the Regional Rail Transportation Protective Account . . . shall
(not) be charged for any amounts of benefits to a protected employee
under the provisions of the Railroad Unemployment Insurance Act or any
other income protection law or regulation.
We do not think this provision applicable. The Board contemplates
setting off moneys which would be due to ConRail, Amtrak and other
recipient entities as reimbursements from the Protective Account. The
moneys the Board intends to transfer to the Railroad Unemployment
Insurance Account are not for benefits payable under the RUIA but for
payments properly payable from the Protective Account. Instead of
mailing the payments to the railroads, however, and hoping that the
railroads will then be in a position to discharge the unrelated debts
they owe to the Board, it seeks to apply the funds belonging to its
debtors which it has in hand to extinguish their debts.
It is well settled that the United States' right of setoff "is but
the exercise of the common law right which belongs to every creditor, to
apply the unappropriated moneys of his debtor, in his hands, in
extinguishment of debts due to him." United States v. Munsey Trust Co.,
332 U.S. 234, 239(1947), citing Gratiot v. United States, 40 U.S. (15
Pet) 336, 370(1841). We have held that setoff may be made by Federal
agencies, B-170119, December 14, 1976 (in the absence of a prohibitory
statute or agreement), so long as the debt is legally valid and the
agency determines the setoff is otherwise proper. B-141048, February
11, 1960; 46 Comp.Gen. 178, 182(1966). Thus, for example, we have
approved setoffs against moneys owed the Veterans Administration (VA) by
the State of Missouri as a result of surpluses from a federally funded
farm training program and trade classes, B-141048, February 11, 1960;
against moneys owed the United States by the State of Texas as a result
of reimbursements due from Federal funds under the 1954 Emergency Hay
Program, B-143573-O.M., August 15, 1960; and, in numerous instances
involving overpayments to contractors, e.g., B-168619, January 14, 1970.
We have also held that moneys of the debtor in the hands of the United
States may properly be set off in liquidation of an independently
established debt to the United States. 41 Comp.Gen. 178, 180(1961);
B-141048, February 11, 1960.
Accordingly, we conclude that the Board may set off against
reimbursements payable from the Protective Account to entities such as
ConRail and Amtrak, amounts owed to the Board by these entities for RUIA
reimbursements.
B-195251.2, December 17, 1979, 59 Comp.Gen. 140
Contracts - Awards - Small Business Concerns - End Product Contributor
Bid received on total small business set-aside wherein sole bidder
indicated that it, as regular dealer, would not supply materials
manufactured by small business concerns was determined properly to be
nonresponsive due to failure to submit binding promise to meet set-aside
requirement, even though allegedly small business firms were listed in
"Place of Performance" clause. Bids - Mistakes - Correction -
Nonresponsive Bids
Nonresponsive bid may not be considered for correction regardless of
circumstances since to permit this would be tantamount to permitting
submission of new bid. Contracts - Performance - Place of Performance -
Confidentiality - Solicitation Assurances - Propriety
While clause permitting bidders to make their proposed place(s) of
contract performance confidential information ("except as inconsistent
with existing law") may lessen or negate ability of competing bidders to
challenge acceptability of other bids, contrary to fundamental concept
of full and free competition, no objection will be made to award under
resolicitation since none of bidders participating on resolicitation
protested use of clause. However, recommendation is made that provision
for confidentiality be deleted in future.
Matter of: Prestex, Inc., December 17, 1979:
Invitation for bids (IFB) No. DLA100-79-B-0593 was issued as a
100-percent small business set-aside for the procurement of cloth.
Prestex, Inc. (Prestex), the sole bidder, represented in its bid that it
was a small business and that it was bidding as a regular dealer, not as
a manufacturer. It also represented that the cloth "will not be
manufactured or produced by a small business concern * * * ," and it
indicated, as required in the IFB "Place of Performance" clause, the
names of the firms (and their locations) which would manufacture the
cloth. Because of the representation that the cloth "will not" be
manufactured by a small business, the contracting officer rejected the
Prestex bid as being nonresponsive to the small business set-aside
requirement. Consequently, he canceled the invitation and readvertised
the procurement. Prestex protested these actions.
