Advanced Team Concepts v. United States
68 Fed. Cl. 147
September 28, 2005
Charles H. Steen, Dallas, Texas, for the plaintiff. Steven Mager, Trial Attorney, David M.
Cohen, Director, Commercial Litigation Branch, Civil Division, and Peter D. Keisler, Assistant Attorney General, United States Department of Justice, Washington, D.C., for the defendant.
Opinion and Order
SMITH, Senior Judge.
Introduction
This case arises from a contract dispute between a management consulting group, Advanced Team Concepts (“ATC”), and the national customer service training facility for the
Immigration and Naturalization Service (“INS”), the Leadership Development Center
(“LDC”). ATC alleges that implied-in-fact contracts existed between itself and LDC and as a
result of LDC’s cancellation and termination of ATC’s alleged implied-in-fact contracts for
the 2001 and 2002 sessions, ATC lost profits in the amount of $602,000. Defendant crossmoved for summary judgment asserting that ATC cannot establish implied-in-fact contracts
between LDC and ATC because neither Director Lee nor Langton had authority to bind the
government to a contract, or in the alternative that the terms of the alleged contract were
ambiguous. Defendant further argues that if the Court finds implied-in-fact contracts existed, the Christian1 Doctrine mandates the inclusion of a termination for convenience clause.
Therefore the government argues that ATC’s claim must fail.
Both parties seek summary judgment. After briefing and oral argument, the Court
GRANTS partial summary judgment for Plaintiff for 2001 sessions and GRANTS partial
summary judgment for Defendant for 2002 sessions.
Discussion
Factual Background
LDC is a management training center that provides training to the INS. Pl. App. 273, 278.
ATC is a management consulting firm and had, since 1996, trained INS personnel in writing and customer relations skills at LDC. Id. at 299-300. Jennifer Lee was the director of
the LDC for the first five years of ATC’s interactions with LDC. Id. at 273. Although not a
warranted contracting officer, Director Lee was the point person for scheduling ATC courses, instructors, and paying invoices. Id. at 302, 312-14. As part of her duties as Director, she
scheduled and paid teachers for the many classes conducted there. Director Lee researched
the appropriate way to exercise authority to hire contractors for LDC courses in compliance
1
G.L. Christian & Assoc. v. United States, 160 Ct. Cl. 1 (1963).
with federal law, and in March 1996 wrote a memo to her supervisor, Vance Remillard,
about her conclusions. Id. at 356-357, 401. On April 23, 1996, Director Lee also spoke on the
phone with procurement officer Art Cooper about the use of SF-182s to pay contractors and
the federal limit on small purchases. Id. at 357, 403. In both instances, she was authorized
to proceed as planned. Id. at 357-358, 403.
To secure training services, Director Lee’s practice was to circulate a tentative schedule of
classes to the various vendors for training services prior to the fiscal year. Id. at 102, 30203. ATC was always among those vendors. Id. at 302-03. Once ATC received the proposed
course schedule, ATC would reserve instructors for those dates throughout that year. Id. at
98-102. After the course was completed, ATC received payment by submitting an invoice to
Director Lee for payment. Id. at 102, 313. Director Lee then completed an internal government form SF-182 to request payment for services. Id. at 310, 347. The form contained the
same information as the ATC invoice and was signed by Director Lee. Id. at 349. During
Director Lee’s tenure, classes were occasionally canceled due to weather and other reasons,
which she would reschedule. Additionally, sessions were canceled for lack of participation,
and in these instances it was her practice to schedule replacement sections. Id. at 341-42.
On November 3, 2000, Director Lee retired from LDC, started teaching for LDC, and was
replaced by Lyle Langton. Id. at 273, 304, 307, 432. Three weeks later, Director Langton
informed ATC that it would be terminated from teaching the seven remaining writing classes on the schedule. Id. at 131, 367. LDC did not cancel the classes, only ATC’s participation in them.2 Id. at 129, 131.
In addition, Director Langton canceled another eight scheduled sections, without rescheduling them as his predecessor had done. Pl. Compl. ¶134, App. 126. In June 2001, Director
Langton circulated the class schedule for teaching year 2002, prefacing it with an email
message informing the vendors that LDC was assessing its courses with the potential to
result in changes to course content and delivery. Pl. App. 429. Director Langton informed
the vendors that he would contact each as he finished the review. Id. In September 2001,
Director Langton informed ATC that LDC would not be utilizing its services. Pl. App. 99,
131, 156, 425
Jurisdiction and Standard of Review
The Tucker Act grants jurisdiction to this Court to hear claims arising from both express
and implied contracts. 28 USC §1491(a)(1) (2000). Here, ATC alleges that the course schedule negotiations between it and LDC created implied-in-fact contracts sufficient to invoke
this Court’s jurisdiction. Pl. Compl. ¶¶12, 13, 14.
Summary judgment pursuant to RCFC 56 is appropriate where there is no genuine issue of
material fact and that the moving party is entitled to a judgment as a matter of law. Anderson v. Liberty Lossy, Inc., 477 U.S. 242, 247 (1996). The parties agree that the material
facts are not in dispute and therefore summary judgment disposition is appropriate.
2
Retired Director Lee, and her new firm, Giraffe Consultants, took over those courses. Id at 307, 425.
Implied-In-Fact Contract
Where a Plaintiff makes a claim under an implied-in-fact contract it bears the burden of
proving the same basic contract elements as for an express contract: 1) mutuality of intent
to contract, 2) offer and acceptance, and 3) consideration. Total Medical Mgmt., Inc. v. United States, 104 F.3d 1314, 1319 (Fed. Cir. 1997); City of El Centro v. United States, 922 F.2d
816, 820 (Fed. Cir. 1990). In addition, when the United States is a party, a fourth element
is added: actual authority of the government agent to bind the government. El Centro, 922
F.2d at 820; Garza v. United States, 34 Fed. Cl. 1, 14 (1995). Authority, either express or
implied, is required to bind the United States in contract. See Harbert/Lumus Agrifuels
Projects v. United States, 142 F.3d 1429, 1432 (Fed. Cir. 1998); H. Lanudau & Co. v. United
States, 886 F.2d 322, 325 (Fed. Cir. 1989).
Defendant’s primary contention is that neither Director had actual contracting authority to
bind the government in a contract. Therefore, the Court must start its analysis with the
fourth element, authority to bind to the government.
1. Authority
In order to bind the government to a contract, the government official agreeing to the contract must possess contracting authority. Fed. Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384
(1947). In order to possess express authority, a government agent is granted that authority
through the Constitution, a statute, or a regulation. Garza, 34 Fed. Cl. at 18. Apparent authority is not enough. Fed. Crop, 332 U.S. at 384; El Centro, 922 F.2d at 820. Thus, a person
contracting with the federal government bears the burden of ascertaining that the agent is
acting within the scope of her authority and duty. Garza, 34 Fed. Cl. at 18. It is undisputed
that LDC’s Director was not a “contracting officer” as defined by the governing FAR, namely, FAR 1.603-3. Further, if Director Lee had honestly but wrongly held herself out as a
statutory contracting officer for LDC, that alone would not create contracting authority.
However, it has been held that implied actual authority can satisfy the fourth element of a
government contract’s existence. See H. Landau & Co., 886 F.2d
at 322. If the authority to bind the government was central to the duties of the person holding himself out as the contracting officer, implied authority exists. Id. at 324, (citing J. Cibinic & R. Nash, Formation of Government Contracts, 43 (1982)). For the reasons set forth
below, the Court finds that the Directors had implied authority to obligate LDC to guarantee payment to ATC.
Director Lee was founder and six-year director of America’s largest INS customer service
training facility, a training facility that engaged several instructional vendors. As part of
her duties as Director, she scheduled and paid teachers for the many classes conducted
there. As one of her many duties, Director Lee sent out proposed schedules for courses. Director Lee was given authority to hire contractors for LDC courses by both her supervisor,
Vance Remillard, and the contracting officer, Art Cooper, by using the SF-182. Clearly,
scheduling, hiring and paying invoices for LDC courses were central to the Director’s duties. These duties were not taken away from Director Langton when he was elevated to the
job. Thus, the Court finds that the Directors had implied authority to bind the government.
Implied authority comes from the actual intent of the government, not the operation of law.
Apparent authority is created by law based on an equitable ideal. Apparent authority, like
contract-implied-in-law tells the party that justice requires that you have this authority.
Implied authority is, on the other hand, created by the party’s own actions and intentions.
B. Mutual Intent to Contract
Having determined that LDC’s Directors had implied authority to bind the government in
contracts for instructional services, the Court turns to the issue of whether LDC manifested
an intent to bind itself for teaching years 2001 and 2002. To find an implied-in-fact contract, the claimant must demonstrate that there was an unambiguous offer to contract upon
specific terms and mutuality of intent between the parties to enter a contract. Garza, 34
Fed. Cl. at 14. In determining whether mutuality of intent has been established, the inquiry is an objective one. AG Route Seven P’ship v. United States, 57 Fed. Cl. 521 (2003).
“Acceptance of the offer must be manifested by conduct, which, reviewed objectively, indicates assent to the proposed bargain.” Id. at 536-37. Here, there is no one document reflecting a contract, but instead various documents. The Court may read all the documents together in order to find the intention of the parties. Id. at 536. The Court finds that for
academic year 2001 ATC and LDC had intent to contract. The Court further finds that for
academic year 2002, such intent was lacking.
Each year since its inception, LDC would circulate a list of course offerings for the upcoming academic year. This was done in order to assure that ATC’s instructors would be available and could commit their time and ATC personnel to LDC. Each year, ATC would prepare to teach the four subject matter classes. After the classes were finished, within the
week, ATC would send an invoice to LDC for payment. Director Lee would then take the
information provided by ATC and enter it into an SF-182 to request payment for ATC.
Sometimes, however, classes would be canceled or rescheduled. Defendant asserts that this
“fluidity of relationship” underscores the lack of a contract. Def. Reply Br. at 2. Defendant
concedes that “while a degree of fluidity may be present in certain contracts, such fluidity
as to material terms may also serve as compelling evidence of ambiguity and a lack of mutual intent.” Id. (citing Kelley v. United States, 19 Cl. Ct. 155 (1989)). The Court is persuaded otherwise for academic year 2001. Prior to academic year 2001, Director Lee circulated
the schedule to various vendors, as she has done since the inception of LDC.
ATC was included on the circulation list. The classes taught by ATC were part of the
schedule. ATC accepted the offer by Director Lee to provide these classes and scheduled its
instructors to teach the courses, thereby committing its resources as done in previous years.
In consideration, ATC would be paid for its services. Three weeks after Lee’s retirement,
the new director, Director Langton, informed ATC that ATC would not be teaching the seven remaining scheduled writing sessions for the 2001 teaching year. The writing classes
were not canceled, just ATC’s participation in them. In addition, another eight sections
were canceled and not rescheduled. The Court finds that ATC had accepted the offer by Director Lee to provide the course instructors. The Court further finds that Director Langton
breached that agreement by canceling the 2001 academic year implied-in-fact contract with
ATC.
With Director Lee’s retirement in 2000, the facts and circumstances surrounding the
LDCATC relationship changed. When Director Langton circulated the 2002 year schedule,
he clearly indicated that there would be a reduced course schedule, and that he would contact the vendors personally with regard to the future schedule. ATC was aware that the
once firm pattern of scheduling was going to be revamped. ATC admits that it was aware
that the lead administrator change signaled a likely complete elimination of courses for
year 2002. This uncertainty of courses for the 2002 year was certainly an ambiguity in offer
and acceptance, and therefore the Court finds no mutual intent sufficient to create an implied-in-fact contract between LDC and ATC for that year. Herefore, any expense incurred,
or damage sustained, by ATC for course year 2002 is not compensable.
The Christian Doctrine
In its cross motion for summary judgment, Defendant argues that if the Court finds actual
authority and implied-in-fact contract, the Court must then also, under the Christian Doctrine, read in a termination for convenience clause. G.L. Christian & Assoc. v. United
States, 160 Ct. Cl. 1, 15 (1963). As with any government contract, express or implied, the
government enjoys the ability to terminate a contract for its convenience, absent bad faith
on the part of the government. Krygoski Const. Co., Inc. v. United States, 94 F.3d 1537,
1541 (Fed. Cir. 1996). Here, three weeks after Director Lee retired, Director Langton terminated ATC from proceeding with its writing classes. Thereafter, Director Langton replaced ATC with his predecessor Director Lee. In terminating ATC, at this point, in favor of
an “inside” candidate, LDC did what presumptively government contract policy seeks to
prevent; favoring contractors who have an “in,” or inside knowledge not available to the
general public. The Ethics in Government Act, Pub. L. No. 95-521, §1, 92 Stat. 1824 (1978),
is targeted at this practice as is the Competition in Contracting Act, 41 USC §253 (2000).
On the facts here it seems clear that the termination for convenience was not for the government’s benefit but for that of a former employee. This is bad faith. Therefore, the Christian Doctrine does not apply.
Conclusion
For the above reasons, the Court GRANTS partial summary judgment for Plaintiff for academic year 2001 and GRANTS partial summary judgment for Defendant for academic year
2002. The parties are ORDERED to confer regarding damages calculations pursuant to this
Opinion and to participate in a telephone status conference to be held on October 17, 2005
at 4:30 p.m. EDT.
It is so ordered.
LOREN A. SMITH
Senior Judge
American Medical Response of Connecticut
B-278457, 98-1 CPD ¶144
January 30, 1998
Gary D. Jones, Esq., Drubner, Hartley, O’Connor & Mengacci, L.L.C., for the protester.
Phillipa L. Anderson, Esq., Merilee D. Rosenberg, Esq., and Philip Kauffman, Esq., Department of Veterans Affairs, for the agency. Henry J. Gorczycki, Esq., and James A. Spangenberg, Esq., Office of the General Counsel, GAO, participated in the preparation of the
decision.
Digest
Agency’s determinations to set aside procurements for chair car services for exclusive small
business participation are reasonable where they are based on knowledge of previous participation in a procurement for the same services by at least two small business concerns
who had submitted bids at fair market prices.
Decision
American Medical Response of Connecticut, Inc. protests request for quotations (RFQ) No.
689-37-98, and RFQ No. 689-2-98, issued by the Department of Veterans Affairs (VA) for
chair car services at the VA Medical Center, West Haven, Connecticut. American Medical
protests the issuance of the RFQs as small business set-asides.
We deny the protest.
American Medical, a large business concern, is the incumbent contractor for these services
and, for approximately the last year, has been performing on an interim, noncompetitive
basis while the agency addressed protests of the solicitation process. During that time, VA
issued an invitation for bids (IFB). Three of the six bids received were from small business
concerns. The contracting officer considered the prices from all three of these small business concerns to be very competitive with prices bid by the large business concerns. That
solicitation was eventually canceled during the pendency of a protest by American Medical.
On September 19, 1997, VA published in the Commerce Business Daily (CBD) an announcement of the issuance of RFQ No. 689-37-98, requesting quotes for providing chair car
services for 2 months. The value of the services was estimated to be within the range of
$2,500 to $100,000 and, considering the previous IFB where three bids from small business
concerns were submitted at fair market prices, the contracting officer determined that competition under the RFQ was required to be restricted to small business concerns under Federal Acquisition Regulation (FAR) §19.502-2(a). The same day of the CBD publication, four
small business concerns inquired about the terms of the RFQ and expressed interest in
submitting quotes; three of these concerns were the same small business concerns that had
submitted bids under the canceled IFB. American Medical, a large business, was not invited to submit a quote for these services. Subsequently, two of these concerns submitted
quotes and award was made to Connecticut Handivan, Inc. on September 29.
RFQ No. 689-2-98, issued on October 16, requested quotes to provide the services for 1 year
with 4 option years. The value of this RFQ was estimated to be more than $100,000 and
competition was restricted to small business concerns pursuant to FAR §19.502-2(b) because, based on the three bids received from small business concerns under the canceled
IFB, the contracting officer determined that she was likely to receive at least two quotes
from responsible small business concerns and to make award at a fair market price.
On September 30, American Medical was notified of the award to Connecticut Handivan
under the 2-month RFQ. On October 10, it faxed a protest to the contracting officer. On October 16, American Medical received notice that its protest was denied. On October 23, it
protested the two RFQs to our Office.
American Medical primarily alleges that the RFQs should not have been set aside for exclusive small business participation because Connecticut Handivan is not a small business
concern and thus the contracting officer did not have a reasonable expectation of receiving
quotes from at least two responsible small business concerns. American Medical also alleges that the contracting officer has acted improperly to favor Connecticut Handivan under
the protested RFQs.
FAR §19.502-2 generally requires that an acquisition be set aside exclusively for small
business participation where there is a reasonable expectation that offers will be obtained
from at least two responsible small business concerns and that an award will be made at a
fair market price. McBer and Co., B-225453, Feb. 11, 1987, 87-1 CPD ¶151 at 1; KimberlyClark Corp., B-221028, Feb. 11, 1986, 86-1 CPD ¶155 at 4. A determination that a particular procurement is to be set aside for small business participation is basically a business
judgment within the broad discretion by the contracting officer. McBer and Co., supra;
Kimberly-Clark Corp., supra. In making this determination, the contracting officer need not
make determinations tantamount to affirmative determinations of responsibility, but rather need only make an informed business judgment that there is a reasonable expectation
of receiving acceptably priced offers from small business concerns that are capable of performing the contract. McBer and Co., supra, at 2; Kimberly-Clark Corp., supra, at 5-6. We
will not question the set-aside decision of the contracting officer in the absence of a clear
showing of abuse of the discretion permitted her. McBer and Co., supra, at 1; KimberlyClark Corp., supra, at 4.
Here, the record does not evidence an abuse of discretion. Even without Connecticut Handivan, there remain two other small business concerns that submitted competitively priced
bids under the earlier solicitation. These same two bidders continued to express interest in
competing for the services during the approximate time when both of these RFQs were issued. In sum, the contracting officer properly considered the procurement history with two
or possibly three apparently responsible bidders who submitted bids at fair market prices
as a basis to set aside these RFQs for small business participation. See Kimberly-Clark
Corp., supra, at 5-6.
To the extent American Medical alleges that “some or all” of these small business concerns
may not be capable of performing the contracts, the allegations as they relate to the two
small business concerns other than Connecticut Handivan are general and unsupported;
these allegations are insufficient to show that the contracting officer’s determination based
on procurement history was unreasonable. See APAC-Tennessee, Inc., B-226365, B-227049,
Apr. 27, 1987, 87-1 CPD ¶438 at 2.
To the extent American Medical challenges Connecticut Handivan’s participation under
these RFQs, or the alleged agency actions favoring that firm in these procurements, American Medical is not an interested party to protest these issues. Only an interested party may
file a protest. 4 CFR §21.1(a) (1997); Fermont Div., Dynamics Corp. of Am., B-201062, Mar.
30, 1981, 81-1 CPD ¶235 at 3. American Medical is an interested party only with respect to
the issue of the legitimacy of the small business set-aside; since the protester is a large
business and we have found that the set-asides here are valid, American Medical is not eligible for contract award under the protested RFQs and may not protest to our Office other
aspects of these procurements. Fermont Div., Dynamics Corp. of Am., supra.
The protest is denied.
Comptroller General of the United States
Bureau of Land Management: Contracts for Fire Protection
B-198,459, 60 Comp. Gen. 637
August 11, 1981
Digest
Obligation to provide services without reimbursement — services to federal Governmentcontracting authority absent specific statutory authority contracts for fire services are not
authorized where a non-federal governmental entity such as rural fire district is legally obligated under state or local law to provide fire service without compensation. Where no antecedent legal obligation exists, however, contracts may be executed.
Mutual aid agreements are statutorily authorized in all jurisdictions as are actual cost reimbursements for losses incurred in fire suppression activities on federal lands.
Decision
The Director of the Bureau of Land Management (BLM) has asked for our opinion on
whether the BLM may legally contract with individual rural fire districts in Oregon and
Washington to secure fire protection and firefighting services for federal lands situated
within the district’s boundaries. The lands in question are extensive tracts of timber, and
the rural fire districts affected are legally required to protect these large, sparsely populated areas. BLM strongly urges that the contracts are authorized. The Department of the Interior regional solicitor’s office in Portland, Oregon, analyzed state laws, court decisions and
previous Comptroller General’s decisions and concluded that contracts with rural fire departments in those states are improper. We agree with the regional solicitor’s conclusion.
In a long line of cases, the Comptroller General has held that there is no authority to
charge appropriations with the cost of providing fire services where a non-federal governmental unit is required by state or local law to provide the services without compensation to
all property owners within its jurisdiction. 24 Comp. Gen. 599 (1945); B-153911, December
6, 1968. Additionally, we have held that if the governmental unit’s provision of fire services
is supported in whole or in part by property taxes or other levies from which the federal
government is constitutionally exempt, any additional payment specifically for fire protection amounts to an unconstitutional tax. 49 Comp. Gen. 284 (1969).
Both of these obstacles could be overcome by statute. However, the statute relied upon
would have to explicitly authorize contracts with or payments to local governments legally
obligated to provide fire protection to property owners without charge. We have held that
statutory authority to enter into agreements to pay state agencies for “services” is insufficient to support a contract for legally required fire protection. B-105602, December 17,
1951. This is consistent with the interpretation of “specific statutory authority” applied in
appropriations law generally. Compare, for example, 38 Comp. Gen. 33 (1958) (statutory
authority to train operating personnel for nuclear ship does not extend to training maritime
administration personnel) and 41 Comp. Gen. 529 (1962) (authority to engage in printing
does not include authority to print business cards, which the comptroller general has held
is personal expense).
BLM argues that it has statutory authority for fire service contracts and cites several statutes as support for that proposition. Particularly mentioned are 43 USC 1469 and 1738
(1976). Section 1469 provides that:
(n)ot withstanding any other provision of law, persons may be employed or
otherwise contracted with by the secretary of the interior to perform work occasioned by emergencies such as fire, flood, storm, or any other unavoidable
cause and may be compensated at regular rates of pay without regard to sundays, federal holidays, and the regular workweek.
Section 1738 deals with resource protection operations and it provides in pertinent part as
follows:
The Secretary is authorized to enter into contracts for the use of aircraft, and
for supplies and services, prior to the passage of an appropriation therefor,
for airborne cadastral survey and resource protection operations of the bureau. He may renew such contracts annually, not more than twice, without
additional competition. Such contracts shall obligate funds for the fiscal years
in which the costs are incurred.
These statutes grant specific authority for BLM to engage in several activities which would
otherwise be prohibited by law: employing firefighters without regard to overtime and premium pay requirements; procuring the use of aircraft; making contractual arrangements
for supplies and services for the resource protection operations of BLM in advance of appropriations; and renewing contracts without competition. Although these statutes generally
are applicable to contracting and other activities in support of fire services, they do not specifically mention entering into contracts with state or local government entities which are
required by law to provide fire services without charge, and hence do not provide the needed authority. The kinds of contracts which are authorized by the statute would be for seasonal personnel, procurement of their equipment, chemical fire suppressants, etc., and contracts for complete fire services with providers who are not legally obligated to offer that
service without charge.
BLM urges that the legislative history of section 1738 implies a broader authority on the
part of the Secretary of the Interior to contract generally for fire services. However, to say
that all contracts for fire services are authorized by the legislative history would be to take
the crucial words of the senate report out of context. The legislative history speaks of “renewable contracts for protection of public lands from fire in advance of appropriations * * *”
S.Rept. No. 94-583, 57 (1975). The fact that the specific exemptions from other restrictions
are reiterated in the legislative history supports the foregoing analysis that contracts with
governmental units, which must be specifically approved, are not intended to be authorized
by the statute. Additionally, the revision of this statute which was accomplished in 1975 did
not revise the provision concerning fire services. Rather, it expanded the renewable advance contract authority to other resource protection operations and surveys.
Further support is derived from the fact that the statute and legislative history both address renewing the contracts without competition. Contracts with local governments for fire
services would not usually lend themselves to competitive procurements. In fact, such contracts would almost always be sole source procurements, because in states where local governments are obligated to provide fire service, there ordinarily are no privately operated
competing fire companies. Thus, the contracting authority is not implicitly extended to contracts with state and local governments which are required to provide such services without
charge. In all, we do not think that the legislative history supports the contention that an
otherwise prohibited act is authorized.
Because the authority to contract with a legally obligated governmental unit must be specific, and because the requirement is federal in origin, the supremacy clause analysis put
forward by BLM is not a consideration in our decision. The other statutory arguments advanced — analogizing the provision of fire services to the statutorily authorized conduct of
state and local law enforcement activities on federal lands, and to the authority to reimburse localities for extraordinary fire-related losses under the Federal Fire Prevention and
Control Act, 15 USC 2210 (1976) — are similarly unpersuasive.
It is clear from the above discussion that no specific statutory authority exists to enable the
BLM to voluntarily contract with governmental units for fire services, but even if states insisted on compensation, there would still remain the question of an unconstitutional tax.
Again, the congress can waive the federal government’s immunity from state and local taxation, but only by an express, affirmative act. Mayo v. United States, 319 U.S. 441 (1943).
BLM conceded in its submission that but for the argued statutory authority to contract, the
proposed payments would amount to an impermissible tax. As we have found no authority
to contract, that conclusion must also prevent payments to rural fire districts.
Further, local fire districts are not lacking for federal financial participation in their activities. We must assume that some of the districts in question receive payments in lieu of taxes under 31 USC 1601 et seq. That law provides payments up to $1,000,000 annually based
on a formula related to population. These payments are intended to compensate a local government for the loss of revenue occasioned by large tax-exempt federal land holdings and to
underwrite the locally provided services which the federal lands receive, B- 149803, May
15, 1972.
Additionally the fire districts may make claims for any extraordinary losses incurred in
fighting a fire on federal property under the federal fire prevention and control act. That
act, codified at 15 USC 2210 et seq., provides that only expenses “over and above (the district’s) normal operating costs * * *” may be reimbursed on a claim. This most recent legislative pronouncement on the financial treatment of fire services for federal property clearly
indicates that Congress did not intend to underwrite the overhead costs of local fire districts. Existing compensation methods alone are applicable to general operating expenses.
These methods would include payments in lieu of taxes, tax exemptions affirmatively
waived by Congress, payments under permissible contracts for fire protection, e.g., con-
tracts with private fire companies and with governmental units not required by law to provide fire services, and other payments specifically authorized by law.
Finally, there is the suggestion that our traditional test in fire service cases of antecedent
legal obligation on the part of a governmental unit is inappropriate, and that instead, the
test should be whether the investment is for the primary benefit of the government. This
theory rests on the assumption that the contract proceeds are used to improve equipment
and services of local fire districts across the board and the government, as a large landowner in the district, would be the principal beneficiary of those improvements if a fire should
occur.
This primary benefit analysis was first employed in 55 Comp. Gen. 1437 (1976). That case
allowed the purchase and installation of a traffic light on government property. The signal
regulated traffic on a state highway, allowing improved access to a government installation.
We found that regulation of traffic is universally a function of local governments. However,
the local government was unwilling to put a traffic light at the intersection of the state
highway and the federal property’s access road, presumably because it would not benefit
from the light. The light was installed by the government on its own property, and, although it made the whole intersection safer for both government and private travelers, it
had the primary effect of allowing gaster and safer ingress and egress at the government
installation.
The “primary benefit” analysis may be appropriate for a capital item like a traffic light, but
it is less applicable to the purchase of a municipal service because it is impossible to determine how much, if any, of the upgraded services provided to the general public by the federal contract payments would ever inure to the government’s benefit. We note in this regard
that, under optimum circumstances in the present case, no fires would occur, and the government would receive no tangible benefit for its investment. Further, we question whether
the affected rural fire districts would ever be able to fully assume responsibility for extinguishing major forest fires without additional federal assistance. The department of the interior would still need to maintain its tanker aircraft and heavy equipment, to employ
smoke jumpers and the like for deployment to major fires. Therefore, the benefit to the government could never result in savings of all fire-related expenditures.
We do not question that BLM has authority under 43 USC 1738 to contract for some kinds
of fire services. It is authorized to contract for services in jurisdictions where no governmental unit is obligated to provide free fire protection. In neighboring Idaho, for example,
where fire protection of timber and range lands was the obligation of individual property
owners, we found contractual arrangements to be entirely proper. See, B-163089, October
19, 1970, and B-163089, February 8, 1968; compare 34 Comp. Gen. 195 (1954). It is also free
to contract for fire protection with entities not otherwise legally obligated to provide such
service if such entities exist. Also, a different result would probably obtain in the case of a
federal enclave under the rationale expressed in 45 Comp. Gen. 1 (1965) which permitted a
contract with local fire district for protection of a tract of federal land which was part proprietary and part dedicated to the sole use of the government — a federal enclave. The the-
ory was that the fire district was not legally required to provide fire protection services for
the federal enclave and it would not be possible to segregate costs for services provided as
between the proprietary and sole use federal land.
Finally, although we hold that contracts with rural fire districts are improper in the states
of Washington and Oregon, we agree with the regional solicitor that mutual aid agreements, pursuant to 42 USC 1856 (1976) could be executed at those installations having a
federally maintained firefighting capability.
C&J Associates
95-2 BCA ¶27,834
July 12, 1995
Appearances: Donald M. Jackson, Esq., Montgomery, Alabama, for the Appellant. William
G. Stevens, Esq., Trial Attorney, Office of District Counsel, Montgomery, Alabama and
Phillipa L. Anderson, Esq., Acting Assistance General Counsel, Washington, D.C., for the
Department of Veterans Affairs.
Opinion by Administrative Judge Anders
These appeals arose under a purchase order (PO) in the amount of $8,040 issued by the Department of Veterans Affairs (VA or Government) on October 1, 1992 to C&J Associates
(Appellant or C&J) for pest control services for the period October 1, 1992 through September 30, 1993 at the VA Medical Center, Montgomery, Alabama (VAMC).
VABCA No. 3892 is an appeal from a final decision of the Contracting Officer (CO) dated
August 17, 1993 on a claim in the amount of $3,831.75 for costs Appellant asserts it incurred as a result of a termination for the convenience of the Government.
VABCA No. 4015 is an appeal from a final decision of the CO dated April 1, 1994 denying,
in part, a breach of contract claim by C&J in the amount of $20,185.
The record consists of the CO’s Rule 4 Appeal File, as supplemented by Appellant, the
pleadings, a one volume transcript of hearing, and the Government’s posthearing brief. Appellant, although given several opportunities to do so, filed no briefs.
Findings of Fact
The Contract
On August 11, 1992, the VA sent a request for quotations (RFQ) (SF 18; Rev 10-83) to three
pest-control contractors. The RFQ requested proposals for furnishing all equipment, supplies, labor and supervision to provide pest control services at the VAMC for the period October 1, 1992 through September 30, 1993. C & J submitted the lowest quotation, in the
amount of $8,040.00, dated August 31, 1992. On October 1, 1992, the VA issued PO No.
619-C30025 to C & J.
The PO contained neither a termination for default nor a termination for the convenience of
the government clause, nor were either incorporated by reference.
Specifications attached to the PO described the “TASKS” required of the Contractor as follows:
a. Inspection to determine which pest management measures are appropriate
and required.
b. Recommending environmental sanitation practices that restrict or eliminate food, water or harborage for pests.
c. Selection and utilization of non-chemical control methods which eliminate,
exclude or repel pests (i.e., insect electrocution devices, traps, caulking, air
screens, etc.).
d. Selection and use of the most environmentally sound pesticide(s) to effect
control when chemical control methods are necessary.
e. Control of general structural anthropoid pests (i.e., cockroaches, ants, carpet beetles, spiders, carpenter ants, carpenter bees, etc.).
f. Control of flying insect pests (i.e., house fly, stable fly, blow flies, etc.).
g. Control of predatory pests (i.e., lice, bedbugs, fleas, mites, ticks, bees,
wasps, mosquitoes, scorpions, etc.).
h. Control of stored product pests (i.e., sawtooth grain beetle, red/confused
flour beetles, trogoderma beetles, grain moths, etc.).
i. Control of mice and rats (i.e., house mouse, field mouse, roof rat, Norway
rat, etc.).
j. Control of pest birds (i.e., pigeons, sparrows, blackbirds, etc.).
k. Control of other vertebrate pests (i.e., dogs, cats, bats, squirrels, gophers,
moles, skunks, snakes, rabbits, etc.).
l. Control of lawn and turf pests (i.e., sod webworms, Japanese beetle larvae,
armyworms, cutworms, wireworms, cinch bugs, crickets, ants, wasps, etc.).
m. Control of shade tree and ornamental pests (i.e., aphids, scales, mealbugs,
mites, weevils, leaf miners, caterpillars, borers, sawflies, chafers, bacterial
diseases, fungi, etc.).
n. Control of aquatic pests (i.e., mosquito larvae/pupae, algae, etc.).
o. Evaluation of control measures through follow-up inspections.
(R4, tab 2)
The following special provision is particularly pertinent to this Appeal:
14. RESIDUAL TREATMENT:
During regularly scheduled visits the contractor shall apply a residual treatment for the control of roaches, using the crack and crevice method only, at
least once every month in kitchens, dining rooms, etc. Approved residual pesticides will be used in other areas as required. Pesticides will not alter the
appearance of walls, floors, bases or other areas.
15. FOGGING TREATMENT:
At the aforementioned time, the contractor shall apply an EPA approved
nonresidual pesticide to the Dietetic Kitchen and Canteen food preparation
areas using an Actisol VLV Unit or equivalent.
Each hospital building was listed with a schedule for treatment of specific areas at specific
times. Provision for emergency response was also included.
VABCA No. 3892
As early as November 2, 1992, the CO began receiving complaints about appellant’s performance, including allegations that C & J was failing to perform scheduled inspections,
failing to respond to call-in requests, and failing to provide documents required by the PO.
In March of 1993, the CO was informed by the VA chief, environmental management service, that C & J was deficient in its hours of operation, response to emergency calls, providing scheduled service, failure to provide fogging treatment (“bomb”) in the kitchen and canteen areas, failure to provide a list of pesticides used or planned to be used, failure to treat
trees and shrubs, and failure to comply with certain reporting requirements. (R4, tabs 6,
10)
On March 24, 1993, the CO sent C & J a notice stating that it was allowed twenty days
from receipt of the notice to correct the deficiencies or have its contract canceled. (R4, tab
11) Complaints continued to come in to the CO about C & J’s performance. Appellant wrote
to the CO on April 1, 1993 in an attempt to explain the problems, and, on April 2, 1993, a
meeting was held between C & J and VA contracting officials to discuss the problems. The
notes of that meeting do not reveal that the problems were resolved. The CO’s memorandum of that meeting stated, “these are recurring problems that must be settled and we
must see an improvement quickly or we will be forced to [cancel] the purchase order.” (R4,
tabs 11-14)
Appellant continued to refuse to bomb the kitchen, as required by the PO. The VA checked
with appropriate environmental agencies to determine if there was any reason not to use a
fogging bomb in the kitchen area, since appellant had asserted that it was not wise to do so.
Responses from both state and federal agencies indicated that there were no restrictions
against fogging except to use common precautions. (R4, tab 15)
On April 13, 1993, the VA chief, dietetic service, informed the CO that immediate action
was necessary to control roaches in the kitchen; that the appellant had been told numerous
times that its spraying was ineffective; and, that the contractor refused to bomb the kitchen. (R4, tab 17) The CO and the assistant chief, environmental management service, visited
the kitchen on that same day and observed “a large amount of roaches crawling around the
kitchen tables.” (R4, tab 18) Without further contact with C & J, the CO terminated the
purchase order on April 13, 1993 by letter (not designated as a “final decision”), stating:
We have made several attempts to allow you to correct performance deficiencies under purchase order 619-C30025. However, we continue to receive complaints from Mr. Charlie Chandley, the Chief of Environmental Management
Services regarding your performance. Therefore, you are hereby notified that
purchase order 619-C30025 is terminated, effective April 13, 1993. You will
be reimbursed for all services rendered up to and including the effective date
of termination.
(R4, tab 19)
On May 1, 1993, appellant sent an invoice in the amount of $335.00 for Pest Control Services & Supplies for the period 04/01/93 through 04/13/93. (R4, tab 20)
On May 12, 1993, C & J wrote the director of the VA medical center asking that he “waive
this improper termination of contract.” C & J asserted that it had been in full compliance
with the specifications and regulations and had not been afforded a sufficient opportunity
to cure the problems detailed in the VA’s cure letter dated March 24, 1993. (R4, tab 22)
On May 19, 1993, the CO responded to C & J’s May 12 letter. In that letter, the CO stated
that the PO was terminated “due to your failure to comply with the terms of the purchase
order,” listing the following:
Specifically, among other reasons you failed to:
a. Treat outside shrubs, trees and Lawn as required. (Section 5-L, M)
b. Provide Fogging Treatments in Dietetic Kitchen and Canteen Food preparation areas. (Section 15)
c. Get approval to work outside regular working hours as stated in the Purchase Order. (Section 2-B, and 10)
d. General Performance of the Purchase Order has been unsatisfactory.
The CO further explained the termination as follows:
Furthermore on April 13, 1993, a large number of adult roaches were found
in the dietetic kitchen. This was an intolerable condition and further evidence
of your continued failure to comply with all of the terms of said purchase order. For health, safety and welfare purposes as well as the above stated failures, the purchase order was terminated so that another exterminator could
perform essential extermination functions. No indications had been received
from you that you intended to comply with the purchase order within the
time period.
As stated, due to the necessity of providing clean sanitary conditions, for the
preparation of meals, it was determined another exterminator’s services were
immediately required.
[Nonperformance] of scheduled inspection and pest maintenance in certain
areas of the Purchase Order were reported to me on several occasions. These
areas included, Storage Processing and Distribution, Operating Room and
the Canteen, which are locked after 4:30 p.m. and only authorized personnel
can allow entrance. The O[perating]R[oom] supervisor has stated that Mr.
Duncan has never been in the OR rooms. As you are aware, Mr. Duncan did
not report to perform work until after 3:30 p.m., which would have required
consent to gain entry into these areas (SPD, OR, and Canteen). This nonperformance also supported my decision to terminate the Purchase Order due to
your failure to comply with all of its terms.
(R4, tab 24)
On June 25, 1993, the CO and other VA officials met with representatives of C & J to discuss the termination. In C & J’s letter to the medical center director requesting reinstatement of the PO, it had asserted that it was not afforded a sufficient opportunity to cure, i.e.,
that it was terminated prior to the expiration of the 20 days allowed in the cure notice. The
cure notice was discussed at the June 25 meeting. Appellant was asked what it had planned
to do in the remaining time left in the 20-day cure period. The response was that it was in
full compliance with all of the items of the contract and that there was nothing to correct or
nothing else to do. (R4, tab 26; Tr. 117, 178, 208, 235)
On June 29, 1993, the CO and other VA officials again met with representatives of C & J in
an attempt to reach a settlement. C & J presented a list of what it wanted, including terminating the contract for convenience in lieu of default, payment for the remaining period of
the contract (from April 15, 1993 to September 30, 1993), and reimbursement for attorney
fees and legal research, for a total of $4,622.60. The matter was not resolved at that meeting. (R4, tab 27)
On July 1, 1993, C & J submitted a revised proposal for settlement of the matter, including
three “choices.” (1) “CHOICE 1” was for a total of $4,622.60, including $3,685.00 for “payment start from date of termination up through expiration of contract;” $100 for attorney
fees; $837.60 for legal research (“10 hrs. @ 2 people @ $41.88 hr”); “A letter to C & J stating
that all letters and negative material will be taken from C & J’s files at the VA;” and
agreement that “Any reference as to the termination of this contract will be addressed as a
termination for convenience.” (2) “CHOICE 2” was for a total of $2,612.60, including reinstatement of the contract; a letter to C & J stating that all letters and negative material
will be taken from C & J’s files at the VA; “back pay (for April, May, and June, 1993) in the
amount of $1,675.00; attorney fees in the amount of $100.00; legal research (“10 hrs @ 2
people @ $41.88 hr) in the amount of $837.60. or (3) “CHOICE 3,” forwarding an appeal of
the termination to this Board. (R4, tab 28)
C & J filed an appeal from the VA’s default termination on July 10, 1993, docketed as
VABCA No. 3858. On July 20, 1993, the CO issued a final decision denying reinstatement
of the purchase order and listing the reasons for the default termination. (R4, tabs 29, 31,
32) On July 24, 1993, the CO, by a final decision, withdrew the termination for default,
stating the following:
Please be advised that VA is withdrawing the final decision, and pursuant to
Federal Acquisition Regulation 49.109-4 and 49.603-6, is converting the default termination to a no-cost termination for the convenience of the government. The no-cost termination is effective April 13, 1993. The VA is pursuing
a no-cost termination because it is the VA’s position that: a. C & J Associates
has been paid in full for all work performed under the contract prior to April
13, 1993; b. C & J Associates did not perform any work on the contract after
April 13, 1993; and c. C & J Associates has not incurred any costs for the
terminated portion of the contract work.
If you disagree with the VA’s position that C & J Associates is not entitled to
any further funds in connection with this no-cost termination for convenience, you may submit a termination settlement claim for further consideration by the undersigned.
(R4, tab 33)
On July 29, 1993, the Board dismissed C & J’s appeal from the default termination
(VABCA No. 3858) as moot, based on the CO’s conversion of the default termination to a
termination for the convenience of the government. (R4, tab 34)
On August 13, 1993, C & J submitted a “TERMINATION CLAIM” in the amount of
$3,831.75:
Profit & Overhead Offered by Government
$3,685.00 @ 10% =
$3,685.00 – $368.50 = $3,316.50  10%
$368.50
$331.65
$700.15
Other Costs Incurred by C & J
Attorney Fees
Legal Research, Composing Appeal Letters, Meetings with
Contracting Officer, 35 hours @ 41.88 Hr. @ 2 People
Total Claim
$200.00
$2,931.60
$3,831.75
(R4, tab 35)
The CO issued a final decision on C & J’s termination for convenience claim on August 17,
1993, stating, in part:
I have considered your claim. As you know C & J Associates was paid by the
Department of Veterans Affairs (VA) up through the date of termination on
April 13, 1993. This included profit and overhead. As anticipatory profits and
overhead costs are not allowable, your claim of $700.15 is disallowed. Since
the claim is uncomplicated, and legal research by lay employees of C & J Associates, cost of appeal letters, and meetings with the contracting officer
would not come within the definition of FAR 31.205-42(g), the amount of
$2,931.60 is disallowed. The attorney fees in the amount of $200 are allowed.
Thus the VA may pay as the total amount of your termination settlement
claim the amount of $200.00.
(R4, tab 36)
C & J’s appeal from that decision was docketed as VABCA No. 3892. (R4, tab 38)
VABCA No. 4015
On March 3, 1994, appellant presented the following “breach of contract” claim in the
amount of $20,185 to the contracting officer:
Your terminating contract #619-C30025 before the 20-day cure notice had expired is a breach of contract. Your letter dated March 24, 1993, received by C
& J Associates on March 29, 1993 (certified mail) stated that we were allowed
“twenty (20) days from receipt of this letter, to address and or correct any of
the problems” listed on said letter.
As a result of this breach of contract we have incurred the cost of:
Costs incurred by C & J
Legal research, negotiating settlement with
government, composing and typing letters,
preparing appeal files, postage, telephone
toll charges, and meetings with contracting
officer
Attorney Fees Disbursed and Accrued
Remaining balance of contract
Total Claim
$11,200.00
5,300.00
3,605.00
$20,185.00
In the best interest of the government, this claim should be settled immediately.
(R4, tab 39)
On March 8, 1994, the CO acknowledged receipt of appellant’s breach of contract claim, and
requested the following information:
a. A complete breakdown for each expense listed under Cost incurred by C &
J. The breakdown should include the amount of time spent on each expense,
who performed the work, their hourly rate and place of performance. I need
itemized receipts for postage and telephone toll charges. These receipts
should also reflect the date on which these expenses occurred.
b. Please submit separate labeled itemized receipts for the amounts disbursed and accrued for the cost in which you have claimed under Attorney
Fees. These receipts should also reflect the date on which these costs occurred.
c. In response to your letter, you indicated your desire to have this claim settled immediately therefore, to assist me in making a final decision on your
claim, I need a complete breakdown of your Overhead and Profit as it relates
to this claim.
(R4, tab 40)
Appellant responded with an itemized list of “work performed by C. Duncan & J. Richardson,” which included a “TOTAL BREACH OF CONTRACT CLAIM” in the amount of
$20,210. That amount was itemized as follows (based on $70 per hour per person for 2 people):
LETTER TO MR. ROWAN FROM C & J (R4, tab 22): $1,400 to research
codes & law (6 hrs), compose & type (3 hrs), and assemble and mail (1 hr.)
RESPONSE FROM VA (R4, tab 24): $280 to read and interpret (2 hrs.)
C & J’S REQUEST TO REINSTATE CONTRACT (Re, tab 25): $280 to compose & type (1 hr.) and assemble & mail (1 hr.)
MEETING AND CLAIM (R4, tab 27): $560 to meet/negotiate (2 hrs.), research codes & law (1 hr.), compose & type (3 hrs.) [only 4 hrs. for 2 people
claimed]
C & J’S APPEAL LETTER (R4, tab 29): $2,380 to research codes & laws (8
hrs.), compose & type (7 hrs.), assemble & mail (2 hrs.)
VA’S FINAL DECISION (R4, tab 31): $560 to read & interpret (2 hrs.), research codes & laws (2 hrs.)
DEFAULT CONVERSION (R4, tab 33): $140 to read & interpret (1 hr.)
ORDER OF DISMISSAL (R4, tab 34): $140 to read & interpret (1 hr.)
TERMINATION CLAIM (R4, tab 35): $420 to read & interpret (3 hrs.)
FINAL DECISION (R4, 36): $140 to read & interpret (1 hr.) C & J’S
PROTEST (R4, tab 37): $1,960 to research codes & laws (6 hrs.), compose &
type (5 hrs.), assemble & mail (3 hrs.)
NOTICE OF DOCKETING (R4, tab 38): $140 to read & interpret (1 hr.)
APPEAL FILE SUPPLEMENT (R4, tabs 500-508): $2,324 to research codes
& laws (8 hrs.), compose & type (5 hrs.), assemble & mail (3.6 hrs.)
RESPONDENT’S ANSWER 11/12/93: $280 to read & interpret (2 hrs.)
MEMORANDUM FROM VABCA 11/18/93: $140 to read & interpret (1 hr.)
ADDITIONAL EXPENSES AND MONEYS CLAIMED:
POSTAGE & TELEPHONE EXPENSES: $56
ATTORNEY FEES accrued and paid between 5/5/93 and 3/18/94: $5,325
REMAINING BALANCE ON CONTRACT: $3,685
On April 1, 1994 the CO issued a final decision on appellant’s March 3, 1994 “breach of contract” claim. Her reasoning, as stated in that decision, was as follows:
a. There is no statutory or regulatory authority which authorizes payment for
principals or employees of the contractor to be reimbursed for cost, if any, for
itemized items set out under exhibits 22, 24, 25, 26, 29, 31, 33, 34, 35, 36, 37,
38, 500-508 (appeal File Supplement), Respondent’s answer, Nov. 12, 1993
and Memorandum from [VABCA], Nov. 18, 1993, totaling $11,144. Therefore,
your claim in this amount is denied. Your claim for postage and telephone
expenses are also denied. As to item #27, you may be reimbursed as corporate
officers for the costs in attempting to achieve a termination settlement
agreement. Based on your previous claim submitted June 29, 1993, you indicated your hourly wage was $41.88. You did not specify as to the length of
this meeting. However it is my understanding this meeting lasted one hour.
Accordingly, costs for two persons (Curtis Duncan and Janice Richardson)
may be paid the sum of $83.76 for attending the meeting.
b. It is my decision that the amount of $325.00 is all that can be allowed,
based on the information submitted by C & J Associates, for attorney fees
paid and accrued. This decision was made on the fact that all of the receipts
submitted, dating from May 6, 1993 through February 4, 1994 show a zero
balance due.
c. As stated earlier in my August 17, 1993 letter to you, C & J Associates was
paid $335.00 for services up to and including the date of termination, April
13, 1993. This amount included profit and overhead. The amount the VA may
pay as the total amount of your breach of contract claim is $408.76.
At the beginning of the hearing in VABCA No. 3892, the appeal from the final decision on
appellant’s termination for convenience claim, appellant indicated that it desired to appeal
from the CO’s final decision dated April 1, 1994 on its breach of contract claim, and to have
that appeal heard along with VABCA No. 3892. Docket number VABCA No. 4015 was assigned the appeal from the April 1 decision.
Discussion
There are two issues involved in these appeals. First, did the government breach the contract by its termination for default and its conversion of that termination to a termination
for the convenience of the government? Second, is appellant entitled to termination costs in
addition to that already allowed by the contracting officer?
Issuance by the government of the order for services in response to appellant’s quotation
did not establish a contract. A quotation is not an offer and, consequently, cannot be accepted by the government to form a binding contract. Therefore, the order was an offer by the
government to C & J to purchase services upon specified terms and conditions. The contract
came into being when C & J accepted the offer by furnishing the services ordered by the
government to the point where substantial performance occurred. (48 CFR 13.108, Legal
Effect of Quotations)
The PO included no default termination or termination for convenience of the government
clauses. 48 CFR §49.504, Termination for Fixed-Price Contracts for Default, provides that:
(a)(1) Supplies and services. The contracting officer shall insert the clause at
52.249-8, default (fixed-priced supply and service), in solicitation and contracts when a fixed-price contract is contemplated and the contract amount is
expected to exceed the small purchase limitation. The contracting officer may
use the clause when the contract amount is not expected to exceed the small
purchase limitation, if appropriate (e.g., if the acquisition involves items with
a history of unsatisfactory quality).
However, a termination for default clause cannot be incorporated into this PO by operation
of law. As this Board stated, in Monarch Enterprises, Inc., VABCA No. 2239, 2296, 86-3
BCA ¶19,281 at 97,481:
Because the language regarding termination for default is permissive and not
mandatory, the clause is not incorporated by operation of law into this contract. A procurement regulation will be accorded the same “force of law” as if
it were a statute and a mandatory clause will be included in a contract by operation of law even though it was not referenced. Conversely, however, a nonmandatory clause will not automatically apply. G.L. Christian and Associates
v. United States, 160 Ct.Cl. 1, 312 F.2d 418[, rehearing denied, 160 Ct.Cl. 58,
320 F.2d 345, cert. denied, 375 U.S. 954 (1963)].
On the other hand, a Termination for Convenience of the Government clause is required to
be included in purchase orders such as this, and if they are not they will be read into such
contracts pursuant to the holding in G.L. Christian, supra.
48 CFR 49.502, Termination for Convenience of the Government, provides in pertinent
part:
(a) Fixed-price contracts of $100,000 or less (short form).
(1) General use. The contracting officer shall insert the clause at 52.249-1,
Termination for Convenience of the Government (Fixed-Price) (Short Form),
in solicitations and contracts when a fixed-price contract is contemplated and
the contract amount is expected to be $100,000 or less. ...
The required clause found at 48 CFR 52.249-1 reads as follows:
TERMINATION FOR CONVENIENCE OF THE GOVERNMENT (FIXEDPRICE) (SHORT FORM) (APR 1984)
The contracting officer, by written notice, may terminate this contract, in
whole or in part, when it is in the government’s interest. If this contract is
terminated, the rights, duties, and obligations of the parties, including compensation to the contractor, shall be in accordance with Part 49 of the Federal
Acquisition Regulation in effect on the date of this contract.
In order to establish that the actions by the government in terminating the PO for convenience constituted a breach, appellant must show that there was bad faith on the part of the
government. This requires a substantial burden of proof. There is a presumption that public
officials act in good faith in the exercise of their powers and responsibilities. Overcoming
this presumption requires “well-nigh irrefragable proof.” See Monarch Enterprises, Inc.,
VABCA No. 2296, 86-3 BCA ¶19,281, and cases cited therein.
C & J has not met its burden of establishing bad faith on the part of the government. The
evidence reveals that there were many problems with appellant’s performance under the
contract, culminating in its refusal to comply with the contract requirement to “bomb” the
kitchen and canteen areas, the failure to do so thereby creating a health hazard to the patients of the hospital whose meals were prepared there. The latter was sufficient reason to
justify the termination of the contract. Appellant’s contention that the government improperly terminated the contract prior to the expiration of the 20-day cure notice is not persuasive in light of the evidence that C & J’s president stated, when asked during a meeting
with VA officials what he would have done during the 6 or so days left before expiration of
the cure period, that he was in full compliance with all of the items of the contract and that
there was nothing to correct or nothing else to do.
Appellant has already been paid for the work it accomplished up until the termination, including overhead and profit. It is not entitled to lost profit on work not performed. It claims
$2,931.60 for legal research, composing appeal letters, and meetings with contracting officer (35 hours @ $41.88 per hour for two people).
C & J is not entitled to breach of contract damages. It is only entitled to allowable costs associated with presenting its settlement claim under the termination for convenience. C & J
was allowed a total of $408.76 in termination for convenience settlement expenses by contracting officer final decisions dated August 17, 1993 and April 1, 1994, including $325 in
attorney fees and $83.76 for C & J’s attendance at a settlement meeting. Appellant is not
entitled to attorney fees and other costs associated with the prosecution of breach of contract
claims
against
the
government.
Federal
Acquisition
Regulation
1-15.205-31(c) provides:
Costs of legal, accounting, and consulting services, and related costs, incurred
in connection with ... the prosecution of claims against the government, are
unallowable.
Appellant has failed to establish costs associated with the presentation of its termination
for convenience claim other than those allowed by the contracting officer, which we see no
reason to disturb.
Decision
For the foregoing reasons, the appeals of C & J Associates under Purchase Order No. 619C30025, VABCA Nos. 3892, and 4015 are DENIED.
DAN R. ANDERS
Administrative Judge
Panel Chairman
We Concur:
MORRIS PULLARA, JR.
Administrative Judge
RICHARD W. KREMPASKY
Administrative Judge
Commonwealth Industrial Specialties
B-277,833, 97-2 CPD ¶151
November 25, 1997
Richard Snyder for the protester. Philip F. Eckert, Jr., Esq., and Stephen Stastny, Esq., Defense Logistics Agency, for the agency. David A. Ashen, Esq., and John M. Melody, Esq.,
Office of the General Counsel, GAO, participated in the preparation of the decision.
Digest
Requirement that responses to simplified acquisition request for quotations be submitted
electronically through the agency’s electronic bulletin board (EBB) is reasonable and consistent with the statutory requirement that competition for procurements using simplified
acquisition procedures be promoted to the maximum extent practicable, where the agency
reasonably determined that electronic quotations would promote efficiency and economy
and would not be overly burdensome to prospective vendors.
Decision
Commonwealth Industrial Specialties, Inc. (CIS) protests the terms of request for quotations (RFQ) No. SPO400-97-T-L228, issued by the Defense Supply Center Richmond
(DSCR), Defense Logistics Agency (DLA), for pressure gages.
We deny the protest.
The RFQ was issued under the agency’s automated procurement procedures as a simplified
acquisition pursuant to the Federal Acquisition Streamlining Act of 1994, 10 USC §2304(g)
(Supp. II 1996), as implemented in part 13 of the Federal Acquisition Regulation (FAR).
Section 2304(g)(1) provides, in relevant part, as follows:
In order to promote efficiency and economy in contracting and to avoid unnecessary burdens for agencies and contractors, the Federal Acquisition Regulation shall provide for ... special simplified procedures for purchases of
property and services for amounts not greater than the simplified acquisition
threshold....
DSCR uses the automated procurement procedures for purchases of supplies of up to
$25,000, where the acquisitions are not complex or urgent; are not for weapons systems,
back-ordered, or rebuy items; and do not involve government- furnished property. Under
these procedures, RFQs are available only through the agency’s electronic bulletin board
(EBB) and quotations can be transmitted only in an electronic format using the agency’s
EBB. Vendors can access the EBB through the vendor’s personal computer by dialing a telephone number or logging on to the Internet. First time users must register with the agency before proceeding to the EBB menu screens that offer the option to download solicitations or submit quotes (or perform such functions as reviewing the vendor’s Automated Best
Value Model past performance score).
CIS argues that the requirement that quotations submitted in response to the RFQ be
transmitted through the agency’s EBB violates the requirement under 10 USC §2304(g)(3)
(1994) that “[i]n using simplified procedures, the head of the agency shall promote competition to the maximum extent practicable.” We disagree.
Where requiring electronic submission of quotations in a procurement using simplified acquisition procedures would increase efficiency and promote competition, without overly
burdening prospective vendors, it is consistent with the statutory mandate that competition
be promoted to the maximum extent practicable when simplified acquisition procedures are
used. Arcy Mfg. Co., Inc. et al., B-261538 et al., Aug. 14, 1995, 95-2 CPD ¶283 at 3-5. Here,
DSCR reports that requiring vendors to use its EBB promotes efficiency and economy by
reducing DSCR’s administrative costs and burdens, accelerating the procurement cycle, and
reducing vendors’ overall costs of doing business with the government. Although CIS questions whether DSCR has adequately documented the claimed benefits of its EBB, in some
respects these benefits are self- evident. Most important, CIS has not suggested how or why
the agency’s conclusions are unreasonable, even with respect to eligible vendors such as the
protester itself or others in the protester’s business.
DSCR’s reported experience is consistent with the experience of agencies generally, which
have found that, with advances in information technology, the use of an electronic format
can be more efficient than the use of a paper format and does not unduly restrict competition. NuWestern USA Contractors, Inc., B-275514, Feb. 27, 1997, 97-1 CPD ¶90 (issuance of
solicitation only in electronic form (CD-ROM) is not unduly restrictive of competition).
Moreover, DSCR’s approach is consistent with the regulations governing the use of simplified acquisition procedures, which provide that “[p]aper solicitations for contract actions not
expected to exceed $25,000 should be issued only when obtaining electronic or oral quotations is not considered economical or practical.” FAR §13.106-2(a)(3).
The agency also maintains that using its EBB generally promotes, rather than diminishes,
competition relative to a paper format by reaching more potential vendors than would otherwise be possible. In this regard, the agency maintains that the statistics on usage of its
EBB demonstrate that requiring EBB quotations has not diminished competition; according
to the agency, there was a 27-percent increase in the number of participating vendors and a
65-percent increase in the number of EBB quotations received between October 1996 and
August 1997. (The fact that four quotations were submitted in response to this RFQ also
tends to support the agency’s position that the requirement to use its EBB has not operated
to impose an unreasonable burden on vendors.)
As mentioned above, the protester has not identified any basis to disagree with the agency’s
conclusion that any burden on vendors as a result of the EBB quotation requirement will be
minimal and will not negatively affect the level of competition. Although a vendor seeking
access to the EBB is required to have access to a personal computer, certain telecommunications software, and a modem, these items are readily available for purchase in the commercial marketplace, and should a vendor not desire to purchase such equipment, access to
the EBB can be obtained by contacting an electronic data interchange provider. Arcy Mfg.
Co., Inc. et al., supra, at 4. Accordingly, we conclude that requiring electronic submission of
quotations here does not violate any statutory or regulatory provision.1
In any case, it does not appear that CIS itself was precluded from competing under this solicitation or otherwise suffered competitive prejudice as a result of the EBB quotation requirement. DSCR reports, and CIS does not deny, that CIS acknowledged to contracting
officials that it possesses the equipment necessary to access the EBB, but simply wished to
retain the option of submitting a quotation by facsimile machine. Where the record demonstrates that an agency’s actions have not prejudiced a firm protesting to our Office, we will
not sustain the protest, even if a deficiency in the procurement, such as an impropriety in
the conduct of discussions, is found. McDonald-Bradley, B-270126, Feb. 8, 1996, 96-1 CPD
¶54 at 3; see Statistica, Inc. v. Christopher, 102 F.3d 1577, 1581 (Fed. Cir. 1996). The protest would thus fail for lack of prejudice, even if the protester had established improper
agency action, which it did not.
