B-152306, JUL. 18, 1968

B-152306, JUL. 18, 1968

TO MR. DRIVER:

REFERENCE IS MADE TO YOUR LETTER DATED JUNE 13, 1968, CONCERNING OUR DECISION B-152306, JANUARY 24, 1967, WHEREIN WE HELD THAT THE COST OF ARCHITECT-ENGINEER (A-E) SERVICES CONTRACTED FOR BY YOUR AGENCY MAY NOT EXCEED 6 PERCENT OF THE ESTIMATED COST OF THE CONSTRUCTION PROJECT TO WHICH SUCH SERVICES APPLY AND THAT THIS LIMITATION PERMITS NO COST EXCLUSIONS FROM THE TOTAL COMPENSATION PAYABLE FOR SUCH SERVICES, INCLUDING SERVICES FOR PRELIMINARY PLANNING, CONSULTANT FEES, TRAVEL EXPENSES, CONSTRUCTION TIME DUTIES, OR THE LIKE.

ON THE BASIS OF THIS DECISION, YOU ISSUED A REVISION OF VETERANS ADMINISTRATION PROCUREMENT REGULATIONS, SECTION 8-3.405-5, BY ADDING A SUBSECTION (D) THEREOF, EFFECTIVE MAY 1, 1967, WHICH PROVIDES AS FOLLOWS:

"/D) THE TOTAL COST OF ALL (A-E) ARCHITECT-ENGINEER SERVICES CONTRACTED FOR MAY NOT EXCEED 6 PERCENT OF THE ESTIMATED COST OF THE CONSTRUCTION PROJECT TO WHICH SUCH SERVICES APPLY EVEN THOUGH THE VARIOUS PHASES OR SEGMENTS OF THE A-E EFFORT ARE CONTRACTED FOR SEPARATELY WITH THE SAME OR DIFFERENT A-E FIRMS. THIS LIMITATION PERMITS NO COST EXCLUSIONS FROM THE TOTAL COMPENSATION PAYABLE FOR ALL SERVICES PERFORMED UNDER AN A-E CONTRACT OR CONTRACTS INCLUDING SERVICES FOR PRELIMINARY PLANNING, PRELIMINARY SITE AND SUBSURFACE INVESTIGATIONS, CONSULTANT FEES, TRAVEL EXPENSES, REPRODUCTION COSTS, CONSTRUCTION TIME DUTIES OR THE LIKE. THE LIMITATION ALSO PERMITS NO COST EXCLUSIONS FOR CHANGES TO AN A-E CONTRACT EXCEPT WHEN THE A-E SERVICES ARE IN CONNECTION WITH ADDITIONAL FACILITIES TO BE ADDED TO THE PROJECT, AND IN THIS EVENT THE COST OF THE A-E SERVICES IS LIMITED TO 6 PERCENT OF THE ESTIMATED COST OF CONSTRUCTION OF THE ADDITIONAL FACILITIES. THIS LIMITATION APPLIES TO FIXED-PRICE CONTRACTS AS WELL AS COST-PLUS-A-FIXED-FEE CONTRACTS.'

YOU REQUEST TO BE ADVISED WHETHER OUR OFFICE WOULD HAVE ANY OBJECTION TO THE CANCELLATION OR AMENDMENT OF THE REGULATION AND WHETHER THE 6-PERCENT FEE LIMITATION FOR ARCHITECT-ENGINEER CONTRACTS MAY BE REGARDED AS COVERING ONLY PROFESSIONAL SERVICES, EXCLUSIVE OF TRAVEL, SITE SURVEYS, SOIL INVESTIGATIONS, REIMBURSEMENT FOR PRINTING PLANS, ETC. IN THIS REGARD, YOU OBSERVE:

"* * * THAT THE VETERANS ADMINISTRATION IS THE ONLY DEPARTMENT OR AGENCY OF THE GOVERNMENT WHICH HAS ISSUED SO INCLUSIVE A REGULATION. APPARENTLY, OTHER PRIMARILY-INTERESTED GOVERNMENT ORGANIZATIONS, SUCH AS THE DEPARTMENT OF DEFENSE AND GENERAL SERVICES ADMINISTRATION, HAVE NOT FELT OBLIGED TO PROMULGATE A SIMILAR REGULATORY PROVISION. IN THIS CONNECTION, WE NOTE THE STATEMENTS IN YOUR DECISION OF DECEMBER 12, 1966, TO THE SECRETARY OF DEFENSE (B-152306), AND OF DECEMBER 19, 1966, TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION (B-152306), TO THE EFFECT THAT WHILE THEIR RESPECTIVE CONTROLLING LAWS DO NOT PERMIT ANY EXCLUSION OF COSTS FROM APPLICATION OF THE 6 PERCENT FEE LIMITATION, YOU WOULD TAKE NO ACTION IN CASES INVOLVING THIS QUESTION AT THE PRESENT TIME. NO SUCH STATEMENT WAS MADE TO US IN THE JANUARY 24, 1967 DECISION.'

IN LINE WITH OUR ADVICE TO THE ABOVE-NAMED AGENCIES THAT NO PRESENT ACTION IS CONTEMPLATED BY OUR OFFICE WITH RESPECT TO THE ESTABLISHED PRACTICES OF EXCLUDING CERTAIN ITEMS OF CONTRACT COSTS FROM APPLICATION OF THE 6-PERCENT FEE LIMITATION UNTIL THE CONGRESS HAS HAD THE OPPORTUNITY TO ACT UPON THE RECOMMENDATIONS CONTAINED IN OUR APRIL 20, 1967, REPORT ON A- E CONTRACTING PROCEDURES, WE WOULD HAVE NO OBJECTION IF THE QUOTED REGULATION IS CANCELED FOR THE TIME BEING. WE, OF COURSE, RESERVE THE RIGHT TO RECONSIDER OUR POSITION IN THIS REGARD DEPENDING UPON THE ACTION TAKEN BY THE CONGRESS ON THE RECOMMENDATIONS MADE IN OUR REPORT.