It is the position of the contracting officer that Prestex did not
bind itself to furnish cloth manufactured by a small business concern
since it represented otherwise and since either the size status of the
firms (assuming they are now small businesses) listed by Prestex in the
"Place of Performance" clause could change after award and Prestex could
not be required to change firms or Prestex could engage a large business
as a manufacturer after award and no means would exist to compel Prestex
to provide small business-manufactured cloth. Second, it is believed
that a bid that can be read as one offering to supply small
business-manufactured cloth (due to the firms listed by the bidder as
the manufacturers) and as one offering to supply large
business-manufactured cloth (due to the representation) is ambiguous and
should be rejected. To do otherwise, it is noted, would permit the
bidder after bid opening to choose the bid interpretation it desired and
thereby determine whether or not it would accept an award.
Prestex maintains that its faulty representation was caused by a
typing error and, as such, is a minor informality which may be
corrected. It believes that the "Place of Performance" clause should
govern as the more definitive of the two and as the one referring to bid
responsiveness if it is not complied with. That clause provides that
the bidder may not change its manufacturing suppliers from those listed
in its bid without the permission of the contracting officer. Thus,
since the firms it listed are small businesses, it has obligated itself
to provide small business-manufactured cloth. As to a possible change
in the small business status of those firms, Prestex states that the
time to determine their status is at the time of bid opening and
contract award. Any change-- which Prestex believes is hardly likely--
after award would be irrelevant. In conclusion, Prestex believes that
since it obligated itself to provide cloth manufactured by the listed
small business concerns and since it would not have bid on the
procurement had it not intended to accept an award, there can be no
ambiguity in its bid, and it should be given the award.
It notes that no other firm would be prejudiced if it were permitted to
correct the wording in its bid since it was the sole bidder on the
procurement.
We believe that the Prestex bid was found properly to be
nonresponsive. While Prestex may have had every intention of meeting
the small business set-aside requirement, the fact remains that Prestex
represented that it was a regular dealer and that the cloth would not be
manufactured by a small business. The failure of Prestex to express its
intention in its bid and to thereby submit a binding promise to meet the
small business set-aside requirement was sufficient to render the bid
nonresponsive, something which now may not be corrected, since to permit
a bidder to make its nonresponsive bid responsive after bid opening
would be tantamount to permitting the submission of a new bid. Jack
Young Associates, Inc., B-195531, September 20, 1979, 79-2 CPD 207.
Even though Prestex was the sole bidder, to allow Prestex to alter its
nonresponsive bid would be injurious to other potential bidders who
might bid-- as was done subsequently-- on the resolicitation of the
procurement.
Finally, we do not view Prestex's completion of the "Place of
Performance" clause as obligating it to comply with the small business
requirement in view of the contrary representation in the clause
intended for that purpose. At best, Prestex's completion of the former
clause created an ambiguity which required rejection of the bid as
nonresponsive. M. A. Barr, Inc., B-189142, August 3, 1977, 77-2 CPD 77.
Accordingly, the protest is denied.
We note that in the "Place of Performance" clause bidders were
permitted to make their proposed place(s) of contract performance
confidential information, and the Government would "maintain information
so submitted except as inconsistent with existing law." We believe that
the granting of any confidentiality to this information is contrary to
the fundamental concept of full and free competition since the
confidentiality of the information might seriously lessen or even negate
the ability of bidders to challenge the acceptability of other bids.
For example, see Defense Acquisition Regulation Sec. 2-404.4 (1976 ed.).
However, since the participants to the resolicitation have not
protested its use, we will not object to an award under the
resolicitation. However, we are bringing the matter to the attention of
the Department of Defense with the recommendation that it be deleted
from future solicitations.
B-194440, December 17, 1979, 59 Comp.Gen. 134
Contracts - Data, Rights, etc. - Disclosure - Owner's Prior Consent,
etc.
Claim for disclosure of proprietary information in testimony by Air
Force personnel is denied because same information was already disclosed
in greater detail with knowledge and assent of claimant. Contracts -
Data, Rights, etc. - Use by Government - Claim for Unauthorized Use
Claim for use of proprietary data by Air Force in efforts to obtain
permit for destruction of herbicide orange at sea is denied because it
was failure of either Air Force or claimant to accomplish acceptable
destruction of dioxin residues that would result from reprocessing of
herbicide that was subject of testimony. General and abbreviated
references to data already disclosed in same forum in effort to obtain
approval for herbicide reprocessing was not use of proprietary
information. Contracts - Data, Rights, etc. - Status of Information
Furnished - Bidder, etc. v. Government Benefit
Claim for payment for production of information for use and benefit
of Air Force is denied where information was produced for benefit of
claimant in effort to satisfy prebid condition on sale of surplus
herbicide orange. Sales - Cancellation - Government Liability -
Withdrawal of Sales Item - Hazardous Substances - Environmental Impact
Consideration
Decision to terminate negotiations and stop proposed sale of surplus
herbicide orange is neither arbitrary nor capricious where neither
prospective purchaser nor Air Force is able to satisfy presale condition
for environmentally acceptable disposition of contaminated filters.