The protest is denied.
Comptroller General of the United States
1
CIS asserts that agencies are only permitted to require electronic quotations or offers where they are using
the Federal Acquisition Computer Network (FACNET), an electronic data interchange system used to exchange acquisition information between the government and private sector vendors. There is, however, no
current status quo for EBB.
CPAD Technologies
B-278582.2, 98-1 CPD ¶55
February 19, 1998
Peter Mellon for the protester. Capt. Joseph R. Doyle and Marian E. Sullivan, Esq., Department of the Air Force, for the agency. Robert C. Arsenoff, Esq., Glenn G. Wolcott, Esq.,
and Paul I. Lieberman, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.
Digest
Protest challenging agency’s placement of an order against a federal supply schedule contract at a price higher than that offered by protester is denied where record reflects that the
agency reasonably concluded that the ordered product is the lowest price schedule item that
meets agency needs.
Decision
CPAD Technologies, Inc. protests the Department of the Air Force’s issuance of a purchase
order for nine narcotics and explosives detection systems to Barringer Instruments, Inc.
under request for quotations (RFQ) No. F11623-97-T-3062. The protester complains that
the agency should have purchased CPAD’s lower-priced systems.
We deny the protest.
On July 3, 1997, the agency published a notice in the Commerce Business Daily seeking
quotations for narcotics and explosives detection systems, specifically stating that it was
seeking to acquire “commercial items.” The systems are to be used at various Air Force bases around the world. Quotations were submitted by three companies, including CPAD’s
quote of $410,000 and Barringer’s quote of $429,656. The agency conducted product demonstrations at Scott Air Force Base on September 3 and 4.
As a result of the product demonstrations, the agency determined that Barringer’s systems
best met the agency’s needs. Among other things, the agency found that Barringer’s systems were easier to set up and operate, were lighter and smaller, and had the best ability to
detect explosive material.
Thereafter, the agency issued a purchase order for the detection systems from Barringer’s
federal supply schedule (FSS) contract. CPAD complains that: (1) it should have been notified of the agency’s intent to purchase from the federal supply schedule; (2) the agency did
not use formal testing procedures; and (3) the agency should have purchased CPAD’s slightly lower-priced detection systems.1 However, CPAD has not presented any information to
this Office showing that the agency’s actions were improper.
1
CPAD also complains that award of this contract will establish a “standard” for other Air Force bases. To
the extent CPAD is asserting that other contracts may be awarded in the future based on issuance of this
purchase order, the protest is premature since it is based on CPAD’s speculation regarding future agency
activities.
Regarding CPAD’s complaints that it was improper for the agency to award an FSS contract, Federal Acquisition Regulation (FAR) §8.001 (June 1997) states:
[A]gencies shall satisfy requirements for supplies and services from or
through the sources and publications listed below in descending order of priority — .....
(vi) Mandatory Federal Supply Schedules (see Subpart 8.4);
(vii) Optional use Federal Supply Schedules (see Subpart 8.4); and
(viii) Commercial sources . . . .
Regarding CPAD’s complaint that the agency failed to engage in formal selection procedures, FAR §8.404(a) (June 1997) provides as follows:
When placing orders under a Federal Supply Schedule, ordering activities
need not seek further competition, synopsize the requirement, make a separate determination of fair and reasonable pricing, or consider small business
set-asides....
Accordingly, CPAD’s assertions that it was improper for the agency to satisfy its requirements by placing an order under an FSS contract, and that formal notice and selection procedures were required, are simply legally incorrect.
Regarding CPAD’s assertion that the agency improperly selected Barringer’s slightly higher-priced detection systems, when placing orders under FSS contracts, a procuring agency
need not order lower-priced items which do not meet the agency’s needs. Rather, the agency
must reasonably ensure that the items purchased meet the agency’s needs at the lowest
overall cost. Commercial Drapery Contractors, Inc., B-271222, B-271222.2, June 27, 1996,
96-1 CPD ¶290 at 3. The determination of the agency’s needs and which product meets
those needs is properly the agency’s responsibility, and we will examine the agency’s assessment of technical acceptability only to ensure that it has a reasonable basis. Midmark
Corp., B-278298, Jan. 14, 1998, 98-1 CPD ¶17 at 3.
Here, the agency states, among other things, that the Barringer system’s lighter weight,
smaller size, and effectiveness of operation caused the agency to conclude that the Barringer system best meets its needs at the lowest overall cost. CPAD has not offered any credible evidence to demonstrate that the agency’s determination in this regard was unreasonable.
The protest is denied.
Comptroller General of the United States
Cross-Cultural Training for Spouses of FAA Overseas Employees — Travel
Expenses
B-259620
February 29, 1996
Digest
The Federal Aviation Administration (FAA) may pay the travel costs of the spouses of FAA
overseas employees to attend cross-cultural training sessions conducted at overseas locations. The FAA states that this training is important to the success of the FAA employees’
assignments. Thus the spouses’ attendance at the training provides a direct and substantial
benefit to the government and the FAA may pay their travel expenses under 5 USC §5703.
Decision
The Federal Aviation Administration (FAA) asks whether it may pay the travel expenses of
the spouses of its overseas employees to attend cross-cultural training programs at various
overseas locations. The answer is yes.
Background
The submission states that the FAA offers cross-cultural training to employees who are stationed at overseas posts and their spouses to facilitate the transition to the foreign environment. According to the agency, this training enables the employees to become more productive in a shorter period of time and greatly improves their chances for a successful
overseas tour. The agency also states, “It is very important that this training be provided to
spouses as well as employees, since the most frequent cause of unsuccessful assignments is
the failure of the spouse to adapt to the foreign environment.” Because it is economically
feasible to offer these training sessions only at central locations where there are a substantial number of FAA employees, the agency would like to pay the costs of the employees’
spouses to travel from the agency’s smaller offices to these central locations. It asks whether it may issue invitational travel orders to the spouses of employees to travel to the training programs.
Opinion
The invitational travel authority is found at 5 USC §5703, which provides:
An employee serving intermittently in the government service as an expert or
consultant and paid on a daily when-actually-employed basis, or serving
without pay or at $1 a year, may be allowed travel or transportation expenses, under this subchapter, while away from his home or regular place of business and at the place of employment or service.1
1
These provisions were derived from provisions enacted by the act of Aug. 2, 1946, ch. 744, §5, 60 Stat. 808
and subsequently codified in the current statutes in 1975. Section 4, Pub. L. No. 94-22, May 19, 1975, 89
Stat. 85. The purpose stated for these provisions at that time was to establish “that the same provisions regarding per diem allowances will be applicable to all persons traveling on official government business, including employees, experts consultants, volunteers and $1-a-year people.” H.R. Rep. No. 94-104, 94th Cong.,
1st Sess., at 6 (1975).
The term employee as used in section 5703, specifically is defined to mean “an individual
employed in or under an agency including an individual employed intermittently in government service as an expert or consultant and paid on a daily when-actually-employed basis and an individual serving without pay or at $1 a year.” 5 USC §5701(2).2
The phrase individual serving without pay encompasses persons other than those serving
the government in a purely advisory capacity. 48 Comp. Gen. 110 (1968). Thus, we held
that section 5703 was broad enough to be used for the purpose of paying for the travel of
individuals to appear as witnesses for the government at an administrative hearing. In 37
Comp. Gen. 349 (1957), we had earlier concluded that persons serving without compensation
may include college faculty members who travel for the purpose of consulting with agency
officials concerning agencies recruitment of college students. We noted that such travel
would enable the faculty members to “become better acquainted with the type of work, the
working conditions, and benefits offered persons in the government service, and, by reason
thereof, [they] would be better able to advise college students concerning government employment.” Id. at 350.
More recently, we have reviewed requests from two agencies to pay the expenses of employees’ and military members’ spouses traveling to attend government-sponsored seminars
held for the purpose of briefing the employees, members and spouses on matters considered
directly relevant to the agencies’ missions, and in both cases, we concluded that 5 USC
§5703 may be used to authorize payment for such costs.
In one of these cases, we approved a proposed amendment to the Joint Federal Travel Regulations to allow reimbursement for the travel expenses of the spouses and dependents of
military members incurred to attend anti-terrorism briefing sessions incident to their accompanying the member on his or her overseas permanent duty assignment. 71 Comp. Gen.
6 (1991). We noted that the dependents of military members stationed overseas often find
themselves in areas where there is terrorism and political unrest and that proper training
about these dangers can prevent government losses in both financial and other considerations. We therefore concluded that the cost of the travel to attend such briefing sessions
could be authorized.
In the other case, we considered a request from the FAA to pay the travel costs of the
spouses of FAA employees to attend security training before traveling with the employee to
the employee’s new overseas duty station. 71 Comp. Gen. 9 (1991). The agency stated that
the training was necessary “to effectively protect the family and interests of the government
under situations including surveillance, counterintelligence and terrorist activities.”
2
By contrast, the definition of “employee” found at 5 USC §2105, which applies generally to title 5, unless
otherwise specified, essentially is limited to persons appointed in the civil service who are engaged in the
performance of a federal function and subject to the supervision of one of the categories of federal officials
named in that section.
We noted that in several prior decisions we had approved reimbursement of travel expenses
for private individuals upon a determination that the travel served a sufficient government
interest. Examples cited were cases involving an employee’s spouse’s travel to attend an
awards ceremony honoring the employee, and applicants’ for federal positions travel to attend pre-employment interviews. See Sharon S. Rutledge, 69 Comp. Gen. 38 (1989); and 60
Comp. Gen. 235 (1981).3
In deciding those cases, we also considered the provisions of 31 USC §1345 that provides in
part:
Except as specifically provided by law, an appropriation may not be used for
travel, transportation, and subsistence expenses for a meeting. This section
does not prohibit —
(1) an agency from paying the expenses of an officer or employee of the
United States Government carrying out an official duty ...
While we said that it is not entirely clear that a government training course is the sort of
“meeting” contemplated by section 1345, we noted that, in any event, section 1345 does not
apply to individuals issued travel orders under 5 USC §5703, provided they are performing
a “direct service” to the government. We concluded that participation of spouses in the security course readily met that test, noting that, essentially, the training sessions were “integral aspects of the proper execution of the employee’s own reassignment and his or her
family’s attendant change of station.” Id. at 11.
Here, also, the FAA wants to pay the travel expenses of the spouses of employees to attend
FAA-sponsored training programs because it receives a substantial benefit from their attendance at the programs. The FAA explains that the most frequent cause of unsuccessful
overseas assignments is the failure of its overseas employee’s spouse to adapt to the foreign
environment. It reports that it recently began presenting in-country cross-cultural training
to the spouses of employees who were recently posted overseas and found that such training
greatly improves the chances for a successful overseas tour and enables an employee to become more productive in a shorter period.
As we recognized in 48 Comp. Gen. 110, supra, the invitational travel authority, 5 USC
§5703, is not limited to the travel of persons serving the government in a purely advisory
capacity, but also encompasses others whose travel is necessary incident to service which
provides a direct benefit to the government. Based on the foregoing, we conclude that the
attendance at agency-sponsored cross-cultural training of employees’ spouses provides a
direct and substantial benefit to the government, significantly more than mere attendance
at a conference or meeting. Accordingly, we have no objection to the FAA’s proposal to pay
the travel expenses of the spouses of FAA employees to attend cross-cultural training ses-
3
This decision concerning job-applicant travel predated enactment of 5 USC §5706b that now specifically
covers such travel.
sions where it is more economical to do so than to hold the sessions at the employee’s duty
station.
Seymour Efros for Robert P. Murphy, General Counsel
Diversified Management Group, a Joint Venture
B-288443.2, 2001 CPD ¶175
October 12, 2001
H.F. Lauer, Lauer Contract Services, Inc., for the protester. Clare A. Kersten, Esq., and
Wilson J. Campbell, Esq., Naval Facilities Engineering Command, for the agency. Jennifer
D. Westfall-McGrail, Esq., and Christine S. Melody, Esq., Office of the General Counsel,
GAO, participated in the preparation of the decision.
Digest
Cancellation of invitation for bids (IFB) prior to bid opening was in the public interest
where agency failed to investigate whether procurement should be set aside for acquisition
from National Institute for the Severely Handicapped or small business prior to issuing the
IFB on an unrestricted basis.
Decision
Diversified Management Group, a joint venture, protests the decision by the Air Force to
cancel invitation for bids (IFB) No. N68711-01-B-0116 and procure the services from the
National Institute for the Severely Handicapped (NISH).
We deny the protest.
The IFB, which was issued on June 26, 2001, sought bids to furnish base family housing
maintenance services at three Navy installations in California (the Naval Base, Ventura
County; the Naval Construction Battalion Center, Port Hueneme; and the Naval Air Station, Point Mugu). The IFB contemplated the award of a firm fixed-price/indefinite quantity
contract for a base and four option years. The solicitation was issued on an unrestricted basis.
The IFB, as amended, set bid opening for July 30. On July 27, the incumbent contractor,
Tri-J Industries, protested the failure of the agency to set the IFB aside for exclusive small
business competition. Upon receipt of the protest, the agency issued amendment No. 0004
to the solicitation, which postponed bid opening indefinitely.
The agency determined that it had erred in releasing the IFB on an unrestricted basis
without evaluating potential set-aside preference categories and that corrective action was
warranted. To determine the appropriate corrective action, the contracting officer consulted
his agency’s “Small Business Programs Set-Aside Preference Matrix,” a document that sets
out by contract type and dollar threshold the order in which the various set-aside programs
should be considered.1 The matrix indicated that for facility support contracts over $25,000
in value, first priority should be given to procuring the services from NISH/NIB agencies
1
The matrix identified the following set-aside programs: NISH/NIB (National Industries for the Blind), 8(a),
HUB (Historically Underutilized Business) Zone, Very Small Business, Emerging Small Business, and
Small Business.
pursuant to the Javits-Wagner-O’Day (JWOD) Act, 41 USC §46.48c (1994),2 and that second priority should be given to setting the acquisition aside for 8(a) firms.3
Based on this guidance, the contracting officer contacted the regional NISH representative
to inquire whether NISH would be interested in performing the solicited services. By letter
dated August 10, the NISH regional office notified the contracting officer that it would seek
to have the services added to the procurement list. Upon receipt of the letter from NISH,
the contracting officer issued amendment No. 0005 to the IFB, which cancelled the solicitation and stated that the services would be procured in accordance with the JWOD Act. On
August 17, Diversified protested the cancellation of the IFB to our Office.
The protester argues that the agency’s decision to cancel the solicitation lacked a reasonable basis.
The FAR recognizes that the cancellation of an IFB before bid opening usually involves a
loss of time, effort, and money spent by the government and bidders; consequently, it instructs that IFBs should not be cancelled prior to bid opening unless cancellation is clearly
in the public interest. FAR §14.209(a). The FAR also requires that procurements meeting
certain requirements be set aside for agencies for the blind or severely handicapped,4 for
particular categories of small businesses,5 or for small businesses generally.6 Where prior to
2
The JWOD Act establishes a committee known as the Committee for Purchase From People Who Are Blind
or Severely Disabled and authorizes it to establish and maintain a list of commodities and services provided
by qualified nonprofit agencies for the blind or severely handicapped that it has determined are suitable for
procurement by the government (the “procurement list”). 41 USC §§46(a), 47(a). Once a commodity or service has been added to the procurement list, contracting agencies are required to procure that commodity or
service from a qualified agency for the blind or severely handicapped if it is available within the time period
required. 41 USC §48, Federal Acquisition Regulation (FAR) §8.704; Aleman & Assocs., Inc., B-287275.2, B287356.2, July 2, 2001, 2001 CPD ¶120 at 3. The Act directs the Committee to designate a central nonprofit
agency or agencies to facilitate the distribution of orders for commodities and services on the procurement
list among qualified agencies for the blind or severely handicapped, 41 USC §47(c); in accordance with this
instruction, the Committee has designated NIB to represent people who are blind and NISH to represent
JWOD participating nonprofit agencies serving people with severe disabilities other than blindness. FAR
§8.701.
3
The matrix further indicates that for this type of acquisition, third priority should be given to a HUBZone
set-aside and fourth priority to a small business set-aside.
4
As previously noted, a service that appears on the JWOD procurement list must be acquired from a qualified agency for the blind or severely handicapped if available within the time period required. FAR §8.704.
5
For example, an acquisition exceeding the simplified acquisition threshold must be set aside for HUBZone
small business concerns when the contracting officer reasonably expects that (1) offers will be received from
two or more HUBZone small business concerns, and (2) award will be made at a fair market price. FAR
§19.1205(a) and (b).
6
Agencies are required to setaside for small business participation each acquisition of between $2,500 and
$100,000 in value unless the contracting officer determines that there is not a reasonable expectation of obtaining offers from two or more responsible small business concerns that are competitive in terms of market
prices, quality, and delivery. FAR §19.502-2(a). Further, agencies are required to set aside any acquisition
over $100,000 for small business participation when there is a reasonable expectation that (1) offers will be
issuing a solicitation on an unrestricted basis, an agency fails to investigate whether the
conditions requisite to a set-aside under the JWOD Act or for a category of small businesses
may be expected, cancellation is clearly in the public interest if the agency subsequently
determines that the solicitation should have been set aside. Ryon, Inc., B-256752.2, Oct. 27,
1994, 94-2 CPD ¶163 at 4 (cancellation even after bid opening was proper where agency erroneously determined initially not to set procurement aside for small business).
Here, the agency admits that prior to issuing the IFB on an unrestricted basis, the contracting officer failed to consider whether it would be appropriate to set this procurement aside
for a JWOD participating agency or for any of the categories of small businesses entitled to
priority under the FAR. The contracting officer subsequently determined, in response to
Tri-J Industries’ protest, that the acquisition should have been set aside for NISH, and in
the event that NISH was unable to perform the services, for the 8(a) program. Under these
circumstances, we think that the contracting officer’s decision to cancel the IFB was justified as clearly in the public interest.
The protester further argues that it was contrary to the requirements of the Competition in
Contracting Act of 1984 (CICA) for the agency to have set the procurement aside for acquisition from NISH pursuant to the JWOD Act.
While CICA generally requires contracting agencies to obtain full and open competition
through the use of competitive procedures, 10 USC §2304(a)(1)(A) (1994 and Supp. IV
1998), non-competitive procedures are authorized where a statute expressly authorizes that
the procurement be made through another agency or from a specified source. 10 USC
§2304(c)(5). The JWOD Act provides authority for the noncompetitive acquisition of supplies and services that appear on the procurement list maintained by the Committee for
Purchase from People Who Are Blind or Severely Disabled. See FAR §6.302-5(b)(2); JAVIT
Enters., Inc., B-266326, B-266327, Feb. 5, 1996, 96-1 CPD ¶39 at 2. Accordingly, it was not
contrary to the requirements of CICA for the agency to have set the procurement aside for
acquisition from NISH.
Finally, Diversified complains that the solicited services were not on the JWOD list at the
time the IFB was cancelled. At the time the solicitation was cancelled, NISH had expressed
interest in performing the services, but they had not been added to the procurement list.
The services were added to the list on October 5. We see nothing objectionable in the fact
that the services were not on the list at the time the IFB was cancelled given that the agency did not enter into a contract with NISH at that time. Compare JAVITZ Enters., Inc., supra (agency violated CICA by issuing noncompetitive purchase order to Goodwill Industries
pursuant to the JWOD Act where the services acquired under the purchase orders were not
listed on the JWOD procurement list at the time the orders were issued).
The protest is denied.
obtained from at least two responsible small business concerns offering the products of two different small
business concerns, and (2) award will be made at fair market prices. FAR §19.502-2(b).
Comptroller General of the United States
DOD Section 6 School Board Members — Invitational Travel Orders
B-260896
October 17, 1996
Digest
Payment may be certified for invitational travel expenses incurred by five nongovernment
DOD Section 6 School Board members elected pursuant to §6 of Public Law 81-874, since
repealed, to attend school board conferences to participate in and keep abreast of current
and essential educational issues that impacted the public schools. Their travel was necessary to carry out their statutory duty under 20 USC §241(h) (1988) to “oversee school expenditures and operations.” Their participation provided a direct benefit to the government
for which reimbursement of travel expenses is warranted under 5 USC §5703.
Decision
The issue raised is the propriety of paying invitational travel and per diem expenses to
nongovernment DOD Section 6 Dependent School Board members for travel to state conferences and workshops sponsored by the State School Board Associations. We conclude that
the travel provided a direct benefit to the government for which reimbursement of travel
expenses is warranted under 5 USC §5703.
Background
This advance decision is made at the request of Paul Schnittger, Commander, SC, USN,
Director for Field Support, Defense Finance and Accounting Service, Cleveland Center
(DFAS), to determine whether he may certify for payment certain expenses resulting from
invitational travel of Department of Defense Section 6 school board members elected pursuant to §6 of Public Law 81-874, September 30, 1950 (since repealed pursuant to Public
Law 103-382, October 20, 1994), and formerly codified at 20 USC §241(g) and (h).
Section 241 permitted the Secretary of Education to establish free public education in the
United States if it were otherwise unavailable as a result of official action by state or local
governmental authority and if no local agency were able to provide suitable free public education. Sections 241(g) and (h) provided for the establishment of a school board as follows:
(g) Elective school boards
The Secretary shall ensure the establishment of an elective school board in
schools assisted under this section. Such school board shall be composed of a
minimum of three members, elected by the parents of students in attendance
at such school. The Secretary shall, by regulation, establish procedures for
carrying out such school board elections as provided in this subsection.
(h) School board oversight of school expenditures and operations
A school board established pursuant to subsection (g) of this section shall be
empowered to oversee school expenditures and operations, subject to audit
procedures established by the Secretary, and other provisions of this section.
The statute was silent with respect to travel by school board members.
Four of the board members in question (Sherry Brisendine, Roberta Chappell, Beth Patrick,
and Cathy Young) represented the School Board at the Fort Campbell, Kentucky, Section 6
Dependent School; and one board member (Ms. Tammy Laurence), represented the School
Board at the Fort Bragg, North Carolina, Section 6 Dependent School. All were nongovernment employees who were issued invitational travel orders by the United States Government. Department of Defense officials invited the four school board members from Fort
Campbell to travel to Louisville, Kentucky, to attend a three-day conference in February
1994 sponsored by the Kentucky School Board Association. Similarly, the school board
member from Fort Bragg was invited to travel to Southern Pines, North Carolina, in December 1993 to attend a two-day training seminar sponsored by the North Carolina School
Boards Association.
When the school board members submitted vouchers for their travel expenses, payment
was questioned by DFAS on the ground that the meetings and workshops were not directly
related to the operation of the Section Six Schools.
In response, the Principal Deputy Under Secretary of Defense stated that the Section 6
school boards were required to provide oversight of the Section 6 Schools to ensure that the
educational programs provided are comparable to those of the public schools in the states in
which they are located. He added:
Attendance at State and National School Board conferences is imperative.
This is particularly true since our Board members have no better means of
keeping abreast of current and essential educational issues that impact the
public schools throughout the United States and our own Section 6 Schools.
This office views attendance at these conferences as a necessary part of the
functions our School Board members.”1
Nevertheless, payment was denied based on an April 8, 1994, memorandum issued by
DOD’s Office of General Counsel, stating that 5 USC §5703 applies only to persons performing a direct service for the government and that the school board members did not meet the
“direct service” test as set forth in 55 Comp. Gen. 750, 752 (1976).
Analysis
The issuance of invitational travel orders to individuals outside the government is authorized by 5 USC §5703 (1994), which provides as follows concerning travel and transportation
expenses:
An employee serving intermittently in the government service as an expert or
consultant and paid on a daily when-actually-employed basis, or serving
1
Memorandum of April 6, 1994 from Albert V. Conte, Principal Deputy Under Secretary of Defense to General Counsel, Department of Defense.
without pay or at $1 a year, may be allowed travel or transportation expenses, under this subchapter, while away from his home or regular place of business and at the place of employment or service.
A separate statute, expressly bars the use of appropriated funds to pay the travel costs of
private citizens to attend meetings. This statute, 31 USC §1345, states in pertinent part:
Except as specifically provided by law, an appropriation may not be used for
travel, transportation, and subsistence expenses for a meeting. This section
does not prohibit —
(1) an agency from paying the expenses of an officer or employee of the
United States Government carrying out an official duty; ...
Although we did not directly address the relationship between 5 USC §5703 and 31 USC
§1345 until 1976 (55 Comp. Gen. 750, supra), the relevant principles were established in
several earlier cases. In one of our earliest decisions under 5 USC §5703, we held that persons who are not government officers or employees may, “when requested by a proper officer to travel for the purpose of conferring upon official government matters,” be regarded
as persons serving without pay and therefore entitled to travel expenses under 5 USC
§5703. 27 Comp. Gen. 183 (1947). See also 39 Comp. Gen. 55 (1959). A critical prerequisite
is this: In order to qualify under 5 USC §5703, the individual must be performing a direct
service for the government. 37 Comp. Gen. 349 (1957).
Thus, 5 USC §5703 permits an agency to invite a private individual (or more than one) to a
meeting or conference at government expense, but only if that individual is legitimately
performing a direct service for the government such as making a presentation or advising
in an area of expertise. However, it is not a device for circumventing 31 USC §1345. The
“direct service” test is not met merely because the agency is interested in the subject matter
of the conference or because the conference will enhance the agency’s program objectives.
Before 1988, DOD regulations implementing these statutes contained in ¶C6000, Item 3 of
the Joint Travel Regulations (JTR), permitted payment of travel expenses under invitational travel orders pursuant to 5 USC §5703, and listed 14 examples of persons to whom invitational travel orders could be issued, including lecturers in DOD programs, members of
the Executive Reserve and Boards of Visitors, and situations where the individual’s attendance and participation at a conference or meeting would be in DOD’s best interest. On July
1, 1988, Item 3 of this regulation was changed to prohibit payment of travel expenses for
individuals under invitational travel orders merely to attend conferences or meetings, except in cases where the invitee confers on an official defense matter with DOD officials, and
thereby performs a direct service to DOD.
The July 1988 change was made in response to our decision In the Matter of Funding of
Conferences, 55 Comp. Gen. 750 (1976), which imposed a “direct service” test on the use of 5
USC §5703. Thus, 5 USC §5703 permits an agency to invite a private individual (or more
than one) to a meeting or conference at government expense, but only if that individual is
legitimately performing a direct service for the government.
Accordingly, we have approved reimbursement of travel expenses for individuals whose attendance at a particular function was determined to be of direct benefit to the government.
For example, in Security Training for Spouses of FAA Employees, 71 Comp. Gen. 9 (1991),
we held that the Federal Aviation Administration may reimburse spouses of its employees
who attend security training upon a determination that the travel served a sufficient government interest. Likewise, we held in Use of Invitational Trade Orders for Military Dependents to Attend Anti-Terrorism Briefings, 71 Comp. Gen. 6 (1991), that military dependents may be paid travel and per diem to attend briefings and training when the
Department of Defense determines it necessary to prepare them for life in countries where
they may be endangered by terrorism or political unrest.
In our view, travel to participate in training or conferring with agency staff,
in which the Department of Defense imparts critical knowledge and information to the dependents of members ... clearly constitutes significantly more
than mere attendance at a conference or meeting.
Similarly, in our opinion, the participation of the five school board members in the present
case at state school board conferences and workshops meets the “direct service” test. Their
travel to participate in and keep abreast of current and essential educational issues affecting public schools imparted knowledge and information that was necessary to carry out
their statutory duty under 20 USC §241(h) (1988) “to oversee school expenditures and operations.” This constitutes significantly more than mere attendance at a conference or meeting. Essentially, participation in the workshops and conferences was a necessary part of the
functions of the School Board members and was directly related to DOD Section 6 schools
activities.
Therefore, reimbursement of travel expenses to the five school board members to attend the
state school board conferences and workshops is warranted under 5 USC §5703.
Robert P. Murphy
General Counsel
Dubinsky v. United States
43 Fed.Cl. 243
March 31, 1999*1
Meir Dubinsky, Niles, Illinois, plaintiff pro se. Katherine A. Barski and Joel McElvain,2
U.S. Department of Justice, Washington, D.C., with whom were Acting Assistant Attorney
General David W. Ogden, Director David M. Cohen, Deputy Director Sharon Y. Eubanks,
U.S. Department of Justice, Washington, D.C., for defendant. Robert E. Hayes and Roberto
A. Lange, Sioux Falls, South Dakota, for defendant-intervenor.
Opinion
BRUGGINK, Judge.
This is a bid protest action challenging a procurement by the United States Air Force
(“USAF”). Nu-Way Signs Company (“Nu-Way”), of which Meir Dubinsky, plaintiff pro se, is
the sole proprietor, submitted proposals in response to a solicitation issued by the USAF
Academy (“Academy”) for two electronic scoreboards for the Academy’s football stadium in
Colorado. After conducting discussions with six offerors and evaluating amended proposals,
the agency awarded the contract to Daktronics, Inc. (“Daktronics”). Subsequently, plaintiff
filed a protest with the General Accounting Office (“GAO”). Before GAO could issue a decision, however, plaintiff filed this action seeking injunctive relief.
Plaintiff challenges the agency’s evaluation of both the awardee’s and plaintiff’s proposals.
The complaint alleges that the Academy improperly determined Daktronics’ amended proposal to be technically acceptable and exceeding the solicitation’s technical requirements. It
also alleges that the agency mis-evaluated plaintiff’s amended proposal by failing to rate it
as exceeding several technical requirements. Daktronics intervened in this protest shortly
before the evidentiary hearing, which was held on February 9, 1999. Oral argument was
heard on February 11, 1999. For the reasons set forth herein and explicated at the oral argument, the defendant’s motion for summary judgment is denied and plaintiff’s motion for
summary judgment is granted.3
*
Note: Redacted material is represented by brackets [ ].
1
An unredacted version of this opinion was filed on March 25, 1999 and judgment was entered that same
date. It was provided to the Government so that offerors’ proprietary information could be redacted prior to
public release of the opinion. The opinion did not include a ruling on the quantum of plaintiff’s claim for
proposal preparation costs. The opinion and judgment of March 25, 1999 are hereby vacated. Today’s opinion incorporates the Government’s proposed redactions and includes a discussion and ruling on plaintiff’s
claim for proposal preparation costs. See infra Discussion §VII.
2
Mr. McElvain served as defendant’s counsel until January 29, 1999. On February 1, 1999, Ms. Barski was
assigned responsibility for this case.
3
After the oral argument, the court entered a summary order granting a permanent injunction to performance of the prior award to Daktronics. Plaintiff has now filed a “Motion to Stop Resolicitation” informing
the court that the agency has resolicited the contract. Plaintiff asks the court to enjoin the resolicitation.
The court denies the motion. Nothing in the preliminary order or this opinion preclude the agency from
Background4
On September 4, 1998,5 the Academy issued solicitation number F05611-98- R-22936 for
two electronic display signs for its football stadium in Colorado. The solicitation, issued as a
request for proposals (“RFP”) on an unrestricted basis, instructed offerors to submit proposals on or before September 19, 1998. The following language of the RFP is pertinent to
the present action:
This is a combined synopsis/solicitation for commercial items prepared in accordance with the format in Federal Acquisition Regulation (FAR) subpart
12.6.... This solicitation ... is issued as a request for proposal (RFP).... Line
Item 0001 — Provide and install two — (2) electronic display signs (marquees) for Falcon Stadium, United States Air Force Academy, CO. The offeror
shall provide all labor, equipment, tools, materials, transportation, and supervision necessary to provide, prepare site, and install electronic display
signs. The signs shall function back-to-back for dual viewing.
Admin. R., tab 23 at 4. The RFP included detailed technical requirements for the signs. The
following excerpts are relevant to this protest:
Each sign shall be of an LED matrix with an approximate 7-1/2 feet by 15
feet display area.... The electronic display area shall provide for full live vidresoliciting. The new solicitation would not be subject to an enforcement proceeding in this proceeding absent some clear violation of the terms of the injunction. See, however, infra p. 276.
4
The facts are drawn from the following sources: the administrative record filed with the court on December
18, 1998, as later supplemented by the defendant; responses to plaintiff’s interrogatories; plaintiff’s affidavit; defendant’s proposed findings of fact; and the testimony presented at the February 9, 1999 hearing.
5
The solicitation appeared on this date on the CBDNet, an online listing of federal government procurements, but did not appear in the print copy of the Commerce Business Daily until September 10, 1998. See
Commerce Bus. Daily, Sept. 10, 1998, at 29.
6
Plaintiff stated the solicitation number as F05611-98-T-2293 in its complaint. Because neither party asserted that the number was material to this dispute, this “fact” was undisputed, and frankly irrelevant, until
oral argument. At oral argument, defendant for the first time asserted that the solicitation number — specifically the letter “T” — supported its argument that the procurement was conducted as a request for quotations (“RFQ”), and thus, by further inference, under simplified acquisition procedures. Defendant, however, failed to identify any support for its assertion, or for the inference that the solicitation was an RFQ.
Plaintiff had no opportunity to investigate this contention or respond to this issue because the court issued
an order the next day adjudicating the dispute without further briefing. Because the government relied on
this “fact” to support its legal argument, and because plaintiff had no opportunity to address defendant’s
assertion, the court reviewed the factual record to assess the validity of defendant’s assertion. As discussed
infra, the solicitation and contract documents strongly support the view that the solicitation was identified
as F05611-98-R-2293, not F05611-98-T-2293. See infra text accompanying note 41. The court concludes,
based upon defendant’s failure to identify support, and the actual lack of support in the record, that no genuine dispute exists with respect to this issue: the solicitation number for this procurement was F05611-98R-2293. Moreover, because defendant failed to point to any support for its proposed inference regarding the
type of solicitation involved here, the precise solicitation number is not a material issue of fact.
eo, text and graphics capability. The LED’s [sic] shall be of three colors: red,
green, and blue, and provide 8 lines of 21 characters per line.... The overall
area for each sign shall be a minimum of 10 feet by 20 feet and shall contain
side panels to allow customized lettering ... [which] shall be translucent
white. The overall color of the signs shall be “Strata blue”.... All computer
software needed to program and operate the electronic display configuration
shall be provided along with upgrades for the life of the sign ... [and] shall be
compatible with a Windows 95 operating system run on a Pentium-based
computer. Any applicable software site license(s) shall be provided with the
proposal.... A one-year warranty for parts, labor and installation is required
for the signs, for all sign hardware/software from [the] time the signs are
made fully operational. Repair and operational assistance, above and beyond
any warranty work, is required via a toll free number to the manufacturer.
This number shall be available from 8:00AM to 5:00PM, Mountain Daylight
Time (MDT), Monday through Friday, for the operational life of the sign. The
offeror shall identify the offerors [sic] on-site training program and outline
specifics. All training will take place on the United States Air Force Academy. At least eight — (8) hours of training shall be provided. Programming
and operational training is required for four — (4) individuals. Hardware
maintenance training is required for two — (2) individuals.... The contractor
shall provide and install the foundation base for the new signs, performing all
site preparation, digging, concrete work, landscaping, and electrical installation as required.
Id. at 5. The RFP informed offerors that “[t]o be technically acceptable, an offeror shall
meet the Government’s specifications.” Id. at 6.
In addition to these technical requirements, the RFP instructed offerors that: (1) numerous
identified FAR clauses governed the procurement, including FAR 52.212-4, Contract Terms
and Conditions — Commercial Items; (2) “[o]fferors must comply with all instructions contained in provision 52.212-1,” Instructions to Offerors — Commercial Items, id. at 5; and (3)
a “complete copy of the FAR provision 52.212-3, Offeror Representations and Certifications
— Commercial Items, shall be submitted with the offer.”7 Id. at 6. Offerors were advised to
include their offer price “FOB destination delivery” and a delivery date in their proposals.
With regard to evaluation of proposals and selection of the awardee, the RFP stated:
The Government will award a contract resulting from this solicitation to the
responsible offerors [sic] whose offer conforming to the solicitation will be
most advantageous to the Government, price and other factors considered.
The following factors, in descending order of importance, shall be used to
evaluate offers: 1) Technical Requirements; 2) Delivery Capability; 3) Past
Performance; and 4) Price. Technical capability is considered the most important and shall be evaluated against the specifications set forth in this so7
The regulations set out in the 1998 edition of 48 CFR generally governed this procurement. For that reason,
all references to the FAR or 48 CFR throughout this opinion refer to the 1998 edition unless otherwise stated.
licitation and specification sheet.... Each proposal shall be evaluated against
the solicitation specifications and evaluated as follows: Exceeds solicitation
requirements shall receive a (+) rating. Meets the solicitation requirements
shall receive a (0) rating. Does not meet the solicitation requirements shall
receive a (–) rating. Technical Requirements will then receive an overall score
of (+), (0), or (–). Past Performance is considered more important than price.
Delivery Capability shall be evaluated against the offerors [sic] proposed delivery as stated in the solicitation. Past Performance will be evaluated to ensure the offeror has performed similar work, with a similar project magnitude
for the past five (5) years; satisfactory business practices, timely performance
and overall customer satisfaction. Price will be considered as the least important factor. Price will be evaluated to determine its fairness, completeness, and reasonableness as it relates to the items offered.
Id. at 5-6.
On September 14, 1998, the Academy issued an amendment to the solicitation which extended the deadline for receipt of proposals until September 22, 1998, and added a new
technical requirement: the successful offeror would be required to remove the existing Falcon Stadium marquee prior to installing the new scoreboards.
Six offerors timely submitted proposals, including Daktronics and plaintiff’s company, NuWay, which submitted three proposals. Daktronics’ proposal included attachments specifically addressing the solicitation warranty and training requirements. Daktronics warranty
consisted of [ ]
Daktronics provided separate, though similar, training programs for the maintenance and
operator training requirements. For maintenance training, Daktronics offered to provide [ ].
With regard to operator training, it offered: [ ]
Daktronics’ proposal and accompanying product literature addressed all but five of the remaining technical requirements.8 In addition, the technical drawing of the scoreboard,
which was included, in part, to demonstrate compliance with the scoreboard display area
and overall area specifications, stated that “dimensions are subject to change due to detailed design considerations.” Admin. R., tab 12 §2a.
Daktronics offered to ship the scoreboards [ ] but provided no date for delivery at the Academy. [ ]
Nu-Way’s submission included offers based upon three different makes or models of signs.
Proposal “A” offered a Daktronics sign; proposals “B” and “C” offered two models of signs
manufactured by another company. Regarding technical requirements, plaintiff provided
8
The five requirements not addressed were: minimum light intensity of 5000 candelas; software compatibility with Windows 95; provision of software licenses; excavation of the existing sign; and translucent white
customized lettering for the signs’ side panels.
information relating to all of the RFP specifications except the lettering color and software
licenses. With regard to warranty, it offered to provide [ ] The training offered by Nu-Way
differed according to manufacturer of the sign offered. For the Daktronics sign, Nu-Way
proposed to meet the minimum on-site operator and maintenance training requirements in
the RFP; for the other manufacturer, Nu-Way offered to provide [ ]
Nu-Way offered the following delivery times and prices for each of its proposals:9
Proposal
“A”
“B”
“C”
Delivery Time
[]
[]
[]
Price
$[ ]
$[ ]
$[ ]
[]
The Academy evaluated the initial proposals at various times between September 22 and
24. The proposals were evaluated with regard to technical requirements by the contracting
officer, Michael Wehrmann and, at least for Nu-Way, Coleman Smith.10 Sgt. Vaccarella
alone reviewed the proposals with respect to the three other evaluation criteria (delivery
capability, past performance and price).
Technical proposals were evaluated for each of the twenty-two specifications stated in the
RFP — for example, the warranty, maintenance training and operator training requirements — and the excavation requirement added by the RFP amendment. These technical
requirements were evaluated as twenty-three subfactors of each offeror’s overall technical
9
[]
10
Although these three officials participated in some form, Mr. Smith’s role appears to have been minor. His
name appears on only one page of the multitude of evaluation documents in the administrative record: the
“evaluation narrative” that accompanies the evaluation sheets for Nu-Way’s initial proposal. The administrative record includes only two evaluation sheets for each initial proposal. At the February 9, 1999 evidentiary hearing, Sgt. Vaccarella testified that the second evaluation sheet (i.e., the one not prepared by him)
was a collaborative effort by Wehrmann and Smith. He did not explain the reason for this unusual sharing
arrangement. The record is clear, however, that only two names appear on the evaluation sheets of
Daktronics and Nu-Way: Vaccarella and Wehrmann.
The court has two additional concerns regarding the scores recorded on the evaluation sheets. First, Wehrmann’s evaluation sheets are neither signed nor initialed by him. In fact, Nu-Way’s second evaluation sheet
does not even identify the evaluator; only the associated one-page narrative bears Wehrmann’s name.
Second, Sgt. Vaccarella has altered Wehrmann’s evaluation scores. For example, on Wehrmann’s evaluation
sheet for Nu-Way’s initial proposal, Sgt. Vaccarella crossed out a (+ +) rating for plaintiff’s offer to provide [
], and replaced it with a (+). His initials appear by this revision. No explanation was provided by the government for these alterations despite plaintiff’s repeated allegations that these corrections indicated misconduct by the contracting officer. In fact, defendant denied that Sgt. Vaccarella modified any of the other
evaluators’ scores. See Def.’s Resp. Pl.’s Interrog. 19. This response is plainly incorrect and the court rejects
it.
capability.11 Contrary to the express language of the RFP, evaluators used a four-tier rating
system to rate each subfactor — (+ +), (+), (0), and (–) — rather than the three ratings stated in the RFP. As Sgt. Vaccarella later testified, the (+ +) rating represented a “benefit” to
the Academy, i.e., the offeror’s feature “not only exceeded the specification, but provided
some sort of a benefit.” Tr. at 67. The two sets of evaluators’ ratings of individual subfactors
were not assimilated into a combined score for each initial proposal. Nor was an overall
technical rating assigned by any of the evaluators for the initial proposals.
Daktronics’ initial proposal was found to be deficient in some areas and exceeding the RFP
specifications in others. Wehrmann rated the proposal as deficient in five areas,12 exceeding
specifications in three areas,13 and in line with specifications with regard to the remaining
fifteen subfactors. In addition, he marked Daktronics’ [ ] as a benefit under the warranty
subfactor, in addition to his (+) rating for the overall warranty. Sgt. Vaccarella rated
Daktronics’ proposal as deficient in six areas,14 exceeding specifications in the same three
areas identified by Wehrmann, and acceptable with regard to the other fourteen subfactors.
Additionally, he awarded Daktronics three benefit ratings: one for warranty [ ]; and two for
on-site training (one each for the operational and maintenance training subfactors). The
latter ratings were in response to Daktronics’ offer to provide [ ] His evaluation narrative
also stated that he awarded two (+) ratings for additional features included in Daktronics’
proposed operator training program: [ ]15
Aside from the technical deficiencies discussed above, Sgt. Vaccarella noted several other
deficiencies in Daktronics’ proposal: (1) it did not include the FAR 52.212-3 representations
and certifications; (2) the proposed payment terms required advance payments, which are
11
The RFP did not explicitly use the term “subfactors.” However, it did inform offerors that each of the technical specifications listed in the RFP would be evaluated using a (+), (0) and (–) rating system, and that
these ratings would be combined to generate an overall rating for the technical requirements factor. The
evaluation sheets prepared by the agency listed these specifications as twenty-three line items under the
“Technical Proposal” evaluation factor. These twenty-three specifications, therefore, constituted evaluation
subfactors. The RFP adequately notified offerors that proposals would be evaluated according to these subfactors and that failure to comply with any one of these subfactors would render a proposal technically unacceptable. See Admin. R., tab 23 at 6.
12
Light intensity, computer software upgrades, software compatibility with Windows 95, software licenses,
and existing sign excavation.
13
[]
14
The five areas identified by Wehrmann, see supra note 12, and toll-free number technical support, which
Vaccarella viewed as deficient because he determined that it was offered “only on weekends.” Admin. R., tab
13 at 5.
15
At the foot of the narrative sheet, Sgt. Vaccarella tallied the subfactor ratings as follows: 1(+ +), 3(+), 4(–),
all others (0). These figures are not consistent with the itemized scores on the three-page proposal evaluation sheet, nor do they correlate with the explanations of ratings in the remainder of the evaluation narrative. Moreover, the scoring on the evaluation sheet differs from that reflected in the narrative. The scores
presented in the text above include all (–), (+), or (+ +) ratings identified in either the evaluation sheets or
the evaluation narrative.
inconsistent with the mandatory prompt payment term in the RFP,16 and (3) the submitted
past performance data was inadequate.
Because each of Nu-Way’s three proposals offered a different make or model of scoreboard,
the technical ratings differed for each. The two evaluation sheets for Nu-Way’s proposals
were identical, with the exception that the ratings for proposal “C” differed with regard to
one subfactor.17 All three proposals were rated as being deficient (–) with respect to some of
the technical subfactors: proposal “A” was found to contain two deficiencies; proposal “B”
had four; and proposal “C” had three.18 Proposals “B” and “C” were found to exceed the solicitation requirements in several areas.19 Sgt. Vaccarella [ ] and awarded all three proposals a (+) for this item.20
On September 23, 1998, Sgt. Vaccarella sent a letter (and an identical e-mail message) to
Daktronics informing the company that its proposal was deficient with respect to five of the
specifications.21 No mention was made regarding the non-technical deficiencies regarding
representations and certifications, payment terms, and past performance data. The communications asked Daktronics to “correct these deficiencies by submitted [sic] an amended
proposal by fax or email,” to be received “no later than 25 Sep 98 at 3:00 Mountain Standard Time.” Admin. R., tab 14 & tab 15A at 1. It further stated: “The amended proposal shall
address the requirements listed above. Failure to do so could result in your company being
eliminated from the acquisition.” Id.
16
The RFP incorporated by reference FAR 52.212-4(i), which states that “[p]ayment shall be made for items
accepted by the government that have been delivered to the delivery destinations set forth in this contract.”
48 CFR §52.212-4(i). In addition, FAR 52.232-1, a mandatory clause for fixed-price supply contracts which
is incorporated into the contract under the Christian doctrine, cf. General Eng’g & Machine Works v.
O’Keefe, 991 F.2d 775, 780-81 (Fed.Cir. 1993) (incorporating a clause that complemented the predecessor to
FAR 52.232-1), provides that the “Government shall pay the Contractor ... for supplies delivered and accepted.” 48 CFR §52.232-1.
17
See infra note 19.
18
Both evaluators agreed on these deficiencies. All three proposals failed to meet the RFP requirements for
licenses and upgrades for the software required to operate the signs. Proposals “B” and “C” were found not
to meet the character size and centering requirement; proposal “B” alone was assessed as not meeting the
RFP’s minimum display area requirement.
19
Proposals “B” and “C” exceeded the minimum requirements for [ ] and for [ ] In addition, proposal “C” exceeded the requirement for [ ]. Regarding the latter, Sgt. Vaccarella rated this feature of proposal “C” as a
(+); Wehrmann/Smith rated it as a (+ +). Sgt. Vaccarella’s subsequent evaluation summary reveals that he
assigned Nu-Way only a (+) rating for this subfactor when he was determining offerors’ overall scores for
the technical requirements factor. No explanation was given as to whether he overruled Wehrmann/Smith’s
(+ +) rating or overlooked it.
20
The handwritten description of [ ] appears on both evaluation sheets in Sgt. Vaccarella’s handwriting. On
both sheets, the score was initially marked as a (+ +), then altered to a (+). Sgt. Vaccarella’s initials appear
next to both changes.
21
The toll-free number technical deficiency identified by Sgt. Vaccarella in his evaluation was not included in
this list.
The next day, September 24, the agency completed evaluations of initial proposals. Sgt.
Vaccarella decided to engage the remaining five offerors in discussions, which was a de facto determination of the competitive range.22 Accordingly, he sent letters to these offerors,
informing them of deficiencies identified in their initial proposals and requesting the submission of amended proposals by 3:00 p.m. Mountain Standard Time on September 25. The
letter sent to Nu-Way identified four technical deficiencies relating to some or all of NuWay’s proposals.23
A number of other developments occurred on September 24. First, at 9:30 a.m., Sgt. Vaccarella received what is purported to be Daktronics’ amended proposal. This proposal consisted of a cover page — signed and dated September 21, 1999 by a Daktronics manager —
and a three-page letter and attachments that were identical to a portion of Daktronics’ initial proposal. Sgt. Vaccarella considered it to be Daktronics’ amended proposal, a position
that the defendant asserts in this litigation. See Def.’s Resp. Pl.’s Interrog. 4.
Second, at some time after 4:15 p.m., Sgt. Vaccarella received an e-mail message from Daniel Minnaert, Daktronics’ college/university regional manager, responding to Vaccarella’s
message the previous day and addressing the five technical deficiencies identified by the
agency. Minnaert’s e-mail message revised Daktronics’ initial proposal with respect to these
five items.24 With regard to Vaccarella’s query regarding [ ] Admin. R., tab 15A at 3.
Finally, later in the afternoon, following receipt of Minnaert’s e-mail response, Sgt. Vaccarella telephoned him to discuss areas of Daktronics’ responses that he found to be problematic. Two memoranda prepared by Sgt. Vaccarella purport to recount the content of this
conversation.25 The first, titled “Final Proposal Revision, 9/24/98 Email @ 4:15,” recounts
22
In its interrogatory responses, defendant asserted that “[t]here was no competitive range determination
eliminating offerors from competition after the initial proposal.” Def.’s Resp. Pl.’s Interrog. 25. The statement of facts in defendant’s brief, however, acknowledged the existence of a competitive range. See Def.’s
Mot. Summ. J. at 2. Moreover, Sgt. Vaccarella testified that “for lack of a better word,” he had established a
competitive range. Tr. at 40. This is consistent with his testimony, see id. at 39-40, that he elected to follow
FAR 15.306(d), which is entitled “Exchanges with offerors after establishment of the competitive range.” 48
CFR §15.306(d).
23
One deficiency related solely to proposal “B” and another applied only to proposals “B” and “C”. See supra
note 18 and accompanying text.
24
Sgt. Vaccarella permitted offerors to simply address the deficiencies which he had identified; offerors were
not required to resubmit those portions of their initial proposals that had been found to be technically acceptable.
25
These two documents were not included in the agency report submitted to GAO, nor were they included in
the administrative record initially filed with the court in this action. Instead, the existence of these documents was made known to the court by testimony of Sgt. Vaccarella during the February 9, 1999 evidentiary hearing. Defendant’s counsel informed the court that her predecessor, Joel McElvain, excluded these
documents from the administrative record, possibly on the basis of a privilege. See Tr. at 95-96. The court
was neither informed that documents were being withheld, nor that a privilege was being asserted. In fact,
the court asked Mr. McElvain on several occasions whether the administrative record was complete and on
each occasion he replied in the affirmative. No basis for a privilege assertion is apparent to the court. In order to maintain a complete administrative record, the court grants defendant’s oral request to include these
three “concerns” he expressed to Minnaert regarding Daktronics’ amended proposal, which
needed to be addressed notwithstanding Daktronics’ e-mail response: inadequate past performance data; the omission of representations and certifications; and the absence of any
software license agreements. The memorandum reveals that Sgt. Vaccarella requested
Daktronics to provide information on these matters: “Need past performance information
and reps & certs.... I also told Dan I need to see a copy of the license agreement.” Admin. R.,
tab 15A1 at 2. The second memo, also dated September 24, and titled “Additional discussion
items concerning the email,” reported oral representations made by Minnaert regarding
Daktronics’ compliance with the training and warranty specifications. According to Sgt.
Vaccarella, Daktronics confirmed that: (1) the warranty would commence upon the date the
sign became fully operational; and (2) the on-site training offered in the amended proposal [
]
Four of the other five offerors submitted amended proposals prior to the deadline on September 25.26 Nu-Way submitted a letter which responded to the four concerns noted by Vaccarella. The letter also amended Nu-Way’s three proposals to [ ]
Between September 25 and 27, Sgt. Vaccarella alone evaluated all of the amended proposals. This second round of evaluations consisted only of his reevaluation of the those subfactors which had been found to be deficient in offerors’ initial proposals. Sgt. Vaccarella
rated all five of Daktronics’ revisions as (0). Combining these revised scores with the scores
for the other eighteen subfactors carried over from its initial proposal, he determined that
the amended proposal warranted an overall technical rating of (+). He prepared a memorandum recording this rating for Daktronics on September 27, 1998. See Admin. R., tab 17.
Nu-Way’s amended proposals were all found to be technically acceptable: all three proposals received a (0) rating for software licenses and upgrades; proposals “B” and “C” received a (+) rating for [ ]; and all three proposals received a (+) rating for [ ].27 In addition,
Sgt. Vaccarella awarded all three proposals a bonus (+) for the [ ]. Nevertheless, all three
proposals received a (0) rating for the overall technical requirements factor. See Admin. R.,
tab 11.
On either September 27 or 28, Sgt. Vaccarella determined that Daktronics’ amended proposal was most advantageous to the Academy. On September 28, Sgt. Vaccarella prepared a
“Final Proposal Evaluation Summary” (“Summary”) which encapsulated his evaluations of
documents in the administrative record. Nevertheless, the court is concerned about how the matter was
handled.
26
One offeror failed to submit an amended proposal. Because its initial offer had been determined to be technically unacceptable, this offeror was not considered for contract award.
27
Sgt. Vaccarella elevated the ratings of proposals “A” and “C” with regard to this subfactor from (0) to (+),
even though Nu-Way’s submission had not modified the [ ] offered in these proposals. These changes appear
to be corrections of prior evaluation errors.
the six offerors’ amended proposals and documented his best value determination.28 The
preamble noted that the (+ +) rating had been used only “[f]or evaluation purposes only ...
to identify a particular technical specification which not only exceeds the standard, but is
determined to add a particular benefit to the specification.” Admin. R., tab 18 at 1. With
regard to the technical requirements factor, the most important of the four evaluation factors, it noted that two offerors had been determined to be technically unacceptable; only one
offeror, Daktronics, had received a (+) rating. Consequently, the Summary noted that
Daktronics amended proposal “appears to provide the most advantageous offer to the Government. The benefits noted for warranty and training are substantial are [sic] the reason
the offer received a (+) for ‘Technical Requirements’.” Id. at 3. Sgt. Vaccarella later testified
that he did not add up the number of (+) or (+ +) subfactor ratings achieved by each offeror
to determine a rating for the technical requirements factor. In fact, it remains unclear how
he derived the overall technical rating for each offeror.
The final evaluations of three offerors other than Daktronics and Nu-Way — we will refer
to them as Offerors X, Y and Z — are also relevant to this protest. Offeror X, one of the two
technically unacceptable offerors, received a benefit for two subfactors — [ ]. See Admin. R.,
tab 18 at 1. Offerors Y and Z, which were found to be technically acceptable, each received a
benefit rating for offering to provide the Academy with [ ], as Nu-Way had also proposed.
See id. at 2-3.29
On September 28, Sgt. Vaccarella also sent out letters to the unsuccessful offerors informing them that they had not been selected for award. The letter to Nu-Way incorrectly informed the plaintiff that it had failed to supply the required past performance data (contrary to the Summary and matrix he had prepared that same day). That afternoon, Sgt.
Vaccarella received a fax from Daktronics which provided a copy of the software license
agreement, additional past performance data, and the mandatory representations and certifications.
On September 29, 1998, after it had been selected as the awardee, Daktronics faxed two
replacement pages to Sgt. Vaccarella to correct some of the deficiencies remaining in its
September 24 amended proposal. The corrected pages made the following two changes to
28
An “Evaluation Status Matrix” attached to the Summary purported to condense all of these scores into tabular form. Unfortunately, it is riddled with errors. For example: (1) it omitted the (+ +) rating for Daktronics’ warranty; (2) it credited Daktronics’ with seven (+) ratings, whereas the evaluation sheets and narrative
only identified five (+) ratings; (3) only five (+) ratings were shown for Nu-Way, whereas proposals “B” and
“C” had received six and seven (+) ratings, respectively; (4) the benefit ratings awarded to Offerors X, Y and
Z were omitted; and (5) the entry for Offeror Z failed to mention the (+) rating described in the text of the
Summary, but attributed three (+) ratings that had not been mentioned. None of these discrepancies have
been explained by the Academy.
29
The evaluation sheets for Offerors X, Y, and Z are not before the court; we have gleaned these benefit ratings from Sgt. Vaccarella’s Summary. At the evidentiary hearing, Sgt. Vaccarella testified that any proposal
offering to provide [ ] was not a benefit to the agency, and that the award of a (+ +) rating to Offeror Z “was
an error on [his] part.” Tr. at 84. Presumably, he also erred in awarding Offeror Y a (+ +) rating for this
same feature.
Daktronics’ amended proposal: (1) contract payments would be in accordance with the FAR
52.232-1 Payments clause;30 and (2) software upgrades would be provided for the life of the
signs. These September 29 submissions were incorporated into the contract, which was
signed by Sgt. Vaccarella on September 30, 1998.
On October 1, Daktronics faxed two further replacement pages to its amended proposal to
Sgt. Vaccarella: (1) a revised technical drawing which corrected an error in the prior drawing relating to LED colors, but deleted language stating that the sign would be painted
Strata blue, one of the RFP requirements; and (2) a corrected statement of Daktronics’
maintenance training program.31 The latter page purported to modify the amended proposal to state that on-site training would be provided for two Academy personnel for eight
hours, the minimum quantity required by the RFP. Sgt. Vaccarella incorporated both pages
into the September 30 contract.32
On October 2, Nu-Way requested a debriefing on the contract award. This debriefing was
provided to Nu-Way by means of a five-page letter from Sgt. Vaccarella. The letter stated
that the post-award debriefing was provided “[i]n accordance with Federal Acquisition Regulation (FAR) 15.506(d) and (e).” Admin. R., tab 21 at 1. Subsequently, on October 13, NuWay filed a bid protest with the GAO. The agency notified Daktronics of the protest and
suspended contract performance on October 16, 1998.
In response to plaintiff’s protest, on October 29, 1998, Sgt. Vaccarella prepared two documents: a statement of facts and a memorandum of law. These documents were included
within the agency report submitted to GAO the following month. Neither document made
any reference to the use of simplified acquisition procedures or FAR Part 13 in this procurement. The statement of facts, however, included the following statement: “The solicitation was issued as a Request For Proposal (RFP) ... using FAR 12 and 15 procedures....”
Admin. R., tab 2 at 1. It also identified the second round of discussions as follows: “Final
proposal revision requested 23 Sep 98, at 3:00 PM. Final proposal revision request [sic] due
25 Sep 98, at 3:00 PM.” Id. A table summarizing the time of receipt of offerors’ proposals
identified the second round of proposals as “Final Proposal[s].” Id. at 5.
30
The first sentences of FAR 52.232-1 and 52.212-4(i), the payment clause explicitly incorporated into the
contract, are substantively identical. Both provide for payment by the Government only after delivery and
acceptance of supplies.
31
Defendant asserts that this page was submitted on September 29, prior to execution of the contract, citing
one its response to plaintiff’s interrogatory number 11. See Def.’s Mot. Summ. J. at 3. The interrogatory response, however, states only that a revision regarding operational training was submitted on that date.
Moreover, the fax transmission header at the top of the replacement maintenance training page, like the
header at the top of the revised technical drawing, reveals that the page was transmitted on October 1. At
the evidentiary hearing, Sgt. Vaccarella acknowledged that the fax header date identifies the date on which
he received a replacement page. See Tr. at 114. Accordingly, we reject defendant’s assertion that the page
was received on September 29.
32
When asked about this unusual sequence of events at the evidentiary hearing, Sgt. Vaccarella was unable
to provide any explanation.
