B-143189, OCTOBER 11, 1978, 58 COMP.GEN. 7

B-143189, OCTOBER 11, 1978, 58 COMP.GEN. 7

CONCESSIONS - CONTRACTS - MODIFICATION - CONSIDERATION SECRETARY OF INTERIOR HAS DETERMINED, AND GENERAL ACCOUNTING OFFICE (GAO) CONCURS, THAT PROVISION IN STANDARD NATIONAL PARK SERVICE CONCESSION CONTRACT REQUIRING CONCESSIONER TO FURNISH ACCOMMODATIONS AT REDUCED RATES TO FEDERAL EMPLOYEES IN PARKS ON OFFICIAL BUSINESS IS NOT IN BEST INTEREST OF GOVERNMENT, DESPITE REDUCED COST, BECAUSE OF RISK AND APPEARANCE OF IMPROPER CONFLICT OF INTEREST. ALTHOUGH GENERALLY VESTED CONTRACT RIGHTS MAY NOT BE WAIVED WITHOUT CONSIDERATION, GAO WILL NOT OBJECT TO ELIMINATION OF CLAUSE IN QUESTION WHERE COST SAVING IS DETERMINED TO OUTWEIGHED BY ADVERSE EFFECT ON GOVERNMENT OF CLAUSE, 40 COMP.GEN. 234, DISTINGUISHED.

IN THE MATTER OF ELIMINATION FROM STANDARD NATIONAL PARK SERVICE CONCESSION CONTRACT OF FEDERAL EMPLOYEE'S DISCOUNT PROVISION, OCTOBER 11, 1978:

THE SECRETARY OF THE INTERIOR REQUESTED OUR OPINION ON THE LEGALITY OF THE UNILATERAL ELIMINATION, BY THE DEPARTMENT OF THE INTERIOR, OF THE FEDERAL AND STATE EMPLOYEES' DISCOUNT PROVISION FROM NATIONAL PARK SERVICE (NPS) CONCESSION CONTRACTS NOW IN FORCE. THAT PROVISION IN THE STANDARD CONTRACT READS AS FOLLOWS:

SEC. 15. ACCOMMODATIONS FOR GOVERNMENT EMPLOYEES. THE CONCESSIONER SHALL FURNISH (AVAILABLE TRANSPORTATION WITHIN THE (AREA) (PARK) FREE OF CHARGE, AND OTHER) ACCOMMODATIONS AT REDUCED RATES, TO FEDERAL AND STATE EMPLOYEES VISITING THE (AREA) (PARK) ON OFFICIAL BUSINESS AND TO THE EMPLOYEES OF THE (AREA) (PARK) AWAY FROM THEIR REGULARLY ASSIGNED STATIONS, UPON THE PRESENTATION OF PROPER CREDENTIALS. PAYMENTS MADE BY SUCH EMPLOYEES IN THE ABSENCE OF SUCH CREDENTIALS SHALL BE WITHOUT PREJUDICE TO A REFUND UPON LATER SUBMISSION THEREOF.

THE QUESTION ARISES BECAUSE THIS OFFICE HAS HELD THAT THE SAME DISCOUNT PROVISION IS A REQUIREMENT IN THE INTEREST OF THE GOVERNMENT AND THAT THE SECRETARY OF THE INTERIOR HAS NO AUTHORITY "TO UNILATERALLY RELIEVE THE CONCESSIONER OF THE CONTRACT OBLIGATION, IN THE ABSENCE OF ADEQUATE CONSIDERATION THEREOF MOVING TO THE GOVERNMENT." 40 COMP.GEN. 234, 239 (1960). THIS OPINION WAS PREMISED UPON THE WELL ESTABLISHED RULE THAT, WITHOUT A COMPENSATING BENEFIT TO THE UNITED STATES, GOVERNMENT AGENTS AND OFFICERS HAVE NO AUTHORITY TO DISPOSE OF THE MONEY OR PROPERTY OF THE UNITED STATES, TO MODIFY EXISTING CONTRACTS, OR TO SURRENDER OR WAIVE VESTED CONTRACT RIGHTS. 35 COMP.GEN. 56, 59 (1955); 40 ID. 234, 239 (1960); CHRISTINE V. UNITED STATES, 237 U.S. 234 (1915); PACIFIC HARDWARE V. UNITED STATES, 49 CT.CL. 327, 335, 337 (1914).