Risk that sale might be halted remains with prospective purchaser even
though Air Force offers to assume control of filters.
Matter of: Agent Chemical, Inc., December 17, 1979:
Agent Chemical, Inc. (Agent), claims reimbursement for expenses
incurred in the construction and test of a pilot plant for the
decontamination of herbicide orange (HO) erected to satisfy a prebid
condition on a sale of surplus Department of Defense (DOD) stocks of HO.
The sale was aborted and the HO was destroyed at sea. Agent asserts
entitlement to payment on the basis that proprietary information
developed through its pilot plant project was disclosed and/or used by
the Air Force to obtain from the Environmental Protection Agency (EPA)
the ocean dumping permit required for destruction of the HO. For the
reasons that follow, we find no legal basis upon which Agent's claim may
be paid.
HO, a combination of two phenoxy herbicides, was first formulated in
1962 for military use as a defoliant. By 1969, however, undesirable
side effects attributable to the use of HO were noted, eventually traced
to the presence in the HO of certain extremely toxic contaminants called
dioxins or TCDD. As a result of these discoveries, in April 1970 the
DOD directed the Air Force to dispose of all DOD stocks of HO.
After investigating disposal methods, in November 1974 the Air Force
published an Environmental Impact Statement (EIS) proposing the
destruction of the HO through high-temperature incineration at sea. The
EPA, however, suspended hearings on the Air Force's application for an
ocean dumping permit after testimony which indicated that reprocessing
technology might exist which would enable the decontamination of the HO
and its conversion to a safe and saleable herbicide. Unsuccessful
contacts with HO manufacturers concerning the prospect of reprocessing
led to the request for quotations (RFQ) which underlies this claim.
The RFQ advised potential purchasers of the proposed sale of DOD's
stock of HO and stated that the sale would be limited to a party having
the ability to reduce it to a safe and registerable herbicide. Before
purchasers could bid on the HO, they were required to explain and
document their proposed reprocessing method, comply with all applicable
Federal, State and local laws pertaining to the processing or use of the
herbicide, submit a description of the residues and their disposal, and,
most importantly for our purposes here, process a test batch through a
pilot plant.
Agent proposed to use a two-part process for decontamination of the
HO and destruction of the TCDD. Decontamination would be accomplished
by absorbing the dioxin onto charcoal in a filtration process developed
by Dr. David L. Stalling and other scientists of the United States Fish
and Wildlife Service to reduce the level of dioxin contaminants to
acceptable levels: Final destruction of the absorbed dioxin was to be
accomplished by incineration of the contaminated charcoal filter
cylinders.
At this time, charcoal filtration of dioxins had only been demonstrated
on a laboratory scale. Dr. Stalling and his associates had performed
preliminary research under an interagency agreement with the Air Force
which indicated that pyrolysis was a promising method of disposal of the
contaminated charcoal residues.
Agent encountered severe difficulties with its pilot plant. The
initial and four subsequent tests of Agent's incinerator system
conducted over the period from November 2, 1975, through March 1-2,
1976, all resulted in failures, as did the initial test of the
filtration system in late January 1976.
In February 1976 Agent advised the Air Force that Dr. Stalling had
identified the flow rate as the culprit in the filtration test failure
and requested 45 additional days to correct and demonstrate its plant.
Before considering Agent's request, the Air Force required Agent to
respond to an extensive statement of deficiencies and problems which the
Air Force had noted in Agent's efforts. Technical analysis of Agent's
response reflected continued dissatisfaction with Agent's performance
and plan and culminated in a recommendation that HO reprocessing be
dropped. A second submission from Agent led to approval of Agent's
requested extension in a letter bearing the caveat: "As in the past,
(Agent) will bear all risk and expense of this effort."
Agent successfully demonstrated its filtration process in June 1976,
but was still unable to incinerate the dioxin-contaminated filters. In
July 1976 Agent filed a report with the Air Force on its filtration
process which contained the information upon which this claim is based.
After efforts at disposal of the filters in a landfill were
unsuccessful, the Air Force proposed that if Agent could not arrange for
burial of the filters in an approved landfill, "we should direct our
mutual efforts toward negotiating a sales agreement providing for
Government control of the containers."