On November 18, 1998, plaintiff filed this action. Plaintiff’s complaint alleges that the
Academy deviated from the evaluation plan announced in the RFP, mis-evaluated Daktronics’ and Nu-Way’s proposals, improperly determined Daktronics’ amended proposal to be
technically acceptable and, consequently, should have awarded the contract to Nu-Way, the
only technically acceptable proposal. Consistent with its regulations, GAO dismissed NuWay’s protest on November 19, 1998. See 4 CFR §21.11(b).
An evidentiary hearing was held in Washington, D.C. on February 9, 1999 to develop the
factual record. Shortly before the hearing, Daktronics filed a motion to intervene in this action pursuant to Rule 24 of the court’s rules. This motion was granted at the evidentiary
hearing. Thereafter, Sgt. Vaccarella, the only witness to testify at the hearing, stated that
he had conducted the procurement under the simplified acquisition procedures set out in
FAR Part 13, as authorized by FAR subpart 12.6, which was invoked in the solicitation. He
testified that he had issued the solicitation as an RFP by mistake — he had intended to issue it as a request for quotations (“RFQ”). Although Sgt. Vaccarella acknowledged that he
conducted discussions in accordance with FAR 15.306 following the submission of initial
proposals, he argued that this action was purely optional because Part 13 allowed him to
pick and choose among Part 15 procedures. Accordingly, he rejected the proposition that he
had issued a request for final proposal revisions pursuant to FAR 15.307(b) because, he asserted, he had opted not to follow that particular aspect of Part 15 in this procurement. He
contended that the proposals submitted by the six offerors following discussions were simply revised proposals.
With regard to the final evaluation of Daktronics’ proposal, Sgt. Vaccarella testified that
the document received on September 24 at 9:30 a.m. was the proposal submitted in response to his discussion questions, not the e-mail message transmitted later that day, and
the proposal he evaluated as being most advantageous to the Academy. He further testified
that he determined this proposal to be technically acceptable, though “unacceptable” for
award because of non-technical deficiencies. To “clarify” the unacceptable features of
Daktronics’ revised proposal, he telephoned Minnaert and asked the company to rectify
these problems. According to Sgt. Vaccarella, Minnaert provided oral representations that
quelled his concerns, and agreed to amend Daktronics’ proposal accordingly prior to contract award. Consequently, he received revisions to Daktronics’ proposal and subsequently
awarded the contract to Daktronics.
Oral argument was held on February 11, 1999. At the conclusion of the oral argument, the
court granted plaintiff’s motion for summary judgment, permanently enjoined further performance of the contract, and ruled that plaintiff was entitled to recover proposal preparation costs. The court issued a written order to that effect on February 12, 1999. As stated in
that order, this opinion explicates the court’s decision to enjoin this procurement.
Discussion
I. Jurisdiction and Standard of Review
The court has jurisdiction over this post-award bid protest pursuant to the 1996 amendments to the Tucker Act. See 28 USC §1491(b)(1) (Supp. II 1996) (codifying amendments
introduced by the Alternative Dispute Resolution Act of 1996 (“ADRA”), Pub.L. No. 104-320
§12(a), 110 Stat. 3870, 3874-75). The amended statute requires this court to apply the
standard of review prescribed in section 10(e) of the Administrative Procedure Act (“APA”),
5 USC §706 (1994). See 28 USC §1491(b)(4) (Supp. II 1996). That section authorizes a court
to hold unlawful and set aside agency action, findings, and conclusions that are “arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 USC
§706(2)(A) (1994).
Defendant argued in both its post-hearing brief and at oral argument that plaintiff may not
prevail because: (1) the four factors to be considered in determining arbitrary and capricious conduct, which were adopted by the Court of Claims in Keco Industries, Inc. v. United
States, 203 Ct.Cl. 566, 492 F.2d 1200, 1203-04 (1974), apply here; (2) under Keco, one of the
factors to be considered is whether the government acted in bad faith; and (3) plaintiff
failed to allege, let alone prove, that Sgt. Vaccarella conducted this procurement in bad
faith.
Although the defendant is correct that bad faith is one of the factors of the Keco analysis,
its other two assertions are incorrect. Bid-protest actions filed in this court since December
31, 1996 fall within the jurisdiction grafted onto the Tucker Act by the ADRA and must be
decided under the APA standard of review. Consequently, the Keco test — which enunciates
criteria that this court should consider when reviewing a protest in which the protester alleges that the government breached an implied contract to give honest and fair consideration to all bids or proposals — has no direct relevance in the present action. Furthermore,
defendant misinterprets the Keco standard. Under Keco, a protester may establish that the
government’s actions were arbitrary and capricious by showing that they had no reasonable
basis, or that the agency committed a prejudicial violation of procurement law, without any
showing of bad faith. See id. The Federal Circuit has explicitly stated that “there is no requirement or implication in Keco Industries that each of the factors must be present in order to establish arbitrary and capricious action by the government.” Prineville Sawmill Co.
v. United States, 859 F.2d 905, 911 (Fed.Cir. 1988); see also R.R. Donnelley & Sons, Co. v.
United States, 40 Fed. Cl. 277, 282 (1998). In particular, “the absence of any allegation or
evidence of bad faith on the part of the [government] ... is not determinative.” Prineville,
859 F.2d at 911 n. 5. The absence of an allegation of bad faith in plaintiff’s complaint, therefore, does not compel the court to grant defendant’s motion for summary judgment.
II. Applicability of Simplified Acquisition Procedures
At the February 9, 1999 evidentiary hearing, the defendant, for the first time, contended
that this procurement was conducted pursuant to Part 13 simplified acquisition procedures.
Prior to that hearing, the defendant had taken the position that the procurement was con-
ducted under Part 15, which sets forth procedures for standard (i.e., non-simplified) negotiated procurements.33
If simplified procedures under Part 13 had been utilized, then many of plaintiff’s concerns
about the conduct of discussions in this procurement would be irrelevant. The simplified
acquisition procedures in Part 13 allow contracting officers considerable flexibility in the
contract award process. For example, contracting officers are granted wide discretion in the
evaluation of offers: “The contracting officer has broad discretion in fashioning suitable
evaluation procedures. The procedures prescribed in parts 14 and 15 are not mandatory. At
the contracting officer’s discretion, one or more, but not necessarily all, of the evaluation
procedures in part 14 or 15 may be used.” 48 CFR §13.106-2(b)(1). Contracting officers,
however, must utilize an “appropriate combination of the procedures in parts 12, 13, 14,
and 15.” Id. §13.003(h)(2).
Generally, Part 13 procedures apply to procurements that do not exceed the simplified acquisition threshold, which is currently $100,000. See id. §§2.101, 13.003(d). In 1997, however, the FAR was amended to incorporate a “test program” under which agencies were authorized to use Part 13 procedures for acquisitions of commercial items in amounts up to
$5,000,000 for a three-year period ending on January 1, 2000. See 62 Fed.Reg. 262, 266
(1997) (codified at 48 CFR §13.500). If the procurement was conducted pursuant to Part 15,
on the other hand, procedural requirements set out in that subpart were mandatory.
The court holds that the procurement was not conducted as a simplified acquisition. As an
alternative holding, assuming arguendo that it was, the Academy improperly failed to notify offerors to that effect.
To support its contention that this procurement was conducted pursuant to simplified acquisition procedures, defendant offered the testimony of Sgt. Vaccarella, who testified that
the reference to FAR subpart 12.6 in the RFP indicated that he used Part 13 procedures. In
its post-hearing brief, defendant claimed that the solicitation was issued as an RFQ, and
attempted to bolster Sgt. Vaccarella’s testimony regarding the implications of subpart 12.6
by directing the court to two FAR provisions: FAR 12.203 and 12.603(a). Also, at oral argument, defendant’s counsel suggested that the solicitation number and the contract cover
page indicate that this procurement was issued as an RFQ and, thus, was conducted pursuant to simplified acquisition procedures. The court finds none of these arguments persuasive.
33
Defendant’s counsel stated at the hearing that she had been informed by Sgt. Vaccarella of his “use” of simplified acquisition procedures for the first time that preceding weekend, i.e., February 6-7, 1999, and consequently had not been able to brief this issue in defendant’s motion for summary judgment filed on February
3. See Tr. at 29. Consistent with this statement, defendant’s counsel never mentioned that this procurement
was conducted as a simplified acquisition — a fact that was potentially significant to the outcome of this
case, if true — during the course of five status conferences preceding the evidentiary hearing, including a
status conference as late as February 1, 1999.
Sgt. Vaccarella testified that the procurement was a simplified acquisition from the outset;
it was merely an oversight on his part that the solicitation was issued as an RFP rather
than as an RFQ.34 He further testified that, as authorized by FAR subpart 12.6, the procurement was conducted under the test program established by subpart 13.5. That subpart
encourages agencies to conduct procurements for commercial items in amounts up to
$5,000,000 under simplified acquisition procedures. See 48 CFR §13.500. According to Sgt.
Vaccarella, because subpart 12.6 authorized use of the FAR subpart 13.5 test program, Part
13 procedures applied and he was able to conduct discussions with only Daktronics after
the date for receipt of final proposal revisions.
The only documentation which discusses the procedures followed by Sgt. Vaccarella — his
statement of facts submitted to GAO — explicitly states that the solicitation “was issued ...
using FAR 12 and 15 procedures.” Admin. R., tab 2 at 1. There is no mention of Part 13 or
simplified acquisition procedures anywhere in the document. The statement of facts, prepared and signed by Sgt. Vaccarella, directly contradicts his testimony at the February 9
hearing. Moreover, he had every reason to inform GAO of his alleged invocation of simplified acquisition procedures because the broader discretion granted contracting officers under Part 13 would have improved the agency’s chances of defeating plaintiff’s bid protest.
See Burroughs Corp. v. United States, 223 Ct.Cl. 53, 617 F.2d 590, 600 (Ct.Cl. 1980).
Circumstantial evidence also supports the conclusion that the agency’s position that this
procurement was conducted according to Part 13 is only an afterthought. First, the RFP
made no reference to use of simplified acquisition procedures, even though offerors were
likely to be unaware of the existence of the temporary, recently-promulgated test program,
or its application to this procurement. Nor did it incorporate a statement to the effect that
the procurement was capped at $5,000,000, the ceiling for the simplified acquisition test
program. See 48 CFR §13.500(a). Second, there is no documentation in the record of Sgt.
Vaccarella’s decision to utilize simplified acquisition procedures. This would be remarkable
in and of itself, considering that Sgt. Vaccarella was electing to deviate from the standard
procedures of Part 15, and might be expected to document his actions as a precaution
against potential protests alleging that his conduct of the procurement was noncompliant
with Part 15 procedures (which offerors presumably would expect). Cf. United Marine Int’l
34
Contrary to the representation in defendant’s post-hearing brief, Sgt. Vaccarella did not use the RFQ format in this solicitation. He merely claims now that in September 1998 his “intent” was to use an RFQ rather than an RFP. See Tr. at 86. Not only did Sgt. Vaccarella identify this as an RFP in the solicitation itself, and the subsequent solicitation amendment, he also referred to the solicitation as an RFP in his
statement of facts and legal memorandum submitted to GAO. See Admin. R., tab 1 at 2 & tab 2 at 1.
Although contracting officers are not required to issue simplified acquisition solicitations as RFQs, this appears to be the customary practice of many agencies, including the Academy. Cf., e.g., West Coast Research
Corp., B-281359.2, 1999 WL 43513 at *1 (Feb. 1, 1999) (USAF Academy procurement conducted by Sgt.
Vaccarella); APTUS Co., B-281289, 1999 WL 95033 at *1 (Jan. 20, 1999) (Dep’t of Army); Environmental
Tectonics Corp., 98-2 CPD ¶140 at 1 (1998) (Dep’t of Navy); Envirodyne Sys., 98-1 CPD ¶174 at 1 (1998)
(Dep’t of Interior); Fluid Power Int’l, Inc., 97-2 CPD ¶162 at 1 (1997) (NASA); Forestry Surveys & Data, 97-2
CPD ¶46 at 1 (1997) (Dep’t of Agric.).
LLC, B-281512, 1999 WL 88941 at *2 (Feb. 22, 1999) (protester alleged noncompliance with
Part 15 where offerors were not notified of the use of Part 13 procedures).
The lack of documentation is even more remarkable in light of FAR 13.501, entitled “Special documentation requirements,” which states, in pertinent part:
(b) Contract file documentation. The contract file shall include —
(1) A brief written description of the procedures used in awarding the contract, including the fact that the test procedures in FAR subpart 13.5 were
used; ....
48 CFR §13.501(b). The administrative record is bereft of the documentation required by
FAR 13.501(b). No explanation was provided for the absence of this mandatory record.35
A third item of circumstantial evidence is the manner in which Sgt. Vaccarella conducted
the procurement: he appears to have followed, or attempted to follow, Part 15 procedures
(which apply generally to all non-simplified negotiated procurements) throughout the procurement. These procedures included: (1) identifying the solicitation as an RFP, in accordance with FAR 15.203(a), and referring to offerors’ submissions as proposals (rather than
quotations) throughout the RFP; (2) incorporating the technical requirements subfactors
into the solicitation, and representing their relative weight, as required by FAR 15.203(a)
(4) and 15.304(d) (and he even exceeded the latter provision by specifying the rating system
for these subfactors); (3) scoring the technical requirements factor and each of the twentythree underlying subfactors prior to establishing the competitive range, pursuant to FAR
15.306(c); (4) conducting discussions with the six offerors in the competitive range, as required by FAR 15.306(d); (5) requesting written final proposal revisions to be submitted by
a common cut-off date, pursuant to FAR 15.307(b); and (6) providing the plaintiff with a
post-award debriefing, in accordance with FAR 15.506.36
None of these actions were necessary if simplified procedures were utilized. Simplified acquisitions are conducted according to less structured procedures: (1) the standard format
for solicitations is the RFQ;37 (2) there is no requirement to include subfactors or the relative weight of the evaluation factors or subfactors in RFQs, see 48 CFR §13.106-1(a)(2); (3)
35
As discussed earlier, see supra note 25, defendant’s counsel on numerous occasions prior to the hearing, and
during the hearing itself, represented that the administrative record contained all of the documents pertaining to this procurement.
36
In addition, when he evaluated proposals, Sgt. Vaccarella utilized a four-tier rating system that he had developed, based loosely upon the color rating system established in Appendix BB of the Air Force FAR Supplement (“AFFARS”). Appendix BB implements Part 15 of the FAR. See AFFARS App. BB, §§BB-100, BB304(a) (1998).
37
Although the defendant correctly notes that Part 13 does not preclude the use of RFPs, the RFQ appears to
be the predominant solicitation format, by far. See supra note 34. As an example, the solicitation prepared
by Sgt. Vaccarella in the procurement at issue in West Coast Research took the form of an RFQ. See Commerce Bus. Daily, Sept. 8, 1998, at 44-45.
scoring of quotations is not required — comparative evaluations of proposals are permitted,
see id. §13.106-2(b)(2); (4) there is no requirement to establish a competitive range or to
conduct discussions, see id.; see also West Coast Research, 1999 WL 43513 at *2 (a procurement co-handled by Sgt. Vaccarella); CDS Network Sys., 98-2 CPD ¶154 at 3 (1998); and (5)
unsuccessful offerors have no right to obtain either pre- or post-award debriefings, see United Marine, 1999 WL 88941 at *4 n.2.
One substantive provision of the solicitation provides further support for the court’s conclusion. The RFP incorporated by reference all five clauses specified in FAR 12.301: four mandatory clauses and 52.212-2, Evaluation — Commercial Items, an optional clause that may
be included “[w]hen the use of evaluation factors is appropriate.” 48 CFR §12.301(c). The
GAO has stated that FAR 52.212-2 “is to be used when FAR part 15 type procedures are
contemplated.” United Marine, 1999 WL 88941 at *3. In that case, GAO concluded that the
absence of this clause undercut the protester’s contention that Part 15 procedures applied
to that procurement. See id. Following this rationale, the inclusion of 52.212-2 provides further support for the conclusion that Sgt. Vaccarella was applying Part 15 procedures here.
This conclusion is supported when FAR 12.602(a) — one of the FAR provisions cited by defendant to support its position — is considered. That provision states in part: “When evaluation factors are used, the contracting officer may insert a provision substantially the same
as the provision at 52.212-2, Evaluation — Commercial Items, in solicitations for commercial items or comply with the procedures in 13.106 if the acquisition is being made using
simplified acquisition procedures.” 48 CFR §12.602(a). It thus presents a contracting officer
with a choice if evaluation factors are incorporated into a solicitation: use FAR clause
52.212-2, or follow the evaluation provision of Part 13 (if Part 13 procedures apply). Sgt.
Vaccarella chose to include FAR 52.212-2 in the RFP. That election indicates that simplified procedures were not being used.
As a final piece of circumstantial evidence, the factual report and legal analysis presented
by Sgt. Vaccarella in his memorandum of law and statement of facts submitted to GAO
suggests that he thought that Part 15, not Part 13, procedures governed the procurement.
In response to plaintiff’s numerous allegations of improper actions, Sgt. Vaccarella cited to
only one FAR provision in parts 12, 13 or 15 — FAR 15.506 — to indicate his compliance
with the appropriate regulations. Moreover, in the section of his legal memorandum discussing the level of discretion granted to him under this solicitation, Sgt. Vaccarella made
no reference to Part 13 and cited case law interpreting only Part 15.
The sequence of events leading up to Sgt. Vaccarella’s testimony at the evidentiary hearing
also suggests that the invocation of simplified acquisition procedures in this procurement
was an afterthought. Sgt. Vaccarella had been the contracting officer on an Academy procurement for laboratory equipment issued on September 8, 1998 and challenged in West
Coast Research. See Commerce Bus. Daily, Sept. 8, 1998, at 44-45; West Coast Research,
1999 WL 43513. Because the available funding was less than $100,000, that procurement
was initiated by an RFQ and conducted pursuant to simplified acquisition procedures. See
West Coast Research, 1999 WL 43513 at *1-*2. In the course of that procurement, he initi-
ated discussions after the deadline for submission of quotations with a company that had
not submitted a quotation. As a result of these discussions, the company submitted a quotation and received the contract award. No discussions were conducted with either of the
timely offerors. Nevertheless, the GAO upheld the contract award for the sole reason that
the solicitation had been issued as an RFQ under simplified acquisition procedures:
An RFQ, unlike a request for proposals or an invitation for bids, does not
seek offers or bids that can be accepted by the government to form a contract;
our Office has raised no objection to agencies seeking and considering revisions to quotations submitted any time prior to award.... [W]e see nothing
improper in allowing [the awardee] to submit a quotation after the closing
date.
Id. at *3 (citations omitted).
That GAO decision was issued on February 1, 1999, see id. at *1, and a copy was sent to the
Academy according to GAO policy. See 4 CFR §21.12(a). On February 4, this court issued a
decision directing Sgt. Vaccarella to testify at the upcoming evidentiary hearing. According
to Ms. Barski, the Department of Justice attorney then assigned to this case, a few days
later (over the weekend of February 6-7) Sgt. Vaccarella for the first time informed her that
he had used simplified acquisition procedures in this procurement. This explanation for his
handling of the procurement was first communicated to the court at the evidentiary hearing
on February 9. The sequence of events suggests that Sgt. Vaccarella’s eleventh-hour recollection was an attempt to characterize this procurement as a type which the GAO had
found unobjectionable in West Coast Research just a few days before.
Although perhaps not determinative on its own, the totality of this circumstantial evidence
supports Sgt. Vaccarella’s assessment in his statement of facts to the GAO that he attempted to follow only the procedures set out in FAR Parts 12 and 15. His testimony to the contrary at the February 9 hearing was less than persuasive.38 The court concludes, therefore,
that Sgt. Vaccarella’s testimony does not establish that this procurement was conducted
according to Part 13 procedures; rather, it was conducted pursuant to Part 15.
Furthermore, the FAR provisions cited by defendant in its post-hearing brief provide no basis for the court to conclude that Part 13 procedures were either required or utilized in this
procurement. FAR 12.602(a) has already been addressed above; the other provision cited —
FAR 12.203 — states, in pertinent part: “For acquisitions of commercial items exceeding
the simplified acquisition threshold but not exceeding $5,000,000, including options, con-
38
Sgt. Vaccarella contradicted himself on occasion and he was defensive and less than forthcoming. He conceded that Daktronics’ revised proposal was “unacceptable” because of numerous problems, including problems relating to technical subfactors (such as maintenance training and warranty), yet refused to
acknowledge that the proposal contained technical deficiencies or was technically unacceptable. Likewise,
he affirmed his evaluation of Daktronics’ revised proposal as being technically acceptable, yet he conceded
that the document he considered to be the revised proposal was an exact copy of one section of Daktronics’
initial proposal, which he had earlier rated as being technically deficient.
tracting activities shall employ the simplified procedures authorized by subpart 13.5 to the
maximum extent practicable.” 48 CFR §12.203; see also id. §13.500(b). Defendant’s reliance
on the word “shall” is misguided. At best, this provision requires agencies to make strenuous efforts to utilize the test program. It does not answer the question, however, of whether
simplified acquisition procedures were actually followed in this procurement. As discussed
above, Sgt. Vaccarella’s statement of facts represented that he followed Parts 12 and 15 in
this procurement, not Part 13, and all of the circumstantial evidence supports that representation. The only direct evidence that Sgt. Vaccarella used the test program is his testimony on February 9, which the court has found to be unsupported.
Defendant also argued in its post-hearing brief that: (1) this solicitation was issued as an
RFQ; and, consequently, (2) that the court should follow the GAO’s holding in West Coast
Research because that procurement by the Academy involved similar post-deadline discussions solely with the putative awardee, and the solicitation there was issued as an RFQ and
conducted under simplified acquisition procedures. At the subsequent oral argument, defendant asserted two corroborating “facts.” The first is an “X” marked in the “RFQ” box in
the section of the contract cover sheet identifying the solicitation type. According to defendant, that indicates the solicitation was issued as an RFQ. Several problems exist with respect to the government’s reliance upon this check mark on the final contract. First, although the contract was signed by Sgt. Vaccarella on September 30, 1998, that check mark
could have been applied at any time prior to the preparation of the administrative record.39
Second, that check mark could, consistent with the contracting officer’s pattern of errors
(admitted or otherwise) throughout this procurement,40 simply be a mistake. Moreover, this
scant evidence is insufficient to rebut the language of the solicitation itself, or Sgt. Vaccarella’s representation in his statement of facts to GAO.
The second point raised by defendant at oral argument relates to the inference to be drawn
from the solicitation number. Defendant asserts that the use of the letter “T” in the solicitation number shown in the heading of the CBD announcement indicates that the solicitation
was an RFQ. The court rejects this argument for two reasons. First, defendant’s contention
is inaccurate. The defendant is correct that the header to the RFP cited the solicitation
number as “F05611-98-T-2293.” However, other evidence in the record suggests that reference was a typographical error: (1) the text of the RFP states “[t]his solicitation, F05611-98R-2293, is issued as a request for proposal,” Admin. R., tab 23 at 4; (2) the revised version of
the solicitation, which accompanies the September 14, 1998 RFP amendment, uses the “R”
identifier in both the heading and the text;41 and (3) the cover page of the contract also uses
the “R” designation, rather than “T.” The government has not asserted that the letter “R” in
39
Sgt. Vaccarella did not testify as to when the box under “RFQ” was checked.
40
See Tr. at 54, 70, 84; infra §IV.A. IV.B.
41
In correspondence and memoranda, Sgt. Vaccarella generally referred to the solicitation using the “T” identifier, though he also used “R” or “Q” on occasions. Daktronics and Nu-Way used both the “R” and “T” identifiers at different times. Clearly, considerable confusion existed regarding the precise solicitation number.
The court chooses to rely on the solicitation, amendment, and contract as the best evidence of the solicitation number.
a solicitation number connotes the use of an RFQ format. Consequently, the evidence that
this solicitation was an RFP issued pursuant to Part 15 is incontrovertible. Because the
holding in West Coast Research was predicated upon the distinction between an RFP and an
RFQ, defendant’s reliance upon that decision is misplaced.42 Second, no evidence exists in
the administrative record, nor did Sgt. Vaccarella testify, that the letter “T” represents that
the solicitation was an RFQ. The court cannot rely on counsel’s unsubstantiated assertion
at oral argument.
In sum, the court finds that this procurement was not conducted under simplified acquisition procedures; rather, as represented by the agency to GAO, the procurement was conducted pursuant to standard negotiated procurement regulations in Part 15 of the FAR.
Alternatively, assuming arguendo that simplified acquisition procedures were employed, we
hold that the agency failed to provide adequate notice of that fact to offerors. The overarching principle codified in the Competition in Contracting Act of 1984 (“CICA”), Pub.L. No.
98-369, Div. B, Title VII, 98 Stat. 1175 is that agencies provide “impartial, fair, and equitable treatment for each contractor.” Krygoski Constr. Co. v. United States, 94 F.3d 1537,
1543 (Fed.Cir.1996), cert. denied, 520 U.S. 1210, 117 S.Ct. 1691, 137 L.Ed.2d 819 (1997). To
this end, CICA requires that agencies “shall obtain full and open competition through the
use of competitive procedures.” 10 USC §2304(a)(1)(A) (1994); 41 USC §253(a)(1)(A) (1994).
As the defendant has correctly observed, simplified acquisitions (including acquisitions for
commercial items under the $5,000,000 threshold conducted according to simplified procedures) are exempted from the full and open competition requirement. See 10 USC §2304(g)
(1)(B) (Supp. II 1996); 41 USC §253(g)(1)(B) (Supp. II 1996). Nevertheless, the statute directs that agencies, when conducting these procurements, “shall promote competition to the
maximum extent practicable.” 10 USC §2304(g)(3) (1994); 41 USC §253(g)(4) (1994); see also
48 CFR §§13.003(i)(1), 13.104; CDS Network Sys., 98-2 CPD ¶154 at 2; Alpha Executive
Servs., Inc., 92-1 CPD ¶197 at 2 (1992). The FAR does not require explicitly that contracting officers announce whether a procurement is to be conducted pursuant to Part 13. In the
court’s view, however, making offerors aware of the rules of the game in which they seek to
participate is fundamental to fairness and open competition. Providing offerors with notice
that a procurement is being conducted as a simplified acquisition has the secondary benefit
of avoiding unnecessary bid protest actions that challenge an agency’s failure to comply
with Part 15 where the agency, unbeknownst to the protester, was conducting the procurement according to Part 13. The court notes that there has been at least one other such protest recently. See United Marine, 1999 WL 88941. These protests — which presumably
would not arise if contractors and the Government were reading from the same page — divert the resources of contractors, agencies, and the judiciary.
No mention was made of simplified procedures, Part 13, subpart 13.5, or the test program
in the RFP. Offerors were not informed that other than standard negotiated procurement
procedures would apply in this procurement. This omission contravenes both the require42
The court has misgivings about the holding of West Coast Research because it appears to undercut FAR
52.212-1(f), which precludes a contracting officer from accepting late offers. See infra note 54.
ment to promote competition mandated by CICA — by failing to put offerors on notice of the
rules governing the procurement — and the deeply-ingrained principle that “all procurements, including small purchases, must be conducted consistent with the concern for a fair
and equitable competition that is inherent in any procurement.” Cellular One, 93-1 CPD
¶169 at 4 (1993); see also Environmental Tectonics, 98-2 CPD ¶140 at 4; General Metals, 921 CPD ¶486 at 2.
In most circumstances, offerors would be aware of the use of simplified procedures. For example, the FAR requires, with a few limited exceptions, an agency to set aside solicitations
under the $100,000 simplified acquisition threshold exclusively for small business concerns.
See 48 CFR §13.003(b)(1). Each solicitation under a small business set-aside must contain
provisions and clauses prescribed by Part 19, see id. §13.003(b)(2), which include the applicable small business size standard and product classification, and a clause notifying offerors of the existence of the set-aside. See id. §§19.501(f), 19.508(c). Offerors are thus made
aware that a procurement is being conducted as a total set-aside and, by inference, that
simplified acquisition procedures will be used.43
This notice of the proposed use of simplified acquisition procedures is absent where an
agency proposes to conduct a procurement for commercial items under the subpart 13.5 test
program and the procurement exceeds the simplified acquisition threshold, as was the case
here. The absence of a FAR notice provision is especially troubling because the test program, by its very nature, is a temporary phenomenon and offerors are unlikely to be aware
of its existence or its invocation by an agency absent notice in the solicitation itself. Because
of these concerns, and because the invocation of Part 13 procedures potentially entails a
wide departure from standard negotiated procurement procedures, the court holds that an
agency must, as a matter of fundamental fairness, inform offerors in the solicitation whether it is invoking the subpart 13.5 test program and simplified acquisition procedures. Failure to do so leaves the procurement subject to challenge on the ground that the lack of notice prejudicially affected the protestor’s ability to compete for award.
This simple requirement imposes a minimal burden on agencies, yet yields significant benefits to the procurement community, and the Government. The burden imposed upon an
agency is simply to state: (1) that the procurement is being conducted under the subpart
13.5 test program; (2) that simplified acquisition procedures apply; and (3) whether the
agency will conduct the procurement according to parts 12, 14 or 15 of the FAR, or some
combination thereof. In the event that an agency chooses to utilize a combination of these
parts, it must provide notice of which procedural provisions it will apply. The court notes
that some agencies already follow such procedures. See, e.g., Micromass, Inc., 98-1 CPD ¶93
at 1 (1998) and Commerce Bus. Daily, Dec. 8, 1997, at 23 (noting that the procurement was
43
Procurements exceeding the $100,000 simplified acquisition threshold may be conducted as total set-asides
under certain circumstances. See 48 CFR §19.502-2(b). In such an event, a contracting officer is required to
include a limitation on subcontracting clause in the solicitation, if the procurement involves supplies, services, or construction. See id. §19.508(e). The presence vel non of this clause, therefore, would inform offerors whether the set-aside falls under simplified acquisition procedures (in the event that the contracting
officer fails to announce this fact).
being solicited in accordance with “FAR Subpart 12.6, the test program in FAR Subpart
13.6,44 and FAR Part 15”).
In the present context, where the solicitation provided offerors with no indication that simplified acquisition procedures would be employed and the mandatory documentation of FAR
13.501 is also absent, the court is obligated to analyze the agency’s conduct under the rubric
of Part 15.
III. Alleged Improper Negotiations with Daktronics
A. FAR 15.307(b)
The court will address first plaintiff’s allegation, subsumed within several allegations in its
complaint and raised directly in its request for summary judgment, that the Academy engaged in improper discussions with Daktronics after the submission of amended proposals.
Having determined supra that this procurement was conducted in accordance with Part 15,
the court has no choice but to conclude that the Academy breached FAR 15.307(b). At oral
argument, defendant’s counsel conceded that, if the procurement was not conducted pursuant to simplified acquisition procedures, the agency’s actions violated Part 15. See Tr. at
178. The court agrees.
Considerable evidence justifies defendant’s concession that the agency violated FAR
15.307(b), regardless of whether the request for a second round of proposals is characterized
as a request for final proposal revisions or merely as a request for revised proposals. If one
accepts Sgt. Vaccarella’s characterization in the agency report submitted to GAO that his
letters to offerors on September 23 and 24 were requests for final proposal revisions, see
Admin. R., tab 2 at 1, his conduct of discussions with Daktronics following that request
would unquestionably have violated FAR 15.307(b). That provision states: “At the conclusion of discussions, each offeror still in the competitive range shall be given an opportunity
to submit a final proposal revision.” 48 CFR §15.307(b). Thus, once the request for final
proposal revisions has been issued at the conclusion of discussions, it follows that an agency
generally may not engage in further discussions with any offerors.45 See id.; Cleveland Telecomm. Corp. v. Goldin, 43 F.3d 655, 659 (Fed.Cir. 1994); Labat-Anderson, Inc. v. United
States, 42 Fed.Cl. 806, 837-838 (Fed.Cl. 1999) (stating that former FAR 15.611(a), a precursor of FAR 15.307(b), precluded discussions after issuance of a request for BAFOs); see also
Data General Corp. v. Johnson, 78 F.3d 1556, 1561 (Fed.Cir. 1996) (stating, prior to the
1997 Part 15 rewrite, that “[o]nce bidders have submitted their BAFOs, the government ...
44
FAR subpart 13.5 was formerly designated as subpart 13.6. See 48 CFR subpart 13.6 (1997). It was redesignated as subpart 13.5, effective February 9, 1998. See 62 Fed.Reg. 64,916, 64,926 (1997).
45
The language of FAR 15.611(a) stated the cut-off point for discussions a little more clearly: “Upon completion of discussions, the contracting officer shall issue to all offerors still within the competitive range a request for best and final offers.” 48 CFR §15.611(a) (1996). It is the date of the request for final proposal revisions (formerly BAFOs), not the deadline for submission of such proposals, that signals the termination of
the discussion period. The quoted excerpts from Data General and HFS thus understate the period during
which discussions are impermissible, but are not inconsistent with either current FAR 15.307(b) or former
FAR 15.611(a).
cannot engage in ‘discussion’ with a particular bidder.”);46 HFS, Inc., 92-2 CPD ¶188 at 6
(noting that the “conduct of discussions after receipt of BAFOs with one offeror is generally
improper” under former FAR 15.611), reconsideration denied sub nom. Oakcreek Funding
Corp., 92-2 CPD ¶337 (1992).47 Moreover, discussions with one offeror after the issuance of
a request for final proposal revisions that enable it to make its proposal technically acceptable — as was the case here — are prohibited. See Global Assocs. Ltd., 96-2 CPD ¶100
at 5 (1996) (holding that post-BAFO discussions were improper); IT Corp., 95-1 CPD ¶78 at
12 (1995) (same); HFS, Inc., 92-2 CPD ¶188 at 6 (same).
The question thus becomes whether Sgt. Vaccarella’s exchanges with Daktronics after his
September 23 letter and e-mail (requesting the submission of an “amended proposal”) constituted discussions. The court concludes that they did. The relevant provision of the FAR is
15.306(d), which states: “Negotiations are exchanges ... between the Government and offerors, that are undertaken with the intent of allowing the offeror to revise its proposal....
When negotiations are conducted in a competitive acquisition, they take place after establishment of the competitive range and are called discussions.” 48 CFR §15.306(d). The exchanges here thus constituted discussions if the agency intended to permit Daktronics to
respond by revising its September 24 proposal.
Clearly, that test is met here. Sgt. Vaccarella’s telephone call to Daktronics on September
24 identified a number of problems in Daktronics’ amended proposal, including the absence
of mandatory past performance data and representations and certifications, the inclusion of
an impermissible payment provision, and Daktronics’ failure to state that it would comply
with the RFP criteria regarding maintenance training and warranty. He instructed
Daktronics to submit information to address each of these concerns. In response to this request, Daktronics faxed documents to Sgt. Vaccarella on September 28 and 29 and October
46
Part 15 was rewritten and extensively reorganized in 1997. See 62 Fed.Reg. 51,224 (1997).
47
As an exception to the general rule, a mandatory clause in noncommercial item negotiated procurements
directs agencies to consider, and permits them to accept, “a late modification or revision of an otherwise
successful proposal that makes its terms more favorable to the Government ... at any time it is received.” 48
CFR §52.215-1(c)(3)(vi). Accordingly, the GAO and courts have permitted agencies to conduct discussions
solely with the putative awardee to negotiate a reduction in contract price, provided that the source selection decision was made on the basis of the price submitted in the successful offeror’s BAFO. See, e.g., Prudential-Maryland Joint Venture Co. v. Lehman, 590 F.Supp. 1390, 1410 (D.D.C. 1984); Space Communications Co., 66 Comp. Gen. 2, 9 n.3, 86-2 CPD ¶377 at 9 n.3 (1986); Information Sys. & Networks Corp., 86-1
CPD ¶30 at 5 (1986). This clause was not incorporated into the solicitation here, nor would it apply if it had
been — Daktronics’ amended proposal was technically unacceptable and thus was not in line for contract
award. See Robotic Sys. Tech., 96-1 CPD ¶229 at 3 (1996); Wilsyk Alaska, Inc., 90-2 CPD ¶209 at 2-3 (1990).
The GAO has also on occasion permitted post-selection exchanges solely with the putative awardee regarding nonmaterial aspects of an offer where the exchanges neither affected the acceptability of the successful
offeror’s proposal nor would have affected the selection decision. See Assets Recovery Sys., Inc., 97-1 CPD
¶67 at 5 (1997); Greco Sys., 90-1 CPD ¶192 at 4 (1990). These decisions are inapplicable here because Sgt.
Vaccarella testified that the discussions were necessary to address the technical unacceptability of Daktronics’ amended proposal. Generally, however, the GAO has overturned procurements where post-selection discussions have occurred, even where the relative standing of offerors was unaffected. See SmithKline Beecham Pharm., 93-2 CPD ¶79 at 4 (1993); HFS, Inc., 92-2 CPD ¶188 at 6.
1, 1998, and he incorporated them into what he considered to be Daktronics’ final proposal.
It is beyond question that the purpose of Sgt. Vaccarella’s telephone call on September 24
was to provide Daktronics an opportunity — unavailable to other offerors — to make its
proposal compliant with the RFP. Therefore, these exchanges constituted discussions.
The court is not persuaded by defendant’s characterization of the exchanges with Daktronics as “clarifications.” First, subsequent to the 1997 rewrite of Part 15, clarifications are defined as “limited exchanges, between the Government and offerors, that may occur when
award without discussions is contemplated.” Id. §15.306(a). Clarifications thus are exchanges conducted in procurements where discussions are not expected to be held; the term
has no application to exchanges that occur after discussions have been conducted with offerors. Second, to the extent that defendant’s assertion is better characterized as an argument that the exchanges between the agency and Daktronics did not rise to the level of discussions, that assertion is contrary to the administrative record and has been addressed
and rejected above. Finally, the court notes that an agency’s characterization of its actions
as “clarifications” is not determinative. See Hago-Cantu Joint Venture, 98-2 CPD ¶99 at 13
(1998); IT Corp., 95-1 CPD ¶78 at 10.48
Furthermore, the Academy’s violation of FAR 15.307(b) prejudiced plaintiff. Plaintiff’s revised proposal was determined by the agency to be technically acceptable; in fact, each of its
three proposals exceeded the technical specifications in numerous areas. In contrast,
Daktronics’ amended proposal was, in fact, technically unacceptable, as Sgt. Vaccarella
himself admitted. See Tr. at 52, 54-55, 62; infra §IV.A. If the agency had not engaged subsequently in improper discussions with Daktronics its proposal would not have been acceptable; therefore, plaintiff would have had a “substantial chance” of contract award. Statistica, Inc. v. Christopher, 102 F.3d 1577, 1581-82 (Fed.Cir. 1996). Consequently, plaintiff
was prejudiced by the agency’s violation of FAR 15.307(b). See Global Assocs., 96-2 CPD
¶100 at 6-7.
At the evidentiary hearing, defendant presented an alternative argument in an effort to
avoid the strictures of FAR 15.307(b). Contrary to his written representations to GAO, Sgt.
Vaccarella testified that his request for amended proposals did not constitute a request for
final proposal revisions, and thus he did not reach the stage of discussions governed by FAR
15.307(b).
48
Moreover, the court rejects Sgt. Vaccarella’s contention at the evidentiary hearing that the exchanges with
Daktronics were not improper because they were unrelated to Daktronics’ technically acceptability vel non.
First, this argument is based on a false premise — his communications did request Daktronics to revise its
proposal to comply with two technical criteria (maintenance training and warranty). Second, any exchanges
which provide an offeror with an opportunity to revise a material aspect of its proposal constitute discussions, regardless of whether the revisions address its compliance with technical criteria. See, e.g., Global
Assocs., 96-2 CPD ¶100 at 5 (holding that post-BAFO exchanges, which were necessary to determine whether an offeror complied with limitations on subcontracting, constituted discussions); Paramax Sys. Corp., 932 CPD ¶282 at 5-6 (1993) (holding that post-BAFO exchanges to obtain a downward revision of the successful offeror’s fee, which exceeded the maximum fee permitted by the RFP, concerned a material term and
thus rose to the level of discussions).
The court has concerns regarding the credibility of Sgt. Vaccarella’s eleventh hour recharacterization of his actions. Nevertheless, even if this testimony represented an afterthought, his assessment is arguably legally correct. A request for final proposal revisions
must: (1) inform offerors that discussions have been completed; (2) state that offerors are
being given a final opportunity to revise their offers; (3) establish a common cut-off date;
and (4) require offerors to submit their offers in writing. See 48 CFR §15.307(b), see also
KMS Fusion, Inc., 91-1 CPD ¶447 at 4 (1991) (holding that a contracting officer’s request
for submissions constituted a request for BAFOs because it communicated that discussions
were closed and established a common cut-off date for final offers); A.T. Kearney, Inc., 90-1
CPD ¶305 at 3 (1990) (same). The request for amended proposals issued by Sgt. Vaccarella
did not meet the first two of these criteria: it provided no indication that discussions had
been completed, or that offerors would not be permitted an opportunity to submit a final
proposal revision.49 Regardless of Sgt. Vaccarella’s intent at the time, his actions did not
comport with FAR 15.307(b), and his letters to offerors did not constitute a request for final
proposal revisions.
This assessment does not aid defendant, however. Sgt. Vaccarella’s admission that he did
not issue a request for final proposal revisions ipso facto establishes that he violated FAR
15.307(b). That provision mandates that “each offeror still in the competitive range shall be
given an opportunity to submit a final proposal revision.” 48 CFR §15.307(b). On September
28, 1998, after the evaluation of revised proposals, he determined that four offerors were
still eligible for award of the contract. Absent a determination to the contrary, these offerors remained within the competitive range. Yet, he failed to give these offerors, with the
exception of Daktronics, an opportunity to submit final proposal revisions. This action violated FAR 15.307(b). Moreover, Sgt. Vaccarella “favor[ed] one offeror over another” during
discussions, which is prohibited by FAR 15.306(e), by: failing to allow any offerors other
than Daktronics to submit proposal revisions after September 25; and accepting revisions to
Daktronics proposal on October 1, 1998, after the contract had been signed.
Furthermore, this conclusion is not dependent upon the court’s holding supra that this procurement was conducted under Part 15; defendant conceded that FAR 15.306 applied, and
the court holds that FAR 15.307(b) applied even if the procurement was conducted under
Part 13. As an alternative holding, therefore, the court concludes that the Academy’s failure
to continue discussions with the other offerors or to request final proposal revisions from all
offerors remaining in the competitive range violated these provisions.
Simplified acquisition procedures relax many of the FAR requirements and grant contracting officers broad discretion, but they do not grant a contracting officer unfettered discretion. When conducting a simplified acquisition, a contracting officer may elect to follow Part
49
The present circumstances are distinguishable from those in Cleveland Telecommunications, 43 F.3d 655.
In that case, offerors were notified that the deadline for receipt of amended proposals was the “final cut-off
for receipt of any amendments.” Id. at 657. Moreover, the plaintiff was informed that “the Government has
no further questions or need for clarification” concerning its proposal. Id. In the present case, offerors were
neither informed that September 25, 1998 was the final deadline for submission of proposals, nor that discussions had been concluded.
15, or select appropriate provisions from that Part to apply. See 48 CFR §§13.003(h)(2).
13.106-2(b). Sgt. Vaccarella chose the latter approach. He conceded that he opted to follow
FAR 15.306 and, of particular relevance here, the provision governing discussions with offerors following the selection of the competitive range, FAR 15.306(d).
That election comes with baggage, however. FAR 15.307(b) completes the regulation of the
discussion process; it governs the conclusion of discussions with offerors. The provision requires a contracting officer, at the conclusion of discussions, to issue a request for final proposal revisions by a common cut-off date. These final proposal revisions form the basis upon
which the contract is awarded. This requirement is not merely surplusage; it is an essential
final step in the competition process. By providing offerors remaining in the competitive
range an opportunity to present their final offers to the Government, it allows them to incorporate the knowledge they have gleaned from discussions; by providing a common cut-off
date, it sets a level playing field on which they may compete for the contract. It allows the
Government to reap the fruits of the discussion process. Without this opportunity, discussions with offerors readily would be subject to abuse, merely becoming a cover for an agency’s discussions with the offeror it has selected to receive the contract prior to the formal
source selection decision. FAR 15.307(b), therefore, is an essential requirement once an
agency engages in the discussion process. In short, it cannot be severed from FAR
15.306(d).
In standard negotiated procurements, of course, compliance with FAR 15.307(b) is mandatory. The court holds that no less is permissible in the context of simplified acquisitions. An
agency’s decision under a simplified procurement to follow FAR 15.306(d) but not FAR
15.307(b), would not comport with its requirement to conduct all procurements in a fair and
equitable manner. Offerors must be given an opportunity to submit a final proposal once
discussions have been entered (providing they remain in the competitive range). Stated in
other words, a contracting officer’s decision to apply FAR 15.306(d) but not 15.307(b) is not
an appropriate selection of Part 15 provisions. See id. §13.003(h)(2).
In the context of this procurement, the Academy’s solicitation and acceptance of repeated
revisions to only Daktronics’ technically unacceptable amended proposal (none of which, we
find infra, ultimately rendered the proposal technically acceptable)50 and its failure to seek
a final proposal revision from plaintiff or other offerors cannot be considered to be fair and
equitable, especially where the agency had determined that the proposals submitted by
plaintiff and two other offerors were technically acceptable. This conduct violated FAR
15.306(e), which prohibits discussions that favor one offeror over another, and FAR
50
At the evidentiary hearing, Sgt. Vaccarella conceded that Daktronics’ amended proposal was deficient with
respect to several technical criteria, and thus technically unacceptable. See Tr. at 54, 62; infra §IV.A. Additionally, the court infra concludes that its final proposal revision (which was incorporated into its contract
with the Academy) remained technically unacceptable. See infra §V.
15.307(b), which applied to this procurement once Sgt. Vaccarella had chosen to follow FAR
15.306(d).51
Plaintiff was prejudiced by these violations. If the Academy had not engaged in this additional round of discussions with Daktronics, its final proposal revision likely would have
remained technically unacceptable with respect to several RFP criteria (including maintenance training) and noncompliant with other material aspects of the solicitation (including
payment terms); it would thus have been ineligible for award. See Burroughs, 617 F.2d at
596; Spectrum Controls Sys., 97-1 CPD ¶89 at 3-4 (1997). Under that scenario, plaintiff, as
a technically acceptable offeror, would have had a substantial chance of award. Alternatively, if the Academy had given plaintiff an opportunity to revise its amended proposal, it is
reasonable to conclude that plaintiff would have taken that opportunity to improve its competitive standing. Plaintiff has asserted that he intended to augment his proposal in the
areas of training and warranty but was given insufficient opportunity to do so. See Pl.’s
Req. for Summ. J. at 25. The court finds it probable that plaintiff would have made his proposal more competitive in these areas if he had been given the opportunity to submit further proposal revisions or, at minimum, a final proposal revision. The court finds this sufficient, given the patent violations and the fact that the plaintiff appears pro se, to conclude
that plaintiff was prejudiced by the Academy’s violations of procurement regulations. See
Telos Field Eng’g, 73 Comp. Gen. 39, 43-44, 93-2 CPD ¶275 at 6-7 (1993).
B. FAR 52.212-1(f)
The agency’s acceptance of revisions to Daktronics’ amended proposal after the September
25, 1998 deadline also violated FAR 52.212-1(f), the late offer clause incorporated by reference into the RFP.52 This serves as an independent basis for overturning the contract
award. The late offer clause states: “Offers or modifications of offers received at the address
specified for the receipt of offers after the exact time specified for receipt of offers will not be
considered.” 48 CFR §52.212-1(f). This provision, by its very terms, prohibits an agency
from accepting revisions of offers submitted after the deadline established by an agency. It
thus precludes an agency from accepting revisions of offers after the common cut-off date
that it has set for revised proposals or final proposal revisions.
Defendant, in its post-hearing brief, assuming that simplified acquisition procedures applied here, cited several GAO decisions that have permitted agencies to accept quotations at
any time prior to contract award. These decisions, however, are narrowly limited to the context of RFQ solicitations, and are thus inapposite in the context of FAR 52.212-1(f), which is
controlling in this procurement.
51
Viewed from a different angle, the Academy’s conduct constituted a de facto competitive range determination which created a competitive range of one (i.e., Daktronics). All other offerors were eliminated from further discussions with the Academy after September 25, 1998. Yet plaintiff’s amended proposal was technically acceptable, whereas Daktronics’ amended proposal was not. This de facto competitive range
determination, therefore, was arbitrary and capricious and in violation of FAR 15.306(c)(4).
52
FAR 52.212-1 is a mandatory clause in all commercial item procurements, see 48 CFR §12.301(b)(1), regardless of whether the procurement is conducted according to Part 13 or Part 15 procedures.
The decisions cited by defendant, which include West Coast Research and John Blood, 96-2
CPD ¶233 (1996), hinge upon the distinction between an offer (submitted in response to an
RFP) and a quotation (submitted in response to an RFQ). In John Blood, the GAO stated
that “[u]nder simplified acquisition procedures, agencies generally may seek and consider
revisions to a quotation any time prior to award.” Id. at 2 (citing DataVault Corp., 92-2
CPD ¶166 at 2 (1992)). The decision on which John Blood relied offered the following rationale:
An RFQ, unlike an invitation for bids (IFB) or request for proposals (RFP),
does not seek offers that can be accepted by the government to form a contract. Rather, the government’s purchase order is the offer which the proposed supplier may accept through performance or by a formal acceptance
document. It follows that, generally, the government may seek and consider
revisions to a quotation under small purchase procedures any time prior to
the government’s issuance of a purchase order.
DataVault, 92-2 CPD ¶166 at 2 (citations omitted); see also, e.g., Brewer-Taylor Assocs., 972 CPD ¶124 at 2 (1997); Safety Storage, Inc., 97-1 CPD ¶32 at 2 (1997); ATF Constr. Co., 952 CPD ¶29 at 2 (1995). This rationale does not apply to offers submitted in response to an
RFP, which is the present scenario.
There is a second reason why John Blood and similar cases have no application here — this
solicitation included a late offer clause which expressly prohibited the Academy’s acceptance of late offers. As these GAO decisions acknowledge, a second basis for their holdings was the absence of a late quotation clause: “[T]he language of an RFQ is not generally
considered as establishing a firm closing date, absent a late quotation provision (not present here), expressly providing that quotations must be received by that date in order to be
considered.” Brewer-Taylor, 97-2 CPD ¶124 at 2; see also, e.g., Safety Storage, 97-1 CPD ¶32
at 2-3; John Blood, 96-2 CPD ¶233 at 2; ATF Constr., 95-2 CPD ¶29 at 2.53 That is not the
case here because FAR 52.212-1(f) expressly prohibited the Academy from considering late
offers or modifications of offers.54
53
Small purchase procurements generally do not contain late quotation clauses. See Alpha Executive, 92-1
CPD ¶197 at 3. One of the cases cited failed to indicate whether the RFQ contained a late quotation clause;
it did not rely, therefore, on this second rationale. See DataVault, 92-2 CPD ¶166.
54
This holding is consistent with Alpha Executive, 92-1 CPD ¶197, but at odds with West Coast Research, the
only two simplified acquisition decisions in which the solicitation contained a late quotation or late offer
clause. In Alpha Executive, the GAO upheld an agency’s refusal to accept a quotation submitted after the
deadline stated in the RFQ. It held that the agency’s decision was reasonable because the solicitation did
contain a late quotation clause. See 92-1 CPD ¶197 at 3. West Coast Research appears to be to the contrary.
The solicitation, conducted as a commercial item procurement, contained FAR clause 52.212-1, and thus the
late offer provision at issue here, FAR 52.212-1(f). The GAO nevertheless held that it saw “nothing improper in allowing [the successful offeror] to submit a quotation after the closing date.” West Coast Research,
1999 WL 43513 at *2. No mention was made of the presence of the late offer clause in the solicitation. West
Coast Research thus appears to be a departure from prior GAO opinions. Accordingly, the court is unwilling
to place any weight on that decision. See Lyons Sec. Servs., Inc. v. United States, 38 Fed. Cl. 783, 786 (1997).
In conclusion, the Academy’s acceptance of proposal modifications from Daktronics after
September 25, 1998 violated FAR 52.212-1(f). This violation prejudiced plaintiff because,
absent these revisions, Daktronics’ amended proposal was technically unacceptable, see infra §IV.A, and thus not eligible for contract award. See Burroughs, 617 F.2d at 596; Spectrum Controls Sys., 97-1 CPD ¶89 at 3-4. The agency’s violation of FAR 52.212- 1(f) thus
provides an alternative basis for granting plaintiff’s motion for summary judgment.55
IV. Improper Evaluation of Proposals
Plaintiff has raised numerous allegations regarding the Academy’s misevaluation of both
its own and Daktronics’ proposals. Plaintiff contends that the agency’s determination that
Daktronics’ amended proposal was technically acceptable was unreasonable. He also asserts that his proposals should have received higher evaluation ratings. For the reasons
stated below, the court agrees.
CICA requires that agencies “shall evaluate ... competitive proposals ... based solely on the
factors specified in the solicitation.” 10 USC §2305(b)(1) (1994); 41 USC §253b(a) (1994); see
also Analytical & Research Tech., Inc. v. United States, 39 Fed. Cl. 34, 44 (1997). The FAR
extends this requirement to include both evaluation factors and subfactors. See 48 CFR
§15.305(a) (“An agency shall evaluate competitive proposals and then assess their relative
qualities solely on the factors and subfactors specified in the solicitation.”). These CICA requirements are in accordance with the fundamental principle that the Government “may
not solicit proposals on one basis and make award on another basis.” See Clean Florida,
Inc., 88-2 CPD ¶411 at 2 (1988); see also Idaho Norland Corp., 88-1 CPD ¶529 at 3, reconsideration denied, 88-2 CPD ¶103 (1988). Accordingly, this court may grant relief if the
plaintiff proves that the Government evaluated proposals on a basis different from that announced in the solicitation and that it was prejudiced as a result. See Analytical & Research
Tech., 39 Fed. Cl. at 44; CACI Field Servs., Inc. v. United States, 13 Cl.Ct. 718, 728 (1987),
aff’d, 854 F.2d 464 (Fed.Cir. 1988); Development Alternatives, Inc., 98-2 CPD ¶54 at 4
(1998).
This aspect of CICA applies equally to procurements conducted under simplified procedures. See 48 CFR §13.106-2(a)(2); Creative Inv. Research, 94-1 CPD ¶84 at 2 (1994); Tahoma Cos., 93-2 CPD ¶162 at 2-3 (1993). Consequently, the GAO has upheld protests where
an agency failed to evaluate quotations in accordance with evaluation factors stated in the
solicitation. See, e.g., Vocational Resources, Inc., 91-1 CPD ¶414 (1991); Armour of Am., 901 CPD ¶304 (1990).
55
Furthermore, the Academy’s acceptance of Daktronics’ proposal modifications after the September 25 deadline contravened the instruction given to offerors that revised proposals “must be received by this office no
later than 25 Sep 1998 at 3:00 Mountain Standard Time.” Admin. R., tabs 8 & 14. These communications
established a mandatory, common deadline for receipt of proposals; it created a reasonable expectation by
offerors that the Academy would not accept revisions to amended proposals submitted after that date (at
least until after further discussions were held). The court concludes that the agency’s subsequent acceptance of Daktronics’ revisions was not consistent with the principle that competition must be conducted
in a fair and equitable manner.
A. Improper Evaluation of Daktronics’ Proposals
1. Improper Award of (+ +) Ratings to Daktronics
Plaintiff asserts that the Academy’s award of three (+ +) ratings to Daktronics’ amended
proposal was arbitrary and capricious.56 We agree.
a. Training
Daktronics initial proposal received two (+ +) ratings for the operator and maintenance
training subfactors, in addition to two (0) ratings. Defendant asserts that the Academy used
the (+ +) ratings as an “internal marker” to identify those aspects of an offeror’s proposal
that exceeded the RFP specifications and had a particular benefit to the Academy. Even if
one accepts this post facto explanation of how the (+ +) ratings were employed, the agency’s
award of both a (0) and a (+ +) for each of these subfactors has no rational basis; one or the
other, or both, must be wrong. We conclude that neither (+ +) rating had any rational basis,
and that Daktronics’ initial and amended proposals were deficient with respect to the
maintenance training criterion.
With regard to maintenance training, Daktronics’ initial proposal offered to provide an unspecified quantity of on-site training [ ]. It thus failed to comply with the requirement that
offerors provide at least eight hours of on- site training for two individuals. Yet, both evaluators found that Daktronics met the specification and no discussions were held with the
56
Although plaintiff does not challenge the ultimate utilization of (+ +) ratings to evaluate proposals, the
court notes that this scheme provides further evidence of the arbitrary manner in which this procurement
was conducted. The RFP specified the use of a three-tier ((+), (0), and (–)) rating system for evaluating the
technical requirements subfactors. The Academy, however, employed a four-tier rating system, which included an unstated (+ +) rating.
Sgt. Vaccarella testified that he had developed this system in an earlier procurement, drawing from the
USAF’s color rating system, which is defined in Appendix BB of the AFFARS, see AFFARS App. BB, §BB304(b) (1998), and is mandatory for most procurements exceeding $5,000,000. See id. §BB-101. Sgt. Vaccarella’s system, however, deviated from the color rating system: only one rating (blue/exceptional) in the
USAF color rating system applies to proposals that exceed RFP specifications (the other three ratings apply
to proposals that merely meet, or fail to meet, the specifications); his system abandoned the lowest
(red/unacceptable) rating of the USAF color system and created a second rating for proposals that exceeded
RFP specifications. Although this system was not explicitly prohibited by the FAR, it adds to the impression
that the procurement was conducted in an unorthodox manner.
Of greater concern to the court, Sgt. Vaccarella provided no explanation for the agency’s departure from the
rating system stated in the RFP. Admittedly, the FAR permits agencies broad discretion in selecting the
rating system to be used in a procurement. 48 CFR §15.305(a). Nevertheless, this regulation does not grant
contracting officers carte blanche to notify offerors of one rating system in the RFP and to then apply a different system during the evaluation of proposals. See Clean Florida, 88-2 CPD ¶411 at 2 (stating the “fundamental principle that a contracting agency may not solicit proposals on one basis and make award on another basis”); Idaho Norland, 88-1 CPD ¶529 at 3. Moreover, this principle applies equally in the context of
simplified acquisitions. See General Metals, 92-1 CPD ¶486 at 2. Such action is arbitrary and capricious and
provides grounds for granting a protest if it prejudices unsuccessful offerors. Plaintiff, however, did not
claim any prejudice from this aspect of the procurement.
company on this issue.57 Because Daktronics’ amended proposal did not rectify the omission
regarding the quantity of on-site training, it too was technically unacceptable, as defendant
has conceded. See Def.’s Mot. Summ. J. at 8. The agency’s award of a (+ +) rating to
Daktronics’ amended proposal with regard to technical requirements lacked any rational
basis. See Technology Servs. Int’l, Inc., 97-2 CPD ¶113 at 4-5 (1997) (abrogating a “benefit”
rating because the awardee’s proposal failed to fully comply with a technical requirement).
Although defendant has conceded that Daktronics’ amended proposal, which was submitted
on the morning of September 24, was deficient with respect to the maintenance training
criterion, see Def.’s Mot. Summ. J. at 6-7, it argues that Minnaert’s oral representations
during a telephone conversation with Sgt. Vaccarella that afternoon rectified the deficiency.
See id. at 7. Subsequently, on October 1, 1998, Daktronics submitted a revision to the
maintenance training section of its proposal which incorporated Minnaert’s oral “amendment;” this revision was incorporated into Daktronics’ contract.
Defendant’s argument cannot be reconciled with the core principle that “agencies are required to evaluate proposals based on the content of the proposal itself[;] an offeror in a negotiated procurement must demonstrate within the four corners of its proposal that it is capable of performing the work upon the terms most advantageous to the government.”