UNDER PRESENT PRACTICE, THE DISCOUNT PROVISION HERE IN ISSUE MAY REPRESENT A MONETARY BENEFIT TO THE UNITED STATES. SEE 40 COMP.GEN. 234, SUPRA. FEDERAL EMPLOYEES RECEIVING A SUBSISTENCE ALLOWANCE WHILE AN OFFICIAL BUSINESS IN NATIONAL PARKS WILL, WHERE THE DISCOUNT PROVISION IS IN FORCE, INCUR LOWER DAILY EXPENSES. SEE 5 U.S.C. 5702(1976). THIS BENEFITS THE GOVERNMENT SINCE ITS REIMBURSEMENT TO EMPLOYEES ON OFFICIAL BUSINESS WILL BE LOWER.

THE SECRETARY NOW URGES THAT THE DISCOUNT PROVISION IS DETRIMENTAL TO PROPER ADMINISTRATION OF NPS CONCESSIONS, AS IT PRESENTS BOTH THE RISK AND APPEARANCE OF AN IMPROPER CONFLICT OF INTEREST. OUR OFFICE FOR A NUMBER OF YEARS, AS A MATTER OF POLICY, HAS FORBIDDEN ITS OFFICIALS FROM TAKING ADVANTAGE OF THE DISCOUNT. IN A LETTER DATED JUNE 7, 1963 (B-151705), THIS OFFICE, IN COMMENTING ON THE DISCOUNT CLAUSE OF THE STANDARD CONCESSION CONTRACT, NOTED THAT WHILE THERE WERE NO LEGAL GROUNDS FOR DISALLOWING ITS INCLUSION IN THE CONTRACT,

* * * IT IS QUESTIONABLE IN EVENT WHETHER IT IS DESIRABLE OR APPROPRIATE TO AUTHORIZE OR REQUIRE A PARK CONCESSIONER TO PROVIDE A SERVICE FREE OF CHARGE OR AT A REDUCED RATE TO EITHER A FEDERAL OR STATE EMPLOYEE * * * .

IMPLICIT REFERENCE IS MADE TO THE POTENTIAL FOR IMPROPER INFLUENCE OF GOVERNMENT OFFICIALS THAT INHERES IN A SITUATION WHERE A REGULATED ENTITY CONFERS MONETARY BENEFITS UPON THE OFFICIALS CHARGED WITH THE DUTY TO REGULATE IT.

THE SECRETARY CITES THE CONCERN EXPRESSED IN A JOINT REPORT BY THE COMMITTEE ON GOVERNMENT OPERATIONS AND THE COMMITTEE IN SMALL BUSINESS (H.R. REP. NO. 869, 94TH CONG., 2D SESS. 46 (1976)) WHICH HIS DEPARTMENT SHARES. THE JOINT REPORT CITES WITH APPROVAL THE FOLLOWING PORTION OF AN EARLIER HOUSE GOVERNMENT OPERATIONS COMMITTEE REPORT:

* * * GOVERNMENT EMPLOYEES WHO, ON BEHALF OF THE GOVERNMENT, EXERCISE SUPERVISORY RESPONSIBILITIES OVER PRIVATE INTERESTS SHOULD AVOID BOTH ANY ACTUAL CONFLICT OF INTEREST, AND ALSO THE APPEARANCE OF ANY CONFLICT OF INTEREST WHICH MIGHT ARISE BY RECEIVING FROM SUCH PRIVATE INTERESTS ANY PERSONAL FAVORS, GIFTS, OR PERQUISITES IN CONNECTION WITH THE PERFORMANCE OF THEIR OFFICIAL DUTIES. SUCH FAVORS TEND TO CREATE IN THE EMPLOYEE A SENSE OF PERSONAL OBLIGATION TO THE COMPANY OR PERSON PROVIDING IT WHICH MAY BE INCONSISTENT WITH HIS PRIMARY RESPONSIBILITY TO THE PUBLIC INTEREST.

MOREOVER, THE FURNISHING OF SUCH ACCOMMODATIONS AND THE ACCEPTANCE THEREOF BY GOVERNMENT OFFICIALS IN THE PERFORMANCE OF THEIR OFFICIAL DUTIES COULD VIOLATE THE CONFLICT-OF-INTEREST LAWS. H.R. REP. NO. 88-306, 8 (9163).