At about the same time, the Air Force published an amended EIS
proposing to decontaminate the HO using Agent's process and store the
contaminated charcoal cylinders until technology could be developed to
permit their disposal. This proposal drew substantial negative
reaction. Several of those commenting pointed out that the filtration
approach did not resolve the problem of TCDD disposal, but merely
converted it to another form. Subsequent investigation by the Air Force
of avenues of destruction of the contaminated charcoal cylinders
produced the following comment in an internal memorandum dated March 7,
1977:
Achieving total destruction of the more densely dioxin-contaminated
charcoal is technically much more difficult than destroying the lesser
concentration of dioxin contained in liquid herbicide orange. The
theoretical technology may exist, but no existing incinerator is capable
of demonstrating it. The technology will have to be applied; an
incinerator designed; military construction funding obtained; and the
incinerator actually constructed.
As in the case of storage, only a DOD site outside the jurisdiction of
any state possesses the slightest chance of being acceptable. The cost
and timing of such an endeavor is unknown and depends on a series of
unprovable assumptions, such as how long it will take to prove the
technology, design the incinerator, complete an environmental statement
process, and have the incinerator successfully compete in the military
construction funding process.
The Air Force concluded that "disposal of the dioxin-laden charcoal
and their containers in the foreseeable future is not feasible and that
herbicide reprocessing should not be regarded as a viable alternative to
ocean incineration." This conclusion was apparently induced in part by
the continuing deterioration of the herbicide containers.
The Air Force subsequently withdrew its amended EIS and reinstated
its original proposal to destroy the HO by high-temperature incineration
at sea. The HO was destroyed by this method during the latter part of
1977.
Agent seeks reimbursement for the research and development expenses
it incurred in applying the filtration process and in its unsuccessful
efforts to incinerate or otherwise dispose of the resulting contaminated
filters. Agent bases its claim on the theory that the Air Force,
without Agent's permission, used proprietary data developed by Agent to
document its earlier unsuccessful request for an EPA permit to
incinerate the HO at sea and that such use required either the prior
approval of Agent or compensation.
We believe that Agent's claim is a composite of three separate
claims: First, a claim resulting from the alleged disclosure of
proprietary information; second, a claim for the use of proprietary
information; and third, a claim for proposal preparation costs. We
discuss each of these claims below. For the purposes of our discussion,
we assume without deciding both that the information on which the claim
is based is actually proprietary and that Agent's expenses for its pilot
plant would be appropriate measure of recovery.
Agent's theory that the Government disclosed proprietary data
developed by Agent is based on testimony by Dr. Billy Welch, USAF,
during hearings in the spring of 1977 on the Air Force's request for the
final granting of an ocean dumping permit. We have reviewed this claim
carefully, including examination of that portion of the transcript of
Dr. Welch's testimony to which it is believed Agent refers, and do not
believe that any information was revealed by Dr. Welch for which Agent
would be entitled to payment. During the course of his testimony, Dr.
Welch discussed Agent's effort at HO decontamination in general terms,
including a general description of Agent's process and such remarks as:
"As many as 1,000 of these canisters, each approximately ten feet long
and 30 inches in diameter and each containing more than one-half ton of
charcoal, could be generated by a reprocessing action involving the
entire stock of orange herbicide."
All of this information, including specific figures for charcoal weight
per column, dimensions of the filter columns, and details of the
process, was published in greater detail in the Air Force's amended EIS
filed on October 12, 1976, with Agent's knowledge and without protest.
The value of proprietary information lies in its possession uniquely
by the owner; once such information becomes public knowledge, its value
and status as proprietary information are lost. As stated by the
Seventh Circuit Court of Appeals, "Of course, as the term demands, the
knowledge cannot be placed in the public domain and still be retained as
a 'secret.' * * * That which has become public property cannot be
recalled to privacy." Smith v. Dravo Corp., 203 F.2d 369, 373(7th Cir.
1953). A trade secret is no longer protectable when it becomes public
knowledge or general knowledge in the trade or business. Kewanee Oil
Co. v. Bicron Corp., 416 U.S. 470, 475(1974); Ferroline Corp. v.
General Aniline & Film Corp. 207 F.2d 912, 921(7th Cir. 1953);
Chromalloy Division-- Oklahoma of Chromalloy American Corporation, 56
Comp.Gen. 537(1977), 77-1 CPD 262.