Patent Scaffolding Co., 93-1 CPD ¶158 at 6-7 (1993); see also Northwestern Travel Agency,
Inc., 91-2 CPD ¶363 at 6 (1991). Here, the Academy selected the awardee on the basis of
amended proposals timely submitted prior to the September 25, 1998 deadline. Moreover,
because amended proposals consisted only of revisions to deficient areas of offerors’ initial
proposals, ratings for technical specifications were derived primarily from scores awarded
on the basis of initial proposals.
The Academy awarded Daktronics its three (+ +) ratings on the basis of its initial proposal;
therefore, these ratings must be substantiated by material within the four corners of that
proposal. Yet, Daktronics’ initial proposal contained no indication that it would provide the
minimum level of training specified in the RFP. Minnaert’s oral statements to the contrary
were neither timely presented prior to the deadline for submission of initial proposals, nor
within the four corners of the proposal. The Academy’s reliance upon this oral representation was therefore erroneous. The maintenance training program offered in Daktronics’
proposals was, in fact, deficient. Accordingly, the agency’s award of (+ +) ratings to
Daktronics for this subfactor was arbitrary and capricious as a matter of law.58
57
At the evidentiary hearing, in response to questioning by the court, Sgt. Vaccarella conceded that the proposal was deficient and that his failure to spot this deficiency and raise it with Daktronics “was an error on
[his] part.” Tr. at 54.
58
Sgt. Vaccarella’s September 24 memorandum also casts doubt on defendant’s present account of Minnaert’s
representations on that date. The memo states: “The on site training, as stated in the proposal, is over and
above (or vise [sic] versa) [ ].” Admin. R., tab 15A1 at 1. This indicates that Minnaert orally confirmed
Daktronics was offering [ ] on-site [ ] training, but makes no mention of a representation regarding the
quantity of on-site training offered; it simply refers back to the amended proposal, which is silent on this
matter. In the court’s view, it is improbable that Sgt. Vaccarella would have omitted reporting any representation made relating to that matter; it is more probable that Sgt. Vaccarella had not identified the defi-
The two (+ +) ratings for operational and maintenance training were arbitrary and capricious for another reason: the Academy awarded these ratings on the basis of Daktronics’
offer to provide [ ]. See Tr. at 71-72; Admin. R., tab 19. The evaluation sheets and Sgt. Vaccarella’s testimony revealed that the agency considered [ ] to be a substantial “benefit.” Yet,
they were expressly precluded by the RFP, which emphasized that “[a]ll training must take
place on the United States Air Force Academy.” Admin. R., tab 23 at 5. As discussed above,
CICA, the FAR, and court and GAO decisions require agencies to evaluate proposals solely
on the basis of criteria stated in the solicitation. Because the RFP here unambiguously informed offerors that off-site training would not be acceptable, the agency’s award of (+ +)
ratings to Daktronics for either training subfactor was arbitrary and capricious.
b. Warranty
Daktronics’ initial proposal received a “benefit” rating for the warranty subfactor, in addition to a (+) rating. We find that both ratings were unreasonable because the warranty offered by Daktronics failed to meet the criteria stated in the RFP.
The RFP required offerors to provide a “one-year warranty for parts, labor and installation
... for the signs ... [and] all sign hardware/software from [the] time the signs are made fully
operational.” Id. at 5. Daktronics’ initial proposal offered a “parts and labor warranty for 1
year,” which consisted of [ ]. Admin. R., tab 12 §2f. The warranty included [ ] Id.
We find that Daktronics’ warranty failed to comply with the specification in numerous respects: (1) it failed to offer labor to repair the signs, i.e., to remove defective parts from the
scoreboard and to replace them with parts from [ ]; (2) it did not cover hardware other than
electronic components; (3) it failed to cover software supplied with the sign; (4) it did not
cover sign installation; and (5) it neglected to specify the date on which the warranty would
commence. Nevertheless, both evaluators found that Daktronics’ initial proposal exceeded
the specification for this subfactor, awarding it both (+) and (+ +) ratings, the latter based
upon the offering of the spare parts package. As a result, the discussion questions in the
request for amended proposals sent to Daktronics did not address the warranty.
At the evidentiary hearing, Sgt. Vaccarella conceded that Daktronics’ initial proposal was
not in compliance with the RFP because it failed to cover installation. See Tr. at 62. He also
acknowledged that it failed to state the date on which the warranty would commence. See
id. at 105-06. Consequently, he admitted that his (+) rating for Daktronics’ warranty was
erroneous. See id. at 70. Ipso facto, Daktronics’ amended proposal, which did not amend the
warranty offered, was also deficient.
Sgt. Vaccarella testified that he subsequently realized that the warranty in the amended
proposal was deficient and initiated a telephone call to Minnaert on the afternoon of Sepciency at that time, and hence did not discuss it during that conversation. The court considers this contemporaneous record of the telephone conversation to be a more accurate account than defendant’s subsequent
statements in the course of discovery.
tember 24. He further testified that he was given verbal assurances that Daktronics’ warranty covered installation and would commence on the date on which the signs became fully
operational, and that these assurance rectified the warranty deficiencies.
This decision by the Academy was unreasonable because it was not supported by information submitted within the four corners of Daktronics’ initial proposal.60 The warranty
submitted in Daktronics’ initial and amended proposals was deficient in the five areas stated above. Defendant has conceded that the warranty was deficient. Given these facts, the
Academy’s award of (+) and (+ +) ratings to this subfactor was arbitrary and capricious. See
Technology Servs. Int’l, 97-2 CPD ¶113 at 4-5.
2. Consideration of Undisclosed Technical Subfactors
Plaintiff asserts generally that the Academy failed to follow its evaluation plan, in particular with regard to the training and warranty subfactors. In addition to improperly considering Daktronics’ offer to provide [ ], the agency appears to have considered and rated technical criteria not stated in the solicitation. These evaluation irregularities violated
provisions of CICA and the FAR. Plaintiff, however, was not prejudiced by these violations.
The Academy awarded two (+) ratings to Daktronics’ initial proposal for two features of the
proposal that related to operator training: (1) [ ]; and (2) [ ]. See Admin. R., tab 13 at 5.61 By
recognizing these two features as additional evaluation criteria, both of which were rated
favorably and improved the competitive standing of Daktronics’ proposal, Sgt. Vaccarella
improperly deviated from the technical criteria stated in the RFP. See 48 CFR §§13.1062(a)(2), 15.305(a). In other words, by granting these additional scores to Daktronics, Sgt.
Vaccarella created an unlevel playing field: Daktronics overall technical rating was assessed on the basis of its ratings for the twenty-three stated criteria as supplemented by
these two “bonus” scores,62 whereas other offerors may not have received the same oppor-
60
Moreover, the contemporaneous documentation of the September 24 conversation only partially supports
Sgt. Vaccarella’s testimony. One of the memoranda prepared on September 24 confirms that Daktronics did
notify Sgt. Vaccarella of the effective date. It states: “Warrant [sic] is effective upon full operation of the
signage [sic] and effective for 1 full year from that date.” Admin. R., tab 15A1 at 1. There is no reference,
however, to any discussion regarding the scope of the warranty. We find it improbable that the memoranda
would discuss one verbal agreement to revise the warranty, but not another, especially one that broadened
its scope of coverage.
61
These ratings were in addition to the (0) and (+ +) ratings for the operator training subfactor, discussed
supra.
62
These scores are “bonus” factors to this extent: the (+) rating signified that an offerors’ proposal “exceeded”
a technical criterion. If the Academy considered [ ] features of Daktronics’ operator training proposal to exceed the minimum criteria for that subfactor, it should simply have awarded Daktronics a (+) for operator
training. Instead, it awarded Daktronics a (0) for operator training per se, a (+ +) for the offered [ ], and two
(+) ratings for the [ ] (i.e., four scores for a single technical subfactor). This scheme impermissibly tilted the
playing field in Daktronics’ favor. We note also that these four scores appear to be irreconcilable with one
another.
tunity to receive “bonuses.”63 Although it is unclear how large a role these two “bonus” subfactors played in the overall (+) rating for technical requirements received by Daktronics,
the fact that Sgt. Vaccarella found them worthy of note on his evaluation narrative sheet is
evidence that they weighed in Daktronics’ favor.64
3. Failure to Comply with RFP Criteria
The Academy also improperly determined that Daktronics’ amended proposal was compliant with all RFP specifications. We have already discussed the deficiencies of Daktronics’
proposal with respect to the warranty and maintenance training criteria. In addition,
Daktronics’ proposal failed to comply with the following specifications or material solicitation terms: (1) software compatibility with Windows 95; (2) display area; (3) overall sign area; (4) light intensity; (5) side panel lettering color; and (6) payment terms. Each of these
deficiencies on its own was sufficient to render Daktronics’ proposal technically unacceptable and thus ineligible for award.
a. Compatibility with Windows 95 Operating System
The RFP required offerors’ sign operating software to operate on the Windows 95 operating
system. Minnaert’s e-mail message to Sgt. Vaccarella on September 24, 1998, however,
acknowledged that Daktronics’ software did not meet that specification — instead, its software operated on the [ ] platform. Nevertheless, Sgt. Vaccarella upgraded Daktronics’ score
with respect to this subfactor from (–) (based upon Daktronics’ initial proposal) to (0). Neither his evaluation scoring sheet nor his evaluation narrative provide an explanation for
this decision; the latter merely states “[a]ll deficiencies corrected.” Admin. R., tab 16 at 5.
This evaluation error prevented Daktronics’ amended proposal from being rated as “technically unacceptable.”
b. Minimum Display Area and Overall Area
Daktronics’ amended proposal failed to obligate the company to providing a sign that met
the minimum display area and overall sign area dimensions stated in the RFP. The only
63
Because the evaluation sheets for the other four offerors are not in the administrative record, the court
cannot determine whether any of these offerors were similarly awarded “bonus” scores.
64
Nevertheless, plaintiff was not prejudiced by these violations because the Academy improperly awarded his
proposals two additional (+) ratings for offering features not contemplated in the RFP. In his initial proposal submission, plaintiff offered to provide the Academy with [ ]. Sgt. Vaccarella evaluated this offer as a
new, separate technical subfactor and awarded it a (+) rating. There is no record that all other offerors were
provided an opportunity to compete on this same basis.
The second “bonus” rating received by Nu-Way was given for [ ] that the company offered with each of its
three amended proposals. [ ] that the Academy had not contemplated in the RFP. Without informing other
offerors that it would consider such [ ], the agency accepted this proposal and awarded each of plaintiff’s
proposals an additional (+) rating.
Both of these actions disadvantaged other offerors vis-a-vis plaintiff and violated the CICA and FAR provisions requiring agencies to evaluate offers solely on the basis stated in the solicitation. Plaintiff thus benefited from the same agency misconduct of which it now complains — the Academy’s failure to adhere to its
evaluation plan. As a result, it cannot show that it was prejudiced by this misconduct. See PADCO, Inc., 961 CPD ¶142 at 3-4 (1996); Presearch, Inc., 94-2 CPD ¶197 at 4-5 (1994).
document in Daktronics’ proposal that addressed these two criteria was a technical drawing
of the sign which indicated that the sign [ ]. A proviso at the bottom of the drawing, however, stated: [ ] Admin. R., tab 12 §2a. This disclaimer precluded the agency from relying upon
the drawing as a representation that it would provide a sign compliant with the minimum
size criteria. The proposal should have been rated as deficient with respect to both criteria.
c. Light Intensity and Side Panel Lettering Color
The RFP specified that the LED display must emit a light intensity of 5000 candelas and
that the offeror was required to provide translucent white customized lettering for the side
panels. Neither Daktronics’ proposal nor the accompanying product literature responded to
these requirements. Accordingly, the Academy erred in finding that the Daktronics’ initial
and subsequent proposals complied with these mandatory criteria.
d. Payment Terms
The RFP instructed offerors that the procurement would be conducted in accord with FAR
52.212-4, which states, in pertinent part, that the Government will make payment upon
delivery and acceptance of the goods being procured. See 48 CFR §52.212-4(i). Both
Daktronics’ initial and amended proposals, however, included a payment provision that [ ].
This payment provision was incompatible with the FAR payment term; indeed, Sgt. Vaccarella noted that fact on his evaluation sheet for Daktronics’ initial proposal. Nevertheless,
he did not raise this concern with Daktronics during his discussions with the company. As a
result, the amended proposal submitted by Daktronics was also deficient in this respect;
yet, Sgt. Vaccarella selected Daktronics as the putative awardee.
Solicitation payment terms constitute a material condition; consequently, if an offeror’s
proposal fails to conform to the RFP’s payment terms, it “should be considered unacceptable
and may not form the basis for an award.” Vertiflite, Inc., 94-1 CPD ¶304 at 2 (1994); see
also E.C. Campbell, Inc., 86-1 CPD ¶565 at 3 (1986); cf. Valley Forge Flag Co., 84-2 CPD
¶251 at 2 (1984) (holding that a bid specifying payment within 20 days was a material deviation from the solicitation’s 30-day payment term). As the GAO stated in Vertiflite: “[t]o
consider [an offeror]’s offer to perform using more favorable payment terms would provide
[the offeror] with an unfair competitive advantage since the other offerors submitted their
offers based upon the terms of the solicitation.” 94-1 CPD ¶304 at 2-3.
Defendant contends that Sgt. Vaccarella remedied this deficiency in his telephone conversation with Minnaert on the afternoon of September 24. Neither of the memoranda prepared
by Sgt. Vaccarella to memorialize Minnaert’s representations in the course of that conversation, however, mention any discussion of that subject. Moreover, even if that subject was
discussed and Daktronics agreed to correct its amended proposal, the proposal was deficient
as submitted, as Sgt. Vaccarella himself conceded at the evidentiary hearing. See Tr. at 52.
As a matter of law, the proposal was unacceptable and ineligible for award. See Vertiflite,
94-1 CPD ¶304 at 2.
This conclusion is consistent with Sgt. Vaccarella’s treatment of one of the other offerors —
Offeror X — which he determined to be ineligible for award. One of the reasons cited for
this determination was the fact that Offeror X “proposed payment terms not consistent with
the solicitation: [ ] Admin. R., tab 18 at 2. It appears irrational to exclude one offeror, at
least in part, on the basis of its use of an invalid payment condition, yet to select Daktronics, which offered a similar condition, as the awardee.
B. Improper Evaluation of Plaintiff’s Proposal
Plaintiff also alleges that the Academy mis-evaluated his proposals by failing to recognize
that they exceeded certain technical criteria. In other words, plaintiff disputes the (0) ratings received and contends that it should have received (+) or (+ +) ratings for these criteria. We find that the Academy’s evaluation of plaintiff’s proposals was arbitrary and capricious with respect to two criteria: (1) warranty; and (2) maintenance and operational
training. With regard to a third — [ ] — plaintiff has established evaluation errors but is
not entitled to summary judgment because the rating attributed to his proposals was arguably not erroneous.
1. Warranty
Plaintiff alleges that he offered the identical [ ] offered by Daktronics, yet received only a(0)
for this subfactor, whereas Daktronics received both (+) and (+ +) ratings. Plaintiff agreed
to provide a warranty for “1 yr [sic] after made operational.” Admin. R., tab 6 at 5. In addition, he offered to provide the [ ] for each of his three proposals.65 Id. at 2. Defendant contends that the Academy was warranted in awarding a (+ +) rating to Daktronics for its [ ]
but only a (0) to Nu-Way given: (a) the lack of specificity in plaintiff’s proposal; and (b) the
fact that plaintiff proposed to act as a middle-man for Daktronics. These explanations do
not provide a rational basis for the disparity in scores.
With regard to the “lack of specificity” assertion, this argument appears baseless here,
where plaintiff had offered to provide (at least for proposal “A”) [ ] and the Academy possessed a detailed description of [ ] (from Daktronics’ proposal).66 The agency’s concern regarding plaintiff’s role as a “middle-man” appears unfounded. There is no indication that
plaintiff’s role would impact the benefit of the warranty to the agency. If Sgt. Vaccarella
had any concerns in this regard, this would have been a legitimate area in which to seek
further information from plaintiff during discussions. Instead, the agency ceased discussions with all offerors except Daktronics after September 24. In sum, the agency has provided no rational basis for considering a program offered by Daktronics as a “benefit” but to
attribute no beneficial weight to the same program offered by plaintiff.
65
In its pre-hearing brief, defendant also argues that if Daktronics’ warranty was deficient, as plaintiff
claims, so was plaintiff’s. This is not so. Plaintiff agreed to meet the warranty specification and [ ]. It did not
explicitly state that it relied solely on the [ ] to meet the warranty specification.
66
The court notes that an agency may consider information in its possession relevant to an offeror’s proposal;
this is an exception to the general rule that an agency may only look within the four corners of a proposal
when it is evaluating a proposal. See, e.g., Fidelity Technologies Corp., 97-1 CPD ¶197 at 5 (1997); Safeguard Maintenance Corp., 96-2 CPD ¶116 at 12 (1995). It defies logic for the Academy to assert that it had
insufficient information to evaluate plaintiff’s warranty when, at the same time, it possessed a detailed description of that very warranty.
2. Training
Plaintiff asserts that the Academy erred by failing to recognize that his offers provided [ ].
We agree.
The RFP stated that “[a]t least eight-8 hours of training shall be provided” for both operational and maintenance training; this training was required to be provided at the USAF
Academy. Admin. R., tab 23 at 5. Operational training was required for four individuals;
maintenance training for two. In response, Nu-Way offered to meet these criteria for proposal “A.” For proposals “B” and “C,” [ ] Admin. R., tab 6 at 7-8. Yet, the Academy awarded
only (0) ratings for each subfactor for each of these proposals.
Defendant argues that the Academy [ ] Def.’s Mot. Summ. J. at 9. The agency directed offerors to offer “at least” eight hours of training, and specifically informed them that their offers would receive a (+) rating for any subfactor if they “exceeded” the solicitation specification. In light of these instructions, it is simply incomprehensible for defendant to now assert
that plaintiff’s offer [ ].67
The Academy’s evaluation becomes even more bizarre when one considers that it awarded
Daktronics a(+ +) rating for both training subfactors on the basis of [ ], which was expressly
precluded by the RFP. Further, Daktronics failed even to state that it would comply with
the minimum quantity of maintenance training. The Academy’s scoring with regard to the
training criteria was arbitrary and capricious.
3. [ ]
Finally, plaintiff argues that it should have received a(+ +) rating for offering to provide [ ]
because other offerors received such a rating for making similar offers [ ]. We agree that
plaintiff has established that errors were made regarding the evaluation of this subfactor,
but is not entitled to summary judgment on the basis that an error was made with respect
to its proposals.
Three offerors, including plaintiff, offered to provide the Academy with [ ]. Although the
administrative record is somewhat clouded by the fact that evaluation sheets for offerors
other than Nu-Way and Daktronics are not included, Sgt. Vaccarella’s Summary of evaluation scores states that Offerors Y and Z [ ] Admin. R., tab 18 at 2-3. Plaintiff received only a
(+) for offering [ ].
Defendant’s only response in its pre-hearing brief was that the accompanying matrix, also
prepared by Sgt. Vaccarella, does not list these (+ +) ratings for Offerors Y or Z; presumably, then, the statements to the contrary in the Summary were erroneous. We choose to rely
on the detailed narrative Summary rather than the abbreviated matrix. As noted earlier,
67
We recognize that, assuming arguendo that (+ +) ratings were appropriate, the award of a (+ +) rating involves a considerable degree of discretion. We accept, therefore, defendant’s argument that it did not perceive any significant “benefit” in plaintiff’s offer.
the matrix contains numerous errors and cannot be considered a reliable source. See supra
note 28.
At the evidentiary hearing, Sgt. Vaccarella testified that the Academy did not consider [ ] to
be a benefit and thus he did not err in awarding a (+) rating to each of plaintiff’s proposals
for [ ]; instead, he had erred by awarding Offerors Y and Z each a (+ +) rating. See Tr. at 84.
This testimony is supported by his summary narrative regarding Nu-Way’s proposals,
which stated that [ ] offered by plaintiff, “although exceeds [sic] the specifications, are not
considered a benefit.” Admin. R., tab 18 at 2.
Sgt. Vaccarella’s admission establishes that errors were made in the evaluation of this “bonus” item, but casts doubt on plaintiff’s assertion that the error was made with respect to
its proposals. We conclude that the Government has presented sufficient evidence to rebut
plaintiff’s assertion that the (+) ratings attributed to plaintiff’s proposals with regard to this
[ ] subfactor were arbitrary and capricious.
C. Prejudice
Plaintiff was clearly prejudiced by many of these errors.68 The Academy awarded the contract to Daktronics primarily on the basis of its overall (+) rating for the technical requirements evaluation factor — Daktronics was the only offeror to receive a (+) rating. In turn,
Daktronics received this overall (+) rating substantially because it received (+ +) ratings for
the training and warranty subfactors. See id. at 3. If the Academy had evaluated Daktronics’ initial proposal in a reasonable manner, Daktronics’ proposal would have received (–)
ratings for the maintenance training and warranty factors, and would not have received a
single (+ +) rating. As a result, each of plaintiff’s initial proposals would received fewer (–)
ratings for the technical requirements subfactors (and one would have received more (+)
ratings) than Daktronics’ proposal.69 Accordingly, plaintiff would have had a substantial
chance of award.
Moreover, if plaintiff’s proposals had been evaluated according to the terms of the solicitation, they would have received (+) ratings for the warranty, operational training, and
68
Plaintiff was not prejudiced by the Academy’s consideration of unstated evaluation subfactors. See supra
note 64. Nor was it prejudiced by the agency’s failure to determine compliance with the side panel lettering
specification because plaintiff also failed to state compliance with that criterion. See PADCO, 96-1 CPD
¶142 at 3-4; Presearch, 94-2 CPD ¶197 at 4-5.
69
Taking into account the court’s findings regarding Daktronics’ offered warranty and training, the scoring of
initial proposals for the 23 technical criteria would have been as follows:
Proposal
Nu-Way “A”
Nu-Way “B”
Nu-Way “C”
Daktronics
(–)
2
4
3
7
(0)
21
17
17
14
(+)
0
2
3
2
(++)
0
0
0
0
This table does not take into account mistakes regarding the evaluation of plaintiff’s proposals, discussed
supra, that would have increased its ratings for several criteria.
maintenance training criteria. Because they were also technically acceptable, it is likely
that they would have received an overall (+) rating for technical requirements. Again,
plaintiff would have had a reasonable likelihood of award.
V. Deficiencies Remaining in Daktronics’ Final Proposal Revision
As an alternative basis for its holding that the actions of the Academy were arbitrary and
capricious, the court finds that the agency’s eventual acceptance of Daktronics final proposal — the amended proposal as revised by various submissions through October 1, 1998
— was arbitrary and capricious because even that proposal was not compliant with the
RFP. Despite an exclusive round of discussions with Sgt. Vaccarella and numerous opportunities to revise its amended proposal, Daktronics’ final proposal was still technically unacceptable. The Academy, therefore, acted arbitrarily and capriciously by entering into a
contract to Daktronics.
Daktronics’ final proposal failed to comply with at least six specifications: (a) warranty; (b)
display area; (c) overall area; (d) paint color; (e) light intensity; and (f) side panel lettering
color.70 With regard to the warranty, the court has found that the warranty offered in
Daktronics’ amended proposal was deficient in five areas. Even if we were to accept defendant’s assertion that the warranty was subsequently orally amended to encompass installation and define the commencement date, the warranty remained deficient in the other three
areas. Consequently, the warranty incorporated into Daktronics’ contract was deficient.
Daktronics’ final proposal also remained deficient with respect to the display area and
overall sign area criteria because the revised technical drawing of the scoreboard, submitted to the Academy on October 1, 1998, failed to remove the proviso that “dimensions are
subject to change.” Admin. R., tab 23 at 24. Moreover, the revised technical drawing omitted the provision stating that Daktronics would comply with the Strata blue paint color requirement, which had been included in the drawing submitted with Daktronics’ initial proposal. The final proposal thus did not comply with that mandatory specification. The
remaining two specifications — light intensity and side panel lettering color — were never
addressed by Daktronics, and thus never met.
In short, even the final proposal presented by Daktronics was technically unacceptable and
ineligible for award. The Academy’s award of the contract to Daktronics was, therefore, arbitrary and capricious.
VI. Proposed Remedy
This procurement was mishandled from start to finish. It was riddled with violations of
procurement regulations and arbitrary and capricious conduct by the contracting officer.
For all of the reasons stated in sections II, III, IV, and V supra, the contract award to
Daktronics must be set aside. This leaves the court, however, with the decision whether to
70
The final proposal (and the contract) also failed to include a delivery date. Thus the contract did not bind
Daktronics to deliver and install the scoreboard by a specific date. This error did not prejudice plaintiff.
set-aside the entire procurement or to devise some remedy short of re-procurement. For the
reasons set forth below, we elect the former remedy.
Plaintiff has vigorously argued, in its request for summary judgment and at oral argument,
that resolicitation would be inappropriate. Instead, plaintiff asks the court to direct the
Academy to re-evaluate amended proposals according to the terms of the RFP. To support
this remedy, plaintiff asserts that errors made by the agency “were only harmful to NuWay,” and all offerors “were equally informed of the requirements, provided an opportunity
to correct deficiencies, and evaluated using the same criteria.” Pl.’s Req. for Summ. J. at 6.
The court disagrees.
An order directing the Academy to re-evaluate amended proposals would prejudice offerors,
such as Daktronics, that did not receive the benefit of adequate discussions following the
submission of initial offers. As discussed in this opinion, Daktronics’ initial proposal was
deficient with regard to several key technical specifications, including the maintenance
training and warranty criteria, and a number of material non-technical requirements, including payment terms. Yet the agency failed to advise Daktronics of these deficiencies in
its September 23, 1998 discussions letter. Without notice of these material deficiencies, the
agency’s discussions with Daktronics were not meaningful. See Analytical & Research
Tech., 39 Fed. Cl. at 48 (holding that, to be meaningful, discussions “must generally lead
offerors into the areas of their proposals requiring amplification or correction”) (quoting
SRS Techs., 94-2 CPD ¶125 at 6 (1994)); Boeing Sikorsky Aircraft Support, 97-2 CPD ¶91 at
12 (1997). It was thus not given a fair opportunity to correct these deficiencies and submit a
technically acceptable amended proposal. See Boeing Sikorsky, 97-2 CPD ¶91 at 12.
The pervasive nature of the errors here draws into question the entire solicitation. There is
no reason to believe other offerors were evaluated in a less arbitrary manner than the parties in this action.71 An order directing the agency to resume this procurement after the
submission of amended proposals would thus harm offerors and provide them with a legitimate basis to protest, which would further delay this procurement. The most equitable
remedy, therefore, given the patent and pervasive errors throughout this procurement, is to
require a new solicitation.
VII. Proposal Preparation Costs
Plaintiff seeks recovery of the costs of preparing its various proposals. In the February 12,
1999 Order, the court ruled that plaintiff was entitled to recover proposal preparation costs.
The only remaining issue is the quantum of plaintiff’s recovery.
71
Indeed, Sgt. Vaccarella conceded that he mis-evaluated the amended proposals of at least two offerors. See
supra §IV.B.3. In addition, plaintiff itself benefited from some plainly inappropriate scoring. See supra note
64.
Plaintiff submitted an affidavit which stated his proposal costs as $23,439.10.72 This total
included three items: (1) $15,625.00 to reimburse plaintiff for time he personally spent preparing his proposals, calculated based upon an hourly rate of $250; (2) $7,739.10 for the
services of Stan Laber, a “contract technical consultant,” who helped plaintiff to prepare his
proposals; and (3) $75.00 for mailing, telephone, faxing, and copying costs. The only documentation to support plaintiff’s claim was his post facto itemization of the hours that he
and his consultant spent preparing the proposals.
After the Government expressed its concern that his affidavit contained insufficient detail
and documentary support, plaintiff filed a revised affidavit. The revised document, however, merely adds plaintiff’s post facto description of the work that he performed on each day.
No documentation was submitted to support any of the three elements of his claim.
Defendant opposes plaintiff’s claim on the basis that plaintiff has failed to provide sufficient
documentation to substantiate his claim in either his initial or revised affidavits. The Government raises several principal objections: (1) plaintiff has failed to provide any documentation in any form to support any of the time entries for Mr. Dubinsky; (2) plaintiff has provided no documentation to substantiate that his compensation rate is $250 per hour; (3)
plaintiff has not submitted an invoice prepared by Mr. Laber, nor has plaintiff submitted
proof that he reimbursed Mr. Laber for his services; and (4) plaintiff has failed to segregate
his claim for mailing, telephone, faxing, and copying costs or to provide any documentation
for any of these claimed expenses. Nevertheless, defendant acknowledges that plaintiff incurred proposal preparation costs and offers that $2,000 would be a fair and reasonable estimate of preparation costs.
Having reviewed plaintiff’s affidavits and his reply brief, which provided no additional documentation, we conclude that plaintiff has failed to provide the necessary support for his
claim for proposal costs despite three opportunities to do so. Even if the court were to accept
plaintiff’s post facto reconstruction of the time he spent preparing his proposals, he has not
provided any basis upon which we can determine his hourly compensation rate. Moreover,
there is no evidence that plaintiff incurred the claimed costs to procure Mr. Laber’s services,73 and there is no support whatsoever for plaintiff’s claim for mailing, telephone, faxing, and copying expenses. We conclude, therefore, that plaintiff has failed to substantiate
his claim for proposal preparation costs. Nevertheless, we agree with defendant that $2,000
is a fair and reasonable estimate of plaintiff’s legitimate costs. The Government has conceded that plaintiff is entitled to recover this amount. Therefore, we award proposal preparation costs to plaintiff in the amount of $2,000.
72
During oral argument on February 11, 1999, plaintiff acknowledged that he had conducted a preliminary
calculation of his proposal preparation costs and estimated that they were “probably [in] the $5,000 range
or $6,000 range.” Tr. at 168.
73
Nor has plaintiff explained why Mr. Laber’s services were necessary in preparing his proposals.
Conclusion
For the reasons stated, the Academy’s award of the contract to Daktronics was arbitrary
and capricious and not in accordance with law. The agency is enjoined from continuing the
procurement with Daktronics under solicitation number F05611-98-R-2293. The Clerk is
directed in her judgment to include an award of $2,000 as proposal preparation costs.
Since this court’s February 12, 1999 Order, the court has learned that the Academy has
resolicited the procurement under solicitation number F05611-99-T-0821. See Commerce
Bus. Daily, Mar. 18, 1999, at 32. This solicitation informs offerors that the procurement is
for commercial items and the Commerce Business Daily synopsis was prepared in accordance with the format in FAR 12.6. See id. It does not, however, explicitly state: (1) whether
the Academy intends to conduct the acquisition as a simplified acquisition under the FAR
13.6 test program; or (2) if the procurement is to be conducted under Part 13, whether the
agency will follow provisions of Part 15, and if so, which provisions of Part 15 will be followed. If applicable, one or both of these announcements are required by this opinion. Accordingly, if the Academy intends to conduct this procurement as a simplified acquisition, it
is hereby directed to issue an amendment to the Commerce Business Daily synopsis to inform potential offerors of these essential facts. Costs to plaintiff.
Expenditures by the Department of Veterans Affairs Medical Center, Oklahoma
City, Oklahoma
B-247563.3, 96-1 CPD ¶190
April 5, 1996
Digest
1. The Department of Veterans Affairs’ appropriation for medical care was not available for
the purchase of novelty items to potential employees. These items did not directly contribute to an authorized function and, therefore, were not justified under the “necessary expense rule.”
2. The Department of Veterans Affairs was not authorized to use its medical care appropriation for contest prizes during Women’s Equality Week absent evidence that the expenditures related to authorized activities of the department.
3. The Department of Veterans Affairs’ appropriation for medical care was not available to
pay the sponsor fees and other costs associated with employees’ participation in a competitive sporting event since such events are personal activities of the participants.
4. In the absence of a statute or regulation imposing liability, agency officials who are not
designated as accountable officers are not personally liable for illegal, improper, or incorrect
payments. Officials for whom the Department of Veterans Affairs requests relief are not
accountable officers and, thus, are not liable for unauthorized payments.
5. To enhance accountability and help to safeguard public funds, agencies should designate
officials authorized to issue third party drafts under the Department of the Treasury’s third
party draft system as accountable officers or issue regulations under which such individuals would be held financially liable for improper payments.
Decision
In the aftermath of an investigation by the Department of Veterans Affairs’ (VA) Office of
Inspector General (IG), VA has requested an opinion on the legality of 72 expenditures
made between March 1990 and September 1991 by the VA Medical Center in Oklahoma
City, Oklahoma from VA’s medical care appropriation. VA has also requested relief from
liability for seven Medical Center officials believed to be liable for the payments. Finally,
VA has requested guidance on the liability of various procurement and financial management officials for improper payments.
To facilitate our analysis and discussion, we have divided the 72 expenditures at issue into
four general categories: recruitment, contests, refreshments, and miscellaneous purposes.
In this decision, we address the Medical Center’s 15 expenditures for recruitment and contests.1 We will address the 57 expenditures for refreshments and miscellaneous purposes in
a separate decision.
1
An attachment to this decision identifies the recruitment and contest-related expenditures addressed.
As discussed below, we conclude that of the eight recruitment-related expenditures totaling
$10,096.71 submitted for our review, four, totaling $2,782.21, were unauthorized. In addition, we conclude that all seven of the Medical Center’s contest-related expenditures totaling $2,394.59 were unauthorized. Finally, we conclude that the officials for whom VA has
requested relief are not liable for the improper payments.
Background
During the period covered by the IG’s investigation, the Medical Center purchased a variety
of novelty items for distribution in connection with its recruiting efforts.2 Specifically, the
Medical Center separately purchased holiday rope pens, folding scissors, and shoe laces imprinted with the Medical Center’s logo or slogan totaling $2,507.10 for potential nurse recruits at three colleges where VA maintains adjunct facilities.3 In addition, the Medical
Center purchased $275.11 worth of patches for the local Explorers Post.
During the same period, the Medical Center purchased three gift certificates for local restaurants and a silk plant, totaling approximately $80.00, for distribution as prizes during
Women’s Equality Week, 1990. The Medical Center also made three expenditures totaling
$2,314.60 in connection with the 1991 Presbyterian Hospital Corporate Challenge, a local
athletic event in which Medical Center personnel participated. Specifically, the Medical
Center paid a $1,200.00 sponsor fee, purchased T-shirts for Medical Center participants,
and rented a tent for the event. According to Medical Center officials, participation in the
Corporate Challenge enhanced employee morale and publicity for the Medical Center and
demonstrated the Medical Center’s emphasis on “networking with other ... leading corporations.”4
Payments for these items were made from VA’s appropriations for “Veterans Health Service
and Research Administration, Medical Care” for fiscal years 1990 and 1991. The appropriations were available, among other things, for necessary expenses for the maintenance and
operation of hospitals, nursing homes, and domiciliary facilities and for furnishing inpatient and outpatient care and treatment to VA beneficiaries. Title I of the Departments of
Veterans Affairs, Housing and Urban Development and Independent Agencies Appropriations Act, 1991, Pub. L. No. 101-507, 104 Stat. 1351, 1352-1353 (1990); Title I of the De2
Four of the eight recruitment-related expenditures were associated with the Medical Center’s activities at
the 1991 Oklahoma State Fair. We previously concluded that VA’s medical care appropriation was available
for three of these expenditures. B-247563.2, May 12, 1993 (regarding the Medical Center’s rental of a booth
and its purchases of matchbooks and jar openers). In this request, VA also asks whether the medical care
appropriation was available for its purchase of balloons, ID kits, and buttons imprinted with the VA seal
and the Medical Center’s telephone number. Since there is no meaningful distinction between the expenditure for balloons, ID kits, and buttons and the other Fair-related expenditures addressed in our prior decision, we conclude that VA’s medical care appropriation was available for this fourth expenditure as well.
3
VA asserts without explanation that these items were also used by Medical Center staff performing their
day-to-day duties and in conjunction with the Medical Center’s awards program.
4
According to the IG’s report, the Medical Center director asserted that the T-shirts purchased for the competition were also used throughout the year in connection with various awards programs.
partment of Veterans Affairs, Housing and Urban Development and Independent Agencies
Appropriations Act, 1990, Pub. L. No. 101-144, 103 Stat. 839, 840-841 (1989).
Discussion
Under 31 USC §1301(a) (1994), appropriated funds are available only for authorized purposes. During the period covered by the IG’s investigation, VA did not have express authority to make the types of recruitment and contest-related expenditures at issue here. Since
the expenditures were not expressly authorized, they were permissible only if reasonably
necessary or incident to the proper execution of an authorized purpose or function of the
agency. 71 Comp. Gen. 527 (1992). The application of the “necessary expense rule” is, in the
first instance, a matter of agency discretion. However, agencies do not have unfettered discretion. Therefore, when we review an expenditure to determine whether it falls within an
authorized purpose or function, we consider whether, under the circumstances, the relationship between the authorized function and the expenditure is so attenuated as to take it
beyond the agency’s legitimate range of discretion. B-257488, Nov. 6, 1995.
Expenditures for Recruitment
Under the “necessary expense rule,” an agency may purchase items in the nature of gifts or
souvenirs only where there is a direct link between the items and the purpose of the appropriation to be charged. In B-234241, May 3, 1989, and B-230062, Dec. 22, 1988, we found
such a direct link. Those cases involved the Army’s purchase of framed recruiting posters
for distribution as prizes at national conventions of medical professionals and student organizations. We observed in those cases that the Army was statutorily required to “conduct
an intensive recruiting campaign....” Further, the Army used the posters to induce convention attendees to provide recruiters with personal information and thus facilitated the Army’s recruiting efforts. Therefore, the Army’s expenditure was directly related to the accomplishment of its statutory mandate. In contrast, in B-236763, Jan. 10, 1990, we
addressed a proposal to distribute pen and pencil sets at job fairs as favorable reminders of
the agency. The pen and pencil sets could not have served as a means of advertising since
they would have been presented only to those already in attendance at the job fairs and
they could not otherwise be justified as a “necessary expense.” See also B-260260, Dec. 28,
1995 (Department of Energy’s purchase of baseball caps for personnel recruitment purposes
not authorized given the absence of a direct relationship between the purchase and the Department’s recruiting efforts).
The record contains no suggestion that the shoelaces, pens, and scissors distributed to potential employees served as anything other than favorable reminders of VA. Unlike the
posters at issue in B-234241 and B-230062, the items at issue here did not facilitate VA’s
acquisition of information necessary to its recruiting efforts. Nor did they provide recipients
with essential information about VA or the Medical Center not commonly available. Cf. 62
Comp. Gen. 566 (1983) (approving the Army’s purchase of wall calendars containing information about the services provided by the Chaplain’s Office and Army Community Services
for military personnel and their families). Rather, the shoelaces, pens, and scissors contained only a slogan or logo to remind the recipient of his or her contact with the VA recruiters. Finally, the record contains no evidence that, like the situation in B-247563.2, May
12, 1993, VA needed to use promotional items to advertise the nurse recruiter’s availability
to attract potential employees. To the contrary, like the situation in B-236763, the availability of VA recruiters was likely known among students interested in medical careers at
the colleges where VA maintained adjunct facilities and the availability of promotional
items likely had little discernable effect on the VA’s ability to attract prospective employees.
Similarly, the Medical Center’s purchase of patches for the local Explorers Post was not authorized under the “necessary expense rule.” The Explorers Program is an affiliate of the
Boy Scouts. However, the record contains no evidence of a relationship between the Medical
Center’s purchase of patches for young people involved in the Explorers Program and legitimate recruiting efforts.
Congress has acknowledged VA’s need for explicit authority to purchase items like those at
issue here in light of the “necessary expense rule” applied in our prior decisions. Section 203
of the Veterans Medical Program Amendments of 1992, Pub. L. No. 102-405, 106 Stat.
1983, 1984 (1992), added subsection (f) to 38 USC §7423, authorizing VA to “purchase promotional items of nominal value for use in the recruitment of [health care personnel].” Considering the provision that became section 203, the House Committee on Veterans’ Affairs
observed that VA needed specific authority to purchase promotional items in light of our
decisions and those of VA’s General Counsel. See H.R. Rep. No. 130, 102d Cong., 1st Sess.
13-14 (1991) (discussing section 203 of H.R. 2280, the Veterans’ Health Care and Research
Amendments of 1991, which was ultimately passed as part of the 1992 legislation). Thus,
Congress recognized that the purchases at issue here were neither explicitly nor implicitly
authorized when they were made.5
Contest-Related Expenditures
Agencies are authorized to sponsor contests and provide prizes under the “necessary expense rule” when the expenditures for the contest bear a reasonable relationship to carrying out an authorized activity. E.g., 70 Comp. Gen. 720 (1991) (approving a proposal to pay
cash prizes to selected fishermen providing needed information to the National Oceanic and
Atmospheric Administration). Federal agencies and employees, like all Americans, were
encouraged by the President to observe Women’s Equality Day6 with appropriate programs,
ceremonies, and activities. See 26 Weekly Comp. Pres. Doc. 1253 (August 14, 1990). Howev5
The items distributed would appear impermissible under VA’s guidance implementing 38 USC §7423(f).
The guidance provides as follows:
To serve as a recruitment aid, the item will include a permanent display of:
The Department’s VA logo and/or the name of either the Department or VA facility purchasing the
item.
A telephone number and/or address to provide potential applicants with a VA point of contact for recruitment follow-up; and space permitting, a recruitment slogan or message.
MP-4, Part V, Change 206, §3A.13.1a(3).
6
The Medical Center’s observation of Women’s Equality Week was presumably an outgrowth of the national
observation of Women’s Equality Day.
er, in its submission and in response to our subsequent requests for information, Medical
Center officials have failed to establish how awarding three gift certificates to local restaurants and a silk plant in connection with a contest advanced its celebration of Women’s
Equality Week. Given the Medical Center’s failure to explain the relationship of these gifts
to its observation of Women’s Equality Week, we have no basis to conclude that the Medical
Center’s purchases of these contest prizes was a reasonable exercise of its discretion under
the “necessary expense rule.”
The Medical Center’s three expenditures incident to the Corporate Challenge were also
clearly unauthorized under our decisions. An agency may only use appropriated funds to
pay a contest entry fee where the agency’s participation in the contest will further the purposes of its appropriation. See, e.g., B-164467, Aug. 9, 1971 (approving the Bureau of Mines’
use of appropriated funds to enter a Bureau film in an annual film contest on the grounds
that a winning film would broaden public awareness of mine safety issues consistent with
the Bureau’s mission).
In B-256194, June 1, 1994, we considered the Department of Energy’s expenditure of appropriated funds for registration fees of employees participating in a local athletic event.
We concluded that competitive fitness events are essentially personal activities and that
the costs of such activities must be borne by the participants.
The athletic event in which Medical Center employees participated was virtually indistinguishable from the contest at issue in B-256194. Therefore, the expenses incurred by the
Medical Center incident to the Corporate Challenge, i.e., the sponsor fee, T-shirts, and tent
rental, were also personal to the participants. Accordingly, despite its assertions that the
expenditures were for advertising and morale enhancement, the Medical Center was not
authorized to use appropriated funds for those expenses.
Liability of VA Officials
VA has asked that we indicate “what type of accountability applies” to various agency officials when improper payments are made.”7 Ordinarily, an agency is not authorized to assess pecuniary liability against its officials for losses resulting from errors in judgment unless a statute provides for such liability or the agency has issued administrative regulations
specifically providing for such liability. 65 Comp. Gen. 177 (1986); B-241856.2, Sept. 23,
1992. We know of no such statute or regulations applicable to VA employees.
In contrast, officials designated as accountable officers are financially liable for losses and
improper payments of public funds. Specifically, certifying officers are liable to the United
States for the amount of any illegal, improper, or incorrect payment resulting from any
false, inaccurate, or misleading certificate made by them, as well as for any payment prohibited by law or which does not represent a legal obligation under the appropriation or
7
VA uses the word “accountability” to refer to pecuniary liability and the phrase “improper payment” to refer
to expenditures that are impermissible under statutes, regulations, and decisions of this Office regarding
the purposes for which appropriated funds may be used.
fund involved. 31 USC §3528(a)(4). Disbursing officers, including cashiers, are responsible
for examining vouchers to verify their propriety, and are liable to the United States for illegal, improper, or incorrect payments, as well as for physical losses of government funds. 31
USC §3325(a)(2), 3527. This Office is authorized to relieve certifying and disbursing officers
from liability for improper payments when applicable criteria are met. See 31 USC §3527,
3528(b).
Authorized certifying officers located at VA automated finance centers rely on the integrity
of the automated payment system as a whole and do not physically examine hard copy
payment documentation (vouchers) in each and every case. Although the use of an automated payment system does not alter the basic concepts of accountability for certifying officers, the reasonableness of a certifying officer’s reliance on an automated payment system
to continually produce legal and accurate payments is a factor that we consider when addressing the officer’s liability for illegal or improper payments. 69 Comp. Gen. 85 (1989).
Further, we have set forth criteria that agencies whose certifying officers rely on automated
payment systems should satisfy. Specifically, certifying officers should be provided with information showing that the system on which they rely is functioning properly and reviews
should be made at least annually to determine that the automated system is operating effectively and can be relied upon to make accurate and legal payments. Id.
VA’s certifying officers necessarily rely on various participants in the procurement and
payment process to ensure that only legal and accurate payments are made. However, these
officials, including contracting officers and voucher auditors, do not become certifying officers subject to liability for improper payments merely because certifying officers rely on
their review or approval of purchases or payments. See B-201965, June 15, 1982 (explaining
that officials who negligently authorize erroneous transactions under an automated payment system are not liable as certifying officers for erroneous payments). Therefore, while
officials other than certifying officers may be subject to administrative sanctions, our Office
has never looked to them for reimbursement in cases of illegal or improper payments. See
55 Comp. Gen. 297 (1975); B-201965 at 4. Moreover, designation as a certifying officer requires a written authorization from the head of the agency.8 See 31 USC §3325; Treas. Financial Manual, vol. I, §2040.30d (T. L. No. 496). Accordingly, unless the other officials
have also been designated as certifying officers, only the authorized certifying officer is financially liable for illegal or improper payments.
8
In response to the IG’s report, the Medical Center updated the position descriptions for its voucher auditors
to include the following statement:
[A]s a certifying official, you are personally accountable and individually responsible for verifying
that [f]ederal [g]overnment payments made under your jurisdiction are legal, proper, and correct.
You are pecuniarily liable if any payment that you have certified is found to be illegal, improper, or
incorrect.
The Department of the Treasury requires agencies to take additional action when designating employees as
certifying officers, specifically the completion of a signature/designation card. See 1 T.F.M. §2040.30d.
Many of the expenditures questioned by the VA IG were made under the Department of the
Treasury’s (Treasury) “third party draft system.” See 1 T.F.M. §3040.70. Under this system,
agencies obtain instruments known as third party drafts from contractors9 and use them for
the same types of purchases that they could make with imprest funds.10 The contractors
process the instruments as they are presented for payment by vendors of goods or services
and subsequently provide agencies with listings of the cleared instruments, i.e., those paid
by a contractor’s financial institution. Agencies then reimburse the contractors for payments made.
Like imprest fund purchases, purchases made with third party drafts may only be made by
authorized officials and do not require prior certification by an authorized certifying officer.
However, in contrast to imprest fund cashiers, issuers of third party drafts are not financially liable for improper purchases made with third party drafts since government funds
are not disbursed when a third party draft is issued. 1 T.F.M. §3040.70; GAO, Policy and
Procedures Manual for Guidance of Federal Agencies, tit. 7, §6.8 (T.S. No. 7-43, May 18,
1993).
Rather, as the only accountable officers involved in the transactions, those who certify reimbursements to contractors are the only officials financially liable for improper payments.
Further, Treasury’s guidance requires agencies to reimburse third party draft contractors
for the full amount of all properly payable instruments that have been paid and states that
a “properly payable instrument” is one issued over the genuine signature of an authorized
payment agent, bearing a genuine or authorized endorsement, and with no alterations. 1
T.F.M §3040.70(c). Therefore, Treasury’s guidance advises agencies to “establish sufficient
internal controls to permit the certifying officer to make prompt reimbursements while exercising reasonable diligence in reviewing the contractor’s request for reimbursement.” 1
T.F.M §3040.70(c).
The Medical Center’s use of third party drafts for a number of questionable and unauthorized payments has led us to question how the use of third party drafts relates to the system
of individual accountability critical to the protection of government funds. Third party
drafts may be used for a variety of small purchases. Further, reimbursements required under the third party draft system may be automated. Authorized certifying officers may have
little or no opportunity to question the legality of such reimbursements and the underlying
purchases before payment is made. Rather, they must rely on others, particularly those authorized to issue third party drafts, to ensure that purchases are consistent with governing
statutes, regulations, and decisions of this Office regarding the proper uses of appropriated
funds. In our view, this division of responsibility and liability in connection with transactions amounting to constructive payments of government funds contravenes basic principles
9
Three contractors provide third party draft services to federal agencies. Two of the entities are themselves
financial institutions and the third clears third party drafts under an arrangement with its financial institution.
10
The 1995 modification to the Treasury Financial Manual expanded the use of third party drafts to purchases of up to $10,000. See 1 T.F.M.§3040.70(a) (T.L. No. 553, April 1995).
of accountability and poses an unacceptable risk to the safeguarding of those funds. Accordingly, we recommend that agencies designate individuals authorized to issue third party
drafts as accountable officers or issue regulations under which such individuals would be
financially liable for improper payments.
We now turn to VA’s specific requests for relief. VA has identified an imprest funds clerk as
the official who purchased the patches for the local Explorers Post and the three gift certificates and silk plant in connection with Women’s Equality Week. As an imprest funds clerk,
the individual issued third party drafts for each of those items. As discussed above, issuers
of third party drafts are not accountable officers subject to financial liability for unauthorized purchases, unless otherwise so designated. Therefore, we need not consider VA’s request for relief.
VA has also requested relief from liability for three officials involved in the three expenditures made for the Corporate Challenge: a visual information specialist and two voucher
examiners. The visual information specialist designed and developed the T-shirts for contest participants. She also approved the purchase request and forwarded it to a purchasing
agent. Payment was ultimately made through VA’s finance center in Austin. While she
clearly participated in the procurement of the T-shirts, the visual information specialist
was not an accountable officer with respect to this unauthorized purchase. Therefore, she is
not financially liable for the unauthorized use of appropriated funds and we need not grant
her relief.
A voucher examiner reviewed the documents associated with the Medical Center’s rental of
a tent and another voucher examiner carried out the same function with respect to the
sponsor fee paid in connection with the Corporate Challenge. Following their reviews, each
“certified” invoices for the tent rental and sponsor fee for payment through the Austin center. We understand that as voucher examiners, both reviewed all payment documentation
for the services received by the Medical Center incident to the Corporate Challenge and approved the payments. In this regard, their activities supported the certification ultimately
made by an authorized certifying officer at the automated system level. Further, several
documents included in VA’s submission refer to their “certifications” or their role as “certifying officers.” However, in response to our inquiries, VA advised that neither had been designated as a certifying officer. Consistent with the above discussion of liability of agency
officials other than accountable officers, we conclude that neither is liable for the unauthorized expenditures of appropriated funds in connection with the Corporate Challenge. Accordingly, we need not consider VA’s requests for relief.
VA requested relief from liability for seven Medical Center officials in connection with 52 of
the Medical Center’s 72 questionable expenditures11 and we have addressed VA’s request
with respect to the expenditures made for the Explorers Program, Women’s Equality Week,
11
VA’s submission came in two parts. The first contained VA’s requests for our views on 52 expenditures and
relief for seven officials associated with those expenditures. The second contained VA’s request for our
views on 20 additional expenditures, but did not include any requests for relief.
and the Corporate Challenge. However, these payments, as well as those for the shoelaces,
pens, and scissors, were also approved by authorized certifying officers. Since VA’s expenditures in connection with Women’s Equality Week and the Corporate Challenge, as well as
four of the eight recruiting-related expenditures, were improper and authorized certifying
officers are strictly liable for improper payments, we now consider whether the relevant
certifying officer(s) should be granted relief from liability. This Office may relieve a certifying officer from liability for an improper payment where “the obligation was made in good
faith; no law specifically prohibited the payment; and the United States Government received value for the payment.” 31 USC §3528(b)(1)(B). Under this criteria, we conclude that
we may grant the relevant certifying officer(s) relief from liability for the improper payments discussed above.
We have previously observed that an important factor in determining whether a certifying
officer acted in “good faith” is whether the certifying officer had, or reasonably should have
had, doubt regarding the propriety of the payments. See, e.g., 70 Comp. Gen. 723 (1991).
Whether the certifying officer reasonably should have been in doubt in any particular case
depends on a weighing of all surrounding facts and circumstances. Id. at 726.
All of the improper payments at issue here, whether reimbursements for third party drafts
or direct payments on invoices, were ultimately made by the finance center in Austin. As
discussed previously, certifying officers at the Austin finance center were in no position to
question individual expenditures made by the Oklahoma City Medical Center. Rather, they
relied on reviews conducted by other VA officials, such as approving officials and voucher
examiners. Although the record suggests that individuals serving in various capacities may
have required additional training and may have made faulty judgments, it does not indicate
that the system under which invoices were processed and payments were made was unreliable as a whole. Therefore, we cannot conclude that the certifying officer(s) should have had
doubt about the propriety of the expenditures certified.
The certifying officer(s) in this case meet the second and third tests contained in 31 USC
§3528(b)(1)(B) as well. No statute specifically prohibited the expenditures at issue. See B191900, July 21, 1978 (pointing out that this element refers to statutory prohibitions of
payments for specific items or services). Finally, there is no suggestion in the record that
the United States government did not receive value for the payments made by VA. Accordingly, we grant the certifying officer(s) who approved the payments at issue here relief from
liability.
Conclusion
VA’s medical care appropriation was not available for several of the purchases identified in
the IG’s report on the Oklahoma City Medical Center. Since none of the officials specifically
identified by VA in connection with the unauthorized expenditures were accountable officers, they are not liable for these payments. However, to enhance accountability and help
safeguard public funds, VA should designate those authorized to issue third party drafts as
accountable officers or otherwise provide for financial liability for improper payments made
with such instruments. Finally, relief is granted to the authorized certifying officer(s) who
approved the payments.
Robert P. Murphy for Comptroller General of the United States
Attachment
Recruitment — 8 expenditures
PO#
Amount
A07539
936.00
A16327
2717.00
A17674
2961.00
IF1109
700.00
A11050
575.00
A13199
900.00
A15757
1032.10
IF1217
275.11
Total — $10,096.71
Description
Stick Matchbooks
Balloons, ID Kits, Buttons
Jar Grip Openers
Booth at Oklahoma State Fair
Holiday Rope Pens
Folding Scissors
Shoelaces with Logo
Explorer Patches
Contests — 7 expenditures
PO#
Amount Description
IF0351
20.00 Gift Certificate
Total — $2,394.59
Federal Acquisition Management Training Service
B-248871, B-248873, 92-2 CPD ¶214
September 28, 1992
Richard E. Batts, Esq., for the protester. Thedlus L. Thompson, Esq., General Services Administration, for the agency. Richard P. Burkard, Esq., and John Brosnan, Esq., Office of
the General Counsel, GAO, participated in the preparation of the decision.
Digest
Agency has a reasonable basis to cancel purchase orders issued under small purchase procedures where vendor declines to accept purchase orders and leads agency to believe vendor
might not enter into performance.
Decision
Federal Acquisition Management Training Service (FAMTS) protests the cancellation of
two purchase orders which had been issued to it by the General Services Administration
(GSA) for instructional services. FAMTS contends that the agency acted maliciously and
arbitrarily in canceling the purchase orders.
We deny the protests.
By notice dated January 29, 1992, GSA issued a request for quotations (RFQ) for more than
200 courses to be taught between March 30 and October 2. The RFQ was issued under the
small purchase procedures as set forth in Part 13 of the Federal Acquisition Regulation
(FAR). The protester submitted quotations in response to the RFQ by the February 21 closing date.
In response to the quotations, the agency on April 16 issued purchase order No.
GS00C92ACMP308 to FAMTS to provide instructional services in Atlanta, Georgia during
June 1-5. On May 5, the agency issued purchase order No. GS00C92ACMP341 to FAMTS
for instructional services in Atlanta during June 22-26.
On May 18, FAMTS filed a protest with our Office contending that it should have received
purchase orders for other sessions as well. One of these sessions was for instructional services to be provided in Arlington, Virginia from June 1-26.12 On May 26, a GSA representative asked FAMTS’ President, Richard Batts, who according to the purchase orders issued
to the firm was to be the instructor, about the “obvious impossibility of performing all three
contracts” (two in Atlanta and one in Arlington) at the same time. Mr. Batts states that
with respect to the courses to be taught in Atlanta, he responded that “acceptance was by
performance and by performance was how I planned to accept.” In this regard, Mr. Batts
states that he “made it clear ... that the only reason for not performing under the Atlanta
purchase orders would be a conflicting award of the (protested) session.” Mr. Batts states
12
This protest was dismissed on June 2 as academic under our file B-248759 after the agency canceled the
purchase orders which were the subject of the protest.
further that he pointed out to GSA “there was no requirement in the solicitation or purchase (order) for a written or oral acceptance.” The agency states that by May 26, one of the
courses for which FAMTS had received a purchase order had 23 students enrolled, 11 from
outside the Atlanta area. Because, in GSA’s view, Mr. Batts expressed his position that he
was not obligated to teach the courses in Atlanta and declined to confirm that he would, the
agency determined that the best course of action would be to cancel the two purchase orders
and request new quotations. On May 27, the agency canceled the two purchase orders
which had been issued to FAMTS.
FAMTS contends that the cancellations were improper because they were in retaliation for
the firm’s protest against the issuance of purchase orders for services at Arlington, Virginia.
Although GSA suggests that contracts arose from issuance of the purchase orders such that
the cancellations involve contract administration matters not cognizable under our bid protest regulations, under the regulations, a quotation is not an offer and, consequently, cannot be accepted by the government to form a binding contract. FAR §13.108(a). Therefore,
issuance by the government of an order for supplies or services in response to a supplier’s
quotation does not establish a contract. Id. A contract comes into existence only after acceptance of the order by the supplier. Thus, what we have here is the cancellation of the
government’s offers prior to acceptance. Since this is a pre-contract matter, we view it as
one appropriate for our review rather than as one of contract administration.
The regulations provide that:
[i]f the government issues an order resulting from a quotation, the government may (by written notice to the supplier, at any time before acceptance
occurs) withdraw, amend, or cancel its offer.
FAR §13.108(c).
Thus, the government may timely cancel purchase orders issued in response to quotations.
Just as cancellation of an RFQ must be reasonable, however, see Tony Ingoglia Salami and
Cheese, Inc., B-244452, Sept. 23, 1991, 91-2 CPD ¶268; Arbor Laboratories, Inc., B-202497,
Aug. 24, 1981, 81-2 CPD ¶167, so, in our view, must the cancellation of a purchase order
issued pursuant to the RFQ.
The protester argues that the cancellations were not reasonable because they were improperly motivated. Specifically, FAMTS complains that the agency acted improperly by questioning its president regarding the protested Arlington, Virginia teaching session. FAMTS
concludes that these discussions demonstrate that the agency canceled the purchase orders
as punishment for its protest.
