B-107718, JULY 11, 1952, 32 COMP. GEN. 18

B-107718: Jul 11, 1952

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WITH AN EMPLOYEE FOR THE PERFORMANCE OF SUCH DUTIES NOR HAVE A COST-PLUS-A-FIXED-FEE CONTRACTOR PLACE THE EMPLOYEE ON ITS PAY ROLL AND REIMBURSE THE CONTRACTOR FOR THE SALARY OF THE EMPLOYEE. 1952: REFERENCE IS MADE TO YOUR LETTER OF JANUARY 25. THAT THEY WERE NOT APPOINTED OR PAID IN ACCORDANCE WITH THE USUAL LAWS APPLICABLE TO FEDERAL CIVIL SERVICE EMPLOYEES. THAT APPARENTLY ALL ARRANGEMENTS FOR THEIR EMPLOYMENT WERE MADE BY OFFICERS OF THE NAVY DEPARTMENT WHO THEN DIRECTED A PARTICULAR CONTRACTOR TO ENTER THE NAMES OF THE EMPLOYEES ON HIS PAY ROLL. IT WOULD HAVE PERMITTED THE DEPARTMENT TO CONTRACT WITH THE INDIVIDUALS PERFORMING SUCH SERVICES. WOULD NOT HAVE AUTHORIZED SECURING PERSONAL SERVICES FOR THE DEPARTMENT BY CONTRACTING WITH A PRIVATE FIRM.

B-107718, JULY 11, 1952, 32 COMP. GEN. 18

PERSONAL SERVICES - PRIVATE CONTRACT V. GOVERNMENT PERSONNEL - FIRST WAR POWERS ACT NEITHER SECTION 201 OF THE FIRST WAR POWERS ACT, AS AMENDED, NOR THE EXECUTIVE ORDERS THEREUNDER EMPOWER AN ADMINISTRATIVE AGENCY TO SECURE PERSONNEL FOR THE PERFORMANCE OF REGULAR AGENCY DUTIES WITHOUT REGARD TO THE STATUTORY MANDATES AND RESTRICTIONS APPLICABLE TO FEDERAL EMPLOYMENT GENERALLY, AND THEREFORE, AN AGENCY MAY NOT ENTER INTO A CONTRACT, UNDER THE AUTHORITY OF SAID ACT, WITH AN EMPLOYEE FOR THE PERFORMANCE OF SUCH DUTIES NOR HAVE A COST-PLUS-A-FIXED-FEE CONTRACTOR PLACE THE EMPLOYEE ON ITS PAY ROLL AND REIMBURSE THE CONTRACTOR FOR THE SALARY OF THE EMPLOYEE.

ACTING COMPTROLLER GENERAL YATES TO THE CHAIRMAN, UNITED STATES CIVIL SERVICE COMMISSION, JULY 11, 1952:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 25, 1952, REQUESTING A DECISION AS TO WHETHER, UNDER THE FACTS AND CIRCUMSTANCES HEREINAFTER RELATED, SECTION 201 OF THE FIRST WAR POWERS ACT, 55 STAT. 839, AS AMENDED BY THE ACT OF JANUARY 12, 1951, PUBLIC LAW 921, 64 STAT. 1257, AND EXECUTIVE ORDER NO. 10210, FEBRUARY 2, 1951, AUTHORIZE AN AGENCY TO SECURE PERSONNEL FOR THE PERFORMANCE OF THE REGULAR DUTIES OF AN AGENCY, EITHER BY CONTRACTING DIRECTLY WITH THE INDIVIDUAL EMPLOYEES, OR BY HAVING A COST -PLUS-A-FIXED-FEE CONTRACTOR PLACE THE NAMES OF SUCH EMPLOYEES ON ITS PAY ROLL WITH REIMBURSEMENT BY THE AGENCY. YOU SPECIFICALLY POINT OUT THAT PURSUANT TO SECTION 201 OF THE FIRST WAR POWERS ACT AND EXECUTIVE ORDER NO. 9001, DECEMBER 27, 1941, THE NAVY DEPARTMENT ADOPTED THE PRACTICE DURING WORLD WAR II OF HIRING CERTAIN EMPLOYEES AND PLACING THEM ON THE PAY ROLLS OF COST-PLUS-A-FIXED-FEE CONTRACTORS RATHER THAN ON NAVY DEPARTMENT CIVILIAN PAY ROLLS.