We think the publication of Agent's data in the Air Force's October
1976 EIS amendment placed this information in the public domain.
Furthermore, we believe that this disclosure was accomplished with
Agent's approval which we infer from Agent's knowledge and lack of
protest of the inclusion of its data in the amendment and our belief
that it was the understanding of the parties at the time of submission
of Agent's July 1976 report that at least some of the details of Agent's
process would have to be disclosed in order to win EPA approval of HO
reprocessing. In these circumstances, we do not think that Dr. Welch's
subsequent testimony constitutes a disclosure of proprietary
information.
Agent claims reimbursement for "its reasonable research and
development expenses for the production of proprietary and confidential
data used by the Air Force in documenting its request for a permit for
the (EPA) to incinerate Herbicide Orange at sea." For the reasons stated
below, we do not think Agent is entitled to compensation for the use of
this information.
We are unable to ascertain from the wording of Agent's claim whether
it is Agent's intent to claim compensation for the use of information
proprietary to Agent or whether Agent seeks reimbursement for the
expense of preparation of information for the benefit of the Air Force.
In either event, we find no basis upon which Agent's claim may be paid.
In the first case, we do not think that Dr. Welch's testimony
constituted a "use of proprietary and confidential data" in support of
the Air Force's renewed request for an ocean dumping permit. It was not
Agent's process but rather the fact of Agent's failure to achieve
destruction of the dioxin residues which was the focus of Dr. Welch's
testimony. However much Agent may have desired to keep this
confidential, we do not regard it as proprietary and neither do we
regard as proprietary Dr. Welch's general and abbreviated references to
materials already disclosed in the same forum to demonstrate the
consequences of the inability to dispose of the TCDD-contaminated
charcoal filters.
In the second case, we think Agent is trying after the fact to recast
the terms of the RFQ under which it proceeded and its subsequent
dealings with the Air Force to incorporate to imply an agreement to
compensate Agent for the product of its research regardless of the
outcome. We find nothing in the record to support Agent's
interpretation.
Agent's pilot plant efforts were in response to a clear and
unequivocal requirement in the RFQ that prospective purchasers document
and demonstrate their process for HO decontamination as a prerequisite
to bidding. The RFQ specifically and prominently provided that "No
payment will be made for the information solicited" and Agent was
advised both at the inception and later that its pilot plant would be at
its own risk and expense. We note in this latter regard that both the
letter commenting on Agent's proposed operational plan in support of its
February 1976 request for a 45-day extension of the time within which to
demonstrate its decontamination process and the letter of May 27, 1976,
actually granting Agent's request, specifically point out that the
Government would incur no liability or obligation to Agent for its
efforts. In this same exchange of correspondence Agent also was advised
that the Air Force was considering alternate disposal methods. And,
while negotiations may have been conducted with Agent concerning the
purchase of rights to Agent's data, no agreement was ever completed.
In these circumstances, we believe that Agent's efforts were for its
own benefit rather than that of the Air Force and we find no basis,
implied or otherwise, upon which Agent might now be compensated for the
production of this information.
Lastly, Agent's claim may be construed as a claim for proposal
preparation costs. The basis of liability for bid or proposal
preparation costs is the breach by the Government of its obligation to
fairly and honestly consider all bids.
Heyer Products Company, Inc. v. United States, 135 Ct.Cl. 63(1956);
Keco Industries, Inc. v. United States, 192 Ct.Cl. 773, 428 F.2d
1233(1970); T&H Company, 54 Comp.Gen. 1021(1975), 75-1 CPD 345. The
ultimate standard is whether the procurement agency's actions were
arbitrary and capricious towards the offeror-claimant. T&H Company,
supra; System Development Corporation, B-191195, August 31, 1978, 78-2
CPD 159. We do not think this is the case here.
Agent voluntarily accepted the burden and substantial risk of
successfully demonstrating both HO reprocessing and the environmentally
acceptable disposal of the dioxin residues, each of which was a
prerequisite to the sale of the HO. We do not believe that the Air
Force's offer to assume control of the contaminated filters after Agent
was unsuccessful in arranging their disposition relieved Agent of the
risk that the sale would not take place if Air Force efforts at
container disposal were also unsuccessful. We think it abundantly clear
that neither Agent nor the Air Force was able to satisfy the requirement
for acceptable disposal of the residues. Consequently, we find nothing
arbitrary or capricious in the Air Force's decision to reject
reprocessing as an option for HO disposal and terminate negotiations
with Agent.
We find no legal basis upon which Agent's claim may be certified for
payment and, therefore, the claim is denied.