We find no merit to this protest. We think it was reasonable for the agency to question
FAMTS about its protest of instructional services in Arlington since, if the protest were
successful, performance under that contract would apparently require that FAMTS decline
acceptance of the purchase orders previously issued to it. The protester itself concedes that
it could not perform in accordance with the terms of at least one of the purchase orders that
it protested and the purchase orders which were issued to it for instructional sessions in
Atlanta. As mentioned above, the protester’s president stated that he advised the agency
that he might not perform in Atlanta if the firm were to receive the purchase order for the
course to be taught in Arlington. We therefore do not think that the record supports
FAMTS’ view that the agency canceled the purchase orders with the specific intention to
injure the protester; rather, we find that the actions were based on the agency’s legitimate
concerns that FAMTS would not perform. Under these circumstances, we think the agency
had a reasonable basis for the cancellations. We therefore deny the protests.
James F. Hinchman
General Counsel
Flexiplace-Mobile Work Site
B-261729
April 1, 1996
Digest
Appropriated funds may not be expended for a bus, even though equipped with office
equipment, whose primary purpose is to daily transport employees from present headquarters to relocated headquarters.
Decision
The Naval Air Systems Command (Command) has requested our opinion regarding the
propriety of using appropriated funds for a mobile work site. The Command considers the
mobile work site concept they have proposed to be consistent with federal flexiplace work
arrangements encouraged by the President. We conclude that the expenditure would be improper.
In 1997, the Command will relocate from its current headquarters in Crystal City, Arlington, Virginia to St. Mary’s County, Maryland. The Command is considering equipping a bus
with computer workstations, telephones, and work surfaces to daily transport employees to
the new headquarters from a pick-up point close to the present headquarters. An employee’s day would commence when he boarded the bus. The return trip would start an hour
and a half prior to the end of the work day with the employee’s work day ending when he
got off the bus at the pick-up point. The Command intends to screen employee workloads
for suitability for the mobile work site.
The Command states that under the Federal Flexiplace Project, it will designate the bus an
official workplace of the riders. The Command contends that the arrangement, therefore,
would be consistent with statutory and case law prohibiting the use of appropriated funds
to subsidize employee commuting expenses.
We disagree. The proposed arrangement was devised to reduce anticipated consequences of
the longer commute the Command’s employees will have when its headquarters are moved
to St. Mary’s County. In its June 6, 1995 request for our opinion, the Command explained
the rationale for its proposal as follows: “It is anticipated that, unless alleviated, the Command will ... experience decreased efficiency occasioned by loss of productivity, absenteeism, reduced morale, fatigue, and loss of highly skilled professionals, all resulting from substantially longer commutes to the new headquarters.” The Command, under guise of a
flexiplace arrangement, is proposing, simply, to accommodate its employees’ commutes.
Commuting is a personal expense, and personal expenses are not payable from appropriated funds absent specific statutory authority. 5 USC §5536; 72 Comp. Gen. 225, 227 (1993).
Specific guidelines for the use of appropriated funds to pay for transportation for official
purposes is contained in section 1344(a)(1) of Title 31, U.S. Code, which provides:
Funds available to a federal agency, by appropriation or otherwise, may be
expended by the federal agency for the maintenance, operation, or repair of
any passenger carrier only to the extent that such carrier is used to provide
transportation for official purposes. Notwithstanding any other provision of
law, transporting any individual other than the individuals listed in subsections (b) and (c) of this section between such individual’s residence and such
individual’s place of employment is not transportation for an official purpose.”1
Once the Command completes its move, the “place of employment” for its employees, within
the meaning of section 1344(a)(1), will be in St. Mary’s County, Maryland. All of the usual
expenses incurred by an employee prior to his arrival at that location, whether or not he
makes an intermediate stop at a different location, are commuting expenses. Vehicles may
not be operated with appropriated funds except for an “official purpose” and since the term
“official purpose” does not include transportation between home and work, it cannot logically include transportation to work from some point in between.
The Command’s desire to expand the concepts underlying the Federal Flexiplace Project
and consider its bus an alternate work site fails to overcome this prohibition. Under flexiplace programs, employees perform their work at alternate work sites, such as the employee’s home or a telecommuting site. See Presidential Memorandum, July 11, 1994, 59 Fed.
Reg. 36017 (1994). Guidance provided agencies by the Office of Personnel Management does
not recognize a bus or other mobile work site as a flexiplace option. Federal Personnel
Manual Letter 368-1, attachment ¶1 (1991). The fact that work is performed while an employee is commuting does not turn the travel into something other than commuting, and
does not allow the employee to obtain compensation for that work. We conclude that expenditure of appropriated funds for the mobile work site would be improper.
We recognize the practical consequences the Command’s move may have on its employees
individually, and on the office as a whole. However, unless the Command can obtain legislative authority for the proposed mobile work sites, 31 USC §1344(a)(1) prohibits it from
mitigating the effects of the move in that manner.
Robert P. Murphy for Comptroller General of the United States
1
The exceptions listed in subsections (b) and (c) are not applicable here.
Food and Drug Administration — Use of Appropriations for
“No Red Tape” Buttons and Mementos
B-257488, 96-1 CPD ¶127
November 6, 1995
Digest
1. Food and Drug Administration may use its appropriations to purchase “No Red Tape”
buttons to promote the effectiveness and efficiency of employees, thereby furthering an authorized agency purpose.
2. Under the Government Employees’ Incentive Awards Act, 5 USC §§4501-4506, Food and
Drug Administration appropriations are available for the purchase of coffee mugs and pens
for federal employees if these items are intended to be presented as honorary or informal
recognition awards.
Decision
The Director, Division of Accounting, Food and Drug Administration (FDA), Department of
Health and Human Services, asks whether FDA appropriations may be used to purchase
“No Red Tape” buttons to remind employees to carry out their functions efficiently, and for
awards, such as coffee mugs and pens, which would be presented to speakers and federal
employees at FDA District Conferences. For reasons discussed below, FDA appropriations
are available for these purchases.
Background
The Office of Management Systems (OMS), Center for Food Safety and Applied Nutrition,
FDA, would like to purchase buttons inscribed with the logo, “No Red Tape.” As part of an
office campaign to promote team building, efficiency, and effectiveness, OMS would distribute these buttons to its staff of 130 to voluntarily wear while at work. OMS intends the buttons to serve as visible reminders to staff and customers that OMS’ mission is not to say
“no” but to find ways to work together to satisfy its customers’ needs. FDA states that these
buttons are not personal gifts but, rather, are a management tool that would provide a costeffective way of displaying the OMS mission statement. The buttons would cost less than
$150.
In addition, FDA would like to purchase items, such as coffee mugs, pens or other inexpensive mementos, to award to participants and to present to guest speakers at District Conferences. The mementos, emblazoned with the theme adopted for the conference, would
serve as a remembrance of a particular task, occasion, or a job well done. FDA believes that
these tokens, while inexpensive ($2 to $3 each), are very important in encouraging a sense
of teamwork and identity with the organization, and in building employee morale.
FDA would charge the expenses in question to its Salaries and Expenses appropriation,
which is provided for the necessary expenses of the agency. Pub. L. No. 104-31 (Sept. 30,
1995). The Senate report on the fiscal year 1995 FDA appropriation stated that FDA’s mission is to ensure that (1) food is safe, pure, and wholesome; (2) cosmetics are safe; (3) hu-
man and animal drugs, biological products, and therapeutic devices are safe and effective;
and (4) radiological products and use procedures do not result in unnecessary exposure to
radiation. S. Rep. No. 290, 103d Cong., 2d. Sess. 132 (1994).
Discussion
“No Red Tape” Buttons
We have been frequently asked about the purchase of relatively inexpensive items for distribution to agency employees as incentives to boost morale or increase support for a particular program. The question, of course, is whether the agency is authorized to use its appropriation for the particular expenditure. 31 USC §1301(a). If the item in question is not
specifically authorized by any appropriation act or other statute, the standard for measuring the propriety of the expenditure is the “necessary expense” rule. 66 Comp. Gen. 356,
359 (1987). Under this rule, an expenditure is permissible if it is reasonably necessary to
carry out an authorized function or will contribute materially to the effective accomplishment of that function, and is not otherwise prohibited by law. Id.
The application of the “necessary expense” rule is, in the first instance, a matter of agency
discretion. However that discretion is not unfettered. For example, we rejected the use of
appropriated funds to pay for plastic ice scrapers imprinted with the inscription “U.S. Army
Corps of Engineers — Huntsville Division — Please don’t drink and drive” for Huntsville
employees. B-223608, Dec. 19, 1988. The Corps argued that the ice scrapers served a valuable promotional purpose in support of the Huntsville division’s safety program.
However, because the Corps did not demonstrate how, if at all, the ice scrapers addressed
an occupational health and safety hazard not shared by the public as a whole, we did not
view the expense as necessary to the Corps’ discharge of its functions. Id. Similarly, we did
not accept an IRS argument that the distribution of T-shirts stamped with the Combined
Federal Campaign (CFC) logo to IRS Memphis Service Center employees contributing five
or more dollars per pay period to CFC was a necessary expense to motivate its employees to
contribute to CFC. 70 Comp. Gen. 248 (1991). In each of these cases, we balanced our respect for agency discretion against the clear potential for abuse of taxpayers dollars if we
were to accept the agency’s rationale. See 1 GAO Principles of Federal Appropriations Law
¶4-128 (2d. ed. 1991). Therefore, in determining the propriety of a proposed expenditure, we
will consider whether the relationship between an authorized function and a proposed expenditure is so attenuated as to take it beyond the agency’s legitimate range of discretion.
B-247563.2, May 12, 1993; B-223608, Dec. 19, 1988.
Under a “necessary expense” analysis, where the item, such as the buttons at issue here,
has no intrinsic value to its recipient, and is designed solely to assist in achieving internal
agency management objectives, the agency must show that the item will contribute to the
agency’s mission. We think FDA has demonstrated the requisite nexus between its appropriation’s purpose and the “no red tape” buttons. The message is clearly informational and
directed at the promotion of an internal agency management objective. The button serves
much the same purpose as other internal agency informational media such as posters,
memos, etc., reminding agency employees of institutional objectives and goals. In these cir-
cumstances, the purchase of the buttons can be considered a necessary expense that is incidental to the purpose of the FDA appropriation. We, therefore, do not object to the use of
appropriations for this proposed purchase.
FDA District Conference Mementos
FDA proposes to purchase inexpensive mementos to award to federal employees and to present to guest speakers at its District Conferences. The Government Employees’ Incentive
Awards Act (Act), 5 USC §§4501-4506, authorizes agency heads to “pay a cash award to,
and incur necessary expenses for the honorary recognition” of, federal employees. 5 USC
§4503. For example, the purchase of telephones (nominal value of $27) to be presented as
honorary awards is an allowable use of appropriated funds under this Act. 67 Comp. Gen.
349, 350 (1988). See also B-184306, Aug. 27, 1980 (desk medallions for use as paperweights).
The Act authorizes the Office of Personnel Management (OPM) to prescribe regulations and
instructions under which agency awards programs will be carried out. 5 USC §4506. In August 1995, OPM issued regulations defining an “award” as “something bestowed or an action taken to recognize and reward individual or team achievement that contributes to
meeting organizational goals or improving the efficiency, effectiveness, and economy of the
government or is otherwise in the public interest.” 60 Fed. Reg. 43936 (to be codified at 5
CFR §451.102). Under these regulations, mugs and pens are acceptable as awards so long
as they are “bestowed ... to recognize and reward ... achievement . ...” Accordingly, if FDA
proposes to present the mugs and pens at issue here to employees in honorary recognition
of an achievement that otherwise meets the criteria set forth in OPM regulations,1 the proposed purchase may be deemed a necessary expense that is chargeable to FDA appropriations. However, FDA’s appropriations are not available to purchase such items for distribution to all conference attendees as a remembrance of the event. The items, in such case,
could not be characterized as “honorary” in nature. See e.g., 53 Comp. Gen. 770 (1974),
where decorative ashtrays, which were distributed to conference attendees, were deemed
personal gifts and hence, not a necessary expense of the agency’s appropriations.
We do not object to presenting such mementos to District Conference guest speakers if the
purpose of the speech is to further an authorized agency purpose. See, e.g., B-208729, May
24, 1983, where an honorarium paid to a guest speaker was deemed a necessary expense of
a program that advanced an agency objective.
Robert Murphy for Comptroller General of the United States
1
60 Fed. Reg. 43946 (to be codified at 5 CFR §451.104(a)).
GMA Cover
B-288,018, 2001 CPD ¶144
August 17, 2001
Marc A. King for the protester. Walter R. Pierce, Esq., and Gail L. Booth, Esq., Defense Logistics Agency, for the agency. Charles W. Morrow, Esq., and James A. Spangenberg, Esq.,
Office of the General Counsel, GAO, participated in the preparation of the decision.
Digest
Agency’s failure to solicit a quote from the protester for an urgently needed item under an
oral solicitation conducted under simplified acquisition procedures is unobjectionable where
the contracting officer solicited the sources that she was aware had supplied the item and
she was unaware of the protester’s interest in submitting a quote, notwithstanding that the
protester had supplied the item for another agency and had submitted quotes on prior
agency simplified procedure acquisitions of the item.
Decision
GMA Cover Corporation protests the award of purchase order No. SP0750-01-M- 0990 to
John Johnson Company for 120 fitted vehicular covers by the Defense Logistics Agency, Defense Supply Center, Columbus, Ohio (DSCC). GMA contends that DSCC improperly denied GMA the opportunity to compete for the order.
We deny the protest.
In April 2001, DSCC determined that it had an urgent requirement for 120 fitted vehicular
covers, National Stock Number (NSN) No. 2540-01-472-5091. DSCC had no supplies on
hand of the item, which is a “Level A” weapon system supporting the “Family of Medium
Tactical Vehicles” critical to the protection of troops and supplies, so that accelerated award
and delivery of the item were required. Contracting Officer’s Report at 1; Agency Report,
Tab 4, Statement of Urgency.
To identify sources for this urgent requirement, the contracting officer consulted the Haystacks System, which is a computerized database list of sources that have previously provided various NSN items to the agency. Three sources, two of which were small businesses,
were listed in the system as prior suppliers of this cover. Neither GMA nor Johnson was
listed in Haystacks. One of the listed sources contacted identified Johnson, a small business, as the actual manufacturer of the item it had supplied. Using the simplified acquisition procedures in Federal Acquisition Regulation (FAR) part 13, the contracting officer
orally solicited quotes from Johnson and one of the small businesses listed in Haystacks,
because both had previously supplied or manufactured the cover and were believed to be
capable of timely delivering the item.1 Based on the responses, award was made on May 25
to Johnson at a price of $65,251.20. After DSCC denied GMA’s agency-level protest, this
protest followed.
1
The other listed small business source was not solicited because of prior delinquent performance.
GMA protests that DSCC improperly denied GMA the opportunity to compete by orally soliciting quotes and not publicly announcing the procurement. GMA states that it holds a
contract to supply similar covers with the United States Army Tank-Automotive and Armaments Command (TACOM) and has previously submitted quotes to DSCC for the item
being procured here as recently as January 2001. GMA argues that DSCC should therefore
have been aware that GMA was a source for this item and researched more references than
Haystacks for qualified manufacturers.
Under the Federal Acquisition Streamlining Act of 1994 (FASA), procurements conducted
using simplified acquisition procedures — used to purchase supplies and services, including
construction, research and development, and commercial items, the aggregate amount of
which does not exceed $100,000 — are excepted from the general requirement that agencies
obtain full and open competition through the use of competitive procedures when conducting procurements. 10 USC §§2304(a)(1)(A), (g)(1), (g)(3) (1994 & Supp. IV 1998). These simplified procedures, implemented in FAR part 13, are designed to promote efficiency and
economy in contracting and to avoid unnecessary burdens for agencies and contractors. To
facilitate these stated objectives, FASA requires only that agencies obtain competition to
the maximum extent practicable when they utilize simplified acquisition procedures. 10
USC §2304(g)(3); see FAR §13.104; Aleman & Assocs., Inc., B-287275, May 17, 2001, 2001
CPD ¶93 at 3. This standard is usually met if an agency solicits at least three sources.
However, the competition may be limited to fewer than three, including limiting the competition to only one source reasonably capable of performing the work, and the solicitation
conducted orally without public notice, if the agency’s needs must be satisfied on an urgent
basis. See FAR §§5.202(a)(2), 13.104(b), 13.106-1(a)(1)(iii), 13.106-1(b), 13.106-1(c).
As discussed above, to expedite the process DSCC orally solicited only those small business
firms that it believed were capable of meeting the agency’s urgent requirement.2 Since the
simplified acquisition procedures specifically allow an agency to solicit sources to fulfill an
urgent requirement on this basis, DSCC’s actions complied with the regulations applicable
to this circumstance. Although GMA argues that DSCC should have conducted a more comprehensive search of other resources, such as other parts lists and the Small Business Administration, DSCC did not act improperly by failing to undertake such an effort.
GMA argues that DSCC should have been aware of GMA due to its previous quotes to
DSCC for this item, and correspondence from TACOM to DSCC informing the agency of the
technical acceptability of GMA’s covers.3 The contracting officer advises that GMA was not
2
There is no merit to the protester’s suggestion that the award of the order is somehow questionable because
Johnson is not listed in Haystack and the agency did not initially advise the protester how it came to solicit
Johnson. The agency has fully explained in the agency report how Johnson was solicited and we see nothing
improper in Johnson being solicited.
3
GMA, in response to supplemental agency comments, submitted a memorandum dated May 12, 2001 from
TACOM to the Commander of DSCC advising it of the technical acceptability of GMA vehicular covers to
meet DSCC’s requirements for covers.
solicited because she was simply unaware that GMA was an acceptable source. Contracting
Officer’s Report at 4. There is no showing that the contracting officer was aware that GMA
was interested in submitting a quote for this requirement. As admitted by GMA, the item it
has supplied under the TACOM contract is not designated by the NSN applicable to this
procurement, so it could not be searched for under the agency’s database. Further, DSCC
states that all prior purchases of the item were conducted under simplified procedures and
the agency does not, and is not required to, maintain a list of prior quoters for purchases
conducted under these procedures. In the absence of any evidence that the contracting officer should have been aware of GMA’s desire to be solicited, such as either a specific request by GMA to compete for this order or its notifying DSCC of its desire to compete for
this requirement, there is no basis to find that the agency improperly excluded GMA from
the competition. See Aleman & Assocs., Inc., supra; Gateway Cable Co., B-223157 et al.,
Sept. 22, 1986, 86-2 CPD ¶333 at 4-5.
The protest is denied.
Anthony H. Gamboa
General Counsel
Jess Bruner Fire Suppression
B-296533
August 19, 2005
Todd A. Plimpton, Esq., Belanger & Plimpton, for the protester. Byron W. Waters, Esq.,
Department of Agriculture, for the agency. John L. Formica, Esq., and James A. Spangenberg, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.
Digest
Agency’s posting of a pre-solicitation notice and solicitation conducted under simplified acquisition procedures on the Federal Business Opportunities Internet site did not deprive
the protester of an opportunity to compete for a contract for fire engine services to be provided in a particular national forest where the pre-solicitation notice and solicitation were
accessible on the Internet site by searching by geographic location.
Decision
Jess Bruner Fire Suppression protests the award of a contract to any other vendor under
request for quotations (RFQ) No. R5SC0605049, issued by the Forest Service, Department
of Agriculture, for regional fire engine support. Bruner argues that the agency did not
properly post the pre-solicitation notice and solicitation to the Federal Business Opportunities (FedBizOpps) Internet site or specifically solicit Bruner, even though it had previously
provided this type of services, thus denying Bruner an opportunity to compete for a contract.
We deny the protest.
The Forest Service has long fought wildland fires using in-house resources as well as those
from other federal and state entities. The work required is performed in “forest and rangeland environments with steep terrain where surfaces may be extremely uneven, rocky, covered with thick tangled vegetation,” and under extreme temperatures accompanied by
smoke and dust. The Forest Service uses wildland fire engines in fighting these fires, which
it has obtained in part through private contractors. RFP at 58.
The acquisition here concerns services for the Forest Service’s Pacific Southwest region, also referred to by the Forest Service as Region Five or “R-5”. Contracting Officer’s Statement
at 1. Region Five is comprised of five “provinces,” with each province consisting of a “group
of forests within a geographic area.” Id. Specifically, Region Five is comprised of the Sierra
Cascade Province, the IBET Province, the Northern Province, the Pacific Southwest Province, and the Southern California Province.
The Forest Service “determined that it would competitively procure” the wildland fire engine services needed by Region Five for the 2005 fire season, and that “[n]eeds for fifteen
fire engines in four locations were identified.”1 Id. at 2. The contracting officer for the Sierra
Cascade Province was tasked to procure the wildland fire engine services needed for Region
Five.2 Id. at 4.
On March 23, 2005, a pre-solicitation notice for RFQ No. R5SC0605049 was posted to the
FedBizOpps Internet site on the Forest Service’s Sierra Cascade Province website within
FedBizOpps.3 The notice provided the contracting office address as the “Department of Agriculture, Forest Service, R-5 Sierra Cascade Province (Lassen Plumas and Modoc [National
Forests]).” The notice stated that the purpose of the acquisition was to obtain the services of
two fire engines for the Shasta-Trinity National Forest, three fire engines for the Tahoe National Forest, eight fire engines for the Plumas National Forest, and two fire engines for the
Six Rivers National Forest (only the Plumas National Forest is in the Sierra Cascade Province).4 The notice continued by stating that the solicitation would only be available electronically, and provided the names and contact information for the designated contracting officer and procurement assistant. The contracting officer also “contacted at meetings and by
telephone” all contractors who had active agreements with any contracting office within
Region Five to provide wildland fire engine services.5 Contracting Officer’s Statement at 4.
The RFQ for the wildland fire engine services was posted to FedBizOpps on the Forest Service’s Sierra Cascade Province website on April 21. The solicitation provided for the award
of multiple requirements-type, daily rate contracts with per-day pricing, for a base period of
1 year with two 1-year options. RFQ at 6. The RFQ’s schedule of services listed, consistent
with the pre-solicitation notice, the previously mentioned four national forests and fire engine requirements for each of the national forests. For example, item number 4 of the
schedule set forth the agency’s requirement for the Tahoe National Forest as three of a certain type of wildland fire engine, with a mandatory availability period of June 1 through
September 30, and required that the fire engines be located within 50 miles of the forest.
RFQ at 7. The RFQ further provided that successful contractors would be “responsible for
all equipment, materials, supplies, transportation, lodging, trained/certified personnel, and
supervision and management of those personnel.” RFQ at 58. The RFQ requested that responses to the solicitation be submitted by May 19.
1
The wildland fire engine services were previously not competitively acquired, but rather were procured
through emergency equipment rental agreements (EERA). Contracting Officer’s Statement at 4
2
According to the agency, each province within Region Five, as well as Region Five itself, has its own contracting staff, including its own contracting officer. Agency’s Supplemental Comments at 2.
3
FedBizOpps is the government-wide point of entry (GPE) for the electronic publication of notices. Federal
Acquisition Regulation (FAR) §§5.003, 5.101, 5.201.
4
Bruner’s protest is focused on the requirement for wildland fire engines for the Tahoe National Forest in
the IBET Province. Protest at 2.
5
The protester was not contacted because it did not have an active EERA to provide wildland fire engine
services within Region Five. Contracting Officer’s Statement at 4. The protester, which apparently previously had an EERA covering these services in Region Five, makes a variety of contentions relating to the
EERAs and concerning restrictions on its ability to compete for these services, all of which are not germane
to the protest of this solicitation and which we will not consider.
Bruner filed this protest with our Office on June 2, arguing that it was not aware of the existence of the pre-solicitation notice or solicitation until shortly before filing its protest. Protest at 2. The protester contends that the agency erred by posting the pre-solicitation notice
and solicitation to FedBizOpps on the Forest Service’s Sierra Cascade Province website, arguing that the notice and solicitation should have been posted on either the Forest Service’s
Region Five website, or on the websites of each of the provinces in which the services were
required to be performed (i.e., the Sierra Cascade, IBET, and Northern Provinces’ websites). Protest at 3.
In this regard, the record here reflects that the pre-solicitation synopsis and RFQ were accessible only through the Sierra Cascade Province’s FedBizOpps website, and could not be
accessed through the websites of the IBET Province, Northern Province, or Region Five. As
such, a vendor, such as Bruner, who was looking for contracting opportunities in the IBET
Province (which includes the Tahoe National Forest) by browsing the IBET Province’s website would not have found either the pre-solicitation notice or RFQ at issue here.
Under the Federal Acquisition Streamlining Act of 1994 (FASA), simplified acquisitions are
excepted from the general requirement that agencies obtain full and open competition
through the use of competitive procedures when conducting acquisitions. See 41 USC
§§253(a)(1)(A), (g)(1), (g)(4). Part 13 of the FAR establishes procedures for simplified acquisitions, which are designed to promote economy and efficiency in contracting, and to avoid
unnecessary burdens for agencies and contractors. To facilitate these objectives, FASA requires that agencies obtain competition to the maximum extent practicable. 41 USC
§427(c); FAR §13.104; Information Ventures, Inc., B-293541, April 9, 2002, 2004 CPD ¶81 at
3.
The simplified acquisition procedures require notice of procurements in excess of $25,000 in
accordance with the Small Business Act, 15 USC §637(e), and the Office of Federal Procurement Policy Act, 41 USC §416 (2000).6 A notice must provide an “accurate description”
of the property or services to be purchased and must be sufficient to allow a prospective
contractor to make an informed business judgment as to whether to request a copy of the
solicitation. 15 USC §637(f) (2000); Information Ventures, Inc., supra. Additionally, “[a]
publication of a notice of solicitation by electronic means meets the requirements for accessibility ... if the notice is electronically accessible in a form that allows convenient and universal user access” through the GPE. 41 USC §416 (a)(7) (2000).
The agency explains that, although the fire engines are needed in three of the Region Five
provinces, the pre-solicitation notice and RFQ were posted only to the Sierra Cascade Province website because the contracting officer for that province was tasked with conducting
this acquisition, and that contracting officer is authorized to post notices and solicitations
only on the Sierra Cascade Province’s FedBizOpps website. The agency concedes that “it
6
Exceptions to the notice requirement are set forth in the regulations, but none are applicable here (nor has
the agency asserted that any are applicable). See FAR §§13.105, 5.101(a)(1), 5.202.
was possible for the Forest Service to have posted the [pre-solicitation notice and] RFQ on
the FedBizOpps website differently,” but states that this would “have been cumbersome.”
Agency Supplemental Comments at 2. The agency also points out that both the presolicitation notice and RFQ included the correct North American Industry Classification
System (NAICS) code (115310, Natural Resources and Conservation Services) for this acquisition, and that both the pre-solicitation notice and the RFQ could thus have been found
by searching the FedBizOpps website using the NAICS code. Id. at 5. The agency also
states that the pre-solicitation notice and RFQ were “searchable by ... geographic criteria,”
that is, by searching the FedBizOpps website using the names of the particular national
forest for which the wildland fire engines were needed. Id. at 2. The agency concludes that
in its view, the pre-solicitation notice and RFQ were properly posted on the FedBizOpps,
given that they contained the correct NAICS code and were searchable by specific geographic location.
We first note that the agency has not stated or otherwise explained in any manner why the
“process of coordinating with other provinces” was so “cumbersome,” or why that would relieve it of any of its statutory and regulatory obligations regarding the proper posting of
procurement actions. In this regard, we note that during a telephone hearing, the basic process of coordinating with the IBET and Northern Province contracting offices was described
as nothing more than sending them the pre-solicitation notice and RFQ, and requesting
that they be posted on the provinces’ respective websites. Additionally, although the agency
is correct that the pre-solicitation notice and RFQ could have been accessed by searching
the FedBizOpps site using the correct NAICS code, we note that this code includes many
divergent services and postings nationwide; indeed, during the course of a telephone hearing with the parties, such a search was conducted and it yielded well over 900 different
postings.7 Given the circumstances here, it would be quite burdensome for a contractor to
have to regularly search such a large database in order for the contractor to be assured that
it remained aware of potential contracting opportunities.
Nevertheless, under the circumstances here, we do not agree with the protester that the
agency’s posting of its requirements on only the Sierra Cascade Province’s FedBizOpps
website failed to meet the statutory requirement that the notice be “electronically accessible
in a form that allows convenient and universal user access.” See 41 USC §416 (a)(7) (2000).
We have long held that prospective vendors have an affirmative duty to make every reasonable effort to obtain solicitation materials. USA Info. Sys., Inc., B-291488, Dec. 2, 2002,
2002 CPD ¶205 at 3; American Material Handling, Inc., B-281261, Jan. 19, 1999, 99-1 CPD
¶13 at 2; see Upside Down Prods., B-243308, July 17, 1991, 91-2 CPD ¶66 at 3. As noted
above, each particular contracting opportunity set forth in the RFQ could have been readily
located on the FedBizOpps website by searching by geographic location. That is, the contracting opportunity that the protester is interested in, the provision of wildland fire engine
services for the Tahoe National Forest in the IBET Province, could have been readily located by searching the FedBizOpps website for contracting opportunities in that forest — that
7
During the hearing, the IBET Province’s website had approximately 60 postings.
is, by searching the FedBizOpps website using the term “Tahoe.”8 See Protest at 2. Had the
protester done this, the protester would have found both the pre-solicitation notice and
RFQ. Given this, we conclude that the agency’s actions satisfied the legal requirements.
The protest is denied.
Anthony H. Gamboa
General Counsel
8
During the telephone conference, a search using the term “Tahoe” yielded about the same number of postings as were listed on the IBET Province’s site.
Kathryn Huddleston and Associates
B-289,453, 2002 CPD ¶57
March 11, 2002
Kathryn Huddleston for the protester. Judith P. Morrison for Act II Management Consultants, the intervenor. Christopher J. Wood, Esq., and Craig R. Schmauder, Esq., Department of the Army, for the agency. Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq.,
Office of the General Counsel, GAO, participated in the preparation of the decision.
Digest
In a procurement under simplified acquisition procedures where the agency elected to establish a competitive range and conduct discussions, the agency improperly excluded the
protester’s low-priced quote from the competitive range and conducted discussions with only the awardee, where the protester’s and awardee’s quotes failed to satisfy the same solicitation requirements and the record did not support the agency’s determination that the
protester would not have had a realistic chance of receiving award if it had been afforded
discussions.
Decision
Kathryn Huddleston and Associates, Ltd. (KHA) protests the rejection of its quote and
award of a purchase order to Act II Management Consultants under request for quotations
(RFQ) No. DACW87-01-Q-0160, issued by the U.S. Army Corps of Engineers for educational
services. KHA challenges the evaluation of its quote and complains that the agency conducted discussions with only Act II.
We sustain the protest.1
The RFQ was issued electronically as a combined synopsis and solicitation as a small business set-aside.2 The RFQ identified the procurement as a commercial item acquisition under Federal Acquisition Regulation (FAR) part 12 and, as amended, provided that the agency would use simplified acquisition procedures under FAR part 13. Agency Report, Tab D-1,
Combined RFQ/Synopsis (Sept. 13, 2001); Tab D-4, Revised Combined RFQ/Synopsis
Amendment (Oct. 5, 2001).
The solicitation requested quotes for all services and material necessary to revise and present an instructional course entitled “Instructional Methods.” Vendors were informed that
the course was designed to “give students skill in developing and conducting any type of
training, presentations, and briefings.” Course topics included “Systematic Approach to
Training, roles of the instructor, instructional objectives, communications skills, lesson
1
Because a protective order was not issued in connection with this case, the language in our decision, which
is based in part upon source selection sensitive and confidential information, is necessarily general.
2
The combined RFQ/Synopsis was posted on-line on the electronic Commerce Business Daily (CBDNET) site
(at www.cbdnet.access.gpo.gov) on September 13, 2001, and subsequently published in print form in the
CBD on September 17.
planning, instructional aids, the adult learner, methods of instruction, classroom management, counseling, tests, and questioning techniques.” In addition, the RFQ provided that
the students in the Instructional Methods course would either have been identified by the
Corps as potential instructors in the Proponent Sponsored Corps of Engineers Program or
“have been charged with developing and conducting any type of training, presentations, or
briefings.” The RFQ provided for the award of a fixed-price order for four class sessions during a base year and for a specified number of classes in the 2 option years. Agency Report,
Tab D-1, Combined RFQ/Synopsis (Sept. 13, 2001), at 1.
The RFQ required vendors to provide two instructors (a lead and an assistant instructor)
for each session, and stated experience and educational qualification requirements for the
instructors. Vendors were required to provide resumes for the proposed instructors with
their quotes establishing the following:
The lead instructor should have 200 hours of teaching experience during the
past 5 years in courses designed to teach instructional methodology to instructors and/or trainers.
....
The assistant instructor should have 100 hours of teaching experience during
the past 3 years in courses designed to teach instructional methodology to instructors and/or trainers.
For both instructors, the RFQ required that the teaching experience include:
development of learning objectives, test items, lesson planning, systematic
approach to training, development and use of instructional aids and classroom management.
In addition, vendors were required to “[i]dentify proposed instructors scheduled to teach
each course session ... [and] identify proposed lead and assistant instructors scheduled to
teach each course session.” Id. at 2.
Around October 5, the Corps issued a solicitation amendment, which, for the first time,
stated evaluation criteria. As amended, the RFQ provided, among other things, that quotes
would be evaluated under three factors: (1) teaching experience, (2) educational qualifications, and (3) price. Factors (1) and (2) were stated to be equal in importance, and factor (3)
was stated to be significantly less important than factors (1) or (2). Agency Report, Tab D-4,
Revised Combined RFQ/Synopsis Amendment (Oct. 5, 2001), at 2. The agency states that
the amendment was not directly distributed to vendors, but was published electronically on
the CBDNET (www.cbdnet.access.gpo.gov) and the Federal Business Opportunities (FedBizOpps) (www.arnet.gov/FedBizOpps/) websites.3 Agency Legal Memorandum at 4. The
3
After October 1, 2001, the contracting officer was required to transfer notices to the governmentwide point
of entry (GPE), which is the FedBizOpps website. See FAR §5.003. When transmitting notices to the GPE
amended solicitation extended the date for submission of quotes from September 27 to October 9.4 Agency Report, Tab D-4, Revised Combined RFQ/Synopsis Amendment (Oct. 5,
2001), at 3.
The Corps received eight quotes, including KHA’s and Act II’s, by the original September 27
date for submission of quotes.5 The quotes were evaluated by an “informal technical evaluation board.” Contracting Officer’s Statement at 6.
The agency found that KHA’s quote did not show that its proposed lead and assistant instructors had the required experience in courses designed to teach instructional methodology to instructors and/or trainers. Specifically, the Corps found that, although KHA’s quote
identified numerous courses that the lead instructor had taught, these courses did not
demonstrate relevant experience (that is, experience teaching instructional methodology to
teachers). With respect to the proposed assistant instructor, KHA listed a number of courses the assistant instructor had conducted that appeared to be relevant, but those courses
were not within 3 years, as required by the RFQ. Agency Report, Tab G-2, KHA Consensus
Evaluation, at 1-2. KHA’s quote received a red adjectival rating for teaching experience,
which, according the agency’s source selection plan, reflected a proposal that “fail[ed] to
meet standards and many requirements.” Id.; Agency Report, Tab G-1, Source Selection
Plan, at 4. KHA’s quote was assessed as purple/very good, however, for the educational
qualifications of its proposed instructors. Agency Report, Tab G-2, KHA’s Consensus Evaluation, at 2.
The Corps found that Act II’s quote also did not show that the firm satisfied all the solicitation requirements. Specifically, the evaluation board determined that although Act II’s
quote showed that the firm’s proposed instructors had taught relevant “topics,” the quote
contained inconsistencies in the amount of experience claimed, did not show that the proposed instructors had the required amount of experience, and did not identify for each
course session which instructors would be the lead and assistant instructors.6 Agency Rebefore January 1, 2002, contracting officers were required to direct the GPE to forward the notice to the
CBD. FAR §5.201(b)(2).
4
The protester states that it never saw and was never apprised of this amendment prior to submitting its
quote and that it submitted its quote believing that this was not to be a “best value” award. Protest at 1;
Protester’s Comments at 7-8. The Corps states that although it “cannot confirm or deny that this amendment was published on the FedBizOpps [website]” (the Corps says nothing in this regard with regard to the
CBDNET), its former contract specialist, to the “best of his recollection,” informed KHA that changes to the
solicitation would be posted on the electronic bulletin board maintained by the Corps of Engineers, Engineering and Support Center, Huntsville, Alabama. Agency Legal Memorandum at 4; Agency Report, Tab H8, Affidavit of Contract Specialist (Jan. 4, 2002). KHA denies that it was so informed. Protester’s Comments
at 7. We need not resolve this dispute since we sustain the protest and recommend reopening discussion.
5
On October 10, Act II “resubmitted its pricing information from its original quote,” which the Corps did not
utilize because it was after the amended date stated for submission of quotes and because it was identical to
the pricing information submitted with Act II’s original quote. Contracting Officer’s Statement at 6.
6
In response to our request, made after receipt of the agency’s report, the Corps submitted to us a typed
transcription of the nearly illegible hand-written contemporaneous consensus evaluation of Act II’s initial
port, Tab G-3, Act II’s Consensus Evaluation, at 3-4. Act II’s quote received a yellow adjectival rating for teaching experience, which was stated to reflect a “proposal that has numerous weaknesses and does not meet several requirements.” Id.; Agency Report, Tab G-1,
Source Selection Plan, at 4. Act II’s quote was assessed as “green+” for the educational
qualifications of its proposed instructors.7 Agency Report, Tab G-3, Act II’s Consensus
Evaluation, at 5.
The agency established what it characterized as a “competitive range” that consisted of only
Act II’s quote because, according to the contracting officer, only Act II’s quote “was determined to meet the minimum requirements of the solicitation,” and that the “eliminated
quotes [including KHA’s] could not be cured with clarifications or discussions.” Contracting
Officer’s Statement at 6. Discussions were conducted with Act II, which provided further
information to establish that its proposed instructors satisfied the solicitation’s experience
requirements and to identify which instructors would teach what courses and who would be
lead instructors and who would be assistant instructors. Agency Report, Tab G-6, Act II’s
Revised Quote. A purchase order was awarded to Act II, and KHA protested to our Office,
after receiving a letter explaining why KHA had not received the award. Agency Report,
Tab H-5, Notification of Unsuccessful Quote (Nov. 27, 2001).
KHA raises numerous challenges to the conduct of this procurement. Specifically, KHA
complains that the Corps conducted discussions only with Act II, despite KHA’s lower proposed price. KHA challenges the evaluation of its quote, arguing variously that its proposed
instructors actually have the required experience that the Corps found lacking and that the
Corps failed to contact its listed references to ascertain the extent of its instructors’ experience.8 KHA also provides further information that it asserts it could have provided during
discussions to establish that its instructors have the requisite experience. Protester’s Comments at 9, 11-13.
As noted above, the Corps conducted this acquisition using simplified acquisition procedures. Simplified acquisition procedures are designed to, among other things, reduce administrative costs, promote efficiency and economy in contracting, and avoid unnecessary
burdens for agencies and contractors. FAR §13.002; Sawtooth Enters., Inc., B-281218, Dec.
7, 1998, 98-2 CPD ¶139 at 3. These procedures provide discretion to contracting officers to
quote. Agency Submission (Feb. 4, 2002), Tab AB-4. The typewritten document purports to show that Act
II’s quote does not contain any deficiencies (only disadvantages), whereas the handwritten evaluation documents appeared to indicate evaluated deficiencies as well as disadvantages. Nonetheless, the differences
between the two documents are not significant, since both documents establish that Act II’s quote did not
satisfy all of the solicitation requirements, and this fact is not altered by the agency’s characterization of
Act II’s failure to meet the requirements as a disadvantage rather than a deficiency. See Bank of America,
B-287608, B-287608.2, July 26, 2001, 2001 CPD ¶137 at 12 n.21 (an agency’s characterization of a proposal’s
failure to satisfy solicitation requirements as not being a deficiency is not controlling).
7
A green adjectival rating was said to reflect a “proposal that meets the minimum contractual requirements
required by the solicitation.” Agency Report, Tab G-1, Source Selection Plan, at 4.
8
KHA admits, however, that, at least with respect to one of its proposed assistant instructors, the firm “erred
in not clarifying” that person’s experience in its quote. Protester’s Comments at 9.
use one or more of the evaluation procedures in FAR parts 14 and 15, and do not require
formal evaluation plans, the establishment of a competitive range, or the conduct of discussions. See FAR §13.106-2(b). Our Office reviews allegations of improper agency actions in
conducting simplified acquisitions to ensure that the procurements are conducted consistent with a concern for fair and equitable competition and with the terms of the solicitation. Nunez & Assocs., B-285666, Feb. 10, 1995, 95-1 CPD ¶62 at 2. Although an agency is
not required to establish a competitive range or conduct discussions under simplified acquisition procedures, we think that where an agency avails itself of these negotiated procurement procedures, the agency should fairly and reasonably treat quoters in establishing the
competitive range and conducting discussions. See Finlen Complex, Inc., B-288280, Oct. 10,
2001, 2001 CPD ¶167 at 8-10.
The Corps contends, citing to the FAR part 15 rules, that it fairly and reasonably established the competitive range. See Legal Memorandum at 15-16. Under those rules, the determination of whether a proposal is in the competitive range is principally a matter within
the discretion of the procuring agency. Dismas Charities, Inc., B-284754, May 22, 2000,
2000 CPD ¶84 at 3. FAR §15.306(c) allows an agency to establish a competitive range consisting of only the most highly-rated proposals. Under the regulation, agencies properly
may eliminate proposals that are deemed to have no realistic prospect for award. SDS Petroleum Prods., Inc., B-280430, Sept. 1, 1998, 98-2 CPD ¶59 at 5-6. Judgments regarding
which proposals are included in the competitive range must be made in a relatively equal
manner. An agency cannot reasonably exclude a proposal from the competitive range where
the strengths and weaknesses found in that proposal are similar to those found in proposals
included in the competitive range. Columbia Research Corp., B-284157, Feb. 28, 2000, 2000
CPD ¶158 at 4; Nations, Inc., B-280048, Aug. 24, 1998, 99-2 CPD ¶94 at 6-10.
In this case, the Corps included only Act II’s quote in the competitive range based upon its
determination that only that firm’s quote was acceptable. However, this determination is
based upon an error of fact. The record establishes that Act II’s initial quote was not technically acceptable, as the agency now asserts. That is, the contemporaneous evaluation documents show that Act II’s quote received a yellow/marginal adjectival rating because the
quote did not satisfy all the solicitation requirements. Specifically, the evaluators found
that Act II’s quote, like KHA’s, did not show that its proposed instructors satisfied the experience requirements. In addition, Act II (unlike KHA) failed to identify which instructors
would teach which courses.
The record also does not support the Corps’s determination that KHA’s quote, unlike Act
II’s initial quote, was not susceptible to being made acceptable through discussions. As explained above, KHA’s and Act II’s initial quotes were similarly flawed; that is, both firms
failed to demonstrate that their respective proposed instructors satisfied all the solicitation
experience requirements. The Corps has not explained why Act II’s failure to satisfy the experience requirements could be cured by discussions and KHA’s similar failure could not.
Also, the Corps has not rebutted KHA’s protest statements that KHA could provide further
information or revise its quote, such that KHA’s quote would become acceptable.
The Corps nevertheless argues that KHA’s lower-priced quote could reasonably be excluded
from the competitive range because KHA had no realistic prospect of receiving award. Legal
Memorandum at 15-16. We do not find any support for this conclusion at this stage in the
procurement. While it is true that Act II’s quote received a higher adjectival rating than
KHA’s quote under the teaching experience factor (a yellow/marginal rating as compared to
KHA’s red/unacceptable rating), KHA received a higher adjectival rating under the equally
important educational qualifications factor (a purple/very good rating as compared to Act
II’s green+/acceptable rating). Also, KHA quoted a much lower price than did Act II. Assuming that KHA could provide information, or revise its quote, to establish the acceptability of its quote, the Corps would be required to perform a cost/technical tradeoff analysis to
determine which quote represented the best value to the government. Given KHA’s much
lower price and higher educational qualification rating (at the time of initial quotes), we
find no reasonable basis for the conclusion that KHA would have had no realistic chance of
receiving award.
In sum, we find unreasonable the Corps’s competitive range determination that included
only Act II’s quote. In making this judgment, the Corps apparently mistakenly believed
that Act II’s quote satisfied all the solicitation requirements and was acceptable. Instead,
the record shows that two firms’ quotes suffered from similar informational weaknesses
that were susceptible of correction through discussions. We sustain KHA’s protest because
the Corps failed to treat the two firms fairly and equally with respect to conducting discussions.
We recommend that the Corps include KHA’s quote in the competitive range, conduct discussions with KHA and Act II, request revised quotes, and make a new source selection decision. If KHA’s quote is selected for award, the Corps should terminate the purchase order
issued to Act II and issue a purchase order to KHA.9
We also recommend that KHA be reimbursed its reasonable costs of filing and pursuing the
protest. 4 CFR §21.8(d)(1) (2001). The protester should submit its certified claim, detailing
the time expended and costs incurred, directly to the Corps within 60 days of receiving this
decision. 4 CFR §21.8(f)(1).
The protest is sustained.
Anthony H. Gamboa
General Counsel
9
Given our recommendation to open discussion with KHA, we do not address KHA’s other complaints regarding the evaluation of the firm’s quote and the failure to advise KHA of the amended solicitation. KHA
also complains that the Corps’s actions in this case reflected bias against KHA. Because government officials are presumed to act in good faith, we do not attribute unfair or prejudicial motives to them on the basis of inference or supposition. Ameriko Maint. Co., B-253274, B-253274.2, Aug. 25, 1993, 93-2 CPD ¶121 at
5. Thus, the protest must provide credible evidence clearly demonstrating bias and that the agency’s bias
translated into action that unfairly affected the protester’s competitive position. Advanced Sciences, Inc., B259569.3, July 3, 1995, 95-2 CPD ¶52 at 17. KHA has not shown that the agency’s conduct of this procurement was motivated by bias.
Kaye — Reimbursement of Registration Fee and Per Diem Expenses
B-210522
December 15, 1983
Mr. John J. Sandy, Acting Director, Financial Management Division, Environmental Protection Agency (EPA), has referred the claim of Dr. M. E. Kaye to us for decision. At issue is
Dr. Kaye’s entitlement to reimbursement of a registration fee and per diem expenses he incurred in connection with his attendance at the annual meeting of the Nevada Academy of
Family Physicians. Also at issue is whether Dr. Kay should have been charged annual
leave.
Digest
1. Claim by medical doctor employed by EPA for reimbursement of registration fee and per
diem expenses incurred incident to his attendance at Nevada Academy of Family Physician’s meeting is governed by the prohibition of 5 USC §5946 against such payment and
may not be allowed absent evidence that his attendance was part of an authorized training
program under 5 USC §4109, or that it was related to agency functions or management under 5 USC §4110. In the absence of such evidence annual leave should be charged since the
employee’s travel cannot be considered official travel.
2. Employee contends that he should be reimbursed for expenses incurred incident to attendance at the Nevada Academy of Family Physician’s meeting because it provided him
with 20 hours of continuing medical education he needs to retain his medical license and
board certification, which he in turn needs to retain his EPA position. The claim is denied
since the expenses are personal in nature, and within the purview of those cases where we
have held that it is the duty of an employee to qualify himself for the performance of his official duties.
Background
Dr. Kaye, whose permanent duty station is Las Vegas, Nevada, attended the Nevada Academy of Family Physician’s 14th Annual Ski-CME Meeting from January 24, 1982, to January 29, 1982, in Lake Tahoe, Nevada. He did so pursuant to a travel authorization granting
him per diem. Upon his return Dr. Kaye submitted a voucher for reimbursement of $657.50,
of which $370 was disallowed. Of this amount, $325 represented the registration fee and
$45 represented a portion of the per diem claimed.
The Las Vegas Finance Office disallowed Dr. Kaye’s claim for reimbursement of the registration fee because it included social activities and meals for Dr. Kaye and his wife that
could not be separated out or priced on an item-by-item basis. The $45 was deducted from
Dr. Kaye’s claim due to a reduction in his per diem entitlement from 7-1/2 to 5-3/4 days,
based on a disallowance of the excess time he spent driving instead of flying.
Dr. Kaye contends that he is entitled to reimbursement of the registration fee because the
specific purpose for his attendance at the meeting was to earn a portion of the continuing
medical education hours he needs to retain his medical license and board certification, and
to maintain his position with EPA as a medical advisor. Although Dr. Kaye has concurred
in the reduction of his per diem claim, Mr. Sandy has asked whether all of the per diem
should have been disallowed in light of the purpose for which dr. Kaye attended the meeting. For reasons we will explain below it appears that EPA’s disallowance of the registration fee was proper and that per diem should not have been authorized.
Opinion
Attendance at Meetings
The general rule regarding expenses of this nature is found in §5946 of Title 5, United
States Code, which provides that:
Except as authorized by a specific appropriation, by express terms in a general appropriations, or by §§4109 and 4110 of this title, appropriated funds
may not be used for payment of—
*****
(2) expenses of attendance of an individual at meetings or conventions of
members of a society or association.
Section 4109 of Title 5 authorizes the head of an agency to reimburse the necessary expenses of an employee selected for training pursuant to an authorized training program, but
there is no indication that Dr. Kaye’s attendance at the meeting of the Nevada Academy of
Family Physicians was pursuant to an authorized training program. Nor are we aware of
any appropriation which provides for reimbursement of these expenses. Therefore, in order
for Dr. Kaye to be reimbursed, his attendance must be determined to fall within the exception to the general rule against such reimbursement found in §4110.
Section 4110 provides that:
Appropriations available to an agency for travel expenses are available for
expenses of attendance at meetings which are concerned with the functions
or activities for which the appropriation is made or which will contribute to
improved conduct, supervision, or management of the functions or activities.
In his letter forwarding Dr. Kaye’s claim, Mr. Sandy does not assert that the meeting Dr.
Kaye attended had any application to EPA’s functions or activities, nor does he assert that
Dr. Kaye’s attendance resulted in the improved conduct, supervision, or management of
EPA’s functions or activities.
It does not appear that EPA made a determination that the meeting of the Nevada Academy of Family Physicians was related to agency functions or management as required under
5 USC §4110, prior to authorizing Dr. Kaye’s travel. Since we have no information regarding Dr. Kaye’s duties at EPA, we cannot make an independent determination that the
meeting he attended was related to EPA’s functions or management.
As a result, in the absence of any indication that one of the exceptions to 5 USC §5946 applies, the prohibition of that section against reimbursement of an individual’s attendance at
meetings of a society or association governs this situation and precludes reimbursement to
Dr. Kaye of the registration fee and per diem expenses.
Official Travel/Annual Leave
Prior to denying Dr. Kaye’s claim for reimbursement of the registration fee, the EPA Las
Vegas Office contacted the Fiscal Policies and Procedures Branch in Washington for advice.
In addition to advising the Las Vegas Office that the registration fee was not reimbursable,
the Fiscal Policies and Procedures Branch stated:
It is our belief that the 14th Annual Ski-CME Meeting was not for the benefit
of the Agency and we must hold, under current findings, that the fee is not
reimbursable. * * *
*****
We also have to question the legality or need for an EPA employee to attend
this meeting on official business and believe it should have been at personal
expense and a charge to their annual leave.
If no determination is made that Dr. Kaye’s attendance at this meeting falls within the confines of 5 USC §4110, we would agree with the EPA Fiscal Policies and Procedures Branch
that Dr. Kaye’s travel cannot be considered official travel and he should be charged annual
leave.
State License/Board Certification
Dr. Kaye contends that he should be reimbursed for the registration fee because to retain
his position at EPA he needs a state license and board certification and to retain those, he
needs a certain number of continuing medical education hours, 20 of which he earned by
attending the Nevada Academy of Family Physicians meeting. Assuming that Dr. Kaye
does need a state license and board certification to retain his position at EPA, his claim
falls within the purview of those cases in which we have held that it is the duty of an officer
or employee of the United States to qualify himself for the performance of his official duties.
In accordance with this rule, we have held that appropriated funds cannot be used to pay
the expenses of a Federal attorney incident to maintaining his status as an attorney in good
standing in a state bar. See 51 Comp. Gen. 701 (1972); B-204215, December 28, 1981. We
have also held that this prohibition extends to preclude the reimbursement of fees required
to practice before a particular court. See 47 Comp. Gen. 116 (1967). While all Federal attorneys are required to maintain membership in a state bar and many must be admitted to
practice before a particular court in order to represent the Government’s interest before
that court, we consider these expenses to be matters of personal qualification. In B-204021,
April 16, 1982, 61 Comp. Gen. 357 we held that the Merit Systems Protection Board could
not reimburse appeals officers for law school tuition and bar review course tuition incident
to a program to assist them in meeting a new requirement that they be bar-admitted attor-
neys. We pointed out, as we had with regard to court admission fees and bar membership
fees, that those expenses which enable or assist the individual to qualify for a position are
personal to the employee and appropriated funds cannot be used to pay for them.
We have applied the same rule where a Federal employee must secure a permit or license to
perform the duties of his position. Thus, in B-186512, January 17, 1977, we held that appropriations of the U.S. Forest Service were not available to reimburse an employee who
was required to purchase a state pesticide applicator license, and in B-193862, April 30,
1979, we held that the National Park Service could not reimburse its employees for the cost
of state certification as water treatment operators. In 46 Comp. Gen. 695 (1967), we held
that the State license fees imposed on medical doctors employed by the Public Health Service, who are detailed to States or local health agencies, could not be reimbursed to those
employees even though they were detailed to carry out State functions.
In summary, without evidence that this situation falls within an exception to the prohibition of 5 USC §5946 and given its similarity to the cases cited above, we hold that Dr. Kaye
may not be reimbursed for the expenses he incurred incident to attending the Nevada
Academy of Family Physician’s meeting and that his travel-time is chargeable to annual
leave.
Milton J. Socolar
for Comptroller General of the United States
MTB Group
B-295,463, 2005 CPD ¶40
February 23, 2005
J. Randolph MacPherson, Esq., Halloran & Sage, for the protester. Angela Puri, Esq., Department of Housing and Urban Development, for the agency. Mary G. Curcio, Esq., and
John M. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation
of the decision.
Digest
Protest that conducting procurement using reverse auction format is impermissible because
vendors’ prices will be disclosed during the auction is denied; agency is conducting reverse
auction under simplified acquisition procedures, which encourage use of innovative procedures and do not expressly prohibit disclosure of vendors’ prices in implementing such procedures, and disclosure is not prohibited under the procurement integrity provisions of the
Office of Federal Procurement Policy Act.
Decision
MTB Group, Inc. protests that an online reverse auction (that is, an auction under which
the lowest priced vendor will be issued a purchase order) being conducted by the Department of Housing and Urban Development (HUD), Real Estate Assessment Center (REAC),
for housing inspection services, is improper because it requires the disclosure of vendors’
prices during the auction.
We deny the protest.
HUD requires the rental housing units for which it is responsible to undergo annual physical inspections to ensure that they are fit for habitation. HUD is contracting for those services using an online reverse auction; indeed, HUD has issued a notice to potential participants indicating its intent to conduct reverse auctions for 330 properties within Georgia
and Pennsylvania.* HUD is conducting the reverse auctions under the simplified acquisition procedures of Federal Acquisition Regulation (FAR) part 13. Using this process, HUD
will notify potential participants of an upcoming auction, specifying the time that the auction will start and close. Those who choose to participate will submit quotations to the
online auction website. During the auction, the website will display the property to be inspected, the current lowest quotation, and the time remaining in the auction. The website
will not display the names of vendors, any other identifying information, or the time at
which quotations were submitted. At the close of the auction, competing vendors will be
able to view all submitted quotations, as well as the winning quotation, and a purchase order will be sent to the winning vendor. HUD will provide to unsuccessful vendors the name
*
HUD previously awarded six regional indefinite-delivery contracts for the inspection services using negotiated procurement procedures; MTB was the incumbent contractor for three of those contracts, which have
now expired.
of the winning vendor and its quotation, but not the identity of the unsuccessful vendors.
Contracting Officer’s Statement at 2.
MTB asserts that the reverse auction process established by HUD violates the Office of
Federal Procurement Policy Act, 41 USC 423(a) (2000) (and the implementing provisions of
the FAR, 3.104-3, 3.104-4), by disclosing or requiring vendors to disclose their quoted prices.
Our Office has not previously considered the question of whether agencies properly may
conduct procurements using reverse auction procedures under which participants’ prices
will be revealed during the auction. We find that the protester has not established — and
that there is no other basis for concluding — that HUD’s use of reverse auctions in conducting the procurements here is improper.
First, as a general matter, while the FAR does not expressly recognize reverse auctions as a
permissible procurement vehicle for goods and services, neither does it expressly prohibit
the government from using auctions, and FAR 1.102(d) provides that a procurement procedure is permissible where not specifically prohibited. At the same time, HUD’s use of reverse auctions is fully consistent with FAR part 13 and promotes the underlying purpose of
that regulation. In this regard, FAR part 13, which is generally aimed at streamlining the
procurement process, advises agencies to use simplified acquisition procedures where, as
here, the value of the acquisition is below the simplified acquisition threshold, FAR 13.002;
to make simplified purchases in the most suitable, efficient, and economical manner based
on the circumstances of the acquisition, FAR 13.003(g); and to use innovative procedures to
the maximum extent practicable. FAR 13.003(h). In addition, agencies are encouraged to
use electronic purchasing techniques, FAR 13.003(d), and to maximize the use of electronic
commerce when practicable and cost effective. FAR 3.003(f). We thus find no basis to object
generally to the agency’s utilizing reverse auction procurement procedures.
Regarding MTB’s specific objection — that the reverse auction here is impermissible because it will result in disclosure of its price — we find no basis for objecting to the agency’s
approach. MTB is correct that the Act prohibits government officials and those acting on
behalf of the government from knowingly disclosing contractor quotation or proposal information before award. 41 USC 423(a). However, that prohibition is not absolute. Rather, the
Act specifically provides that it does not “restrict the disclosure of information to, or its receipt by, any person or class of persons authorized in accordance with applicable agency
regulations or procedures, to receive the information,” 41 USC 423(h)(1), and does not “restrict a contractor from disclosing its own quote or proposal information or the recipient
from receiving that information.” 41 USC 423(h)(2).1 We think the price disclosure under
HUD’s reverse auction procedures falls within the exception language, although we are
aware of no judicial or other authoritative interpretation of these provisions. First, under
1
FAR 3.104-4 similarly restricts the disclosure of price information except, in accordance with applicable
agency regulations or procedures, to persons authorized by the agency head or the contracting officer to receive such information, and also recognizes that a contractor may disclose its own information.
the procedure the agency has established, vendors actually will disclose their own prices —
albeit, as a condition of competing — by entering the prices on the auction website; as noted, a vendor’s disclosing its own price is not prohibited under the Act.2. Moreover, even if
the price disclosure were considered to be by government officials due to its nature as a precondition to a vendor’s competing, the disclosure is pursuant, and integral, to the reverse
auction procurement procedures established by the agency; we thus would view the disclosure as being to persons authorized by agency procedures to receive the information, consistent with the exception language. See generally DGS Contract Serv., Inc. v. United
States, 43 Ct. Cl. 227, 236 (1999); Ocean Servs., LLC., B292511.2, Nov. 6, 2003, 2003 CPD
¶206 at 5 (neither the Act nor the FAR establishes an absolute prohibition against disclosure of price information, and both make clear that prices can be disclosed under certain
circumstances).
