B-252754.3 January 30, 1995

B-252754.3 January 30, 1995

GAO defers to GSA's allocation of liability to NRC in settlement of breach of contract with the Heritage Reporting Corporation. NRC did not request a waiver from GSA, under FAR section 8.404-3, of NRC's obligation to order off of the contract, and NRC has provided no documentation to suggest that GSA had assented to NRC's ordering off-schedule.

Donald F. Hassell Deputy Assistant General Counsel for Administration U.S. Nuclear Regulatory Commission

Dear Mr. Hassell:

By letter dated November 7, 1994, you disputed the amount of liability allocated to the Nuclear Regulatory Commission (NRC) by the General Services Administration (GSA) in settlement of the government's breach of the mandatory federal supply schedule contract for court reporting services with Heritage Reporting Corporation. You assert that GSA, in effect, waived NRC's obligation to order reporting services needs through the Heritage contract. In B-252745, Oct. 6, 1994, we concluded that GSA's allocation of liability among the various agencies is entitled to deference unless that allocation is demonstrably erroneous. As explained below, NRC has failed to show error on GSA's part. Accordingly, we will not object to GSA's allocation of liability to NRC.

You acknowledge in your submission that NRC knew of GSA's plans to issue a mandatory schedule for court reporting services, and that GSA, when contacted by NRC about the possibility of a waiver, told NRC that it would not grant a waiver. Nevertheless, relying on a conversation with a GSA contracting officer who indicated that if NRC believed its requirements fell outside the scope of the Heritage contract, NRC would not be required to order from it, NRC prepared a memo to its files outlining the agency needs that were not met by the contract and then awarded its own contract to Neil R. Gross & Co. NRC believes that in light of its conversations with the GSA contracting officer, the agency was justified in its determination to procure off schedule and therefore should not be allocated any liability as a result of the Heritage settlement.

We disagree. The Federal Acquisition Regulations, section 8.404-3, provide that when a mandatory user under a schedule determines that items available from the schedule will not meet its specific needs, but similar items from another source will, it shall submit a request for waiver to GSA. While the oral information NRC obtained may have dissuaded it from pursuing a waiver, section 8.404-3 provides that waiver requests be sent to the Commissioner, Federal Supply Service, and lists the information that must accompany the request. In our October 1994 decision, we agreed with the Securities and Exchange Commission (SEC) that GSA had waived SEC's obligation to order from Heritage. There, the record clearly demonstratted that GSA had agreed with SEC to obtain a contract modification from Heritage exempting SEC from the contract. After obtaining Heritage's signature on the contract modification, GSA, without notifying SEC, did not execute the contract modification. We viewed SEC's reasonable reliance on GSA's initial position coupled with GSA's failure to timely advise SEC to the contrary as tantamount to a waiver. We can find no evidence in the record of comparable action by GSA with regard to NRC. Consequently, we have no basis to disagree with GSA's allocation of liability to NRC.