THE COMMITTEES ULTIMATELY RECOMMENDED THAT

(THE SECRETARY OF THE INTERIOR * * * PROMPTLY PUBLISH REGULATIONS PROHIBITING NATIONAL PARK SERVICE CONCESSIONERS FROM PROVIDING DISCOUNTS FOR FOOD AND LODGING TO FEDERAL EMPLOYEES OR THEIR FAMILIES, NOTWITHSTANDING ANY PROVISION IN EXISTING CONCESSION CONTRACTS OR PERMITS.

CLEARLY, THEN, THERE ARE COMPETING CONSIDERATIONS INVOLVED IN THIS DECISION:

(A) THE MONETARY BENEFITS WHICH WILL ACCRUE TO THE GOVERNMENT FROM FROM OPERATION OF THE DISCOUNT PROVISION, AND

(B) THE INTEREST OF THE GOVERNMENT IN AVOIDING THE APPEARANCE OF CONFLICTS OF INTERESTS AND IN MAINTAINING PUBLIC CONFIDENCE IN THE GOVERNMENT.

VESTED CONTRACT RIGHTS WOULD BE OF LITTLE VALUE TO THE UNITED STATES IF THEY COULD BE ARBITRARILY WAIVED BY GOVERNMENT AGENCIES. THIS WAS THE GUIDING PRINCIPLE IN THE FORMULATION OF OUR 1960 OPINION AND IS NO LESS VALID TODAY. HOWEVER, A STUDIED ADMINISTRATIVE DETERMINATION THAT THE ELIMINATION FROM A CONTRACT OF A VESTED RIGHT OF THE UNITED STATES WOULD, ON BALANCE, BE "IN THE BEST INTEREST" OF THE UNITED STATES, WOULD NOT BE INCONSISTENT WITH THAT PRINCIPLE.

OUR OPINION OF 1960 DEALT EXCLUSIVELY WITH THE QUESTION OF UNILATERAL WAIVER WHERE THE INTERIOR DEPARTMENT PERCEIVED THAT "THERE IS NO INDICATION THAT THE PRACTICE (EMBODIED IN THE DISCOUNT CLAUSE) IS NOT FULLY CONSISTENT WITH THE BEST INTEREST OF THE UNITED STATES * * * ." COMP.GEN.234, 235. THAT OPINION WAS NOT DISPOSITIVE OF THE ISSUE NOW BEFORE US, SINCE THE INTERIOR DEPARTMENT HAS NOW TAKEN THE POSITION THAT THE RETENTION OF THE DISCOUNT PROVISION WOULD NOT BE "IN THE BEST INTEREST" OF THE UNITED STATES.

AN ARBITRARY DETERMINATION THAT A CONTRACT RIGHT WAS NOT IN THE BEST INTEREST OF THE UNITED STATES WOULD, OF COURSE, BE ENTITLED TO NO WEIGHT, NOR WOULD IT BE PERMISSIBLE TO RELINQUISH A VESTED CONTRACT RIGHT OF THE UNITED STATES MERELY BECAUSE IT WAS OF RELATIVELY LITTLE VALUE. HOWEVER, AGENCIES MAY GIVE RECOGNITION TO OTHER THAN PURELY FINANCIAL INTERESTS OF THE UNITED STATES IN DECIDING WHETHER THERE IS A BENEFIT TO THE UNITED STATES IN RELINQUISHING A CONTRACT RIGHT. IN THIS CASE, THERE IS AMPLE BASIS FOR A FINDING BY THE DEPARTMENT THAT, AS THE SECRETARY SAYS: "(THE FEW DOLLARS SAVED BY THE GOVERNMENT ARE FAR OUTWEIGHED BY THE INIMICAL NATURE OF A CONTRACTUAL PROVISION WHICH PERMITS GOVERNMENT EMPLOYEES WHO HAVE RESPONSIBILITY FOR REGULATING THE OPERATIONS OF PRIVATE ENTERPRISES TO RECEIVE FINANCIAL BENEFITS FROM THE REGULATED INDUSTRY." IT MIGHT BE SAID THAT THE DISCOUNT PROVISION IS, IN EFFECT, AGAINST PUBLIC POLICY.

IN ACCORDANCE WITH THE FOREGOING, WE WOULD NOT BE REQUIRED TO OBJECT TO THE ELIMINATION BY THE INTERIOR DEPARTMENT OF THE DISCOUNT PROVISION FROM CONCESSION CONTRACTS NOW IN FORCE. WE ASSUME THAT THERE WILL BE NO OBJECTION FROM THE CONTRACTOR.