MTB asserts that the reference in the exception language to “any person or class of persons
authorized in accordance with applicable agency regulations or procedures” does not envision disclosures to competing vendors — such as under the reverse auction procedures here
— but, rather, refers only to agencies’ disclosure of pricing and other procurement information to contractor personnel assisting the agency in proposal evaluation and other related activities. This argument is without merit. While MTB refers to support for its interpretation in the legislative history of other legislation, it cites nothing in the Act itself or the
Act’s legislative history — and we find nothing — to support its assertion. In fact, MTB ultimately acknowledges that neither the legislative history of the Act, nor the regulatory history of FAR 3.104(a), explains the purpose or scope of the exception. Protester’s Comments
at 21. MTB’s interpretation is all the more untenable in light of the Act’s underlying purpose — to prevent government officials from disclosing sensitive procurement information
in exchange for gratuities or future employment opportunities. See 134 Cong. Rec. 32156
(Oct. 20, 1988) (Comments of Senator Glenn summarizing the purpose of the Act); H.R.
Rep. No.100-911, at18 (1988). This purpose would in no way be served by applying the Act
to preclude HUD from conducting procurements using its reverse auction procedures. Given
all of these considerations, we find no basis for objecting to HUD’s use of reverse auction
procedures here.3
2
The agency argues that disclosing a price without the vendor’s name is not a disclosure at all within the
meaning of the Act. We agree that it is questionable whether revealing a price alone constitutes a disclosure
under the Act and regulations. However, in light of our conclusion that, in any case, the disclosure under
HUD’s procedures here does not violate the Act, we do not reach this question.
3
MTB maintains that it considers its price information confidential and that revealing its price will effectively reveal its labor, overhead and profit rates. However, we fail to see — and the protester does not explain
— how this differs from any other procurement. In particular, whenever a firm submits a sealed bid, its
price — and all information that can be derived from its price — is revealed at the public opening. MTB also
complains that, although the quotations here will be anonymous, due to the nature of the market for inspectors, vendors will be able to deduce which quotations were submitted by which vendors and will be able to
use that information in developing their prices in future auctions. Again, however, this same result obtains
under any competitive procurement; in negotiated procurements, the successful offeror’s price is revealed
and can be used by competing vendors in future procurements, and, as noted above, in sealed bid procurements, all bidders’ prices are revealed at the public opening. The disclosure of prices — and any competitive
MTB maintains that HUD’s dividing its overall requirement for inspection services —
which previously was met under large regional procurements — into procurements for only
one or a few inspections violates FAR 13.003(c)(2). This provision requires procuring agencies to use simplified acquisition procedures to the maximum extent practicable for acquisitions that will not exceed the simplified acquisition threshold (generally 100,000) or the micropurchase threshold (generally $2,500). In the language to which MTB is referring, the
provision also admonishes agencies not to divide requirements aggregating work valued
above the threshold amounts into several purchases below the threshold amounts solely to
permit use of the simplified procedures or to avoid requirements applicable to purchases
exceeding the thresholds. MTB asserts that HUD is violating this prohibition by dividing
its single requirement for inspection services into several smaller requirements, all below
the threshold amounts.
This argument is without merit. The record shows that HUD’s motivation is not to avoid
competition requirements, but to expand the field of competition to include all interested
inspectors — including those who desire to compete for single inspections — instead of effectively limiting the competition to the few companies, such as MTB, that are able to compete to perform large numbers of inspections in a specific region. The agency will achieve
this aim by, as discussed above, publicizing each separate requirement and giving all interested vendors an opportunity to submit quotations on any or all of those requirements
through the reverse auction procedures. Agency Report at 3, 8. The agency reports that prior auctions for smaller requirements have resulted both in adequate competition and in
lower prices for inspections. Id. at 3- 4. In any case, the record does not show that the protester has suffered any prejudice as a result of the agency’s new multiple procurement approach; MTB does not allege, and there is no reason to assume, that it will be precluded
from competing for any of the requirements. MTB’s mere preference that HUD continue to
procure its inspection services as it has in the past is not a valid basis of protest. See Frasca
Int’l, Inc., B-293299, Feb. 6, 2004, 2004 CPD ¶38 at 3.
The protest is denied.
Anthony H. Gamboa
General Counsel
advantage that inures to competitors as a result — is simply an inherent feature of the transparency in any
public competition for a federal contract award.
National Institutes of Health — Food at Government-Sponsored Conferences
B-300,826
March 3, 2005
Digest
The National Institutes of Health (NIH) may pay for legitimate, reasonable conference
costs, including meals and light refreshments, of a formal conference pertaining to Parkinson’s disease subject to the conditions outlined herein. A formal conference typically involves topical matters of interest to, and participation of, multiple agencies and/or nongovernmental participants. In addition, other indicators of a formal conference include
registration, a published substantive agenda, and scheduled speakers or discussion panels.
An agency hosting a formal conference may consider the cost of providing meals and refreshments to conference attendees an allowable conference cost so long as (1) meals and
refreshments are incidental to the conference, (2) attendance at the meals and when refreshments are provided is important for the host agency to ensure full participation in essential discussions, lectures, or speeches concerning the purpose of the conference, and (3)
the meals and refreshments are part of a formal conference that includes not just the meals
and refreshments and discussions, speeches, or other business that may take place when
the meals and refreshments are served, but also includes substantial functions occurring
separately from when the food is served. The NIH conference here satisfies these three criteria.
Without statutory authority to charge a fee and retain the proceeds, NIH may not charge a
registration or other fee to defray the costs of providing meals or light refreshments. An appropriation establishes a maximum authorized program level, and an agency, without specific statutory authority, may not augment its appropriations from sources outside the government.
In applying this decision, NIH should develop an agency policy specifying the types of formal conferences at which NIH may consider providing food. NIH also should develop procedures to ensure that the provision of meals and refreshments meet the criteria listed above.
We expect agency counsels, as well as certifying officers, agency auditors, and Inspectors
General, to apply these criteria. To the extent that agency officials are uncertain as to the
applicability of the criteria in particular circumstances, they may request a decision from
this office, pursuant to 31 USC 3529, before proceeding.
Decision
Pursuant to 31 USC 3529(a), a certifying officer at the National Institutes of Health (NIH)
requested an advance decision regarding the use of appropriated funds to provide meals
and light refreshments to federal government and nonfederal attendees and presenters at
an NIH-sponsored conference. The certifying officer also asked whether NIH may charge a
registration or other fee to defray the costs of any food provided.
NIH may pay for all legitimate, reasonable costs of hosting a formal conference pertaining
to Parkinson’s disease. A formal conference typically involves topical matters of interest to,
and the participation of, multiple agencies and/or nongovernmental participants. In addition, other indicators of a formal conference include registration, a published agenda, and
scheduled speakers or discussion panels. An agency may consider the cost of providing
meals and refreshments to conference attendees an allowable conference cost so long as (1)
meals and refreshments are incidental to the conference, (2) attendance at the meals and
when refreshments are provided is important to ensure full participation in essential discussions, lectures, or speeches concerning the purpose of the conference, and (3)the meals
and refreshments are part of a formal conference that includes not just the meals and refreshments and discussions, speeches, or other business that may take place when the
meals and refreshments are served, but also includes substantial functions occurring separately from when the food is served.
Agencies must have specific statutory authority to charge a fee for their meetings or programs and to retain the proceeds. NIH has no such specific authority and therefore may not
charge a registration or other fee to defray the costs of the conference, including providing
meals or light refreshments.
Background
NIH plans to hold a formal conference on the latest scientific advances in treating Parkinson’s disease. NIH has designed the event to be of broad interest to a number of professional disciplines and to advance NIH’s research and information sharing efforts. Attendees will
include a mix of federal employees and nonfederal individuals. Nonfederal attendees will
include grantees, contractors, and research/science advisors. Some of the nonfederal individuals will be presenters who will receive honoraria, and some will be on invitational travel. NIH will engage a contractor to assist in organizing the conference. The conference will
be held at a hotel in Maryland close to NIH headquarters. The cost of food will not be included in the fee NIH is paying for the conference space.1 NIH would like to charge a fee for
meals and light refreshments that it plans to provide at the conference.
NIH asked us if its appropriated funds are available to pay for food for the various attendees and whether NIH has the authority to charge the attendees a fee that could be used
to recover the costs of the food.
Analysis
Questions concerning the cost of food at a conference are often raised when an agency
wants to know whether it may pay for food for an employee attending a formal conference.
1
In a 1999 decision, we concluded that the Nuclear Regulatory Commission (NRC) could pay an all-inclusive
facility rental fee for a meeting of NRC employees to discuss internal NRC matters, even though the fee also covered the cost of food. B281063, Dec. 1, 1999. The facility charged a fixed fee that included conference
rooms, refreshments at breaks, lunch, equipment, and other supplies. We concluded that renting the facilities was a reasonable expense of NRC’s Environmental Programs and Management appropriation. Because
the fee would have remained the same to NRC whether or not it accepted, and its employees ate, the food,
the harm that the general rule is meant to prevent (i.e., expenditure of federal funds on personal items) was
not present. Id.
In this decision we address the question from a different perspective — that of the agency
hosting a conference — and whether, as host, it may use its appropriation to provide food to
conference participants. In our analysis we first discuss when an agency may sponsor a
formal conference. Then, from the perspective of the agency as host, we analyze whether
the agency may provide food, as a conference expense, to participants, and whether appropriated funds may be used to provide food for other federal agency and nonfederal attendees. We also analyze whether agencies must have specific authority to both charge a
fee for conference-related expenses, including food, and retain the proceeds.
NIH’s Authority to Host a Formal Conference
An agency, generally, does not need express statutory authority to host a conference, so
long as the agency determines that a formal conference is reasonably and logically related
to carrying out its statutory responsibilities and serves its statutory mission. It would not
be inappropriate, for example, for an agency that is charged with promoting public health
to organize a conference to bring together elected local officials, physicians, public health
leaders and practitioners to identify precautions to avoid a possible influenza epidemic.
Similarly, it is not inappropriate for NIH to organize a conference to coordinate and discuss
Parkinson’s disease research efforts within the scientific community.2
NIH, an agency of the Public Health Service, is composed of 27 institutes and centers that
were established “to conduct and support research, training, health information, and other
programs with respect to any particular disease or groups of diseases or any other aspects
of human health.” 42 USC 281. Several of its research institutes, as well as a number of
universities, medical centers, and pharmaceutical companies, conduct research to understand and find a cure for Parkinson’s disease. For the formal conference discussed in this
decision, NIH has invited experts from the private sector as well as from other federal
agencies, in addition to researchers from its own research institutes. Given NIH’s statutory
mission “to conduct and support” research, it is well within NIH’s discretion, we believe, to
organize a formal conference of interested researchers to discuss and coordinate research
efforts to encourage efficient and productive research aimed at a common goal understanding and curing Parkinson’s disease.3.
Provision of Food at an Agency Hosted Formal Conference
In hosting a formal conference, an agency incurs a number of expenses, many of which are
discretionary but legitimate nonetheless so long as they serve the purposes of the confer2
Because several of NIH’s research institutes conduct Parkinson’s disease research, Congress has required
NIH to coordinate their research efforts. 42 USC 284f(b)(1). “Coordination shall include the convening of a
research planning conference not less than once every 2 years.” 42 USC 284f(b)(2)
3
From the perspective of participating or sponsoring federal agencies and their employees, many conferences
similar to NIH’s proposed conference may qualify as “training” under the broad definition thereof in the
Government Employees Training Act, 5 USC 4101. Paragraph 4 of section 4101, title 5, United States Code,
defines “training” to include “making available to an employee ... a planned, prepared, and coordinated program ... of instruction or education, in scientific, professional ... fields which will improve individual and organizational performance and assist in achieving the agency’s mission and performance goals.” Although
not crucial to our holding, the NIH conference, arguably, falls within this definition.
ence. For example, a conference host typically incurs such obvious expenses as the cost of
program materials, conference space, signage, the production of a video or other form of
presentation, and personnel costs to administer the conference and conference registration.
While meals and refreshments have not been obvious costs of government-sponsored conferences, meals or refreshments are not significantly different from these other expenditures and in some circumstances may be considered, like programs, videos, and signage, to
be reasonable, legitimate expenses of the conference.
In determining when meals or refreshments are allowable expenses of an agency hosting a
formal conference, we turn to earlier decisions dealing with the cost of food as an employee
training expense. As noted earlier, the perspective of these decisions look at when an agency may pay for the costs of meals and refreshments incurred by an agency in providing
training to its own employees or to an agency employee attending a conference. The Government Employees Training Act (Training Act), Pub. L. No. 85-507, 72 Stat. 327 (1958),
authorizes an agency to pay the necessary expenses incident to an authorized training program. 5 USC 4109. We have held that the government can provide meals and light refreshments under this authority if the agency determines that providing the meals and refreshments to federal employees is necessary to achieve the objective of the training
program. 48 Comp. Gen. 185 (1968); 39 Comp. Gen, 119 (1959); B-247966, June 16, 1993;
B193955, Sept. 14, 1979. Similarly, the Training Act authorizes agencies to pay “for expenses of attendance at meetings which are concerned with the functions or activities for
which the appropriation is made.” 5 USC 4110. To be considered “expenses of attendance at
meetings” under section 4110, we have held that the costs of meals and refreshments must
be included as an incidental and nonseparable portion of a registration or attendance fee —
B-288266, Jan. 27, 2003; 64 Comp. Gen. 406 (1985); 38 Comp. Gen. 134 (1958); B-233807,
Aug. 27, 1990 or satisfy the following criteria: (1) the meals and refreshments are incidental
to the conference or meeting, (2) attendance at the meals and when refreshments are
served is important for the employees’ full participation in the conference or meeting, and
(3) the meals and refreshments are part of a formal conference or meeting that includes not
just the meals and refreshments and discussions, speeches, lectures, or other business that
may take place when the meals and refreshments are served, but also includes substantial
functions occurring separately from when the food is served. 72 Comp. Gen. 178 (1993); B233807, Aug. 27, 1990; B-198471, May 1, 1980.
We think similar criteria should apply to determining whether the costs of meals or refreshments are allowable expenses of the agency hosting a formal conference. As the discussion above indicates, we have long permitted agencies, under appropriate circumstances,
to cover their employees’ costs of meals when attending formal conferences. 38 Comp. Gen.
134 (1958); B-198471, May 1, 1980; B-154912, Aug.26, 1964. Further, we have permitted
agencies that hold formal in-house training conferences for their employees to cover the cost
of meals when necessary to achieve the program or conference objective. 48 Comp. Gen. 185
(1968); 39 Comp. Gen. 119 (1959).4 We think the presence of private citizens or federal em4
Federal employees who are in travel status, however, are required to reduce their allowances for meals by
the amounts specified in the regulations for each meal furnished as part of the event. 41 CFR 301-74.21
ployees from other agencies who are essential to achieve the program or conference objectives should not change the character of the expense from allowable to unallowable. The
fact that the meals and refreshments also are available to private citizens and employees of
other agencies should not be an obstacle so long as an administrative determination is
made that their attendance is necessary to achieve the conference objectives.
The extension of the availability of appropriated funds to these circumstances should satisfy the criteria discussed earlier. In this regard, to determine whether the costs of meals and
refreshments at an agency-hosted conference involving, in addition to its employees, other
interested federal employees and private citizens administratively determined necessary to
achieve the conference objectives, the criteria are as follows: (1) the meals and refreshments
are incidental to the formal conference, (2) attendance at the meals and when refreshments
are served is important for the host agency to ensure attendees’ full participation in essential discussions, lectures, or speeches concerning the purpose of the formal conference, and
(3) the meals and refreshments are part of a formal conference that includes not just the
meals and refreshments and discussions, speeches, lectures, or other business that may
take place when the meals and refreshments are served, but also includes substantial functions occurring separately from when the food is served.
The level of formality required is the same as what one would expect of a conference sponsored by a nongovernmental entity. See 64 Comp. Gen. 604 (1980); B-249795, May 12, 1993.
Thus, a formal conference must involve topical matters of interest to, and the participation
of, multiple agencies and/or nongovernmental participants. See B-249795, May 12, 1993. In
addition, a formal conference would include, among other things, registration, a published
substantive agenda, and scheduled speakers or discussion panels. Meetings discussing
business matters internal to an agency or other topics that have little relevance outside of
the agency do not constitute formal conferences. For example, day-long quarterly supervisors meetings discussing general business/management topics, suggestions, issues, and
problems of the agency are not formal conferences. 68 Comp. Gen. 606 (1989); B-249749,
May 12, 1993.
As NIH explained its conference to us, the conference has the indicia of a formal conference
and will meet the three criteria described above. The conference will include a registration
process, a published substantive agenda, and scheduled speakers or discussion panels. It is
designed to be of broad interest to a number of professional disciplines, and attendees will
include a mix of federal employees and nonfederal individuals. The conference will be organized to take full advantage of the participants’ and presenters’ time and availability and
not to accommodate the provision of food. In order to make the best use of the participants’
and presenters’ time, essential discussions, panels, and speeches will occur at the time the
meals and light refreshments are served. Finally, NIH also has scheduled substantive
presentations and discussions separately from the time when the food is served. According-
ly, based on the conference description NIH provided to us, we conclude that NIH may provide food at this formal conference.5
The purpose of the criteria we set out is to balance the legitimate benefits that accrue to an
agency hosting a conference with the need to ensure that the agency is not expending public
funds on a personal expense, food. It is important to note that these criteria necessarily apply on a case-by-case basis. Before implementing this decision, an agency should develop an
agency policy specifying the types of formal conferences at which the agency may consider
providing food, consistent with the criteria contained in this decision. An agency also should
develop procedures to ensure that the provision of meals and refreshments meet the criteria
listed above. We expect agency counsels, as well as certifying officers, agency auditors, and
Inspectors General, to apply these criteria. To the extent that agency officials are uncertain
as to the applicability of the criteria in particular circumstances, they may request a decision from this office, pursuant to 31 USC 3529, before proceeding.
Registration Fees to Cover Expenses of Formal Conferences
If an agency wishes to charge a fee for one of its programs or activities, it must have statutory authority to do so. B-300248, Jan. 15, 2004. In addition, even if an agency has authority to charge a fee, it may not retain and use the amounts collected without statutory authority. Id. An appropriation establishes a maximum authorized program level, meaning
that an agency, absent statutory authorization, cannot operate beyond the level that can be
paid for by its appropriations. See 72 Comp. Gen. 164, 165 (1993). An agency may not circumvent these limitations by augmenting its appropriations from sources outside the government, unless Congress has so authorized the agency. Id.
In a recent decision we explained that the Independent Offices Appropriation Act, 31 USC
9701, known as the user fee statute, provides general authority for an agency to impose a
fee if certain conditions are met. Id. The user fee statute authorizes an agency to charge recipients of special benefits or services a user fee. 62 Comp. Gen. 262 (1983). Our decisions
have not addressed specifically whether the user fee statute authorizes an agency to charge
a conference registration or attendance fee, and we need not address that question here.
Even if we were to conclude that the user fee statute would permit NIH to charge a registration fee, we are aware of no specific authority that would permit NIH to retain the proceeds. Without such a specific authorization, agencies may not retain or use fees collected
under the user fee statute or other laws but must deposit them in the general fund of the
5
Because hosting this conference is reasonably related to NIH’s statutory responsibilities and serves to advance its statutory mission, NIH is not barred by the prohibition of 31 USC 1345 from providing food. Section 1345 prohibits the use of appropriated funds for “travel, transportation, and subsistence expenses for a
meeting.” Section 1345, however, has limited application, addressing only those conventions and other
forms of assemblages or gatherings that private organizations seek to hold at government expense. See 72
Comp. Gen. 229, 231 (1993) (effectively overruling prior GAO decisions that applied section 1345 to meetings and conferences other than assemblages and gatherings that private organizations sought to hold at
government expense).
Treasury as miscellaneous receipts.6 B-300248, Jan. 15, 2004. Nor could NIH authorize its
contractor to charge a fee to offset costs because, pursuant to 31 USC 3302(b), a contractor
receiving money for the government may not retain funds received for the government to
pay for the conference costs. B-300248, Jan. 15, 2004.7
If a host agency concludes that it cannot use its appropriations to provide food to participants because the conference does not satisfy the criteria we discuss herein, or if the host
agency otherwise decides not to provide food (for example, because of budgetary constraints), the participants may cover the costs of their food using their own personal funds.
Conclusion
NIH may pay for meals and light refreshments, for all conference participants including
federal employees from other agencies and nonfederal participants, at a formal conference
pertaining to Parkinson’s disease, subject to the conditions outlined herein. However, without statutory authority to charge a fee and credit the proceeds to its appropriation, NIH
may not charge a registration or other fee that can then be used to defray the costs of
providing meals or light refreshments.
In applying this decision, NIH should develop an agency policy specifying the types of formal conferences at which NIH may provide food. NIH also should develop procedures to ensure that the meals and refreshments meet the criteria above. We expect agency counsels,
as well as certifying officers, agency auditors, and Inspectors General, to apply these criteria. To the extent that agency officials are uncertain as to the applicability of the criteria in
particular circumstances, they may request a decision from this office, pursuant to 31 USC
3529, before proceeding.
Anthony H. Gamboa
General Counsel
6
The “miscellaneous receipts” statute requires an official or agent of the government receiving money for the
government from any source, absent statutory authority to the contrary, to deposit the money into the general fund of the Treasury. 31 USC 3302(b).
7
The only other statute that would have bearing in this situation — the Economy Act, 31 USC 1535, which
authorizes an agency to provide goods or services to another agency on a reimbursable basis — is not applicable in these factual circumstances.
National Science Foundation Annual Awards Dinner
B-235163.11, 96-1 CPD ¶136
February 13, 1996
Digest
The National Science Foundation may use its salaries and expenses appropriation for dinner-related expenses and travel expenses for the awardee and his/her spouse incurred in
connection with the presentation of the statutorily established Alan T. Waterman Award at
the National Science Board’s annual awards dinner.
Decision
The National Science Foundation (Foundation) asks whether it may use its salaries and
expenses appropriation, without regard to reception and representation or donated funds,
to defray part of the cost of the National Science Board’s (Board) annual awards dinner.
The Foundation also asks whether it may use its salaries and expenses appropriation to
defray part of the cost of travel and per diem for the awardee, and his or her spouse, of the
statutorily established Alan T. Waterman Award. For the reasons discussed below, we conclude that the Foundation may use its salaries and expenses appropriation to defray part of
the cost of the awards dinner and the travel and per diem expenses of the awardee and his
or her spouse.
Background
The National Science Foundation consists of a 24-member National Science Board and a
director. By statute, the Board meets annually in May. 42 USC §1863(e). Since 1960, the
Board has hosted a dinner at its annual meetings which has become known as the Board’s
annual awards dinner. Beginning in 1977, the dinner has featured the presentation of the
statutorily created Alan T. Waterman Award. More recently, the Board has used the annual awards dinner to present two administratively created awards — the Vannevar Bush
and the National Science Foundation Distinguished Service awards. Letter from the Foundation’s Inspector General to the Comptroller General, Mar. 25, 1994.
The Waterman Award is a statutorily established award.1 The purpose of the award is to
recognize and encourage the work of younger scientists in research and advanced study in
1
In its entirety, the statute establishing the Waterman Award, 42 USC §1881a, reads as follows:
Alan T. Waterman Award
Establishment; amount
(a) The National Science Foundation is authorized to establish the Alan T. Waterman Award for
research or advanced study in the mathematical, physical, medical, biological, engineering, social,
or other sciences. The award authorized by this section shall consist of a suitable medal and a
grant not to exceed $50,000 per year for a period not to exceed three years to support further research or study by the recipient.
Purpose
the mathematical, physical, medical, biological, engineering, social or other sciences. 42
USC §1881a(a), (b) (1992). The award consists of a “suitable medal” and a research grant of
up to $50,000 per year for not to exceed three years. 42 USC §1881a(a) (1992).
According to the Foundation’s Inspector General, the Board spent a total of $18,865.96 on
the awards dinner for 1993: $16,620.60 for dinner-related expenses, including rent for the
site of the dinner, printing, and catering; and $2,245.36 for the travel expenses and per diem of the awardee and her spouse. Of the total amount spent, the Foundation paid all but
$5,372.60 from subscriptions2 and donated funds.3
Typically, Board members and representatives from scientific organizations and corporations pay for themselves and their guests. The Board, however, does not ask awardees,
their families and guests, Foundation employees, their spouses and guests, Members of
Congress and their staffs, media representatives and other executive branch employees to
subscribe.
Out of a total 1993 attendance of 169 persons, 65 paid, including the Administrator of the
National Oceanic and Atmospheric Administration and his wife and representatives of private associations. Of the 27 Board members in attendance, 26 paid, as did 7 of 9 former
Board members. When the Board found that subscriptions and other donations were not
sufficient to defray the total costs of the dinner, the Board applied appropriated funds from
the Foundation’s salary and expense account to cover the shortfall ($5,372.60).
Analysis
The legal issues raised by this matter are whether the Foundation may use its salaries and
expenses appropriation to cover dinner expenses of Board members, Foundation employees
and guests at the Board’s annual awards dinner, and whether the Foundation may use the
same appropriation to pay the costs of the awardee’s and her spouse’s travel and per diem
expenses. While the Foundation applied its appropriation to defray a shortfall in subscriptions and donated funds, an audit by the Foundation’s Inspector General showed that except in two instances, no federal employee paid for his or her meal; most nonfederal employees in attendance paid except for the awardee and her spouse, former award recipients,
and members of the Waterman family.
(b) Awards under this section shall be made to recognize and encourage the work of younger scientists whose capabilities and accomplishments show exceptional promise of significant future
achievement.
Number
(c) No more than one award shall be made under this section in any one fiscal year.
2
The Board asks many invitees to pay $100 each to attend, or “subscribe” to, the dinner.
3
The Foundation is authorized to receive and use funds donated by others. 42 USC §1870(f). The Foundation
may use such funds for entertainment expenses when it determines such expenditures are necessary to carry out its authorized functions and such use of the funds is consistent with the terms of the donation. B142538, Feb. 8, 1961.
As a general rule, appropriated funds are not available for the costs associated with dinners, because meals and other such expenses are considered personal in nature. 65 Comp.
Gen. 16 (1985); 47 Comp. Gen. 657 (1968). Accordingly, the decisions of the accounting officers of the government have required congressional authorization before agency appropriations may be used for such expenses. B-223678, June 5, 1989.
The Government Employees’ Incentive Awards Act, 5 USC §4501-4506, is an often used example of such authority. The Incentive Awards Act authorized agencies to “incur necessary
expenses for the honorary recognition of employees.” 5 USC §4503. We have interpreted
this language to permit agencies to use operating appropriations to pay for refreshments
and meals in connection with agency employee awards ceremonies. 65 Comp. Gen. 738, 740
(1986) (Social Security Administration’s annual awards ceremony). We explained our rationale as follows:
Clearly the statutory objective will be better met by presenting an award
along with a measure of public recognition, rather than anonymously depositing it in the recipient’s in-box. Once we have said this, it becomes apparent
that an awards ceremony is different from an agency’s typical day-to-day
conduct of official business. It is by its very nature and purpose, for lack of a
better term, “ceremonial.” It should therefore not stretch the imagination to
conclude that certain things — such as refreshments — which would be inappropriate in other contexts, might be appropriate as part of a ceremonial
function.” Id.
See also B-167835, Nov. 18, 1969 (NASA banquet honoring Apollo 11 astronauts).
Presentation of the Waterman Award is a statutory function of the Foundation.4 42 USC
§1881a. The Foundation’s authorizing legislation authorizes it “to make such expenditures
as may be necessary” to carry out its functions. 42 USC §1870(b). The Foundation points
out that the prescribed purpose of the award is two-fold: to recognize and to encourage the
work of young scientists. 42 USC §1881a(b). Citing our Incentive Awards Act decisions noted above, the Board maintains that in order to achieve the statutory objectives of providing
both recognition and encouragement, a dinner meeting, attended by those prominent in the
research community, is “patently the only forum filling this bill.” Accordingly, the Foundation considers the costs of meals and refreshments at the annual awards dinner a necessary
expense of its operating appropriation.
As noted above, the Foundation is authorized “to make such expenditures as may be necessary” to carry out its functions. 42 USC §1870(b). We have described the concept of a “necessary expense” as a relative one, “measured not by reference to an expenditure in a vacuum, but by assessing the relationship of the expenditure to the specific appropriation to be
charged.” 65 Comp. Gen. at 740. We also have afforded the agencies reasonable discretion
to decide how to spend their operating appropriations to satisfy their statutory duties. We
4
The Board also presents two other awards at its annual awards dinner. The Board established the two
awards pursuant to the Government Employees’ Incentive Awards Act.
agree with the Foundation’s assessment of the purposes of the Waterman Award. The
$50,000 grant that accompanies the Waterman Award would certainly seem to encourage
the work of younger scientists and would carry with it, we presume, a certain degree of
recognition. The Foundation’s decision to enhance the recognition value of the award and
its recipients by presenting it at an annual awards dinner attended by those prominent in
the research community does not in the context of the purpose of the Waterman Award
seem unreasonable. Resolved in light of the statutory objectives sought to be achieved and
given the Board’s determination that its annual awards dinner is the appropriate and necessary vehicle to accomplish these objectives, we do not object to the Foundation’s use of its
operating appropriation to finance part of the dinner. We would recommend, however, that
the Foundation disclose in its budget submissions the amount of its appropriation used to
defray the cost of the awards dinner.
Travel and Per Diem of Awardees and Spouses
As a general proposition, agency appropriations are not available to pay for the travel,
transportation and subsistence expenses of private parties. 31 USC §1345. We have previously recognized that the authority to make an award carries with it the authority to incur
necessary expenses that will contribute to effectively achieving the purpose of the award. 65
Comp. Gen. 738. In this regard, we have concluded that the travel expenses for an awardee,
32 Comp. Gen. 134 (1957), and for an awardee’s spouse, 69 Comp. Gen. 38, 39 (1989), are
appropriate expenses of an awards ceremony. Having concluded that an awards ceremony
at the Board’s annual dinner meeting is an appropriate vehicle for presentation of the Waterman Award, we view the cost of the awardee’s and his or her spouse’s travel and per diem as a necessary expense of the Foundation’s operating appropriation.
Robert P. Murphy for Comptroller General of the United States
Nuclear Regulatory Commission (NRC) — Payment of a Non-Negotiable, NonSeparable Facility Rental Fee that Covered the Cost of Food Served at NRC
Workshops
B-281063
December 1, 1999
Digest
Notwithstanding the general prohibition against serving food to employees within their official duty station, agency may pay under limited circumstances a facility rental fee that
includes the cost of food provided to agency employees at an agency workshop. The payment
was not improper because the fee was all-inclusive, not negotiable, and competitively priced
to those that did not include food.
Decision
The Director of the Division of Accounting and Finance, Office of the Chief Financial Officer, United States Nuclear Regulatory Commission (NRC) requests our opinion on whether it was proper for NRC to pay a non-negotiable, non-separable facility rental fee for five
NRC workshops when the fee covered the cost of meals and refreshments served at the
workshops. Under the circumstances described below, we conclude that the payment was
not improper.
Background
The NRC sponsored five workshops for its employees between July and October 1997. The
workshops were held at the William F. Bolger Center for Leadership Development (Bolger)
in Potomac, Maryland. The workshops were attended by NRC employees exclusively and
focused on internal NRC matters. The employees were not in official travel status.
Regarding the first three workshops held in July, an NRC employee was tasked with obtaining on very short notice (within two weeks) an off-site conference facility convenient to
headquarters at a cost less than $2,500 to accommodate 20 to 25 individuals to pursue NRC
strategic planning initiatives. Due to the short timeframe, the employee only made inquiries to Bolger, which had been used by NRC in prior years, and one other facility. After receiving Bolger’s proposal to charge a daily flat fee of $45.00 per person,1 the employee determined that it was comparable to, if not less expensive than, the other facility and
procured its use through his NRC BankCard (Visa). Bolger’s flat fee included the use of a
conference room and a breakout room, breaks (refreshments), lunch, equipment, and appropriate supplies.2 With the success of the first three workshops at Bolger, two more workshops were scheduled at Bolger for August 15 and October 21, 1997 and procured in a similar manner. One NRC certifying officer certified the payments to VISA for the first three
workshops and another NRC certifying officer certified the last two.
1
Bolger inadvertently charged NRC $28.00 per person, a rate reserved for U.S. Postal Service conferences,
for the first workshop.
2
Prior to 1997, Bolger’s daily flat fee did not include meals or refreshments. Workshop participants paid for
these costs.
Some NRC officials questioned whether these payments were proper to the extent of the
cost of the food provided, and whether the workshop attendees or the certifying officers
should reimburse NRC for the questioned costs. Although Bolger’s flat rate was nonnegotiable and non-separable, Bolger responded to NRC’s request to identify the portion of
the daily fee attributable to meals and refreshments. Bolger stated that of the $45.00 flat
rate, $13.00 represents amounts attributable to meals and refreshments. NRC identified 73
different employees attending one or more of the workshops, resulting in a total of 89 instances in which employees received meals and refreshments. NRC estimates the questioned costs to be $1,157. NRC then requested our opinion on whether the payments were
improper.3
Analysis
As a general rule, the government may not furnish meals or refreshments to employees
within their official duty station. 65 Comp. Gen. 508, 509 (1986). This principle comes from
the proposition that expenses for food and refreshments are considered personal expenses
that government employees are expected to bear from their own salaries. Id.
Two provisions of the Government Employees Training Act (Training Act) are often cited as
authority for government agencies to provide meals or refreshments to employees within
their official duty station. The first, 5 USC §4109, authorizes agencies to reimburse the
necessary expenses incurred by those who attend training programs at their duty stations.
Agency funds may be used to provide meals under section 4109 if necessary to achieve the
training program’s objectives, 50 Comp. Gen. 610 (1971); 48 Comp. Gen. 185 (1968); B247966, June 16, 1993. Agency funds also may be used to pay for an employee’s meals incident to training provided by other than the government if the employee’s attendance at the
meals is necessary to obtain the full benefit of the training, B-193955, Sept. 14, 1979. In
this case, NRC acknowledges that the five workshops do not comply with the definition of
“training” in the Training Act, 5 USC §4101(4).
The second, 5 USC §4110, allows an agency to pay for the expenses for attendance at certain meetings or conferences, but does not apply to purely internal business meetings or
conferences sponsored by government agencies involving day-to-day agency operations and
concerns. 72 Comp. Gen. 178 (1993); 68 Comp. Gen. 606 (1989); 68 Comp. Gen. 604 (1989).
“The legislative history of [5 USC §4110] shows that it was intended to dispense with the
specific appropriation authorizations required by [5 USC §5946] for the payment of expenses of Federal officers and employees in attending meetings of members of any society or association”. 68 Comp. Gen. at 608; 68 Comp. Gen. at 605-606. Consequently, there is a clear
distinction between paying for meals incidental to formal conferences or meetings, typically
externally organized or sponsored, involving topical matters of general interest to govern-
3
Because of our conclusion that the payments were not improper, we do not address NRC’s questions about
obtaining reimbursement for past improper payments, relief for two certifying officers under 31 USC §3528,
and appropriate NRC actions in future situations.
mental and nongovernmental participants, and internal business or informational meetings
primarily involving day-to-day agency operations of government. 72 Comp. Gen. at 180.
The general prohibition against using appropriations for food for employees within their
official duty station is meant to prevent the expenditure of government funds on items that
are purely personal in nature. Here, the harm that the general prohibition is meant to prevent, i.e., expenditure of federal funds on personal items, is not present. NRC determined
the Bolger facility met its needs and there is nothing indicating that Bolger’s fee structure
providing for food influenced NRC’s determination. The facility fee itself was a reasonable
and necessary expense for which NRC funds were available. The facility fee would have
remained the same to the government whether or not NRC accepted and the employees ate
the food. Because the meals were furnished at no additional cost to the government, there
was no divergence of funds for meals. No purpose would be served by applying the general
prohibition against using appropriations for food for employees within their official duty
station in a way that requires NRC to either (1) reject the Bolger proposal, (2) reject the
food at no savings to the government, or (3) have employees “reimburse” the government
even though it incurred no additional cost for the food provided. Accordingly, under the circumstances, we conclude that NRC may pay the all-inclusive facility rental fee even though
the fee resulted in food being served to NRC employees at their official duty stations.
Comptroller General of the United States
NuWestern USA Constructors
B-275514, 97-1 CPD ¶90
February 27, 1997
Thomas M. Sullivan, Jr., Esq., for the protester. Albert C. Proctor, Esq., and Barbara Bear,
Esq., Department of the Army, for the agency. Paula A. Williams, Esq., and John Van
Schaik, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.
Digest
Agency’s issuance of solicitation only in electronic format (CD-ROM) is not unduly restrictive of competition or otherwise inconsistent with applicable law and regulation; nothing in
the regulations requires issuance of paper solicitations.
Decision
NuWestern USA Constructors, Inc. (NuWestern) protests the decision of the Department of
the Army, Army Corps of Engineers Fort Worth District, to issue request for proposals
(RFP) No. DACA63-97-R-0004, to design and construct a warehouse, only in electronic format. NuWestern, a small business, argues that issuance of the solicitation in electronic
format only, rather than in addition to paper copies, is unduly restrictive of competition.
We deny the protest.
Prior to issuing the RFP, the Corps participated in a study to determine the feasibility of
producing and distributing solicitation documents in electronic format. Representatives
from the Air Force, Army, and Navy were asked to develop a process for issuing electronic
solicitation packages. To that end, five pilot projects were identified and the electronic format for the distribution of the plans and specifications was initiated. The cost savings for
these five projects were significant and, in the judgment of the study group, the use of electronic format to distribute solicitations represented an effective way to reduce the government’s cost of operation without restricting competition or imposing a financial hardship on
potential bidders or offerors. As a result of its participation in the study, the Corps decided
to issue this solicitation only in electronic format, with proposals to be submitted on paper.1
A Commerce Business Daily (CBD) synopsis indicated that the agency intended to issue the
solicitation only on CD-ROM; amendments would be issued on floppy disks, CD-ROM, or
the Internet. The synopsis further advised that paper copies of the plans and specifications
would not be provided and that firms should check the agency’s internet address daily for
changes to the solicitation.2 The solicitation was sent on CD-ROM to 63 firms, including the
protester. Of the 63 firms that expressed interest in the procurement, the agency reports
1
The agency makes available on the Internet a list of firms that will print solicitations from CD-ROM and
the Internet.
2
Although firms can download or view the solicitation on the Internet, the official copy of the solicitation is
provided on CD-ROM.
that 41 are small businesses, six are small disadvantaged businesses, and two are small
disadvantaged, woman-owned businesses.
NuWestern argues that use of the electronic format limits competition to those firms that
possess the technology required to print the solicitation plans and specifications from the
CD-ROM or that have the financial resources to pay a third party for the printing. By not
printing the solicitation itself, the protester alleges, the agency unduly restricts competition
because it places an undue financial burden on NuWestern and other small businesses and
improperly shifts the responsibility for adequacy, completeness and accuracy of the solicitation from the government to potential offerors.
The Competition in Contracting Act of 1984 (CICA) requires contracting agencies to obtain
full and open competition, and this is accomplished only where all qualified firms are allowed and encouraged to submit offers on federal procurements and a sufficient number of
offers is received to ensure that the government’s needs are met at the lowest possible cost.
10 USC §304(a)(1)(A) (1994); Cutter Lumber Prods., B-262223.2, Feb. 9, 1996, 96-1 CPD
¶57. Further, the Small Business Act, as amended, 15 USC §637b (1994), requires that procuring agencies provide a copy of a solicitation to any small business concern upon request.
These statutes contemplate that interested responsible sources will be given a copy of solicitation and the opportunity to compete, and thus do not permit an agency to act in a way
that has the effect of unreasonably excluding a concern from competing for an award. Techniarts Eng’g, B-235994, Sept. 28, 1989, 89-2 CPD ¶293.
Federal agencies have traditionally issued their solicitations on paper and furnished paper
copies to interested vendors, who then responded with paper proposals. With advances in
the information technology field, however, agencies have found that the use of an electronic
format, in place of a paper format, can be more efficient and economical. For example, submission of quotation prices on a floppy disk was required in Latins American, Inc., 71
Comp. Gen. 436 (1992), 92-1 CPD ¶519, cost spreadsheets were required on disk in D.O.N.
Protective Servs., Inc., B-249066, Oct. 23, 1992, 92-2 CPD ¶277, and complete cost proposals
on a disk were required in W.B. Jolley, 68 Comp. Gen. 443 (1989), 89-1 CPD ¶512. Further,
in both Continental Airlines, Inc., B-258271, B-258271.4, July 31, 1995, 97-1 CPD ¶—, and
Spectronics Corp., B-260924, July 27, 1995, 95-2 CPD ¶47, the agency furnished offerors
with certain solicitation-related information on a computer disk, while in Arcy Mfg. Co.,
Inc., et al., B-261538 et al., Aug. 14, 1995, 95-2 CPD ¶283, the agency conducted entire procurements electronically, posting solicitations on its electronic bulletin board and requiring
electronic responses only. Moreover, with the enactment of the Federal Acquisition Streamlining Act of 1994, which called for the development and utilization of a federal acquisition
computer network, 41 USC §426 (1994), Congress clearly signaled its desire that agencies
use electronic acquisition methods.
The agency’s use of the CD-ROM format here is entirely consistent with this recent history
and, from the facts of record, is not unduly restrictive or otherwise inconsistent with the
full and open competition standard. Although NuWestern maintains that CICA and the
Small Business Act require agencies to provide paper copies of solicitation documents on
request, the protester cites no provision of either of those statutes for that proposition,3 and
we are aware of no specific requirement that the agency provide paper copies of the solicitation. Moreover, as noted above, 63 firms, including 41 small businesses, responded to the
CBD notice and were provided an official copy of the solicitation on CD-ROM. Thus, the
record supports the agency’s position that vendors, including small businesses, can compete
here. NuWestern and other prospective offerors can print the solicitation with their own
equipment or have another company print it from the CD-ROM; we are not persuaded that
either method, requiring access to computerized CD-ROM printing equipment or the incurring of a charge for printing, is unduly burdensome. See generally Arcy Mfg. Co., Inc. et al.,
supra (a requirement that responses to small purchase solicitations be submitted electronically was reasonable and not overly burdensome to prospective vendors); W.B. Jolley, supra
(requirement to furnish cost proposals on disk not unduly burdensome); and FAR
§5.102(a)(6) (allowing agencies to impose a reasonable fee for solicitation documents). In
this regard, as noted above, the agency has publicized the names of firms that can provide
the printing services, and the agency reports that these firms have quoted printing prices
ranging from $22.97 to $29.74 for printing this solicitation, less than the $34 the agency
would have charged offerors for an RFP paper package. We also find no merit to the protester’s contention that the agency has shifted responsibility for the accuracy and completeness of the solicitation to prospective offerors by requiring them to obtain their own
paper copies of the solicitation. The CD-ROM contains the official copy of the solicitation
plans and specifications, and as the agency concedes, the government is responsible for the
accuracy, completeness, and content of the solicitation issued by CD-ROM and for all
amendments issued by CD-ROM, floppy disk, or by facsimile. In short, the manner in which
the agency issues solicitation — electronic or paper format — is not material to the government’s obligation to issue accurate and complete solicitations.
The protest is denied.
Comptroller General of the United States
3
Although the protester also argues that various provisions of the Federal Acquisition Regulation (FAR) require agencies to provide paper solicitations, we have reviewed the cited FAR provisions, and we conclude
that they include no such requirement. For instance, NuWestern notes that FAR §11.201 states that contracting officers do not have to provide certain types of specifications “except when ... [a] prospective contractor requests a copy....” Although NuWestern argues that this provision requires agencies to provide paper solicitations upon request, we do not see why an electronic copy would not satisfy the requirement.
Pension Benefit Guaranty Corp. — Court Admission Fees
B-289,219
October 29, 2002
Digest
Under 5 USC 5757(a), agencies may, at their discretion, use appropriated funds to pay expenses incurred by employees to obtain professional credentials. If the Pension Benefit
Guaranty Corporation (PBGC) determines that payment of court admission fees required of
its attorneys for admission to practice before federal courts is necessary to carry out its
statutory mission and wishes to pay the fees pursuant to the discretion granted the agency
under §5757(a), the General Accounting Office will not object to the PBGC’s using appropriated funds to pay the fees.
Decision
The General Counsel of the Pension Benefit Guaranty Corporation (PBGC) asks whether
the PBGC may pay court admission fees incurred by its attorneys when they litigate
matters under authority of the Employee Retirement Income Security Act (ERISA) of 1974.
For the reasons that follow, we conclude that the PBGC may, at its discretion, pay the court
admission fees.
Background
Unlike most federal agencies, the PBGC has independent authority under its authorizing
legislation to sue and be sued, to complain and defend, in its corporate name and through
its own counsel in state and federal courts. 29 USC §1302(b)(1). The PBGC employs approximately 80 attorneys, all of whom work out of the headquarters building in Washington,
D.C. The PBGC attorneys primarily litigate ERISA matters involving pension plan termination and trusteeship, although they may on occasion litigate other matters. The PBGC
attorneys are responsible for litigating ERISA cases throughout the country in every judicial circuit where litigation is required. Many of the courts charge a one-time fee that all
attorneys, including PBGC attorneys, must pay before they can be admitted to practice before a particular court.
The General Counsel states that PBGC attorneys would be unable to carry out the agency’s
statutory mission without paying the fees required for admission to the various courts
where they must litigate ERISA matters. The General Counsel states that the practical
benefits derived from paying court admission fees in multiple jurisdictions inures to the
PBGC and not to the individual attorneys. Therefore, the General Counsel urges our Office
to approve the PBGC’s payment of the fees.
Discussion
The PBGC is a nonprofit, wholly-owned government corporation within the Department of
Labor, whose purpose is to insure that participants in private pension plans have guaranteed pension benefits should the plans under which they are covered terminate with insufficient assets. 29 USC §1302; B-223146, Oct. 7, 1986. The PBGC serves in its corporate capacity as an insurer of the plans covered under the laws it administers. 29 USC §§1322,
1322a. Under its enabling legislation, the PBGC is authorized to litigate in its corporate
name using its own attorneys. 29 USC §1302(b)(1). When acting in this capacity, the PBGC
serves primarily the interests of the United States, and its costs are financed through revolving funds under 13 U.S.C. § 1305. Revolving funds, including those of the PBGC, are
appropriated funds subject to statutory restrictions governing appropriated monies. 65
Comp. Gen. 226 n.1 (1986); see also B-275525, Nov. 30, 1994, and 63 Comp. Gen. 31 (1983).
When the PBGC initiates the termination of a covered pension plan with unfunded benefit
liabilities, the PBGC may take over as the plan’s trustee.1 B-286026, June 12, 2001. Once
the PBGC becomes the trustee of a plan that has not yet terminated, the PBGC assumes
the same duties and powers as a nongovernmental party appointed to the position. 29 USC
§1342(d)(1)(A); B-223146, Oct. 7, 1986. As trustee of plans after termination, the PBGC has
broad authority, 29 USC §§1342(a), (d), and may commence, prosecute, or defend on behalf
of the plan any suit or proceeding involving the plan. 29 USC §1342(d)(1)(B)(iv).
In the past, we consistently held that, absent specific statutory authority to charge appropriated funds for the expense, agencies could not use appropriated funds to pay fees incurred by attorneys employed by the agency for admission to practice before various courts.
See, for example, 47 Comp. Gen. 116 (1967). Our reasoning was that an officer or employee
of the government has upon his own shoulders the duty of qualifying himself for the perform-ance of his official duties and that, if a personal license is necessary to render him
competent therefor, he must procure it at his own expense. 22 Comp. Gen. 460 (1942). Even
where the agency attorney applied for admission and paid the court fee for the purpose of
representing the agency in a case pending before the court, we reasoned that the expense
related to the attorney qualifying himself for the performance of his official duties with respect to such case, and, therefore, was a personal obligation of the attorney employee rather
than the United States. Id.
However, a recently enacted statute gives agencies the discretion to use appropriated funds
to pay the expenses their employees incur for obtaining professional credentials. Section
1112 of the National Defense Authorization Act for Fiscal Year 2002, Pub. L. No. 107-107
(December 28, 2001) amends chapter 57 of title 5, United States Code, by adding a new
§5757(a), which provides for the payment of expenses to obtain professional credentials as
follow:
An agency may use appropriated funds or funds otherwise available to the
agency to pay for—
(1) expenses for employees to obtain professional credentials, including
expenses for professional accreditation, State-imposed and professional licenses, and professional certification; and
1
In some cases, a federal district court appoints the PBGC as trustee. 29 USC §§1342(b), (c). In other cases,
the PBGC and plan administrators may agree to the PBGC’s appointment without court action. 29 USC
§1342(b)(3)
(2) examinations to obtain such credentials.
As noted above, the PBGC is a wholly-owned government corporation within the Department of Labor listed in the Government Corporation Control Act, as amended. 29 USC
§1302(a); 31 USC §9101(3)(J). As a wholly-owned government corporation, the PBGC is
considered an executive agency covered by the personnel laws in title 5 of the United States
Code. 5 USC §105. Therefore, the provisions of 5 USC §5757(a) are applicable to the PBGC.
Neither Section 1112 of the National Defense Authorization Act for Fiscal Year 2002, 5
USC §5757(a), nor its legislative history define what was intended by the terms “professional credentials,” “professional accreditation,” or “professional certification.” Nor did we
find specific limitations imposed upon those terms. Agencies have discretion to determine
what types of professional expenses may be paid under the statute.
We understand that PBGC attorneys represent the PBGC in litigation before the United
States bankruptcy courts, district courts, and circuit courts of appeals, and that many of the
courts charge fees to practice before them. Since the fees are prerequisite to practicing in
the federal courts, the fees are an obligatory qualification that PBGC attorneys must satisfy
in order to do their work, and we believe that the court admission fees fall within the scope
of the term “professional credentials” as used in §5757(a). It is necessary for PBGC attorneys to pay the court-imposed fees for admission to practice before the many different
courts where the PBGC is a party to litigation, in order to protect the PBGC’s interests as
well as the interests of pension plan participants and beneficiaries. As the PBGC General
Counsel points out, without admission to the courts, PBGC’s attorneys would not be able to
carry out the agency’s statutory mission, and any benefits of court admission inure to the
agency not the individual attorneys. In view of these circumstances, if the PBGC determines that payment of court admission fees is necessary to carry out its statutory mission
and wishes to pay the fees pursuant to the discretion granted the agency under §5757(a),
our Office will not object to the PBGC using its appropriated funds to pay them. If the
PBGC makes the requisite determination, it may assume such payments as of the date of
the act, providing that funds are available.
Conclusion
Under 5 USC 5757(a), agencies may, at their discretion, use appropriated funds to pay expenses incurred by employees to obtain professional credentials, state-imposed and professional licenses, and professional certifications. Therefore, if the PBGC determines that the
fees PBGC attorneys must pay for admission to practice before federal courts are in the nature of professional credentials or certifications and are necessary to carry out the PBGC’s
statutory mission, our Office will not object to the PBGC’s paying those fees out of its appropriated funds.
Anthony H. Gamboa
General Counsel
Petchem v. United States
99 F.Supp 2d 50
May 15, 2000
David T. Smorodin, Assistant United States Attorney, Washington, DC, for U.S. Denis
Lawler, Craig L. Hymowitz, Blank, Rome, Comisky & McCauley, LLP, Philadelphia, PA, for
Plaintiff.
Memorandum Opinion
SULLIVAN, District Judge.
I. Introduction
This case involves the Navy’s procurement policies for certain tug boat services at Port Canaveral, Florida. Plaintiff, Petchem, Inc., (“Petchem” or “plaintiff”) is a small business that
had been providing these tug services at Port Canaveral since 1984. With Petchem’s most
recent contract due to expire in fall 1999, the Navy, in the summer of 1999, solicited bids
for a new contract for the tug services. Petchem was one of seven small businesses to bid on
the work. However, on November 23, 1999, the Navy announced that it was canceling its
solicitation for a new contract on the tug work because all of the bids were deemed too high
in comparison to market rates at Port Canaveral. The next day, plaintiff filed this lawsuit
alleging a violation of the Competition in Contracting Act (CICA), 10 USC §2304.a.1 and 41
USC §253.a.1.
Plaintiff initially sought a temporary restraining order that would have extended Petchem’s
most recent contract at Port Canaveral. This Court held a hearing on that motion on December 10, 1999 and found that plaintiff had not met its burden for a temporary restraining
order under Washington Metropolitan Area Transit Commission v. Holiday Tours, 559 F.2d
841, 843 (D.C.Cir. 1977). Pursuant to Fed.R.Civ.P. 65(a)(2), the Court consolidated the request for injunctive relief with the merits determination. Now, this matter is before the
Court on the parties’ cross-motions for summary judgment pursuant to Fed.R.Civ.P. 56(c).
Upon consideration of the pleadings and the arguments of counsel, and for the following
reasons, the defendant’s motion for summary judgment is GRANTED and the plaintiff’s
motion for summary judgment is DENIED.
II. Procedural History
Plaintiff Petchem had provided tugboat services for the Military Sealift Command (MSC)
and Naval Ordnance Testing Unit (NOTU) at Port Canaveral, Florida since January 1984
under a series of contracts. The contracts involved towing nuclear submarines and surface
vessels, as well as transferring military personnel to and from these vessels. The most recent contract was to have expired on November 30, 1999, but was extended through December 14, 1999. That contract provided Petchem a fixed monthly payment in exchange for
the exclusive use of Petchem’s two tugboats and one personnel transfer vessel on a 24-hour,
365-day per year basis.
Early in 1999, naval procurement officials began preparing a new solicitation for the tug
and personnel transfer services at Port Canaveral. Concluding that the demand for these
services would be substantially reduced in the future, the Navy decided to abandon the
fixed-price contract it had been using with Petchem in favor of a so-called Indefinite Delivery/Indefinite Quantity (IDIQ) contract under which the government would pay for only the
amount of services it actually used above a stated minimum. (Def.’s Mot. to Dismiss at 4.)
The solicitation was issued on July 9, 1999 as a small- business set-aside. However, large
firms were also allowed to submit bids in the event that there were not at least two offers
from qualified small business providers. The Navy reserved the right to award different
portions of the work to different bidders unless the bidder specified that it would not accept
a partial award.
MSC received seven bids from qualified small business concerns and, as a result, did not
open the single bid submitted by a large business. Petchem was among the seven small
business bidders. Petchem submitted an initial bid in early August, revised the bid to reflect MSC’s concerns regarding pricing and technical issues, and submitted a final bid on
September 29, 1999.
On or about November 12, 1999, the Navy informed Petchem it would be allowed to compete for any contracts for tug boat work over $2,500. On November 19, 1999, the government notified Petchem it would end the then-current contract entirely on November 30,
19991 and not use its option to extend the contract up to four months.
On November 23, 1999, MSC officially canceled the solicitation for tug services.2 The bids
from the seven small business providers were all deemed too high in comparison to posted
rates from the port’s commercial operator, Port Canaveral Towing (PCT).
On November 24, 1999, Petchem filed this lawsuit against the government, alleging violations of the Competition in Contracting Act (CICA), 10 USC §2304.a.1 and 41 USC §253.a.1,
the Small Business Act, 15 USC §631, and the Federal Acquisition Regulations (FAR),
15.306(d)(3) and 19.506. The lawsuit was initially filed in the United States Court of Federal Claims, but was removed to this Court because of the possibility of maritime issues. See
Order of November 24, 1999, U.S. Court of Federal Claims, No. 99-953C.
Since Petchem’s contract expired in mid-December, the MSC has been procuring tug services on a piecemeal basis — to date on a competitive, spot-bid basis from PCT, a large
1
The contract was subsequently extended until December 14, 1999.
2
MSC did not cancel the portion of the solicitation for personnel transfer services and that contract was subsequently awarded to CRC Marine, the low bidder for this work, on December 21, 1999. Petchem was not eligible for that contract because it had indicated it would not accept a partial award for the solicitation —
only the entire contract for personnel transfer and tug work.
commercial operator in the area, or from Petchem. Petchem and PCT have both received
some of the tug jobs bid in this fashion.
III. Cross-Motions For Summary Judgment
Plaintiff’s original complaint alleged five counts of improprieties regarding the Navy’s handling of the now-canceled Port Canaveral solicitation. Over the course of the litigation,
however, plaintiff has abandoned several of those allegations and now presses only its first
count: that the government is violating the Competition in Contracting Act (CICA), 10 USC
§2304.a.1 and 41 USC §253.a.1, by failing to award the tug work via “full and open” competition.
CICA requires agencies, including the military, to promote competition for federal contracts. The law generally requires that procurement be conducted via “full and open” competition designed to ensure maximum participation.3 However, there are various exceptions
to this requirement including a partial exception for smaller contracts. Specifically, procurement under the “Simplified Acquisition Threshold” (SAT) of $100,000 is subject to lesser requirements. So-called micro-purchases of up to $2,500 are even less restricted.
Plaintiff contends that although the small business bids were deemed unacceptably high,
the Navy was not relieved of its statutory obligation to secure the tug services through “full
and open” competition. Specifically, plaintiff argues that defendant was required to resolicit the tug services work on a “full and open” basis. Had it done so, plaintiff contends,
Petchem and other bidders would have known they were competing against the commercial
rates and might have lowered their bids accordingly.
Petchem claims that the tug work does not qualify for any of the regular statutory exceptions to CICA, 10 USC §2304(a)(3)(c)1-7. Moreover, Petchem maintains that the government does not qualify for the looser requirements for purchases below the SAT of $100,000,
or below the “micro- purchase threshold” of $2,500. It is a violation of CICA, 10 USC
§2304(g)(2),4 and FAR 13.0035 to fragment a procurement order that would fall above the
SAT simply to take advantage of the simplified procedures. Plaintiff maintains that de-
3
See 48 CFR. §6.102 (detailing the procedures that meet the requirement for “full and open” competition).
4
10 USC §2304(g)(2) states: “A proposed purchase or contract for an amount above the simplified acquisition
threshold may not be divided into several purchases or contracts for lesser amounts in order to use the simplified procedures required by paragraph (1).”
5
FAR 13.003(c) states in relevant part: “Do not break down requirements aggregating more than the simplified acquisition threshold ... or the micro-purchase threshold into several purchases that are less than the
applicable threshold merely to —
(1) Permit use of simplified acquisition procedures, or
(2) Avoid any requirement that applies to purchases exceeding the micro- purchase threshold.
fendant is engaging in precisely this type of prohibited fragmenting, since the government’s
own estimates for the original solicitation were much higher than $100,000.6
Alternately, plaintiff argues that defendant is violating the general requirement that procurements over $2,500 but under $100,000 be reserved for small business providers. See
FAR 13.003 and FAR 19.502-2. Since seven small businesses bid for original solicitation,
plaintiff contends that it was reasonable for the contracting officer to expect at least two to
bid on the tug work and, therefore, that these contracts should be a small-business setaside.
Plaintiff is seeking summary judgment and an injunction that would order MSC to re-solicit
the tugboat contract and would block MSC from awarding the tugboat work to any contractor other than Petchem during the re-solicitation.
Defendant has countered with a motion to dismiss or, in the alternative, for summary
judgment under Fed.R.Civ.P. 56(c).7 Defendant argues that procurement officers enjoy considerable discretion in regard to contracting and that, here, plaintiff has failed to show an
abuse of that discretion. Procurement officers began with an effort to secure the tug work
through a competitive solicitation and abandoned that effort only when all the bids came in
well above market rates. Hence, defendant maintains, there was no attempt to evade CICA
thresholds or requirements, and procurement officers acted in good faith and within legal
discretion in choosing this route to obtain tug boat services. Part of this argument is the
government’s contention that each tug is a distinct requirement that need not be aggregated for purposes of the CICA thresholds; although the government attempted to combine
these requirements via an IDIQ contract, it was never required to do so and is not now.