YOUR LETTER STATES THAT THE NAVY DEPARTMENT EMPLOYEES IN QUESTION PERFORMED THE DUTIES OF REGULAR CIVIL SERVICE POSITIONS WHILE CARRIED ON A CONTRACTOR'S PAY ROLL; THAT THEY WERE NOT APPOINTED OR PAID IN ACCORDANCE WITH THE USUAL LAWS APPLICABLE TO FEDERAL CIVIL SERVICE EMPLOYEES; THAT APPARENTLY ALL ARRANGEMENTS FOR THEIR EMPLOYMENT WERE MADE BY OFFICERS OF THE NAVY DEPARTMENT WHO THEN DIRECTED A PARTICULAR CONTRACTOR TO ENTER THE NAMES OF THE EMPLOYEES ON HIS PAY ROLL; AND THAT THE CONTRACTOR EXERCISED NO CONTROL OVER THE EMPLOYEES BUT SIMPLY PAID THEIR SALARIES AND RECEIVED REIMBURSEMENT THEREFOR FROM THE NAVY DEPARTMENT.

YOU EXPRESS THE VIEW THAT SECTION 201 OF THE FIRST WAR POWERS ACT, AS AMENDED, DOES NOT CONSTITUTE AUTHORITY TO HIRE EMPLOYEES FOR THE PERFORMANCE OF THE DUTIES OF A FEDERAL AGENCY IN THE MANNER DESCRIBED WITHOUT REGARD TO THE CIVIL SERVICE LAWS, THE CLASSIFICATION ACT OF 1949, 63 STAT. 954, AND OTHER LAWS GENERALLY APPLICABLE TO FEDERAL EMPLOYEES; AND THAT EVEN IF THE FIRST WAR POWERS ACT COULD BE CONSTRUED AS AUTHORIZING CONTRACTS FOR PURELY PERSONAL SERVICES, IT WOULD HAVE PERMITTED THE DEPARTMENT TO CONTRACT WITH THE INDIVIDUALS PERFORMING SUCH SERVICES, BUT WOULD NOT HAVE AUTHORIZED SECURING PERSONAL SERVICES FOR THE DEPARTMENT BY CONTRACTING WITH A PRIVATE FIRM, CITING 22 COMP. GEN. 700

IN REPLY TO A REQUEST FROM THIS OFFICE FOR A REPORT UPON THIS MATTER, THE DEPARTMENT OF THE NAVY REPORTED BY LETTER DATED MAY 24, 1952, IN PART, AS FOLLOWS:

* * * ACTING UNDER AUTHORITY OF SECTION 201 OF THE FIRST WAR POWERS ACT AND EXECUTIVE ORDER NO. 9001 OF DECEMBER 27, 1941, WHICH, AT THE TIME, AS YOU KNOW, WAS GIVEN A VERY BROAD LEGAL INTERPRETATION IN THE INTEREST OF EFFECTIVE PROSECUTION OF THE WAR, THE BUREAU EMPLOYED CERTAIN PERSONS TO PERFORM THE VARIED FUNCTIONS OF CONTRACT ADMINISTRATION OF ITS FIELD REPRESENTATIVES, THE OFFICERS-IN-1CHARGE OF CONSTRUCTION AND THE RESIDENT OFFICERS-IN-1CHARGE OF CONSTRUCTION. THESE EMPLOYEES WERE SELECTED BY THE BUREAU OR ITS REPRESENTATIVES AND, DURING THEIR TENURE OF EMPLOYMENT, WERE ASSIGNED TO THE STAFFS AND RETAINED UNDER THE SUPERVISION AND DIRECTION OF THE BUREAU OR ITS OFFICERS-IN-1CHARGE OF CONSTRUCTION OR RESIDENT OFFICERS -IN-1CHARGE OF CONSTRUCTION. THEY PERFORMED DUTIES IN CONNECTION WITH LABOR RELATIONS; PERSONNEL, WAGE AND SALARY ADMINISTRATION; AUDIT AND FINANCIAL CONTROL; DISPOSITION OF CLAIMS UNDER EMPLOYMENT CONTRACTS; AND LIKE FUNCTIONS RELATED TO THE BUREAU'S RESPONSIBILITIES IN THE ADMINISTRATION OF COST-PLUS-A-FIXED-FEE CONTRACT WORK. WHEN HIRED, THESE EMPLOYEES WERE PLACED ON THE PAYROLLS OF A COST-PLUS-A-FIXED-FEE CONTRACTOR RATHER THAN ON THE PAYROLLS OF THE BUREAU AS A MEANS OF EXPEDITING THE EMPLOYMENT PROCESSES, THUS FACILITATING THE BUREAU'S PERFORMANCE OF ITS CONTRACT FUNCTIONS UNDER THE TREMENDOUS WAR EMERGENCY CONDITIONS EXISTENT AT THE TIME. * * *

