B-152306, DEC. 20, 1966

B-152306, DEC. 20, 1966

TO ADMINISTRATOR, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION:

WE REFER TO A LETTER DATED SEPTEMBER 2, 1966, WITH ENCLOSURES, FROM YOUR GENERAL COUNSEL, WHEREIN HE FURNISHED YOUR ADMINISTRATION'S COMMENTS CONCERNING OUR GOVERNMENT-WIDE STUDY ON THE INTERPRETATIONS AND APPLICATIONS OF THE STATUTORY 6-PERCENT LIMITATION ON FEES PAYABLE TO ARCHITECT-ENGINEERS, ESPECIALLY AS FOLLOWS:

"* * * THE 6 PERCENT LIMITATION CONTAINED IN SECTION 4 (B) OF THE ARMED SERVICES PROCUREMENT ACT IS BY ITS EXPRESS TERMS NOT APPLICABLE TO FIXED- PRICE CONTRACTS. IN THE ALTERNATIVE, EVEN IF IT IS ARGUED THAT 10 U.S.C. 2306 (D) INCLUDES AN ERRONEOUS CODIFICATION OF SECTION 4 (B), THE NATIONAL AERONAUTICS AND SPACE ACT, ENACTED SUBSEQUENT TO THE CODIFICATION LEGISLATION, REFERS ONLY TO THE U.S.C. PROVISION. THEREFORE, THE ONLY FEE LIMITATION APPLICABLE TO NASA'S ARCHITECT ENGINEER CONTRACTS IS THAT CONTAINED IN 10 U.S.C. 2306 (D).'

CHAPTER 137 OF TITLE 10 OF THE U.S.C. GOVERNING THE PROCUREMENT OF ALL PROPERTY AND SERVICES BY THE MILITARY DEPARTMENTS, WAS MADE APPLICABLE TO THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA) BY SECTION 301 (B) OF PUBLIC LAW 85-568, 72 STAT. 432. SECTION 2306 (D) OF THAT CHAPTER PROVIDES THAT:

"* * * THE FEE FOR PERFORMING A COST-PLUS-A-FIXED-FEE CONTRACT FOR ARCHITECTURAL OR ENGINEERING SERVICES FOR A PUBLIC WORK OR UTILITY PLUS THE COST OF THOSE SERVICES TO THE CONTRACTOR MAY NOT BE MORE THAN 6 PERCENT OF THE ESTIMATED COST OF THAT WORK OR PROJECT, NOT INCLUDING FEES. * * *"

ESSENTIALLY THE SAME POSITION AS ADVANCED HERE WAS CONSIDERED IN OUR DECISION TO THE SECRETARY OF DEFENSE DATED DECEMBER 12, 1966, 46 COMP. GEN. -, COPY HEREWITH, WHERE WE HELD, AFTER FULLY DISCUSSING THE APPLICABLE STATUTES ANTECEDENT TO 10 U.S.C. 2306 (D), THAT THE FEE LIMITATION OF SUBSECTION 2306 (D) SHOULD NOT BE REGARDED AS LEGALLY RESTRICTED TO ONE TYPE OR CLASS OF CONTRACTING. WHILE THAT DECISION DID NOT CONSIDER THE FACT THAT, BY STATUTE, NASA IS SUBJECT TO THE LITERAL LANGUAGE OF SUBSECTION 2306 (D) WITHOUT REFERENCE TO, OR RELIANCE UPON, THE ANTECEDENT STATUTES, THERE IS NO BASIS TO REACH A DIFFERENT CONCLUSION HERE. WE RECOGNIZE THAT YOUR GENERAL COUNSEL HAS, IN EFFECT, RELIED UPON A RULE OF STATUTORY CONSTRUCTION WHICH PRECLUDES RESORT TO THE LEGISLATIVE HISTORY OF A STATUTE IN THE ABSENCE OF AMBIGUITY THEREIN. THIS "PLAIN MEANING" RULE OF CONSTRUCTION WAS CAREFULLY CONSIDERED AND WEIGHED IN OUR DECEMBER 12 DECISION, BUT WE CONCLUDED THAT A STRICT, LITERAL APPROACH TO DETERMINE THE NATURAL SIGNIFICANCE OF THE WORDS USED IN SUBSECTION 2306 (D) WOULD LEAD TO AN UNREASONABLE OR IMPRACTICAL RESULT. IN ADDITION TO WHAT WAS SAID IN OUR DECEMBER 12 DECISION, WE HELD IN A COMPANION DECISION OF AUGUST 31, 1966, TO THE ADMINISTRATOR OF VETERANS AFFAIRS, 46 COMP. GEN. -, IN PERTINENT PART AS FOLLOWS:

"WE CANNOT ATTRIBUTE TO THE CONGRESS A DELIBERATE INTENTION TO EXCLUDE FIXED-PRICE NEGOTIATED CONTRACTS FOR ARCHITECT-ENGINEER SERVICES FROM THE STATUTORY LIMITATION AND ON THE OTHER HAND RESTRICT THE FEE PAYABLE UNDER COST-TYPE CONTRACTS. TO CONCLUDE THAT SUCH PROFESSIONAL SERVICES COULD BE FREELY CONTRACTED FOR ON A FIXED-PRICE BASIS WITHOUT REGARD TO WHETHER THE FIXED COMPENSATION EXCEEDS 6 PERCENT OF THE ESTIMATED COST OF CONSTRUCTION WOULD BE TO GIVE CONGRESSIONAL SANCTION TO AN ANOMALOUS SITUATION WHEREUNDER ARCHITECT ENGINEERS CONTRACTING ON A COST-TYPE BASIS WOULD HAVE THEIR TOTAL COMPENSATION EFFECTIVELY LIMITED AND THOSE CONTRACTING ON A FIXED PRICE BASIS WOULD BE FREE TO NEGOTIATE WITHOUT REFERENCE TO A FEE LIMITATION OTHERWISE IMPOSED BY STATUTE.'

THEREFORE, AND SINCE WE HAVE HELD THAT ARCHITECT-ENGINEER CONTRACTS NEGOTIATED PURSUANT TO THE MILITARY PROCUREMENT STATUTE AND THE CIVILIAN PROCUREMENT STATUTE ARE SUBJECT TO THE 6-PERCENT FEE LIMITATION WITHOUT REGARD TO THE TYPE OF CONTRACT EMPLOYED, IT IS OUR OPINION THAT ALL ARCHITECT-ENGINEER CONTRACTS NEGOTIATED BY NASA MUST BE CONSIDERED AS SUBJECT TO THE FEE LIMITATION OF 10 U.S.C. 2306 (D). HOWEVER, NO ACTION WITH REFERENCE THERETO WILL BE TAKEN BY OUR OFFICE OTHER THAN TO INCORPORATE THE VIEWS OF NASA IN OUR REPORT OF SURVEY TO THE CONGRESS. THE ADDITIONAL COMMENTS PRESENTED BY YOUR GENERAL COUNSEL CONCERNING THE DIFFICULTIES ENCOUNTERED IN ADMINISTERING THE 6 PERCENT STATUTORY LIMITATION WILL ALSO BE CONSIDERED IN OUR REPORT. AT THIS DATE, WE EXPECT TO TRANSMIT THE REPORT TO THE CONGRESS SHORTLY AFTER JANUARY 1, 1967.

WE APPRECIATE THE COOPERATION EXTENDED IN CONNECTION WITH OUR PRESENT REVIEW.