IV. Discussion
A. Standard of Review
Summary judgment should be granted pursuant to Federal Rule of Civil Procedure 56 only
if there are no genuine issues of material fact and the moving party is entitled to judgment
as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91
L.Ed.2d 265 (1986). In ruling upon a motion for summary judgment, the Court must view
the evidence in the light most favorable to the nonmoving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986);
Bayer v. United States Dep’t of Treasury, 956 F.2d 330, 333 (D.C.Cir.1992). Likewise, in ruling on cross-motions for summary judgment, the court shall grant summary judgment only
if one of the moving parties is entitled to judgment as a matter of law upon material facts
that are not genuinely disputed. See Rhoads v. McFerran, 517 F.2d 66, 67 (2nd Cir. 1975).
The cross-motions for summary judgment pending before the Court present no genuinely
disputed material facts that would preclude summary judgment.
6
Plaintiff additionally alleges that MSC is fragmenting even further, to fall below $2,500 “micro-purchase”
boundary, in violation of FAR 13.003(c)(2).
7
In response, plaintiff filed an opposition and cross-motion for summary judgment.
A contract award is considered an informal agency action for purposes of review under the
Administrative Procedures Act (APA), 5 USC §§701-706. See GE Government Services, Inc.
v. United States, 788 F.Supp. 581, 590 (D.D.C. 1992) (citing Doe v. Devine, 703 F.2d 1319
(D.C.Cir. 1983)). To prevail, the plaintiff must show the contracting officer was arbitrary
and capricious, abused her discretion, or violated applicable rules and statutes. 5 USC
§706(2)(A). The D.C. Circuit has further refined this standard to suggest that the disappointed bidder must show the procurement official’s decisions had no rational basis, or that
the procedure involved a clear and prejudicial violation of applicable statutes and regulations. See Kentron Hawaii Ltd. v. Warner, 480 F.2d 1166, 1169 (D.C.Cir. 1973). Courts typically accord procurement officials, in particular, a significant amount of deference. (Mot. To
Dismiss at 13, 14, citing M. Steinthal & Co. v. Seamans, 455 F.2d 1289 (D.C.Cir. 1971).)
B. Fragmentation
Turning to the particulars of this case, the primary issue is whether the procurement officer
improperly fragmented the procurement to evade requirements under CICA and FAR.
1. Plaintiff’s Argument
Plaintiff argues that this is a clear case of improper fragmentation given the Navy’s initial
estimates of its needs when it solicited the indefinite quantity or IDIQ contract in July. The
regulation governing IDIQ contracts specifies that the government must use a realistic
amount for the guaranteed minimum quantity specified in the solicitation.8 Here, that minimum would still come in well above SAT threshold; the original solicitation guaranteed a
minimum of 180 moves per tug, for a total of $340,320 per year without overtime and
$459,432 with overtime, based on even the government’s own estimates using commercial
rates as a guide. (AR 316, AR 1514, and Plaintiff’s Mem. in Supp. of Cross Mot. for Summ.
Judg. at 4.) Plaintiff also notes that the solicitation was ostensibly canceled because prices
were too high, not because the Navy downgraded its estimates of need. Petchem alleges
that MSC is trying to get around this requirement by breaking up tug services into small
increments that fall below the $100,000 cutoff triggering full CICA procedures. Therefore,
according to Petchem, MSC should re-solicit the tug work under a fully competitive procurement.
Plaintiff cites L.A. Systems v. Department of the Army, 1996 GSBCA LEXIS 54, a 1996 case
from the General Services Administration Board of Contract Appeals, to support its claim.
In L.A. Systems, protestors challenged four separate procurements for computer upgrades
made within a short time span, alleging improper fragmenting of what was really a unified
requirement above the SAT threshold. In that case, the Board of Contract Appeals found
that the agency had improperly fractured its requirements. Although the court found that
the individual procurement officer did not know of the entire need when he or she processed
the four procurements separately, the court further found that the director of the agency
had determined — at the same time — that all four computer upgrades were needed and
8
FAR 16.504(a)(2) states that “… the minimum quantity must be more than a nominal quantity, but it
should not exceed the amount that the Government is fairly certain to order.”
were thus part of one “requirement.” The court found this to be a violation of FAR 13.003(c).
L.A. Systems at *27 (citing Digital Services Group, GSBCA 87-35-P).
2. Defendant’s Argument
The government offers several counter-arguments. First, it cites Canon U.S.A., Inc., 1986
WL 63273 (Comp.Gen.) to establish that a plaintiff must show that there was a specific intent to fragment a known requirement in violation of CICA and FAR. In the Canon case,
which dealt with a comparable anti-fracturing rule under a different regulation, a contracting officer was found not to have improperly fragmented by making an initial purchase of
six microfilm readers out of a total demand for 75 such machines. The opinion stated that
the officer must have “specific intent” to evade the thresholds to violate the regulation. See
Canon at *1 (stating that the protestors “would have had to show that the acquisition of the
six units was merely the first in a series of purchase orders to be placed with the specific
intent to evade the maximum dollar limitation....”).
Moreover, defendant argues that the “need” at Port Canaveral is more indefinite than that
in the L.A. Systems case. The government argues that an IDIQ contract by its nature deals
with a series of smaller, discrete requirements that would each likely fall under the SAT
were it not for the potential to consolidate them in an IDIQ contract. Here, defendant argues that its attempt to solicit a new IDIQ was unsuccessful, therefore it was permissible to
forgo full solicitation. The core of this argument is the contention that tug requirements are
separate and distinct as the jobs arise, not a single requirement that is subject to aggregation thresholds. Defendant bolsters this theory by citing several cases underscoring an
agency’s discretion to choose the type of contract that meets its needs. See James Foos &
Assocs., 1993 WL 7007 (Comp.Gen., Jan.6, 1993); Professional Services Unlimited, 1991 WL
290496 (Comp.Gen., Dec.30, 1991).
3. Analysis
The Court is concerned by the implications of both lines of argument. Under the government’s view, it is often permissible to calculate requirements in small, recurring increments
and thus evade the strictures of full and open competition for contracts valued at more than
$100,000. This practice could easily be exploited as a loophole to evade Congress’ intent in
passing CICA.
In particular, it is troubling that several administrative documents generated in October
seemed to anticipate that, if the original, small business solicitation were to be canceled,
the MSC would go to a new solicitation or “free and open” competition. (AR 1510, 1534,
1535) There is no clear explanation in the record as to why this idea was bypassed in favor
of the current, piecemeal bidding approach.
Yet the plaintiff’s theory likewise offers no clear stopping point. Many discrete procurements could, in theory, be aggregated into one, larger procurement. Given enough time, the
aggregate value of many types of recurring requirements could top $100,000. This would
leave an infinite number of procurement strategies open to attack as potential violations of
the anti-fragmenting language in CICA and FAR.
Plaintiff maintains that Congress did intend to impose sharp limits on agency discretion
when it passed CICA, citing ATA Defense Industries, 38 Fed.Cl. 489, which discusses the
legislative history of CICA and Congress’ desire to limit agency discretion on procurement.
Thus, ATA urges a relatively strict reading of CICA and states “federal agencies have only
the discretion that Congress allows them.” ATA Defense Industries, 38 Fed.Cl. at 504. Yet
while ATA does stand for the proposition of holding agencies to the statutory thresholds, it
does not answer the question of what should properly be classified as one “requirement” for
purposes of triggering the $100,000 threshold.
Neither party can point to controlling authority on the interpretation and implementation
of the anti-fragmentation provisions of CICA and the FAR. Those cases they do cite address
procurement of goods rather than services, and therefore do not confront the complicated
issue of how far into the future a procurement officer must look in assessing a “requirement.”
Here, there are several factors that tip in favor of the defendant’s contention that there is
no violation of CICA.
First, the applicable caselaw suggests there must be a clear intent to evade CICA. Here, the
Court draws not only on the Canon case cited by defendant, supra, but also upon two opinions issued by the Comptroller General, and not addressed by the parties, concerning the
propriety of spot purchasing in light of the anti-fragmenting requirements of CICA.
In Mas Hamilton Group, Inc., 72 Comp.Gen. 6 (October 20, 1992), the plaintiff challenged
an agency decision to purchase security locks as a series of procurements — allegedly in an
improper exercise of fragmenting. However, the court upheld the piecemeal procurements
to satisfy an urgent need for the locks because of the agency’s “persuasive” explanation of
complications toward issuing a competitive procurement for the locks. Mas Hamilton Group
at * * 11. “Here, where the agency is using the small purchase procedures to make shortterm, filler buys until a fully competitive award can be completed,” the court found no violation of CICA or FAR. Id.
Five years later, the Comptroller General applied a similar rationale to find that the use of
month-to-month contracts for security guard services did not constitute an improper attempt to fragment a requirement and evade CICA. See Master Security, Inc., 1997 WL
11254 (Comp.Gen.) at *6 (stating that “[w]hen an agency is faced with a critical need while
being simultaneously unable to proceed with a fully competitive award for that item, it may
properly use the small purchase procedures as an interim means to procure its needs until
a fully competitive award is possible.”).
Implicit in both these opinions is the idea that good faith efforts to comply with CICA’s
mandate for competitive procurement will protect a procurement officer’s decision-making
from a potential legal challenge of fragmenting. Of course, to be clear, in those cases the defendants represented that the spot purchases were merely an interim measure pending a
full solicitation, whereas the defendant in this case does not specify when, if ever, MSC
might seek to conduct a new solicitation for tug services at Port Canaveral. Yet in this case,
unlike the scenarios in Mas Hamilton and Master Security, Inc., the defendant has already
conducted a good faith competitive solicitation (albeit one potentially reserved for a small
business provider), involving several rounds of negotiation. Only after bidders had been
given a chance to revise their offers did the procurement officer determine the prices were
too high and move to dissolve the solicitation. Thus the current practice of spot bidding is
not in the first instance an attempt to evade a competitive solicitation, but rather the response to a failed attempt to employ such competitive bid procedures.
Second, this case does not involve the fragmentation of requirements that were precisely
known to defendant on a given day. Rather, the defendant does have knowledge of a recurrent need but not of the particular dates or specifications of the tug work required. Further,
defendant argues that the overall decline in demand for MSC operations at Port Canaveral,
and by extension for tug work, makes it difficult to predict future needs from past experience. The Court is persuaded that this uncertainty, coupled with the good faith effort of the
initial competitive solicitation, distinguishes this case from a case such as L.A. Systems.
This Court does not, however, pass judgment on defendant’s contention that the MSC is always free to bid each tug as an individual “requirement.” As the MSC continues to evaluate
the changing requirements at Port Canaveral it must reassess its obligations under CICA
and FAR and ensure that its procurement strategy is in keeping with the letter and spirit of
those laws. Rather, the Court merely endorses the MSC’s current spot bidding practices at
Port Canaveral as appropriate under CICA and FAR on the facts of this case as a current
strategy without deciding whether this would be acceptable as a permanent procurement
policy.
Finally, it is significant that the government is bidding this work competitively between the
two providers currently available in the Port Canaveral area.9 Nor is it axiomatic that bidding out work in small increments is anti-competitive; indeed, some lawsuits challenge the
government for “packaging” more than one requirement into a larger solicitation, on the
theory that this practice effectively excludes some smaller providers and thus hurts competition.10
9
Indeed, the record suggests that White describes this as competitive procurement and suggests MSC did so
even though the individual job was expected to be less than $2,500 (and therefore, presumably not subject
to competitive bid requirements at all so long as the price obtained was reasonable). This practice undermines plaintiff’s allegation of fragmenting to fall below the micropurchase threshold because defendant is
not taking advantage of the lower bid amounts to sole-source the work.
10
See, e.g., S & K Electronics, 1999 WL 427411, *3 (Comp.Gen.) (noting that “[s]ince bundled, consolidated or
total-package procurements combine separate, multiple requirements into one contract, they have the potential for restricting competition by excluding firms that can furnish only a portion of the requirement.”)
Moreover, it seems unlikely that the government would re-solicit the contract as a small business set-aside
given that the original bids were deemed so far out of the acceptable price range. More likely, the government would issue a solicitation open to all bidders, large and small. It would be ironic if plaintiff were able
to force such a solicitation through this lawsuit, when Petchem earlier protested the agency’s effort to include large businesses in the original solicitation for the tug work at Port Canaveral.
Here, there is ample support in the record that the government reasonably wanted to abandon the previous style of contract that supplied 24-hour service at a premium price. Once
the attempt to aggregate the tug jobs in an IDIQ contract yielded no viable bids, it was a
reasonable option to simply bid on a piecemeal basis since those spot, commercial rates
were the basis for finding the small business bids unreasonably high. While the government
might have re-solicited the tug work under an IDIQ contract with or without the small
business restriction, it was not required to do so. The regulatory language for using an
IDIQ-style contract is permissive, not mandatory: “An indefinite- quantity contract may be
used when the Government cannot predetermine, above a specified minimum, the precise
quantities of supplies or services that will be required during the contract period.” FAR
16.504(b) (emphasis added). The tug jobs are sufficiently dispersed over time to justify bidding separately and, at least on this record, there does not seem to be a willful fragmenting
or evasion of CICA. Nor does plaintiff point to any language suggesting that requirements,
and the $100,000 threshold for use of the simplified acquisition techniques, must be calculated in yearly increments.
Thus, on the facts of this case, this Court does not find a clear and prejudicial violation of
CICA or the FAR on the issue of fragmentation.
C. Small Business Set-Aside
Having found that the Navy’s current procurement strategy for tug work at Port Canaveral
does not constitute an evasion of CICA’s provisions for requirements greater than $100,000,
the Court turns to plaintiff’s alternate theory that defendant is evading the small-business
set-aside for procurements under the SAT of $100,000 and above the “micro-purchase”
threshold of $2,500. The pertinent regulation, FAR 13.003(b)(1), states:
Each acquisition of supplies or services that has an anticipated dollar value
exceeding $2,500, but not over $100,000, is automatically reserved exclusively for small business concerns and shall be set aside unless the contracting officer determines that there is not a reasonable expectation of obtaining offers
from two or more responsible small business concerns that are competitive in
terms of quality, price and delivery.
This regulation works in tandem with FAR 19.502-2, which states: “... If the contracting officer receives only one acceptable offer from a responsible small business concern in response to a set-aside, the contracting officer shall make an award to that firm.”
The decision whether or not to create a set-aside under this regulation is within the discretion of the agency and will not be second-guessed by the courts “unless an abuse of discretion is clearly shown.” Nordic Sensor Technologies, Inc., 1999 WL 533611 at *1 (Comp.Gen.)
(citation omitted). Plaintiff contends that since seven small business companies submitted
bids for the original solicitation, it was reasonable for the procurement officer to expect that
at least two would bid for the tug work on a spot basis.
The government argues that Petchem is the only small business company operating in Port
Canaveral (Declaration of Juanita White, a contracting officer at MSC, at ¶2, stating that
Petchem and PCT are “the only two commercial tug operators at Port Canaveral.”) and
there is nothing in the record to contradict this. It appears reasonable for the procurement
officer to conclude that small business providers who did not have ongoing operations in
Port Canaveral would not be available to bid on or have the capability to provide spot tug
work on short notice. Indeed, Petchem itself had earlier represented that it would be forced
to abandon the area if its contract were not extended or a new one approved. However, Petchem later notified the MSC that it was available to perform ongoing work and, accordingly, has been offered an opportunity to compete with PCT, the only commercial operator at
the port. It is telling that no other small business bidder provided the government with
such notice, either after the original solicitation was cancelled or since MSC began bidding
the work on a spot basis. Therefore, this Court finds no basis to conclude that the contracting officer abused his discretion in deciding not to set-aside the spot tug work pursuant to
FAR 13.003(b)(1).
V. Conclusion
Therefore, for the reasons stated, the Court finds that there has been no clear and prejudicial violation of CICA or FAR. Accordingly, Plaintiff’s Motion for a Permanent Injunction
and Cross Motion for Summary Judgment [19] is DENIED, Defendant’s Motion for Summary Judgment [17] is GRANTED, and the above- captioned case is DISMISSED WITH
PREJUDICE. An appropriate order shall accompany this opinion.
Order
Upon consideration of the parties’ cross motions for summary judgment, the oppositions
and replies thereto, the arguments in court and for the reasons detailed in the attached
memorandum, it is hereby ORDERED that Plaintiff’s Motion for a Permanent Injunction
and Cross Motion for Summary Judgment [19] is DENIED; and it is further ORDERED
that Defendant’s Motion for Summary Judgment [17] is GRANTED; and it is further
ORDERED that this case is DISMISSED WITH PREJUDICE.
DOCUMENT FOR PUBLIC RELEASE. The decision issued on the date below was subject to a GAO
Protective Order. No party requested redactions; we are therefore releasing the decision in its entirety.
Pitney Bowes
B-294868; B-294868.2
January 4, 2005
Grace Bateman, Esq., and Amanda B. Weiner, Esq., Seyfarth Shaw, for the protester. Carmody A. Gaba, Esq., and Michael I. Goulding, Esq., Department of Homeland Security,
Customs and Border Protection, for the agency. Carl L. Vacketta, Esq., Richard P. Rector,
Esq., William J. Crowley, Esq., and David E. Fletcher, Esq., Piper Rudnick, for Neopost,
Inc., an intervenor. Paul N. Wengert, Esq., Glenn G. Wolcott, Esq., and Michael R. Golden,
Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.
Digest
1. Protest that agency improperly canceled delivery order initially issued to protester is denied where protester’s response to solicitation did not contain prices for all required line
items.
2. Protest that agency improperly permitted successful vendor to submit revised pricing following initial submissions is denied where agency sought and received revised pricing from
both protester and successful vendor.
3. Protest that successful vendor failed to acknowledge material amendments to solicitation
is denied where successful vendor’s submission indicated compliance with all material
terms.
4. Protest that successful vendor’s equipment does not comply with the solicitation requirements is denied where solicitation did not require detailed technical submissions and
agency reasonably relied on general statements of compliance and descriptive literature
submitted by successful vendor to conclude that its equipment complies with solicitation
requirements.
Decision
Pitney Bowes Inc. protests the issuance of a delivery order to Neopost, Inc. by the Department of Homeland Security, Customs and Border Protection (CBP), under request for quotations (RFQ) No. 48269 for mailing system equipment and installation, maintenance, and
training services. Pitney Bowes also objects to the cancellation of an initial delivery order
that had been issued to Pitney Bowes.
We deny the protest.
The RFQ was issued in August 2004 and, as amended,1 sought quotations from vendors
holding Federal Supply Schedule (FSS) contracts for commercial mailing equipment.2 The
RFQ provided that the mailing systems to be obtained under this solicitation must include
the following line items: meter head, meter head base, scale, effective interface, software,
training, training guides, removal/return of existing equipment, and equipment repair/replacement support. The RFQ provided specific quantities for each line item with regard to a base year and for each of four 1-year option periods. For each line item, the solicitation provided a space, under the heading “unit price,” for the vendor to submit its
quotation and at the top of the pricing schedule vendors were directed to “complete the following pricing.” AR, Tab 3, at 1. The RFQ also advised offerors as follows: “The number of
units to be provided in the option years has not been determined[;] therefore the quantities
identified in the option years are included only for the purpose of evaluating bids.” AR, Tab
3A, at 1. Finally, under the heading “evaluation of offerors,” the RFQ stated: “The vendor
who submits the low bid, and obtain[s] a satisfactory past performance evaluation will be
awarded subject contract.”3 RFQ at 3.
Only Pitney Bowes and Neopost submitted quotations. After reviewing the initial quotations, the contracting officer invited both vendors to submit revised pricing. Neopost submitted a set of revised pricing sheets on August 26. AR, Tab 5B, Neopost Pricing, at 6-7.
Pitney Bowes submitted its revised pricing, which it referred to as pricing “correction,” on
August 29. AR, Tab 4B, Pitney Bowes Pricing, at 1-2. Thereafter, CBP determined that the
quotation submitted by Pitney Bowes was lower-priced, and issued a delivery order to Pitney Bowes on August 30. AR, Tab 8, Delivery Order, at 1.
On September 7, CBP canceled the August 30 delivery order on the basis that Pitney Bowes
had failed to submit pricing for several line items. Specifically, Pitney Bowes’s submission
did not reflect any pricing for the purchase of meter head bases or scales for any of the four
option periods. AR, Tab 9, Termination Notice, at 1. CBP then issued an order dated September 9 to Neopost, which incorporated by reference the RFQ, and also “Neopost Inc.’s
proposal which responded to this RFQ with related FAX; and the three amendments to the
RFQ.” AR, Tab 23, Delivery Order, at 2.
In its protest to our Office, Pitney Bowes presents the following assertions: the initial delivery order to Pitney Bowes was unjustifiably canceled; Neopost was improperly allowed to
amend its quotation after initial submissions; Neopost failed to acknowledge material solic-
1
CBP issued three amendments to the RFQ.
2
Specifically, CBP distributed the RFQ using “e-Buy” to firms holding contracts under FSS Schedule 36, titled “office imaging and document solution.” AR, Tab 3, e-Buy Posting Confirmation, at 5.
3
Although the solicitation anticipated issuance of a delivery order under an FSS contract and was posted on
e-Buy as an RFQ, the document described itself as an “IFB” (invitation for bids) and referred to vendor responses as “bids.”
itation amendments; and Neopost’s equipment will not comply with the solicitation requirements.4
Pitney Bowes first protests that the agency lacked a proper basis to cancel the initial delivery order. Pitney Bowes does not dispute that its submission failed to reflect any prices for
meter head bases5 or scales in the option years. Nonetheless, Pitney Bowes maintains that
the RFQ only sought vendors’ quotations to purchase meter head bases and scales during
the base year, and that no such purchases were contemplated during the option years. The
record is to the contrary.
As noted above, the solicitation expressly advised the vendors that they were to “complete
the following pricing,” that “[t]he number of units to be provided in the option years has not
been determined,” and that the vendors’ quotations for the option-year quantities would be
used “for the purpose of evaluating bids.” RFQ at 1. Accordingly, it is clear that quotations
for all line items, including option-period line items was required. To the extent Pitney
Bowes viewed this clear solicitation requirement as either unrealistic or otherwise contrary
to other aspects of the RFQ, any protest on that basis had to be filed prior to the time set for
submission of quotations, in order to be timely under our Bid Protest Regulations.6 4 CFR
§21.2(a)(1). On this record, we find nothing improper in the agency’s cancellation of the initial delivery order issued to Pitney Bowes.
Pitney Bowes next protests that the agency improperly sought and evaluated the revised
pricing submitted by Neopost on August 26, following submission of initial quotations. As
noted above, the record is clear that both Pitney Bowes and Neopost were provided an op-
4
Pitney Bowes also protests that the procurement violated requirements in Federal Acquisition Regulation
(FAR) Part 8.4 because the evaluation criteria did not include a “comparative evaluation of the technical
merits” of the products. Supplemental Protest at 9. As mentioned above, the RFQ stated that the selection
would be based on low price and satisfactory past performance. The challenge that the evaluation criteria
were inconsistent with FAR §8.4 is untimely because it was not protested prior to the time set for submission of quotations, as required under our Bid Protest Regulations. 4 CFR §21.2(a)(1) (2004).
5
Although meter manufacturers are permitted to sell the “meter head base” portion of a postal meter, under
regulations of the United States Postal Service (USPS), the meter mechanism itself (the “meter head”) cannot be sold, but may only be rented from one of the USPS-authorized postal meter manufacturers. Therefore in both the Schedule 36 contract and the RFQ, vendors provided purchase prices for meter head bases,
and monthly rental rates for the meter heads.
6
Pitney Bowes argues that because the RFQ listed the same quantity (311) of meter head bases and scales
for each of the 4 option years as it listed for the base year and the agency had indicated an intent to purchase 311 bases and scales in the base-year period, Pitney Bowes reasonably concluded that there would be
no purchases of meter head bases and scales during any of the 4 option years. This interpretation is unreasonable because it is directly contrary to the solicitation provision, quoted above, indicating that vendors
must submit quotations for all line items for each of the option years, and that such quotations would form
the basis for the agency’s evaluation of price. At best, the solicitation contained a patent ambiguity that
Pitney Bowes was obligated to protest prior to submitting its quotation. Kellogg Brown & Root, Inc., B291769, B-291769.2, Mar. 24, 2003, 2003 CPD ¶96 at 8.
portunity to revise their respective quotations, and that both did so.7 Thus, we conclude
that CBP properly considered the revised pricing from both vendors.
Next, Pitney Bowes protests that Neopost failed to acknowledge amendments 2 and 3 to the
RFQ, and maintains that this alleged failure renders Neopost’s quotation defective. We disagree because the Neopost quotation complied with all material aspects of the revised RFQ.
Specifically, the Neopost quotation specified the correct quantity of 311 systems, and the
descriptive literature showed that the Neopost machine would process letters at the specified rate. Further, the Neopost quotation indicated that Neopost would comply with the
general requirement to provide sufficient supplies to meet the specified rate of performance.
Finally, Pitney Bowes protests that Neopost’s equipment will not comply with certain RFQ
requirements. In this regard, Pitney Bowes references a provision in the RFQ’s statement
of work regarding system software that states:
CBP requires the ability to account for postal expenditures. It is necessary to
track how the USPS and other carriers send mail. The software should provide ad hoc reporting, monitor postage usage, establish business rules, create
mail accounts and manage mail accountability.
RFQ at 1.
Pitney Bowes complains that Neopost’s equipment will not comply with the requirement
that the software “establish business rules.” The phrase “establish business rules” was not
defined in the RFQ. CBP explains that by “business rules” it meant the ability to “create
passwords, short-cut keys, and custom rates,” and notes that the descriptive literature
submitted by Neopost demonstrated that its equipment had the ability to “perform custom
rates and accommodate shortcut keys.... [and] perform functions including tracking costs
for up to 50 departments.” Supplemental Report at 24. Accordingly, the agency concluded
that Neopost’s equipment complies with the RFQ requirements, including the requirement
regarding business rules.
To the extent Pitney Bowes disagrees with the agency’s interpretation of the term “business
rules,” we view the solicitation as patently ambiguous.8 As noted above, an offeror has an
7
On September 29, apparently after issuance of the delivery order, Neopost submitted a third set of pricing
sheets, which only added an extended price for purchase of meter head bases in option years (where the prior version had listed only a quantity and unit price). AR, Tab 5Bii. Since this final submission was simply
the mathematical product of the previously-submitted prices for the stated quantities, the agency’s acceptance of this submission does not provide a basis for sustaining the protest.
8
Our conclusion in this regard is supported by Pitney Bowes’ own submissions in pursuing this protest. Specifically, Pitney Bowes has provided two different definitions of the term “business rules.” In its comments
on the initial agency report Pitney Bowes argued that business rules meant “software that enables the
agency to restrict the user of the mailing system from incurring certain types of postage costs, or that caps
the amount of postage that a particular user may incur.” Protester’s Comments at 11. In its comments on
the supplemental agency report, Pitney Bowes attached a declaration from an employee and argued that in
the mailing and freight-handling industries, “‘Business rules’ is a specially-defined term that means a rout-
affirmative obligation to seek clarification prior to the first due date for submissions responding to the solicitation following introduction of the ambiguity into the solicitation. 4
CFR §21.2(a)(1). Where a patent ambiguity is not challenged prior to such submissions, we
will dismiss as untimely any subsequent protest assertion that is based on an alternative
interpretation. Kellogg Brown & Root, Inc., supra; Bank of Am., B-287608, B-287608.2, July
26, 2001, 2001 CPD ¶137 at 10. Our rule that protests of patent ambiguities must be filed
prior to responsive submissions is intended to facilitate clarification of legitimate questions
prior to preparation of submissions. Since Pitney Bowes sought no clarification of this matter prior to responding to the solicitation, it may not now assert that the only permissible
interpretation of this term is its own.
The protest is denied.9
Anthony H. Gamboa
General Counsel
ing guide that specifies shipping methods, carriers, and/or services based on customer preferences, negotiated contracts, or other specific criteria.” Protester’s Supplemental Comments at 7. Since Pitney Bowes itself has provided two divergent definitions of the term, we decline to conclude that the agency’s definition of
the term is unreasonable.
9
Pitney Bowes also protests that Neopost’s submission did not explicitly address the RFQ requirement that
equipment be capable of calculating correct charges for various carriers. Specifically, Pitney Bowes complains that, while Neopost’s submission certified that it “acknowledge[d] and will comply” with this requirement, its descriptive literature “is silent on the capability” of correctly calculating various rates. Supplemental Protest at 4. Since the RFQ did not require a detailed technical submission, in our view, CBP
reasonably accepted Neopost’s general assurance that its equipment was capable of calculating the appropriate rates.
Purchase of Cold Weather Clothing, Rock Island District, U.S. Army Corps of
Engineers
B-289,683
October 7, 2002
Digest
Without specific statutory authority, cold weather clothing is an employee’s personal responsibility, not the government’s, and appropriated funds, therefore, are not available for
that purpose. Our Office has identified three statutes including the Occupational Safety
and Health Act of 1970 (OSHA), that permit the use of appropriated funds to purchase
wearing apparel. In the circumstances presented here, two of these three statutes are not
available to the Army Corps of Engineers for the purchase of cold weather clothing. Unless
the Corps determines that providing suitable cold weather clothing is necessary to satisfy
the OSHA standards promulgated by the Secretary of Labor, OSHA is also not available.
General statements in the Corps’ safety manual about clothing employees should wear to
protect themselves from cold weather do not constitute a determination by the agency that
it is necessary to provide the clothing in order to satisfy OSHA standards.
Decision
The financial manager for the Rock Island District of the U.S. Army Corps of Engineers requested an advance decision on the availability of appropriated funds for the purchase of
cold weather gear for union employees who work outside in cold weather. The American
Federation of Government Employees filed a grievance alleging that the Corps violated its
collective bargaining agreement by not providing suitable protective clothing for employees
requested to work outdoors in cold weather. The Corps, relying upon the decisions of our
Office and contending that such an expenditure was improper, agreed to arbitration by the
Federal Mediation and Conciliation Service (FMCS). In August 2001, the arbitrator issued
a decision directing the Corps to provide the cold weather gear. The Corps asks whether
appropriated funds are available to purchase cold weather gear for district employees who
work outdoors year round.
Generally it is the responsibility of the employee to report for duty properly clothed to carry
out his or her responsibilities. 68 Comp. Gen. 245 (1984). There are three statutes, including the Occupational Safety and Health Act (OSHA), that permit the purchase of wearing
apparel. We address each of the statutes in our analysis below. Two of these statutes are
clearly not available as authority to the Corps in the circumstances presented here. Only if
the Corps determines that it is necessary to provide protective clothing to satisfy OSHA
standards would OSHA provide the necessary authority. The Corps has not made that determination. The general statements in the Corps safety manual do not constitute the necessary determination.
Background
The Local 584 bargaining unit representative of the Rock Island District filed a grievance
on December 14, 2000, alleging that the Corps had violated Article 21 (Safety) of its negotiated collective bargaining agreement dated April 1, 1997. Article 21 states:
Section 1. The employer shall maintain an occupational safety and health
program meeting the requirements of the Occupational Safety and Health
Act of 1970 (OSHA); Executive Order 12196; 29 CFR Part 1960, Department
of Labor Rules and Regulations; and EM [Engineering Manual] 385-1- 1. The
employer shall make a reasonable effort to provide that conditions detrimental to health are removed, remedied, or kept to a minimum. The Union
shall cooperate to that end and encourage employees to perform work assignments safely and in accordance with the requirements of EM 385-1-1 and
OSHA regulations.
Section 11. The Employer will provide suitable protective clothing in accordance with EM 385-1-1.”
Specifically, the Union claimed that the Corps does not provide suitable protective clothing
to employees working outside in the cold weather in violation of both the collective bargaining agreement and OSHA requirements. The Corps denied the grievance, and in January
2001, the Union appealed to the Deputy District Engineer. This too was denied. The matter
was submitted to arbitration. In October 2001, the arbitrator found that the Corps had violated the collective bargaining agreement by failing to provide cold weather clothing. Arbitration Award: U.S. Army Engineer District, Rock Island and National Federation of Federal Employees, Local 584. “Article 21, Safety,” FMCS Case No. 01-07519 (Oct. 17, 2001)
(hereinafter, Arbitration Award). The arbitrator ruled that the Corps should provide suitable cold weather clothing. Id.
The Financial Manager of the Rock Island District requested an advance decision on
whether appropriated funds are generally available to purchase cold weather gear, what
exceptions apply if appropriated funds are generally not available for such a purchase, and
whether, if there is an exception where the agency makes a determination to furnish such
gear as protective equipment under the Occupational Safety and Health Act of 1970, provisions of the Army Corps of Engineers Manual EM 385-1-1 constitute such a determination.
Analysis
At the outset, we should point out the limits of GAO’s jurisdiction with regard to this matter. Our function is not to decide whether the arbitrator came to the correct decision or
whether these issues are negotiable. We are required by 31 USC §3529 to rule on the legality of expending appropriated funds. Hence we shall confine our considerations to the issue
of whether appropriated funds are available to purchase cold weather gear.
We generally consider items of clothing such as cold weather gear to be a personal expense
of the employee, and appropriated funds are not generally available for personal expenses.
B-240271, Oct. 15, 1990. We stated that “every employee of the government is required to
present himself for duty properly attired according to the requirements of his position.” 63
Comp. Gen. 245 (1984)
Our Office has identified three statutory provisions that explicitly permit the purchase of
items of wearing apparel. First, under 10 USC §1593, the Secretary of Defense is authorized to pay an allowance or provide a uniform to each civilian employee of the Department
of Defense who is required by law or regulation to wear a prescribed uniform while performing official duties. The record indicates that apparently some districts provide uniforms for
members of bargaining units. Arbitration Award, at 10. However, the only uniform policy
for the relevant employees in the Rock Island District is that they wear U.S. Army Corps of
Engineers hats. Id. These employees are not required by law or regulation to wear a prescribed uniform other than a hat. Thus this exception would not apply.
Second, under 5 USC §7903, enacted as part of the Administrative Expenses Act of 1946,
“Appropriations available for the procurement of supplies and material or equipment are
available for the purchase and maintenance of special clothing and equipment for the protection of personnel in the performance of their assigned tasks.” In order for an item to be
authorized by 5 USC §7903, it must satisfy three tests: (1) the item must be “special” and
not part of the ordinary and usual furnishings an employee may reasonably be expected to
provide for himself; (2) the item must be for the benefit of the government, that is, essential
to the safe and successful accomplishment of the work, and not solely for the protection of
the employee, and (3) the employee must be engaged in hazardous duty. See 32 Comp. Gen.
229 (1952); B-193104, January 9, 1979.
We have generally been unwilling to hold that cold weather gear meets these standards. B230820, Apr. 25, 1988. We view such gear as personal to the employee. In rare circumstances, we have recognized an exception. For example, in 1984, we applied these standards to
allow the procurement of down-filled parkas for Office of Surface Mining employees working in Alaska and western high mountain regions. 63 Gen. 245 (1984). In that case, however, the employees were assigned to temporary duty in these regions and could not be expected to own clothing suitable for such extreme environments. Id. at 247. Because the item
was not solely for the benefit of the employee, the expenditure was authorized.
In applying the three-part test here, that there is nothing in the record to indicate that the
cold weather gear at issue is “special.” By contrast with the situation faced by the Office of
Surface Mining employees, the situation here involves weather that is uncomfortable rather
than intolerable, and the weather encountered on the job is no different from that encountered by millions in the midwest during their day-to-day activities. The only issue is whether the requirement to perform outside for long periods of time creates a situation different
from that where the employee is only outside for the passage from parking lot to building,
or from building to building, or while attending sporting events. To the extent that operators working outside on the locks and dams suffer more exposure from the cold weather
than those who merely encounter the weather briefly, the District’s practices of providing
sheltered or heated enclosures, with the work day punctuated by frequent breaks, appears
adequate to protect the employees.
The third statute permitting the purchase of wearing apparels with appropriated funds is
OSHA. Section 668 of title 29 of the U.S. Code requires each federal agency to establish and
maintain an effective and comprehensive occupational safety and health program consistent with standards promulgated by the Secretary of Labor pursuant to the Act. See,
generally, 51 Comp. Gen. 446 (1972). Under §668, protective clothing may be furnished by
the government if the agency determines that it is necessary under OSHA and its implementing regulations. 57 Comp. Gen. 379, 382 (1978); B-187507, Dec. 23, 1976.
There is nothing in the record here to indicate that the Corps has designated cold weather
gear as required equipment pursuant to OSHA regulations. While the Corps EM 385-1-1
(referenced in section 11 of Article 21 of the collective bargaining agreement) incorporates
American Council of Government and Industrial Hygienists (ACGIH) standards into the
collective bargaining agreement, it does not designate cold weather gear as required
equipment pursuant to OSHA regulations. Paragraph 06.J.02 of EM 385-1-1 requires that
each installation develop a site-specific plan for monitoring heat/cold stress in accordance
with ACGIH guidance. There is no reference in that paragraph to provide clothing to the
employees. Subsequent paragraphs do list specific circumstances where the agency will
provide wearing apparel: (1) paragraph 06.J.06 states that employees who become “immersed in water” will be provided a change of clothing and treated for hypothermia; and (2)
paragraph 06.J.07 states that employees “shall be provided” gloves at certain temperatures.
By contrast, paragraph 06.J.10, which deals specifically with “cold weather clothing requirements,” does not provide that the agency will supply such clothing. Rather, those requirements address the individual employee’s obligation to provide and maintain equipment adequate to protect himself from the environment.
There is no determination in the Engineering Manual that specific items of cold weather
gear are required to satisfy OSHA requirements. The general statements found in the
manual do not constitute a determination for purposes of OSHA. See B-191594, Dec. 20,
1978 (Forest Service Manual provided authority to local line officers to determine, for their
local job situations, the personal protective equipment and clothing necessary to satisfy
OSHA requirements).
Conclusion
Without specific statutory authority, cold weather clothing is an employee’s personal responsibility, not the government’s. The purchase of cold weather clothing by the Army
Corps of Engineers for employees required to perform work outside on locks and dams during midwestern winters is not a proper use of appropriated funds unless the agency determines that providing suitable cold weather clothing is necessary to satisfy the standards
promulgated by the Secretary of Labor pursuant the OSHA. The general language of EM
385-1-1, requiring employees to wear clothing that protects them from the weather, does
not constitute a determination that the agency must provide that clothing to comply with
OSHA standards.
Anthony H. Gamboa
General Counsel
REEP
B-290,665, 2002 CPD ¶156
September 17, 2002
Gilbert J. Ginsberg, Esq., for the protester. Lt. Col. Daniel K. Poling, Department of the
Army, for the agency. Scott H. Riback, Esq., and John M. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.
Digest
Protest against agency’s issuance of delivery orders under Federal Supply Schedule (FSS) is
sustained, where agency issued orders to firm that was only vendor on one schedule within
the FSS, identical services were available at lower price from protester and other vendors
on another schedule within the FSS , and agency had knowledge that the services were
available under the second schedule; since agency must review information reasonably
available before awarding FSS delivery orders, it could not make award without reviewing
vendors’ prices on second schedule.
Decision
REEP, Inc. protests the Department of the Army’s issuance of delivery order Nos.
DAKF23-02-F-5215 and DAKF23-02-F-5315 to Worldwide Language Resources, Inc. under
that firm’s Federal Supply Schedule (FSS) contract in connection with its acquisition of
language training services for the 5th Special Forces Group (SFG). The protester maintains
that the agency improperly issued these delivery orders on a sole-source basis to Worldwide, even though REEP could have provided the same services under its FSS contract at a
lower price.
We sustain the protest.
The 5th SFG has an ongoing requirement for language training services and has been
meeting its need through the award of delivery orders under the FSS. Worldwide had been
performing these services under a prior 1-year delivery order awarded in March 2001 and
due to expire on March 15, 2002. On March 4, 2002, the agency issued request for quotations (RFQ) No. DAKF-23-02-Q-0040 (RFQ 0040) in an effort to meet its requirement for
language training services. REEP filed a protest in our Office in which it asserted that the
RFQ’s terms were unduly restrictive and that Worldwide had a conflict of interest that
should preclude the firm from competing to provide language training services. In response
to that protest, the agency advised our Office that it intended to cancel the RFQ, redraft the
solicitation and evaluate REEP’s conflict of interest allegation with a view to avoiding, neutralizing or mitigating any possible conflict on the part of Worldwide. Based on this proposed corrective action, we dismissed REEP’s protest (B-290155, April 29, 2002). On May
24, the agency issued a new solicitation (RFQ No. DAKF23-02-Q-0059) for its language
training services requirement. REEP has filed a protest in our Office challenging the terms
of that RFQ, which we intend to address in a separate decision.
In order to meet its ongoing requirement for language training services during this same
period, the agency issued two FSS delivery orders to Worldwide, the first on March 15 and
the second on June 3. These delivery orders were executed without issuance of solicitations
or receipt of competitive quotations. The delivery orders were awarded against Worldwide’s
contract under FSS No. 69; Worldwide is the only vendor with a language training contract
under that schedule. In contrast, REEP, Worldwide and numerous other vendors hold language training contracts under FSS No. 738-II.
REEP maintains that it was improper for the agency to award the delivery orders to
Worldwide without also considering vendors’ prices under FSS No. 738- II. REEP states,
and the agency does not dispute, that its prices under its FSS contract are lower than
Worldwide’s.
We agree with REEP. Agencies are not required to conduct competitive acquisitions when
making purchases under the FSS; by statutory definition, the award of a delivery order under the FSS satisfies the requirement for full and open competition — so long as award is
made to the vendor providing the best value to the government at “the lowest overall cost.”
10 USC 2302(2)(c) (2000); Federal Acquisition Regulation (FAR) 8.404(a). Provided that
agencies satisfy this statutory condition, they are not required to seek further competition,
synopsize the requirement or make a separate determination of fair and reasonable pricing
before awarding an FSS delivery order. FAR 8.404. To ensure that it is meeting the statutory obligation to obtain the best value at the lowest overall cost to the government when
placing orders under the FSS, an agency is required to consider reasonably available information, typically by reviewing the prices of at least three schedule vendors. FAR
8.404(b)(2); Commercial Drapery Contractors, Inc., B-271222, B-271222.2, June 27, 1996,
96-1 CPD 290 at 3.
Here, the agency’s only explanation for its actions is that it placed the delivery orders with
Worldwide because it was the only vendor with a contract under FSS No. 69. However, the
record shows that the agency had actual knowledge of numerous other vendors that offered
the same language training services under FSS No. 738-II.1 The agency has not asserted
that there is anything unique about the training offered by Worldwide under its FSS contract — for example, that it includes features not available from other vendors — that
would provide a basis for paying a price premium for the services. Accordingly, we find that
the agency failed to meet its obligation to consider reasonably available information, namely, the prices offered by other vendors under FSS No. 738-II, before placing its delivery orders with Worldwide. Had it done so, it would apparently have discovered that the same
requirement could be met at a lower overall cost to the government. Under these circumstances, we sustain REEP’s protest.
Since the agency continued (and has completed) performance under the delivery orders
awarded to Worldwide, corrective action is not practicable. Accordingly, we recommend that
1
The agency issued RFQ 0040 on March 4 to vendors holding contracts under FSS No. 738-II; this was prior
to issuance of the first delivery order to Worldwide on March 15.
REEP be reimbursed the costs of filing and pursuing its protest, including reasonable attorneys’ fees. 4 CFR 21.8(d)(1) (2002). REEP’s certified claim, detailing the time spent and
the costs incurred, should be submitted to the agency within 60 days of receiving this decision. 4 CFR 21.8(f)(1).
The protest is sustained.
Anthony H. Gamboa
General Counsel
Sales Resources Consultants
B-284943.2, 2000 CPD ¶102
June 9, 2000
Peter A. Cerick, Esq., for the protester. William M. Rosen, Esq., for Intellisys Technology
Corporation, an intervenor. David A. Ingold, Esq., Internal Revenue Service, for the agency.
Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq., Office of the General Counsel,
GAO, participated in the preparation of the decision.
Digest
In deciding whether to place an order for brand name software under a Federal Supply
Schedule (FSS) contract, agency is not required to first consider the unsolicited offer of an
alternate software product from a vendor that does not have an FSS contract.
A protester that does not have a Federal Supply Schedule (FSS) contract is not an interested party to challenge an agency’s determination as to its minimum needs and its decision to
conduct a limited competition among FSS vendors for a particular brand name software.
Decision
Sales Resources Consultants, Inc. (SRC) protests the issuance of an order to Beyond.com
and Intellisys Technology Corporation (ITC) by the Internal Revenue Service (IRS) under
the Federal Supply Schedule (FSS) program for electronic delivery of various Microsoft
Corporation software. SRC, which does not have an FSS contract, complains that the IRS
refused to consider SRC’s unsolicited offer to provide Lotus SmartSuite software1 to satisfy
the agency’s needs for office applications software.
We dismiss the protest.
In 1998, the IRS decided to standardize its workstation software to provide for service-wide
compatibility, system management interfaces, and cost savings. To this end, IRS’s chief information officer (CIO) issued a memorandum designating two levels (mandatory and controlled) of commercial off-the-shelf software that may be purchased by the IRS.2 See Agency
Report, Tab 6, CIO Memorandum 1 (Dec. 14, 1998). The CIO directed that only the listed
standard software, which included various Microsoft Corporation software products, could
be purchased by the agency. Id. at 2. In March 1999, consistent with the 1998 directive of
the CIO, the IRS determined that it would seek to competitively acquire Microsoft Windows
NT operating system and Microsoft Office application software under the FSS program. See
Agency Report, Tab 7, Brand Name or Equal Justification (Mar. 1, 1999) (justifying restriction to Microsoft operating system and office application software on the basis of compatibility and costs).
1
Lotus SmartSuite bundles word processing, spreadsheet, database, time management, and other office applications. See <www.lotus.com>.
2
There were no exceptions permissible for software in the mandatory category, but office heads could request
exceptions for software in the controlled category. Agency Report, Tab 6, CIO Memorandum, at 1.
In March 1999, the IRS requested reductions in pricing for the Microsoft Corporation software from four FSS vendors, including ITC, with which the IRS had entered blanket purchase agreements (BPA).3 Agency Report, Tab 8, Request for price reduction. ITC entered
into a teaming arrangement with Beyond.com, another FSS software vendor, to respond to
the IRS’s price reduction request,4 and on April 26 ITC/Beyond.com provided a price reduction quote to the IRS. Agency Report, Tab 9, ITC/Beyond.com quote. On April 29, Beyond.com’s FSS contract was modified to include the software sought by the IRS. Supplemental Contracting Officer’s Statement at 2; Supplemental Agency Report, exh. 2, Mod. 1
to Beyond.com’s FSS Contract. On May 13, after evaluation of the vendors’ responses to the
agency’s price reduction request, the IRS decided to accept the ITC/Beyond.com teaming
arrangement and modified ITC’s BPA accordingly. Agency Report, Tab 10, Selection of Microsoft Enterprise Agreement Vendor; Supplemental Contracting Officer’s Statement at 2.
Two delivery orders have been issued under the ITC/Beyond.com FSS teaming arrangement. Agency Report, Tab 2, Jan. 4, 2000 Order, and Tab 11, June 3, 1999 Order.
SRC protests the issuance of the second order for electronic delivery of Microsoft office applications software. SRC variously complains that the IRS has no reasonable basis to restrict its acquisition of office applications software to Microsoft products; that the IRS did
not timely or adequately justify its restriction of the acquisition to Microsoft software; that
the issuance of the order was “in reality” an unpublicized, sole-source award; and that the
IRS did not comply with FSS program “requirements” in selecting the ITC/Beyond.com FSS
teaming arrangement to receive delivery orders.
We disagree with SRC that the IRS’s use of a limited competition under the FSS program to
satisfy its software needs violates the full and open competition requirements of the Competition in Contracting Act of 1984, 41 USC 253(a)(1) (1994), as implemented by FAR part
6. The FSS program, directed and managed by GSA, provides federal agencies with a simplified process for obtaining commonly used commercial supplies and services at prices associated with volume buying. FAR 8.401(a). Section 259(b)(3) (1994) of title 41 of the United
States Code provides that the procedures established for the GSA’s multiple award schedule program (that is, the FSS program) satisfy the general requirement in 41 USC 253(a)(1)
for use of competitive procedures: if — (A) participation in the program has been open to all
responsible sources; and (B) orders and contracts under such procedures result in the lowest overall cost alternative to meet the needs of the Government.
3
All FSS contracts contain BPA provisions, and ordering agencies are permitted to establish BPAs with FSS
contractors for recurring requirements. Federal Acquisition Regulation (FAR) §8.404(b)(4). FAR
§8.404(b)(3) provides that where, as here, the FSS order would exceed the maximum order threshold of the
schedule contract, the ordering office should seek price reductions.
4
FAR subpart 9.6 specifically recognizes the validity of contractor teaming arrangements. The General Services Administration (GSA) also recognizes that FSS vendors may team to provide products and services
from their combined schedule contracts. See <www.fss.gsa.gov/schedules/sched-wn.cfm>.
SRC argues that the IRS did not comply with 41 USC 259(b)(3) because it did not consider
its unsolicited offer to provide Lotus SmartSuite software, which SRC states would represent a lower cost alternative to the Microsoft software acquired under the FSS program. We
disagree.
Consistent with 41 USC 259(b)(3), participation in the FSS program is open to all responsible sources — a fact not disputed by SRC. With respect to the second statutory element, referring to the lowest overall cost alternative meeting the needs of the government, SRC apparently believes that the IRS was required to consider its offer, outside the FSS program,
to determine whether purchasing software from the schedule would result in the lowest
overall cost alternative. In our view, imposing such a requirement on agencies is inconsistent with the purpose of the FSS program, which, as noted above, is meant to provide a
simplified process for obtaining commonly used commercial supplies and services. In this
regard, we note that FAR 6.102(d)(3), which implements 41 USC 259(b)(3), indicates that
the requirement for competitive procedures is satisfied through the use of the FSS program,
given that the program is open to all responsible sources.5 Accordingly, we find reasonable
GSA’s position that purchases from the schedule using the procedures of FAR subpart 8.4
are considered to result in the lowest overall cost alternative. See (“orders placed following
the procedures in FAR 8.4 result in the lowest overall cost alternative to meet the needs of
the Government”). While one FSS vendor may protest that it offers a lower cost alternative
meeting the agency’s needs than the vendor selected by the agency, see, e.g., Delta Int’l,
Inc., B-284364.2, May 11, 2000, 2000 CPD —, we do not believe that 41 USC 259(b)(3) requires an agency to consider whether non-FSS alternatives would meet the agency’s needs
at a cost lower than that offered by FSS vendors, or that the failure to do so constitutes a
basis of protest. Because the FSS program meets the requirements of 41 USC 259(b)(3), an
agency, when placing an order under the FSS, is not required to seek further competition,
synopsize the requirement, or determine fair and reasonable pricing, since the planning,
solicitation, and award phases of the FSS satisfy these requirements. FAR 8.404(a); Design
Contempo, Inc., B-270483, Mar. 12, 1996, 96-1 CPD 146 at 2.
SRC also cites numerous examples of what it asserts are failures to comply with FSS program requirements, such that the acquisition was in effect not under the FSS program. See
DRS Precision Echo, Inc., B-284080, B-284080.2, Feb. 14, 2000, 2000 CPD 26 at 2 (order
issued against expired FSS contract was outside FSS program).
For example, SRC notes that the software purchased under the second delivery order to the
ITC/Beyond.com team was added to Beyond.com’s FSS contract after the date on which ITC
and Beyond.com entered into a teaming arrangement and 4 days after the submission of
the team’s price reduction to the IRS. See Protester’s Supplemental Comments, May 15,
2000, at 2. SRC acknowledges, however, that the software was on Beyond.com’s schedule
contract prior to the placement of any delivery orders by the IRS. Protester’s Supplemental
5
The regulations governing use of the FSS program address the situation that SRC asserts exists here, by
stating that, “when the ordering office finds a schedule supply or service elsewhere at a lower price ..., requesting a price reduction [from FSS contractors] could be advantageous.” FAR §8.404(b)(5).
Comments at 2. We fail to see any violation of FSS program requirements, given that, at
the time of the orders, the software was in fact on Beyond.com’s schedule contract.
SRC also asserts that the IRS did not adequately conduct acquisition planning and market
research, as required by FAR parts 7 and 10, in deciding to satisfy its needs under the FSS
program. Protester’s Comments at 17-20. The crux of SRC’s argument is that adequate acquisition planning and market research would have compelled the IRS to conduct its procurement outside the FSS program and to consider SRC’s offer. Acquisition planning and
market research are required to ensure that agencies, among other things, develop a plan
to suitably satisfy their needs in a timely manner and at a reasonable cost. See FAR 7.101,
10.000. The FSS program specifically satisfies these goals by allowing the government to
acquire a wide range of commercial products and services in a timely fashion and at fair
and reasonable prices. Thus, we think that, as a general rule, obtaining information from
the FSS program and FSS vendors satisfies the agency’s obligations to conduct procurement planning and market research. See Canon U.S.A., Inc., B-232262, Nov. 30, 1988, 88-2
CPD 538 at 2-3.
SRC also argues that ITC’s schedule contract provided for at least annual reviews of ITC’s
BPA with the IRS and that the record does not demonstrate that such reviews were conducted to determine if the BPA still represents the best value to the government. Protester’s Comments at 4. This argument is without merit. Because the IRS conducted a competition among its BPA holders, including the ITC/Beyond.com team, to obtain price reductions
from the FSS contracts, the agency adequately determined that ordering from the
ITC/Beyond.com team represented the lowest overall cost alternative satisfying the government’s needs.
SRC also complains that the IRS did not reasonably justify its determination to purchase
only Microsoft Corporation software. We find that SRC is not an interested party to challenge this determination. Under the bid protest provisions of the Competition in Contracting Act of 1984, 31 USC 3551-56 (Supp. III 1997), only an “interested party” may protest a
federal procurement. That is, a protester must be an actual or prospective supplier whose
direct economic interest would be affected by the award of a contract or the failure to award
a contract. 31 USC 3551(2). Bid Protest Regulations, 4 CFR 21.0(a) (2000). Determining
whether a party is interested involves consideration of a variety of factors, including the
nature of issues raised, the benefit or relief sought by the protester, and the party’s status
in relation to the procurement. Four Winds Servs., Inc., B-280714, Aug. 28, 1998, 98-2 CPD
57 at 2. Here, SRC is not an FSS vendor and is thus ineligible to compete for orders under
the FSS program, which the IRS has chosen to use to satisfy its needs. We note in this regard that the Lotus SmartSuite software, which SRC would offer, is available through the
FSS program from other vendors. Accordingly, even if SRC could successfully challenge the
IRS’s determination to limit its FSS competition to Microsoft software, such that the IRS
would also seek information from FSS vendors offering the Lotus software, SRC would still
not be in line for receipt of an order. In sum, SRC does not have an adequate economic interest to qualify as an interested party for purposes of filing a protest challenging the agency’s determination to limit its FSS competition to a Microsoft product.
The protest is dismissed.
Comptroller General of the United States
Scope of Professional Credentials Statute
B-302548
August 20, 2004
Digest
Pursuant to 5 USC 5757(a), federal agencies are authorized to use appropriated funds to
pay an employee expenses to obtain professional credentials. However, an agency may pay
only the expenses required to obtain the license or official certification needed to practice a
particular profession, including licensing fees and examinations to obtain credentials. Accordingly, §5757(a) does not authorize the agency to pay for an employees membership in a
professional association unless membership is a prerequisite to obtaining the professional
license or certification. Under 5 USC 5946, payment for voluntary memberships in organizations of already-credentialed professionals is prohibited, and §5757(a) does not provide
any authority to pay such fees.
Decision
Pursuant to 31 USC 3529(a), a certifying officer at the Department of Agricultures Risk
Management Agency requested an advance decision whether §5757(a) of title 5, United
States Code, authorizes an agency to pay for an employees membership in a professional
association if membership is not a requirement for obtaining a license or certification. Section 5757(a) allows federal agencies to use appropriated funds to pay the expenses of an
employee to obtain professional credentials. As explained below, §5757(a) does not authorize agencies to pay for the membership of an employee in a professional association unless
membership is a prerequisite for the employee to obtain required credentials, such as a license to practice a profession. Payment of the cost of voluntary membership in a group of
professionals who are already credentialed is prohibited by 5 USC 5946.
Background
A Risk Management Agency employee asked the agency to pay for her Certified Public Accountant (CPA) license as well as membership in the California Society of Certified Public
Accountants (CalCPA). Membership in CalCPA is voluntary and not a prerequisite to obtaining a CPA license.1 In addition to the payment of a license fee, applicants for a CPA license in California have to meet certain education and experience requirements, pass the
Uniform CPA Examination and the California Professional Ethics Examination, undergo a
criminal history record check, and, once licensed, meet continuing education and license
renewal requirements. See California Board of Accountancy, Information Handbook for the
Certified Public Accountant Applicant, No.11A-54 (January 2004).2
1
We verified with the California State Board of Accountancy that membership in CalCPA is not required to
obtain a CPA license in California. Letter from Carol Sigmann, Executive Officer, California Board of Accountancy, to Thomas H. Armstrong, Assistant General Counsel, U.S. General Accounting Office, Mar.17,
2004 (Sigmann Letter).
2
The Handbook is accessible at http://www.dca.ca.gov/cba/toc.htm (last visited July 29, 2004).
A Risk Management Agency certifying officer determined that the agency had the authority
to pay the CPA license fee pursuant to 5 USC 5757(a), which reads in relevant part as follows:
(a) An agency may use appropriated funds or funds otherwise available to the
agency to pay for—
(1) expenses for employees to obtain professional credentials, including
expenses for professional accreditation, State-imposed and professional licenses, and professional certification; and
(2) examinations to obtain such credentials.
Because the certifying officer was uncertain whether §5757(a) applied to a membership fee
that was not a condition of obtaining the CPA license, the certifying officer asked us for an
advance decision under 31 USC 3529(a) whether §5757(a) authorizes an agency to use appropriated funds for membership in a professional society or association if such membership is not a condition for obtaining the credentials required to practice that profession.
Analysis
Professional Credentials
Generally, personal expenses are not payable from appropriated funds absent specific statutory authority. B-261729, Apr. 1, 1996; 72 Comp. Gen. 225, 227 (1993). We have held that
expenses necessary to qualify a government employee to do his or her job are personal expenses, and as such, are not chargeable to appropriated funds. 61 Comp. Gen. 357 (1982).
As we explained in B-286026, June 12, 2001, as early as 1890 the Supreme Court held that
it is the duty of persons receiving appointments from the government ... to qualify themselves for the office. United States v. Duzee, 140 U.S. 169, 171 (1890). Our decisions have
applied this rule on numerous occasions. In 61 Comp. Gen. 357 (1982), for example, we held
that an agency could not pay the costs of bar review courses or bar membership fees for its
attorneys because these expenses are personal expenses related to qualifying for office. See
also B260771, Oct. 11, 1995 (appropriated funds could not be used to cover the cost of obtaining a Certified Government Manager designation); 46 Comp. Gen. 695 (1976) (appropriated funds could not be used for medical licensing fees for Public Health Service physicians).
In December 2001, Congress specifically provided agencies the authority to use appropriated funds to pay expenses for their employees to obtain professional credentials. National
Defense Authorization Act for Fiscal Year 2002, Pub. L/ No. 107-107, 1112(a), 115 Stat.
1012, 1238 (Dec.28, 2001), codified at 5 USC 5757.3 But for this statutory authority, appropriations would not be available for this purpose. 61 Comp. Gen. 357 (1982). The statutory
language does not create an entitlement to payment; instead, it authorizes agencies to con3
In Pub. L. No. 107-273, 207(a), 116 Stat. 1757, 1779-1780 (Nov. 2, 2002), Congress enacted another §5757 of
title 5 of the United States Code There are now two sections in the Code numbered 5757 which are not related.
sider such expenses as payable from agency appropriations if the agency chooses to cover
them.
Consistent with our regular practice, we solicited the Departments legal position on the use
of Risk Management Agency appropriations to pay for an employees membership in
CalCPA. Letter from Thomas H. Armstrong, Assistant General Counsel, U.S. General Accounting Office, to Nancy Bryson, General Counsel, U.S. Department of Agriculture, Mar.
5, 2004. The Department has advised us that membership in CalCPA is not an authorized
agency expenditure because it is neither tied directly to obtaining official documentation of
professional authority nor is it a prerequisite to obtaining such documentation. Letter from
Kenneth E. Cohen, Assistant General Counsel, General Law Division, U.S. Department of
Agriculture to Thomas H. Armstrong, Assistant General Counsel, U.S. General Accounting
Office, Apr. 2, 2004.
The Department, referring to the ordinary meaning of the terms in the statute, said that
the terms credential, accreditation, and certification mean they are required components
for an individual to practice in his or her profession. Id. at 2. The Department pointed out
that Websters New Collegiate Dictionary (1979) defines credential as something that gives
a title to credit or confidence, accredit as to give official authorization or approval to, and
certification as the act of certifying [to attest authoritatively]. The Department stated that
these definitions suggest that professional credentials would include only those items that
are official documentation of professional authority.... Membership in the California Society
of Certified Public Accountants does not bestow any sort of professional credential upon its
members. Id.
We agree with the Department. As the Department explained in its letter to us, in order to
interpret congressional intent regarding the meaning of the statute, one begins by looking
first to the language of the statute itself. Mallard v. United States District Court, 490 U.S.
296, 300-301 (1989). The meaning of the statutory language is the ordinary, everyday
meaning rather than some obscure usage. E.g., Mallard, 490 U.S. at 301; 38 Comp. Gen.
812 (1959). The primary vehicle that Congress uses to express its intent is the words it enacts into law. See, e.g., Hartford Underwriters Insurance Co. v. Union Planters Bank, N.A.,
530 U.S. 1 (2000); Robinson v. Shell Oil Co., 519 U.S, 337 (1997).
The plain meaning of the language in §5757(a) suggests that professional credentials would
include only those items that are required for an individual to be licensed or otherwise certified to practice a particular profession. It speaks in terms of accreditation, licenses, and
certification — terms ordinarily used and commonly understood to refer to permission conferred on an individual by a regulatory body to engage in the practice of a regulated profession. Some types of documentation of regulatory authorization that would demonstrate an
employees qualification to work in a specific professional area include annual state bar
membership, CPA licenses, medical licenses, court admission fees required of attorneys for
admission to practice before a court if admission is necessary to carry out an agency’s statutory mission, teacher certifications, and other certifications that permit an employee to
practice in a professional area.
In our view, §5757(a) also permits an agency to pay for certain costs related to licensing
which, although they are not licensing fees, are required in order for the employee to obtain
the license. For example, where attorneys licensed to practice law are required to be members of state bar associations in order to maintain their license to practice, agencies may
pay the costs of those memberships. In this regard, we distinguish state bar membership,
necessary to maintain a license to practice, from membership in professional associations
such as the American Bar Association or the Federal Bar Association, which is not a condition of a license. Similarly, in this case, CalCPA membership is not a prerequisite to obtain,
or a requirement to maintain, a CPA license in California.4 Section 5757(a), consequently,
does not authorize the Risk Management Agency to use appropriated funds to pay for
CalCPA membership.
Reduced Costs of Training
The Risk Management Agency employee requesting payment of her CalCPA membership
fee justifies agency reimbursement of the fee as a cost of training; she argues that membership in CalCPA is an economical way of obtaining the mandatory continuing education that
is required by the California State Board of Accountancy. Licensed CPAs in California are
required to take 40 hours of continuing education classes each year to maintain their eligibility for the license. The Education Foundation of CalCPA offers courses, and the employee
notes that the Foundation provides discounts on course fees to CalCPA members. The employee states that the amount of the discounts would cover the annual dues for those members taking 40 or more hours of training through the Foundation.5
Section 5946 of title 5 of the United States Code, however, prohibits agencies from paying
for individual employee membership in a society or association without specific statutory
authority. 68 Comp. Gen. 606 (1989); 46 Comp. Gen. 135, 136-137 (1966). The fact that
there may be some collateral benefit to the government from the employees membership in
an organization, such as the discounts here, is not sufficient to overcome this prohibition
against payment of membership fees. See, e.g., 53 Comp. Gen. 429 (1973); 52 Comp. Gen.
495 (1973); B-205768, Mar. 2, 1982.
Agencies have authority pursuant to the Government Employees Training Act, 5 USC 4109,
to pay for employee training. Nevertheless, agencies generally do not have the authority to
pay for membership fees unless the fee is a necessary cost directly related to the training
itself or that payment of the fee is a condition precedent to undergoing the training. 5 USC
4109(b). Here, membership in CalCPA is not a necessary cost of the training nor a condition
precedent to undergoing the training. Thus, §4109 does not apply.
4
Sigmann Letter (see footnote 1 infra).
5
The Risk Management Agency employees’ statements were contained in an e-mail she wrote to her Office
Manager, which was forwarded to GAO on May25, 2004, for inclusion in the record.
Accordingly, the Risk Management Agency, pursuant to §4109, may pay for the employee to
participate in any training that CalCPA offers, but not for the employees CalCPA membership fees.
Agency Membership
The Risk Management Agency employee requesting payment of the membership fee argues
that the agency has the authority to pay for the CalCPA membership fee because the employees membership benefits the agency.6 The employee states that her membership in
CalCPA and her participation in CalCPA-sponsored conferences will help the Department
of Agriculture maintain its credibility with the CPAs throughout California with whom Department CPAs work on a regular basis.
Although §5946 prohibits the Risk Management Agency from paying for the employees
membership, if the agency determines that the agency will benefit from an agency, as opposed to an individual employee, membership in the association, it may obtain a membership in the agency’s name. See, e.g., 52 Comp. Gen. 495 (1973) (Department of Justice may
not pay an employees membership fee in a professional organization even though savings
would accrue to the government from reduced subscription rates for professional publications and the government would benefit from the employees development as a result of the
membership; Justice, however, may become a member in its own name if membership is
necessary in carrying out authorized agency activities). See also 53 Comp. Gen. 429 (1973);
B-221569, June 2, 1986; B-205768, Mar. 2, 1982. The agency must determine that such
membership is of primary benefit to the government and is necessary to carry out its statutory function. Id.
Accordingly, the Department of Agriculture, at its discretion, may pay for an agency membership in CalCPA, in its own name or in the name of the Risk Management Agency, if such
membership is of primary benefit to the government and the Department determines that
such membership is necessary to carry out its statutory function.
Conclusion
Pursuant to 5 USC 5757(a), federal agencies are authorized to use appropriated funds to
pay the expenses of an employee to obtain professional credentials, but an agency may only
pay employee expenses necessary to qualify for a particular profession. Agency payment of
fees for voluntary memberships in organizations of already-credentialed professionals is
prohibited under 5 USC 5946. Accordingly, the Risk Management Agency does not have authority under §5757 to pay for an employees membership in a professional association if
membership is not a prerequisite for the employee to obtain qualification.
Anthony H. Gamboa
General Counsel
6
See note 5.
To the Secretary of the Army
B-125,617, 45 Comp. Gen 1, 1965 CPD ¶1
July 2, 1965
To the Secretary of the Army
When a military reservation, a portion of which is a “federal enclave” exclusively under the
jurisdiction of the United States, is located in a locally formed rural fire district that refuses
to furnish free fire-fighting services to the government, a contract for fire protection to cover the entire reservation is not precluded by the ruling that federal funds may not be expended to fight fires on a government reservation, the statutory duty of a state or municipality to furnish fire-fighting services to property owners extending to property of the
United States, the locally established rural fire district having no obligation ot furnish fire
protection services to the federal enclave and free to redraw boundaries to exclude the federal reservation inadvertently included within its boundaries; therefore, to provide fire protection service the government may enter into a contract with the fire district to cover both
the federal enclave and the part of the military reservation that is under federal jurisdiction.
Reference is made to letter of June 1, 1965, from J. H. Finch, Acting Assistant Secretary of
the Army (FM), concerning a problem involving fire protection for Fort Missoula, Montana,
44 acres of which are under exclusive federal jurisdiction, and the remainder, some 4,000
acres, under nonexclusive federal jurisdiction.
It is explained that prior to February 1961, the post volunteer fire department provided nocost fire-protection services to adjacent civilian property owners, however, due to limited
resources it then became necessary to withdraw such protection in unusual cases. As a result, the Missoula Rural Fire District was formed pursuant to §11-2008, Revised Code of
Montana, which provides that the Board of County Commissioners by resolution may form
a fire district when a petition signed by owners of over fifty percent of the area included in
the district constituting a majority of the taxpayers, who are freeholders of the area, requests formation of such a district.
Following formation of the fire district, cognizant military authorities considered discontinuance of the fire-fighting facilities at Fort Missoula. Upon learning of this proposed discontinuance, the fire district, by letter of July 10, 1963, offered its support in exchange for the
Army fire truck and equipment. In reply of January 23, 1964, the fire district was advised
that Fort Missoula authorities could not enter into such agreement since the Fort Missoula
reservation was within the boundaries of the fire district. It was also stated in the reply
that—
Our regulations, as well as decisions of the Comptroller General, prohibit any
agreements for fire protection when another fire organization is legally obligated to provide such protection. Since we anticipate closing our fire fighting
facilities on 15 Feburary 1964, we must rely on the cooperation and support
of the Missoula Rural Fire District in accordance with the provisions of the
Revised Codes of Montana, §11-2010, and the resolution creating such fire
district.
Shortly thereafter, in Feburary 1964, the fire-fighting facilities at Fort Missoula were discontinued. Subsequently, the fire district alleged that Fort Missoula was properly subject to
an assessment for support of the fire district and supported its demands for financial assistance by an opinion of the Missoula County attorney dated December 15, 1964.
In reply to that demand, the commanding officer asserted that the Fort Missoula reservation was immune to state taxation and therefore was not subject to special assessment in
support of the fire district. He suggested that the fire district obtain an opinion regarding
the matter from the Montana attorney general.
Pursuant tot hat suggestion an opinion, dated February 3, 1965, was obtained from the
Montana attorney general. In that opinion the attorney general held that the Fort Missoula
reservation was not subject to any form of taxation by the State of Montana or its political
subdivisions and, consequently, it was not subject to the special fire district levy.
However, he quoted extensive from Part I of a report entitled “Jurisdiction over Federal Areas within the States: issued by the Interdepartmental Committee for the Study of Jurisdiction Over Federal Areas within the States, which report was submitted to the Attorney
General of the United States and transmitted to the President in April 1956.
Such report states in part, that:
* * * For areas under the exclusive jurisdiction of the United States arrangements have
varied all the way from formal contracts with local agencies to mere assumptions on
the part of the federal manager that the local fire department will respond if called
in an emergency. In cases where the federal agency has its own fire-fighting equipment, the arrangement is generally reciprocal in that each party will respond to the
call of the other in emergencies beyond the capabilities of either’s individual capacity. Where the United States has exclusive or one of the various forms of partial legislative jurisdiction the furnishing of these services by the state would appear to be
strictly a matter of grace although the Comptroller General of the United States has
ruled to the contrary. In the absence of express agreement by state or local authorities, there is no legal obligation whatever on the part of a non-federal fire company
to respond to a fire alarm originating within the federal enclave * * *.
The Montana state attorney then concludes his opinion by stating that:
There is certainly nothing in Montana’s laws respecting rural fire districts
which obligates rural fire districts to provide fire protection to areas not included within such districts although such areas may be located within the
external boundaries of these districts. I am therefore of the opinion that the
Missoula Rural Fire District is under no legal obligation to furnish fire protection services to Fort Missoula.
Relying on this opinion, the Missoula Rural Fire District on April 30, 1965, advised the
proper military authorities at Fort Missoula that unless an agreement could be reached
concerning compensation for fire protection services “* * * it is the intention of the district
to withdraw any further fire protection from the federal agencies in the Fort Missoula area,
which will be effective from and after the 1st day of July, 1965, which is beginning new fiscal year for taxation and operation.”
As indicated in the Acting Assistant Secretary’s letter, our decisions have generally held
that federal funds may not be paid to a municipality for fighting fires on a government reservation within the limits of a city which legally is required to extinguish such fires. Such
holdings were based upon the premise, stated generally, that where there existed a statutory duty of a state or municipality to render fire fighting services to property within its limits, without cost to the owners of the property, such duty extended to protecting the property of the United States located within such limits without charge therefore. See Comp. Gen.
559; 26 Id. 382, and 32 Id., 901.
In the instant case, it is noted that 44 acres of the Fort Missoula reservation are under the
exclusive jurisdiction of the United States. Areas so situated are often referred to as “federal enclaves” and, as indicated in the report of the Interdepartmental Committee, quoted
above, there exists considerable doubt as to the obligation of local fire departments to furnish fire protection services to such areas. See also Thiele v. City of Chicago, 145 N.E.2d
637. And, if a contract properly may be made with the fire district to furnish fire protection
services to such 44-acre area, we see no practical objection to including the entire Fort Missoula reservation under such contract.
Futhermore, as above noted, the Montana state attorney general has advised that the Missoula Rural Fire District is not required by the laws of Montana to furnish fire protection
services to any part of the Fort Missoula reservation notwithstanding the fact that it is located within the external boundaries of the district, and authorities there have been advised that such services will not be furnished beginning July 1, 1965. And finally, it is suggested that the fire district apparently could take action to have its boundaries changed to
exclude the federal reservation in that the boundaries inadvertently were drawn to include
the reservation and there then would be no question but that the district would have no obligation to furnish fire protection services to the federal property.
In view of the facts and circumstances presented in this case, it appears that no action can
be taken to require the fire district to continue to provide the necessary fire protection services to the Fort Missoula reservation. Consequently, if in order to secure such protection it
is necessary to enter into a contract with the fire district covering such services, we will not
question the legality of an otherwise property contract.
SKJ & Associates
B-291,533, 2003 CPD ¶3
January 13, 2003
Joseph M. Jankite for the protester. Mike Colvin, Department of Health & Human Services,
for the agency. Charles W. Morrow, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
Digest
Agency did not have a reasonable basis to reject the protester’s quotation under request for
quotations (RFQ) for training services where the RFQ required submission of a technical
proposal but gave no guidance as to its content or how it would be evaluated; the protester
submitted a technical proposal; and the agency then rejected the proposal as “unresponsive”
because it was too short and too general and failed to provide evidence that the firm understood how to perform the work or to include a plan showing how the firm would implement
the substance of the work.
Decision
SKJ & Associates, Inc. protests the award of a purchase order to Policy Research Associates, Inc. under request for quotations (RFQ) No. 02M000077, issued by the Department of
Health and Human Services (HHS), for intensive training in the social security income application process. SKJ contends that the agency’s evaluation was not in accordance with the
evaluation criteria.
We sustain the protest.
The Substance Abuse and Mental Health Services Administration (SAMHSA), an agency
within HHS, provides funding (under the Projects for Assistance in the Transition from
Homelessness (PATH) program) to states and territories to offer community-based services
for people who have serious mental illness who are homeless or at risk of imminent homelessness. One of the services provided to these individuals is to assist in obtaining social security income (SSI) and social security disability income benefits for which they are eligible.
This responsibility is performed by various case managers associated with PATH-funded
programs and other federal agency programs.
The RFQ, issued August 28, 2002, under simplified acquisition procedures as a total small
business set-aside, represented a collaborative effort between SAMHSA and the Social Security Administration. The basic purpose of the RFQ was to obtain intensive training for
case managers assisting in the SSI and social security disability income application process.
In the statement of work, the RFQ listed the specific requirements of the work under nine
separate tasks. These tasks included (1) “post-award telephone conference call and memorandum,” (2) “submit quarterly progress reports,” (3) “coordination with other agencies,” (4)
“propose preferred methods of training,” (5) “develop toolkit,” (6) “develop teaching guide
and training material,” (7) “assess the toolkit and teaching materials,” (8) “conduct train-
ing,” and (9) “submit material and documents for formal SAMHSA approval.” RFQ at 2-4.
The RFQ also included a schedule of deliverables and payments, which required the contractor to satisfy various requirements by certain specified times over a 200-day period.
The cover letter to the RFQ stated that “proposals will be evaluated on price and price related factors.” It further advised vendors that they were required to “submit an original and
three (3) copies of their technical proposal and cost proposal.” Id.
The agency answered several questions about the evaluation scheme, of which the following
are relevant here:
What is the technical proposal based on? Is it based on the nine (9) tasks or
some other basis? The proposal is based on the 9 tasks.
….
Can you provide any guidance on the evaluation criteria and relative weights
that will be used to review proposals? The criteria and weight are to be determined.
....
[D]o you have any other requirements for the proposal, such as client references, resumes, etc.? No.
RFQ, Questions and Answers, at 2, 4. No other advice as to the expected contents of the
technical proposal or how it would be evaluated was provided.
HHS received three quotations in response to the RFQ, including SKJ’s and Policy Research’s. SKJ’s quoted price ($83,620) was the lowest and Policy Research’s quoted price
($99,501) was next low. After evaluating the quotations, the project officer determined that
SKJ’s quotation was “unresponsive” and that Policy Research should receive the award because it submitted a “technically sound” quotation. See Agency Report, Tab 7, Project Officer’s Letter. With regard to SKJ’s quotation, we quote the project officer’s findings in their
entirety:
The proposal for [SKJ], the lowest bidder, indicates that the firm has experience in developing policy and procedure manuals. While this is tangentially
related to the development of a toolkit, the proposal submitted by [SKJ] is
unresponsive to the RF[Q].
SKJ has provided no plan, other than to list the tasks, indicating how it will
implement the substance of the work. Its “Technical Proposal” consists of only three pages, containing 21 paragraphs. About half of the paragraphs laud,
in general terms, the capabilities, business principles and energy of the firm
and its leader. There is no explanation on how the firm will carry out each
task of the statement of work.
There is no evidence that the offeror understands how to develop a toolkit
and training material, and provide training to case managers assisting homeless clients with serious mental illnesses apply for SSI benefits. Only two
paragraphs on page two refer obliquely to the content of the task. The firm
indicates that it has visited the Social Security Administration web site, reviewed information on how to qualify for SSI benefits, and downloaded forms.
“This background work,” SKJ claims, “provides a solid foundation, enabling
[SKJ] to begin immediately.[“] There is no mention of mental health, homelessness or case managers.
The SKJ proposal indicates that a project manager and manager will be performing most of the work. And, the firm indicates how their time will be allocated to each task. But, there is no statement on the qualifications needed for
each position or any indication who will fill the positions and his/her experience.
Id. On September 24, HHS made award to Policy Research. A debriefing was provided to
SKJ on October 11. This protest followed.
SKJ challenges the rejection of its quotation as not “responsive” because the RFQ only provided for considering price and price-related factors in the award selection. Moreover, SKJ
argues that its technical proposal included a “detailed” work plan based on the nine tasks
that complied with the terms of the RFQ, and that HHS lacked a reasonable basis to reject
its quote because the RFQ did not require vendors to demonstrate their qualifications to
perform the work, or to possess any specific skills, or program knowledge.
Simplified acquisition procedures are designed to, among other things, reduce administrative expenses, promote efficiency and economy in contracting, and avoid unnecessary burdens for agencies and contractors. Federal Acquisition Regulation (FAR) §13.002. FAR
§13.106-2 affords contracting officers using simplified acquisition procedures discretion in
determining how to conduct a procurement and in fashioning suitable evaluation procedures. In the contracting officer’s discretion, one or more, but not necessarily all, of the
evaluation procedures in Part 14 or 15 may be used. FAR §13.106-2(b)(1). Where an agency
seeks quotations, there is no legal requirement that it request technical proposals (as the
agency did here).
Even when using simplified acquisition procedures, however, an agency must conduct the
procurement consistent with a concern for fair and equitable competition. Elementar Americas, Inc., B-282698, July 16, 1999, 99-2 CPD ¶17 at 2-3. Moreover, FAR §§13.106-1(a)(2)
and 13.106-2(a)(2) specifically require that solicitations advise potential quoters of the basis
upon which award is to be made, and agencies must conduct evaluations based on the factors set forth in the solicitations. American Artisan Prods., Inc., B-278450, Jan. 30, 1998,
98-1 CPD ¶37 at 4.
Here, the sole award basis announced in the RFQ was the consideration of price and pricerelated factors. Even though a technical proposal was requested, the RFQ did not state how
it would be evaluated or instruct vendors to include any specific information in their technical proposals, except to notify potential quoters that their technical proposals should be
based on the various tasks. Thus, HHS failed to comply with the requirements in FAR
§§13.106-1(a)(2) and 13.106-2(a)(2) that the RFQ clearly disclose the basis of award and
that undisclosed factors not be used in the award evaluation. HHS admits that the RFQ
was defective in that there was no mention of how technical proposals would be considered
in the award evaluation.
These defects in the RFQ were apparent on the face of the solicitation, so that a protest
challenging them had to be filed before quotations were due. 4 CFR §21.2(a)(1) (2002). That
SKJ failed to do. So the question before us is whether the agency’s evaluation and source
selection, in the context of an admittedly defective solicitation, were reasonable.
HHS maintains that, when read as a whole, the only reasonable interpretation is that technical proposals would be evaluated on an acceptable/unacceptable basis with award to be
made based on the lowest priced, acceptable quote. Thus, HHS argues that the evaluation
and award was proper since award was based on the lowest acceptable quote.
We agree with HHS to the extent the agency is contending that SKJ was on notice that a
technical proposal was required, so that the agency was free to reject a quotation that failed
to include a technical proposal; SKJ, of course, submitted one. We also agree that SKJ was
on notice that the technical proposal would somehow be evaluated, so that the agency could
reject a quotation that could not reasonably be viewed as acceptable. See Forestry, Surveys
& Data, B-276802.3, Aug. 13, 1997, 97-2 CPD ¶46, at 2. Because of the agency’s failure to
provide vendors any guidance as to the content requested in technical proposals or the basis
for evaluating them, we believe that any doubt in this case as to the acceptability of SKJ’s
technical proposal should be resolved in favor of the vendor. Cf. COMARK Fed. Sys., B278343, B- 278343.2, Jan. 20, 1998, 98-1 CPD ¶34 at 6 (where solicitation failed to identify
evaluation criteria, GAO finds reasonable protester’s understanding of what agency was
seeking).
For that reason, and as discussed below, we conclude that the agency lacked a reasonable
basis for determining SKJ’s technical proposal was “unresponsive” or unacceptable here. All
of HHS’s explanations for rejecting SKJ’s technical proposal reflect evaluation criteria, and
none of them were disclosed to SKJ or other vendors. For example, in response to the protest, HHS argues that SKJ’s technical proposal was properly found unacceptable because
“the purpose of the technical proposal was to determine whether or not offerors were capable of performing the required work,” that “[t]he agency was reasonably expecting the offeror to describe its qualifications to do the work and its plan for doing the work,” and that
SKJ “merely parroted the requirements of the solicitation and gave no specifics that could
be evaluated.” Agency Report at 2; Contracting Officer’s Statement at 4. The contracting
officer contends that the RFQ put the burden on the vendors to demonstrate that they were
qualified to perform the work, but that SKJ’s proposal failed to “provide the names or any
information about the personnel who would be assigned to the project.” Contracting Officer’s Statement at 5.
As noted by the protester, the RFQ did not expressly require vendors to describe their
knowledge, skills, experience, understanding, ability or qualifications to perform the work.
In answer to one of the questions (quoted above), the agency specifically advised that no resumes or references were required, which suggests that experience and qualifications were
not to be part of the technical proposal.
The RFQ stated only that the technical proposal was to be “based on the 9 tasks.” The protester asserts that its technical proposal provided a detailed work plan as to how it intends
to accomplish the tasks set out in the RFQ. Our review of SKJ’s proposed plan confirms
that it breaks down the nine RFQ tasks into their various elements, where applicable, and
states what resources will be devoted to each task element and when work on each element
will start and finish.
Under the circumstances, we find the agency lacked a reasonable basis under this RFQ to
find’s SKJ’s quotation technically unacceptable. The quotation took no exception to the RFQ
requirements and addressed the nine tasks in the RFQ.
We recognize that the agency may have reasonably desired, and certainly could have required, that technical proposals include a detailed plan, as well as evidence of the vendors’
understanding of the requirements and their qualifications and experience. That would be
altogether appropriate and within the agency’s discretion. Stating such desires and requirements is the purpose of evaluation criteria in a solicitation, and it is to provide transparency in our federal procurement process and fairness for those competing for federal
contracts that, as explained above, agencies are required by procurement law to set out in
the solicitation the evaluation criteria, and then to follow them. Here, the RFQ did not put
vendors on notice of any of the requirements that the agency has now identified.1 In our
view, it would be unfair for the agency, after the fact, to evaluate technical proposals based
on criteria that the agency was required to identify before vendors submitted those proposals. See FAR §§13.106-1(a)(2), 13.106-2(a)(2). We therefore sustain the protest.
We recommend that the agency amend the RFQ to state the desired content of proposals
and the criteria to be applied in evaluating them and selecting the winner.2 The agency
1
This case is similar in some respects to Forestry, Surveys & Data and American Artisan Prods., Inc., supra,
which also involved procurements conducted under simplified acquisition procedures, where the agency required technical proposals but did not describe how they would be considered in the award evaluation. In
those cases, we found the protesters were not prejudiced by the agency’s consideration of the technical proposal in the award evaluation. However, in both those cases, unlike the present case, the RFQs described
what was to be addressed in the technical proposals so that the vendors were put on notice of what was to
be evaluated.
2
Here, the contracting agency decided to continue performance based on a finding that to do so would be in
the best interest of the government. When an agency relies on that basis to continue performance, the Competition in Contracting Act of 1984 requires our Office to make our recommendation without regard to any
should obtain revised quotations and if, upon reviewing quotations in response to the
amended RFQ, the agency selects other than Policy Research, we recommend that HHS
cancel that firm’s purchase order and award to the selected company. We also recommend
that the protester be reimbursed the reasonable costs of filing and pursuing the protest, including attorneys’ fees. 4 CFR §21.8(d)(1) (2002). The protester should submit its certified
claim for such costs, detailing the time expended and the costs incurred, directly to the contracting agency within 60 days after the receipt of this decision.
The protest is sustained.
Anthony H. Gamboa
General Counsel
cost or disruption from terminating, recompeting, or reawarding the contract. 31 USC §3553(b)(2) (2000);
4CFR §21.8(c) (2002).
SMS Data Products Group
B-280970.4, 99-1 CPD ¶26
January 29, 1999
Mark J. Stechschulte, Esq., for the protester. Paralee White, Esq., and Lisa K. Miller, Esq.,
Gadsby & Hannah, for NetCon, Inc., an intervenor. Maj. David Newsome, Jr., Department
of the Army, for the agency. Paul E. Jordan, Esq., and Paul Lieberman, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
Digest
Agency’s corrective action of terminating purchase order and issuing a revised solicitation
in response to a protest is reasonable where material solicitation requirements and the
agency’s written clarifications of those requirements were susceptible to more than one reasonable interpretation.
Decision
SMS Data Products Group, Inc. protests the Department of the Army’s decision to terminate SMS’s purchase order under solicitation No. DAHA90-98-Q-0124, and to issue a revised request for quotations (RFQ). The Army’s corrective action resulted from a protest by
Netcon, Inc., a competitor, challenging SMS’s ability to meet the RFQ specifications, which
caused the Army to conclude that the specifications, as stated and interpreted through
agency responses to vendor questions, were ambiguous. SMS contends that there was no
ambiguity in the specifications and that recompetition will result in an improper auction.
We deny the protest.
The RFQ sought quotations for a quantity of compact disk servers to Army National Guard
units. The RFQ advised prospective vendors that “only GSA quotes will be accepted” (RFQ
at 1, block 20) referring to products on the General Services Administration (GSA) Federal
Supply Schedule (FSS). Prior to the submission of quotations, a prospective vendor submitted the following question: “This contractor understands it is the government[’]s intention
to only accept quotes with part numbers currently on GSA schedule as of the Solicitation
issue date.” Solicitation Questions at ¶1. The agency responded, “Correct. It is our intention
to procure this requirement from GSA schedules.” Id. NetCon interpreted this response to
mean that only products on the FSS as of May 26, 1998, the RFQ issue date, could be proposed. Since SMS had proposed items that were not on the FSS until after that date,
NetCon protested the issuance of a purchase order to SMS. According to NetCon, had it
known that it was acceptable to propose items not yet on the FSS, it could have proposed a
less expensive item in response to the RFQ.
The RFQ also required that the “server must have full functionality on a Banyan Vines or a
Microsoft NT 4.0 network operating system,” that “[a]ll CD servers will be configured to
work in either a Banyan Vines or Microsoft NT 4.0 environment,” and that the contractor
must provide installation documentation which would “provide for both Banyan Vines and
Microsoft NT 4.0 networks.” Statement of Work (SOW) at 4.1, 4.2, 4.3. Another vendor
question referred to these three sections and asked:
There are three different interpretations possible from this language: a) Each
server must be capable of operating with both operating systems; b) The
server must be capable of operating with either operating system and the
Government will specify the operating system at time of order; or c) The offeror may select either environment as it sees fit. Which if any interpretation is
correct? Please keep in mind when responding to this question, that it is more
expensive to configure a system to work in both environments.
Solicitation Questions at ¶11. The agency responded that “[i]interpretation A is correct.” Id.
NetCon interpreted this response to mean that the servers must be capable of operating
simultaneously on both systems. Consequently, it proposed a particular solution to meet
this requirement. According to NetCon, had it not had to meet this requirement, it could
have proposed a less expensive alternative.
The Army originally defended its decision to issue a purchase order to SMS. In this regard,
it explained that it intended for vendors to be able to quote on any product so long as it was
on the FSS at the time the purchase order was issued. Likewise it intended the item to be
capable of operating on both systems, but not necessarily simultaneously. After reviewing
NetCon’s comments on the report and a supplementary protest, the agency determined that
the questioned requirements and its responses to vendor questions were ambiguous. In the
Army’s view, NetCon’s interpretations were as reasonable as the agency’s intended meanings.
The Army advised our Office that it intended to take corrective action by canceling the RFQ
and SMS’s purchase order, and by issuing a new solicitation. SMS then filed this protest
arguing that the requirements were not ambiguous and that resolicitation would result in
an improper auction and technical leveling.
Contracting officials in negotiated procurements have broad discretion to take corrective
action where the agency determines that such action is necessary to ensure fair and impartial competition. Patriot Contract Servs., LLC, et al., B-278276.11 et al., Sept. 22, 1998, 98-2
CPD ¶77 at 4; Rockville Mailing Serv., Inc., B-270161.2, Apr. 10, 1996, 96-1 CPD ¶184 at 4;
Oshkosh Truck Corp.; Idaho Norland Corp., B-237058.2, B-237058.3, Feb. 14, 1990, 90-1
CPD ¶274 at 4. It is not necessary for an agency to conclude that the protest is certain to be
sustained before it may take corrective action; where the agency has reasonable concern
that there were errors in the procurement, even if the protest could be denied, we view it as
within the agency’s discretion to take corrective action. Patriot Contract Servs., LLC, et al.,
supra; Main Bldg. Maintenance, Inc., B-279191.3, Aug. 5, 1998, 98-2 CPD ¶47 at 3. An
agency may amend a solicitation, and request and evaluate further offers where the record
shows that the agency made the decision to take this action in good faith, without the specific intent of changing a particular offeror’s technical ranking or avoiding an award to a
particular offeror. See PRC, Inc., B-233561.8, B-233561.9, Sept. 29, 1992, 92-2 CPD ¶215 at
3-4; Burns & Roe Servs. Corp., B-248394, Aug. 25, 1992, 92-2 CPD ¶124 at 5; Unisys Corp.,
B-230019.2, July 12, 1988, 88-2 CPD ¶35 at 5. We will not object to an agency’s proposed
corrective action where the agency concludes that the award, because of perceived flaws in
the procurement process, was not necessarily made on a basis most advantageous to the
government, so long as the corrective action taken is appropriate to remedy the impropriety. Rockville Mailing Serv., Inc., supra.
There is no evidence in the record that suggests the agency is acting other than in good
faith. On the contrary, while the protester contends that the agency has not supported its
determination to take the corrective action proposed, the record supports that the agency’s
corrective action is appropriate and not overbroad.
In this regard, the original SOW requirements concerning operability on Banyan Vines and
Windows NT 4.0 are less than models of clarity. While the SOW speaks in terms of full
functionality on either system, it also requires documentation for both systems. Taken together, the requirements reasonably can be read as specifying alternative operability or dual/simultaneous operability. When the agency then advised offerors that “[e]ach server
must be capable of operating with both operating systems,” while intending that the servers
be capable of operating with either system, the agency exacerbated the ambiguity. Similarly, the FSS requirement, as stated in the RFQ, does not indicate when the products had to
be on the FSS. However, when a vendor asked if this meant on the FSS as of the RFQ issue
date, the Army’s response of “correct” unequivocally validated the vendor’s interpretation,
even though this was not what the agency intended.
SMS also contends that, because the vendors’ prices and products have been exposed, canceling the RFQ and resoliciting will foster an improper auction and technical leveling.
Where, as here, the corrective action proposed by the agency is not improper, the prior disclosure of information in an offeror’s proposal does not preclude the corrective action, and
the resolicitation of the same requirement does not constitute an improper auction. See
Unisys Corp., supra; Sperry Corp., B-222317, July 9, 1986, 86-2 CPD ¶48 at 4. The corrective action does not constitute improper leveling, and the possibility that the purchase order may not have been issued based on a fair competition has a more harmful effect on the
integrity of the competitive procurement system than the fear of an auction; the statutory
requirements for competition take priority over the regulatory constraints on auction techniques. See Unisys Corp., supra.
The protest is denied.
Comptroller General of the United States
Mr. Anthony Stapon
B-230,820
April 25, 1988
Digest
Appropriated funds may not be used to purchase foul weather clothing for Internal Revenue
Service employees to wear in the performance of official duties during inclement weather.
Expenditures for such items are not authorized by GAO decisions construing 5 USC §7903,
and no other statutory authority authorizes the purchase in question.
Dear Mr. Stapon:
This responds to your inquiry concerning whether the Internal Revenue Service (IRS) may
use appropriated funds to purchase foul weather clothing for you to wear in the performance of official duties during inclement weather. You indicate that your request to the
IRS for such clothing was refused. As explained below, we agree with IRS that appropriated
funds are not available for this purpose.
In 5 USC §7903 (1982), the Congress has provided a standard specifically applicable to expenditures for protective clothing and equipment, as follows:
Appropriations available for the procurement of supplies and material or
equipment are available for the purchase and maintenance of special clothing
and equipment for the protection of personnel in the performance of their assigned tasks....
This Office has construed 5 USC §7903 in numerous decisions concerning the propriety of
furnishing special clothing and equipment to civilian employees. In order for an item to be
authorized by 5 USC §7903, three tests must be met: (1) the item must be “special” and not
part of the ordinary and useful furnishings an employee may reasonably be expected to
provide for himself; (2) the item must be for the benefit of the government, that is, essential
to the safe and successful accomplishment of the work, and not solely for the protection of
the employee; and (3) the employee must be engaged in hazardous duty. 63 Comp. Gen.
245, 247 (1984). See also, B-193104, Jan. 9, 1979; 32 Comp.Gen. 229 (1952).
We have generally been unwilling to hold that the purchase of foul weather gear meets
these standards, instead holding that such gear must be viewed as personal to the employees and relates only incidentally to their employment with the government. B-193104,
above; B-122484, Feb. 15, 1955 (copies enclosed).
The only time that we applied these standards to allow expenditures for foul weather gear
involved the provision of parkas to employees temporarily assigned to areas with severe
winter conditions from permanent duty stations where they would not have been expected
to own their own heavy winter clothing. 63 Comp. Gen., at 247. We have no reason to believe that such unique circumstances exist in this case.
Therefore, we must conclude that your proposal that the government use appropriated
funds for the purchase of foul weather gear to be used in your duties for the IRS is not authorized by 5 USC §7903. In addition, we are unaware of any other specific statutory authority which would permit the purchase in question.
Sincerely yours,
Robert H. Hunter
Assistant General Counsel
USA Information Systems
B-291,488, 2002 CPD ¶205
December 2, 2002
David K. Wilson, Esq., Troutman Sanders, for the protester. William B. Barton, Jr., Esq.,
and William T. Welch, Esq., Barton, Baker, McMahon & Tolle, for Information Handling
Services, Inc., an intervenor. Clarence D. Long, Esq., Department of the Air Force, for the
agency. Tania Calhoun, Esq., and Christine S. Melody, Esq., Office of the General Counsel,
GAO, participated in the preparation of the decision.
Digest
In a procurement conducted by electronic commerce, where the solicitation materials were
available only on the Internet, protest that it was improper for the agency to post an
amendment with a short response time without specifically advising the protester is denied
where the record shows that the protester failed to avail itself of every reasonable opportunity to obtain the amendment by either registering for e-mail notification or checking the
Internet site, and that this failure was the reason the protester allegedly had insufficient
time to protest the solicitation’s terms.
Decision
USA Information Systems, Inc. (USAInfo) protests the manner in which the Department of
the Air Force amended the terms of request for quotations (RFQ) No. F16602-02-Q-S9A3,
issued to acquire a 1-year Internet-based network subscription service for various military
and engineering specifications, instructions, and regulations. USAInfo argues that by posting the amendment online with a short response time, without specifically advising the
firm, the agency prevented it from timely protesting the amended solicitation’s terms.
We deny the protest.
On September 14, 2002, Barksdale Air Force Base posted a presolicitation notice of this solicitation on the Federal Business Opportunities (FedBizOpps) Internet site at
www.eps.gov. The notice stated that no quotations would be accepted for the requirement
because it was being procured on a sole-source basis; the sole-source justification indicated
that Information Handling Services, Inc. (IHS) was the only supplier of this service. Sole
Source Justification at 1. On September 19, a representative from USAInfo contacted the
agency and obtained a copy of the solicitation. The next day, USAInfo’s counsel sent an email to the contracting officer objecting to the sole-source procurement and arguing that the
RFQ’s line items were improperly bundled. USAInfo asked the contracting officer to amend
the RFQ to delete all references to IHS’s products, unique features and part numbers, and
to unbundle the line items.
On September 24, the agency posted RFQ amendment no. 01 to the FedBizOpps Internet
site. Among other things, the amendment revised the RFQ to reflect that the procurement
was now a full and open competition, changed all line items to read IHS items “or equal,”
and extended the due date for quotations to Thursday, September 26. On Wednesday, Sep-
tember 25, USAInfo’s counsel discussed additional concerns with counsel for the agency,
who agreed to extend the due date for quotations and further amend the solicitation. While
the parties disagree as to whether agency counsel told USAInfo when the amendment
would be issued, USAInfo’s counsel states he was told that the agency wanted to make the
award by the end of the fiscal year. USAInfo Counsel Affidavit ¶4. The end of the fiscal year
was Monday, September 30. On Friday, September 27, the agency posted RFQ amendment
no. 02 to the FedBizOpps Internet site. The amendment, which deleted references to IHS
and its part numbers, established a closing date of noon on Monday, September 30. IHS
was the only firm to submit a quotation, and the Air Force awarded the firm a purchase order in the amount of $37,447.12, effective October 1.
USAInfo filed the instant protest 1 week later. USAInfo states it did not become aware of
the existence of the amendment or the new due date for quotations until after the deadline,
and argues that the manner in which the agency amended the solicitation — by posting it
online on Friday, September 27 and providing for a noon, Monday, September 30 deadline
— while not so notifying USAInfo was unreasonable. The protester states that it believes
the amended solicitation still “likely does not allow [it] to submit a compliant response,”
Protest at 2, but that the agency’s actions prevented it from filing a timely protest of the
solicitation’s terms.1
We agree with the Air Force that it was USAInfo’s failure to make every reasonable effort
to promptly obtain the amendment that led to its inability to timely file a protest or submit
a quotation.
Prospective offerors have an affirmative duty to make every reasonable effort to obtain solicitation materials. Performance Constr., Inc., B-286192, Oct. 30, 2000, 2000 CPD ¶180 at
2; American Handling, Inc., B-281261, Jan. 19, 1999, 99-1 CPD ¶13 at 2. A prospective vendor bears the risk of not receiving a solicitation amendment unless it can show that the
agency failed to furnish the amendment inadvertently after the firm availed itself of every
reasonable opportunity to obtain the amendment, or the agency made a deliberate attempt
to exclude the firm from competing. Christolow Fire Prot. Sys., B-286585, Jan. 12, 2001,
2001 CPD ¶13 at 2; Sentinel Sec. & Patrol Servs., B-261018, Aug. 9, 1995, 95-2 CPD ¶67 at
3. USAInfo has made neither showing.
The record shows that USAInfo did not avail itself of every reasonable opportunity to obtain
the amendment. As indicated above, this was an electronic procurement conducted pursuant to Federal Acquisition Regulation (FAR) Subpart 4.5. The FedBizOpps site includes an
e-mail notification service that allows vendors to fill out a subscription form in order to receive notices associated with particular procurements. When amendments are issued to
posted solicitations, the websites automatically notify registered users of the change by email. The e-mail also contains a link to the location that the user can access to locate and
download the amendment. See Lyons Sec. Servs., Inc., B- 289974, May 13, 2002, 2002 CPD
¶84 at 1-2, n.1. USAInfo did not avail itself of the registration opportunity presented by the
1
USAInfo has not identified which, if any, of the solicitation’s terms it believes are improper.
FedBizOpps Internet site2 and, accordingly, did not receive e-mail notice of amendment No.
02. In addition, despite being on notice of the Air Force’s desire to issue the purchase order
by the end of the fiscal year — Monday, September 30 — USAInfo apparently did not avail
itself of the opportunity to check the FedBizOpps web site for the promised amendment until after noon on Monday, September 30.3 USAInfo must bear the risk it assumed in not
availing itself of either of these opportunities to obtain the amendment and, in our view, its
failure to do so was the reason it allegedly had insufficient time to timely protest the solicitation’s terms. See Performance Constr., Inc., supra.
There is also no evidence that the agency made a deliberate attempt to exclude USAInfo
from competing here. On the contrary, the agency provided USAInfo a copy of the solicitation, carefully considered its objections to the solicitation’s terms, and twice amended the
solicitation in response to those objections. Among other things, the agency withdrew the
sole-source designation to permit USAInfo to compete and eliminated the references to
IHS’s products in the solicitation. USAInfo’s assertion that the agency “may have intentionally precluded” it from responding to the solicitation to avoid a protest, Comments at 4,
is unsupported and belied by the agency’s actions.
USAInfo finally complains that amendment No. 02 did not afford vendors sufficient time to
prepare their quotations. In simplified acquisitions such as this one, contracting officers are
to establish deadlines that afford suppliers a reasonable opportunity to respond, considering the circumstances of the individual acquisition, such as the complexity, commerciality,
availability, and urgency. FAR §§13.003(h)(2), 5.203(b). The decision as to the appropriate
preparation time lies within the discretion of the contracting officer. See Crowley Am.
Transp., Inc., B-259599.2, June 19, 1995, 95-1 CPD ¶277 at 6. Here, while the time allowed
for revision after amendment No. 02 was short, the changes made by the amendment were
relatively minor, and the protester had advance notice of the agency’s intent to issue the
purchase order by the end of the fiscal year. Under the circumstances, USAInfo has not
demonstrated that the contracting officer abused her discretion in establishing the short
timeframe in which to respond to the amendment by either submitting a quotation or filing
a protest.
The protest is denied.
Anthony H. Gamboa
General Counsel
2
According to USAInfo, the employee who tracks solicitation changes states that when she was initially on
the web site the subscription service was not available. USAInfo acknowledges, however that the service
was available at a later point.
3
USAInfo is silent as to when it actually learned of the amendment.
Use of Appropriated Funds to Purchase Light Refreshments at Conferences
B-288,266
January 27, 2003
Digest
1. The General Services Administration (GSA), through its travel regulation on conference
planning, purports to authorize federal agencies to pay for light refreshments at official
government-sponsored conferences where a majority of the attendees are in travel status.
41 CFR §301-74.11. While GSA is authorized to define subsistence for travelers to include
light refreshments, 5 USC §5702, GSA does not have the authority to authorize agencies to
pay for light refreshments for those not in travel status.
2. The Comptroller General is required to settle the accounts of the United States. 31 USC
§3526(a). Pursuant to his account settlement authority, the Comptroller General can take
exception to an improper transaction and refuse to relieve a certifying officer from personal
liability for the amount of money improperly expended. Certifying officers are afforded protection from personal liability by relying on decisions of the Comptroller General concerning
the legality of payments disbursing officers may make, or of expenditures covered by vouchers presented to certifying officers for certification. 31 USC §3529. Since Congress reposed
the authority in the Comptroller General to settle the accounts of the government, certifying officers should not rely on GSA’s travel regulation on conference planning to authorize
light refreshments at meetings for employees in nontravel status.
3. As a general proposition, absent statutory authority, appropriated funds are not available to feed government employees at their duty station. The Comptroller General has identified other authorities that, in certain circumstances, permit the use of appropriated funds
to pay for meals and light refreshments. Agencies (and their accountable officers) should
rely on existing, relevant statutory authority as interpreted by the Comptroller General to
determine whether they may provide food to federal employees.
Decision
Pursuant to 31 USC §3529(a), a Navy certifying officer asks us to clarify whether the light
refreshments provision of the General Services Administration (GSA) Federal Travel Regulation (FTR) on conference planning, 41 CFR §301-74.11, permits agencies to use appropriated funds for refreshments at a meeting to discuss internal, day-to-day business operations held within the official duty station. As a general proposition, an agency may not use
appropriated funds to pay for light refreshments for business meetings conducted by government agencies at an employee’s duty station. There are certain statutory authorities
that may permit the use of appropriated funds for light refreshments in certain situations.
GSA does not, however, have the authority to permit agencies to use appropriated funds to
pay for employees’ food and light refreshments, except as part of an employee’s travel subsistence allowance. Moreover, since Congress reposed the authority to settle the accounts of
the government in the Comptroller General, 31 USC §3526, certifying officers should not
rely on GSA’s travel regulation on conference planning to authorize light refreshments at
meetings for employees in nontravel status.
Background
In January 2000, GSA published an amendment to the Federal Travel Regulations to address “conference planning.” 65 Fed. Reg. 1326, Jan. 10, 2000. The amendment defines
“conference” as “[a] meeting, retreat, seminar, symposium or event that involves attendee
travel. The term ‘conference’ also applies to training activities that are considered to be conferences under 5 CFR 410.404.”1 41 CFR §300-3.1. The regulation focuses on the total costs
involved in employee travel to conferences, including guidance on comparing the cost of and
selecting conference facilities, 41 CFR §§301-74.2–74.5, and holding a conference at a hotel,
motel, or other place of public accommodation. 41 CFR §301-74.14. In addressing the costs
of conferences, the amendment includes a provision permitting agencies to pay for light refreshments at official conferences:
Agencies sponsoring a conference may provide light refreshments to agency
employees attending an official conference. Light refreshments for morning,
afternoon or evening breaks are defined to include, but not be limited to, coffee, tea, milk, juice, soft drinks, donuts, bagels, fruit, pretzels, cookies, chips,
or muffins.
41 CFR §301-74.11. In its Federal Register notice explaining the light refreshments provision, GSA asserted that “[t]he serving of light refreshments for conference attendees ... is a
common business practice, and should not be prohibited for Government-sponsored conferences.” 65 Fed. Reg. at 1326.
GSA has advised agencies that they may use appropriated funds to pay for refreshments for
nontravelers at some conferences. GSA’s Travel Management Policy Homepage explained:
“We have not made it mandatory that every attendee has to be in travel status, as that
would not be practical at every conference/meeting. It would not be in the Government’s
best interests to not allow Non-travel attendees to participate in the break (forcing them to
go elsewhere for refreshments) or to collect funds from just certain attendees and keep the
appropriate records of those funds.” GSA advises, therefore, that if the majority of the attendees are in travel status, the agency may fund refreshments for all attendees. GSA,
1
Pursuant to Office of Personnel Management (OPM) regulations, an agency “may sponsor an employee’s
attendance at a conference as a developmental assignment under section 4110 of title 5, United States
Code, when—
a.
The announced purpose of the conference is educational or instructional;
b.
More than half of the time is scheduled for a planned, organized exchange of information between
presenters and audience which meets the definition of training in section 4101 of title 5, United
States Code;
c.
The content of the conference is german to improving individual and/or organizational performance; and
d.
Development benefits will be derived through the employee’s attendance.”
5 CFR §410.404
Travel Management Policy’s Frequently Asked Questions, <http://www.gsa.gov/Portal/ content/offerings_content.jsp?contentOID=118763&Content Type=1004&PMTT=1>.
A Navy certifying officer submitted a request for an advance decision pursuant to 31 USC
§3529(a). The certifying officer stated that since the light refreshment provision of the travel regulation on conference planning appears inconsistent with Comptroller General decisions, the regulation has created confusion regarding when an agency may provide food for
employees.
Analysis
Comptroller General’s Authority to Settle Accounts
At the outset it is useful to delineate the General Accounting Office’s and GSA’s authorities.
The Comptroller General is required to settle the accounts of the United States. 31 USC
§3526(a). In carrying out this duty, the Comptroller General resolves questions about the
legality of payments disbursing officers or heads of agencies may make, or the legality of
expenditures covered by vouchers presented to certifying officers for certification. 31 USC
§3529. Thus, a certifying official may request a decision from the Comptroller General on a
question involving a voucher in advance of the certifying officer’s certification of that
voucher. 31 USC §3529(a). A decision by the Comptroller General pursuant to 31 USC
§3529 is conclusive on the Comptroller General when settling the account containing the
payment. In more practical terms, the Comptroller General in an audit of agency obligations and expenditures may not legally object to particular financial transactions that he
has already decided under section 3529 are in accordance with law.
Congress has authorized GSA to prescribe regulations necessary for the administration of
travel and subsistence expenses, and mileage allowances. 5 USC §5707. Indeed, GSA promulgates and maintains the Federal Travel Regulation that provides travel policy for federal
government agencies and their travelers. 41 CFR Ch. 301–304. While we recognize GSA’s
role in promulgating travel regulations and the deference due GSA in the exercise thereof,
there is nothing explicitly or implicitly in such function that affects the Comptroller General’s role as the arbiter of the use of funds for official as opposed to personal purposes.
Appropriated Funds Generally Are Not Available for the Personal Expenses, Including
Food, of Government Employees
Appropriations, as a general matter, are not available for the purchase of food for government employees. This rule, though often stated, is not often explained; hence, over time, the
basis for the rule may be overlooked.
Any analysis of the purpose availability of an appropriation begins with the purpose statute, 31 USC §1301(a): “Appropriations shall be applied only to the objects for which the appropriations were made.” Additionally, because a federal agency is a creature of law, the
Supreme Court has articulated an axiom of appropriations law: “The established rule is
that the expenditure of public funds is proper only when authorized by Congress, not that
public funds may be expended unless prohibited by Congress.” United States v. MacCollom,
426 U.S. 317, 321 (1976).
We, of course, do not read the purpose statute to require, nor would it be reasonable to expect, that every item of expenditure be specified in an appropriations act. We do view appropriations of public funds as enacted to finance public purposes, not the personal expenses of federal employees. An employee is expected to bear the cost of personal expenses, such
as meals and refreshments, from his or her salary. 72 Comp. Gen. 178 (1993); B-270327,
Mar. 12, 1997.
The Congress over the years has adjusted this rule by enacting statutory authority for
agencies to pay for food for employees in particular circumstances. Some legislation addresses specific situations; for example, the John C. Stennis Center for Public Service
Training and Development has statutory authority to provide meals and refreshments at its
programs and activities. 2 USC §1108(a)(7). Other legislation has governmentwide application. An example is the legislation at issue here — GSA’s authority to define a traveler’s
subsistence costs that an agency may reimburse, 5 USC §5702. In this decision, we analyze
GSA’s authority first, then we discuss briefly some other authorities. Because public confidence in the integrity of those who spend the taxpayer’s money is essential, any item, such
as meals or refreshments, that may appear frivolous or that is easily abused, however legitimate it may seem in a specific context, should be authorized by the Congress if it is to be
charged to public funds. B-223678, June 5, 1989.
Light Refreshment Provision of GSA’s Travel Regulation on Conference Planning
Through informal contacts with accountable and other financial officers of the government,
we are aware that many agency officials would like to use appropriations to pay for food
and refreshments at government-sponsored meetings and conferences, including meetings
to discuss internal operational or other day-to-day matters of agency business. Typically,
we will be advised that the impetus is the agency’s desire to follow common business practices in the private sector. Indeed, in its Federal Register notice explaining its light refreshments travel regulation, GSA asserts that “[t]he serving of light refreshments for conference attendees ... is a common business practice, and should not be prohibited for
Government-sponsored conferences.” 65 Fed. Reg. at 1326. Of course, reference to “common
business practice” is not in itself an adequate justification for spending public money on
food, or, for that matter, other objects. An expenditure of public funds must be anchored in
existing law, not the practices and conventions of the private sector.
GSA’s statutory basis for the light refreshment provision of its conference planning regulation is 5 USC §5702. Section 5702 addresses the subsistence expenses of federal employees
“when traveling on official business away from the employee’s designated post of duty.” 5
USC §5702(a)(1). Pursuant to section 5702, an employee is entitled to a per diem allowance
or reimbursement for the actual expenses of travel. 5 USC §5702(a)(1). Section 5701(3) defines “subsistence” as “lodging, meals, and other necessary expenses for the personal sustenance and comfort of the traveler.” GSA interprets “personal sustenance and comfort of the
traveler” to include the light refreshments it identifies in its conference planning travel
regulation. Letter from George N. Barclay, Acting General Counsel, Office of General Counsel, GSA, to Thomas H. Armstrong, Assistant General Counsel, GAO, Aug. 9, 2001.
Traditionally, GSA has not viewed light refreshments as subsistence.2 Nevertheless, while
the travel regulation reflects a fairly broad view of subsistence, many would agree that a
mid-afternoon snack or light refreshment, replenishing waning energy levels, is nourishment. Similarly, some may find morning and evening snacks nourishing as well. Accordingly, we do not object to GSA’s determination that subsistence for travelers may include light
refreshments.
Important, nevertheless, are the statutory limitations on the application of the travel regulation. As stated above, GSA’s statutory basis for the regulation is 5 USC §5702, which authorizes agencies to use appropriated funds to pay the costs of subsistence for employees on
official business away from their official duty stations. GSA’s authority does not extend to
employees who are not in travel status. Accordingly, certifying officers should not rely on
the travel regulation to pay costs of refreshments for employees in nontravel status. Agencies (and their accountable officers) should rely on relevant statutory authority, as interpreted by the Comptroller General, to determine whether they may use appropriations to
provide food or refreshments to their employees.
Other Authority
Another example of the Congress adjusting the general rule that appropriations are not
available to pay for federal employees’ food, and one that is relevant to the factual circumstances raised by the Navy certifying officer here, is the Government Employees Training
Act (Training Act), Pub. L. No. 85-507, 72 Stat. 327 (1958). The Training Act authorizes
agencies to “pay ... for all or a part of the necessary expenses of training,” and to pay “for
expenses of attendance at meetings which are concerned with the functions or activities for
which the appropriation is made,” regardless of whether the event is held within the employees’ official duty station. 5 USC §§4109, 4110. The Comptroller General, exercising his
statutory accounts settlement authorities, 31 USC §§3526, 3529, has interpreted and applied authorities such as the Training Act to accommodate the day-to-day realities of governmental operations within the limits imposed by the statute. To that end, in applying the
Training Act, we have held that an agency may pay for the costs of meals and refreshments
when they are included as an incidental and nonseparable portion of a training or meeting
registration or attendance fee. 66 Comp. Gen. 350 (1987). If the cost of the food is not included in a registration or attendance fee, we have held that the meal or refreshments may
be paid for if they are necessary to obtain the full benefit of the event. B-247966, June 16,
1993; B-244473, Jan. 13, 1992; B-198471, May 1, 1980. Although section 4110, which concerns meetings, generally applies only to meetings sponsored by nongovernmental organizations, we have extended section 4110 to government-sponsored meetings as long as the
meeting satisfies the same conditions as required for nongovernment-sponsored meetings
2
Over the years, applying GSA regulations, we objected to agencies reimbursing travelers for the actual expenses of various snacks or light refreshments consumed while in travel status, because GSA did not deem
them subsistence under GSA’s regulations. See, e.g., B-167820, Oct. 7, 1969 (traveler’s expenditures for
newspapers, candy, pop, and coffee and rolls not consumed as part of a regular meal are not necessary expenses of subsistence).
and the government sponsored meeting is not an internal day-to-day business meeting. See,
e.g., B-198471, May 1, 1980.3
In our analysis of whether an expenditure constitutes a personal or official expense, we do
not view our case law as static and inflexible. Certainly, any analysis of a personal expense,
necessarily, starts from the premise that the public’s money is generally not available for
the personal expenses of public employees. Recognition of that fundamental principle does
not mean, for example, that an agency may not use appropriated funds to pay an expense in
any given situation that in another context would be considered personal. See, e.g., 65
Comp. Gen. 677 (1986) (physical examination); B-239774, July 22, 1991 (cable television
service). In these instances, we have not objected to the use of appropriations where the
benefit to the government of what might otherwise be viewed as a personal expense weighs
in favor of using appropriated funds. In this regard, as we weigh benefits to the agency,
such as the recruitment and retention of a dynamic workforce and other considerations enabling efficient, effective, and responsible government, our decisions indicate a willingness
to consider changes in societal expectations of benefits to be provided the nonfederal workforce. See, e.g., 71 Comp. Gen. 527 (1992) (eldercare as an employee benefit not typical of
those benefits provided the nonfederal workforce); B-286026, June 12, 2001 (overruling our
earlier decisions based on reassessment of the training opportunities afforded by examination review course).
As we noted earlier, we recognize from informal contacts from agency officials an interest in
re-examining the rules on food and refreshments. Indeed, GSA’s light refreshments regulation, while it exceeds GSA’s authority, is an expression of that interest. We remain willing
to re-examine our case law, including our decisions on food, and to revise, to the extent
permitted by law, rules that agency officials believe frustrate efficient, effective and responsible government. Any revision of these rules, of course, must be founded on sound reasoning, and must include appropriate safeguards to prevent abuse and to ensure public confidence in the integrity of those who spend the taxpayer’s money.
Conclusion
GSA does not have the authority to permit agencies to use appropriated funds to pay for
employees’ food and refreshments except as part of an employee’s travel subsistence allowance. 5 USC §5702. Certifying officers should not rely on GSA’s travel regulation on conference planning to authorize light refreshments at conferences for employees in nontravel
3
The Comptroller General has exercised his statutory accounts settlement authorities in other instances, as
well, to accommodate the ordinary needs of federal agencies. For example, in a 1991 decision, we concluded
that the Nuclear Regulatory Commission (NRC) could pay an all-inclusive facility rental fee for a meeting of
NRC employees to discuss internal NRC matters, even though the fee resulted in food being served to NRC
employees at their official duty stations. B-281063, Dec. 1999. The facility charged a fixed fee that included
conference rooms, refreshments at breaks, lunch, equipment and other supplies. We reasoned that renting
the facilities was a reasonable expense of NRC’s appropriations. Because the fee would have remained the
same to NRC whether or not it accepted and its employees ate the food, the harm that the general rule is
meant to prevent (i.e., expenditure of federal funds on personal items) was not present. B-281063, Dec. 1,
1999.
status. Agencies (and their accountable officers) should rely on existing, relevant statutory
authority as interpreted by the Comptroller General.
Anthony H. Gamboa
General Counsel