ONE ORGANIZATION ESTABLISHED UNDER THIS PRACTICE WAS THE RESIDENT OFFICER -IN-1CHARGE OF NAVY CONSTRUCTION CONTRACTS FOR THE PACIFIC OCEAN AREAS, LOCATED AT SAN FRANCISCO, CALIFORNIA. OPERATING AS FIELD REPRESENTATIVES OF THE BUREAU OF YARDS AND DOCKS AND SUBJECT TO THE DIRECT MANAGEMENT AND TECHNICAL CONTROL OF THE BUREAU, THE RESIDENT OFFICER-IN-1CHARGE OF CONSTRUCTION AND HIS CIVILIAN STAFF PERFORMED THE FUNCTION OF REGULATING COST-PLUS-A-FIXED-FEE CONTRACTS HELD BY VARIOUS ENGINEERING FIRMS THROUGHOUT THE PACIFIC OCEAN AREAS. FROM THE BEGINNING OF EMPLOYMENT THE PERSONS COMPRISING THE CIVILIAN STAFF WERE SELECTED BY THE BUREAU OR ITS REPRESENTATIVES AND PERFORMED BUREAU FUNCTIONS SOLELY UNDER THE DIRECTION OF BUREAU OFFICERS, BUT WERE PAID, AS A MATTER OF URGENT NECESSITY, FROM THE PAYROLLS OF THE ENGINEERING FIRM * * *.

THE DEPARTMENT FURTHER STATED THAT SUCH EMPLOYMENT PRACTICE WAS DISCONTINUED IN 1948, FOLLOWING ENACTMENT OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, APPROVED FEBRUARY 19, 1948, 62 STAT. 21, WHICH WAS ACCEPTED AS THE CURRENT AUTHORITY FOR MILITARY CONTRACTS; AND THAT THE LAST OF SUCH EMPLOYEES WERE TRANSFERRED TO FEDERAL PAY ROLLS DURING 1950 UNDER PROCEDURES AUTHORIZED BY THE CHAIRMAN, CIVIL SERVICE COMMISSION.

SECTION 201 OF THE FIRST WAR POWERS ACT, AS AMENDED, EMPOWERS THE PRESIDENT TO AUTHORIZE CERTAIN DEPARTMENTS OR AGENCIES TO ENTER INTO CONTRACTS "WITHOUT REGARD TO THE PROVISIONS OF LAW RELATING TO THE MAKING, PERFORMANCE, AMENDMENT, OR MODIFICATION OF CONTRACTS.' EXECUTIVE ORDER NO. 9001 AUTHORIZED THE NAVY DEPARTMENT TO EXERCISE SUCH POWER DURING WORLD WAR II, AND EXECUTIVE ORDER NO. 10210, FEBRUARY 2, 1951, CURRENTLY EMPOWERS THE DEPARTMENT OF DEFENSE TO EXERCISE SUCH POWER. EXECUTIVE ORDER NO. 10210 PROVIDES, IN PART, THAT THE CONTRACTS MAY INCLUDE AGREEMENTS OF ALL KINDS "FOR ALL TYPES AND KINDS OF THINGS AND SERVICES NECESSARY, APPROPRIATE OR CONVENIENT FOR THE NATIONAL DEFENSE.' EXECUTIVE ORDER NO. 10227, MARCH 24, 1951, EXTENDS THE AUTHORITY TO THE GENERAL SERVICES ADMINISTRATION. ALSO VARIOUS OTHER EXECUTIVE ORDERS EXTEND THE AUTHORITY TO CERTAIN OTHER AGENCIES.

IT HAS BEEN STATED THAT IT WAS CLEAR FROM THE TERMS OF SECTION 201 OF THE FIRST WAR POWERS ACT THAT THE ONLY LAWS WHICH THE CONGRESS INTENDED TO EMPOWER THE PRESIDENT TO AUTHORIZE CERTAIN DEPARTMENTS AND AGENCIES TO DISREGARD IN THE EXERCISE OF FUNCTIONS IN CONNECTION WITH THE PROSECUTION OF THE WAR, OR AS NOW IS THE CASE, THE NATIONAL DEFENSE, WERE THOSE LAWS WHICH RELATED TO THE MAKING, PERFORMANCE, MODIFICATION, OR AMENDMENT OF CONTRACTS. SEE 21 COMP. GEN. 835. THE ACT HAS NOT BEEN UNDERSTOOD TO HAVE CONTEMPLATED, THROUGH THE DEVICE OF A CONTRACT, ANY DEPARTURE FROM THE STANDARDS SET BY LAW FOR THE COMPENSATION PAYABLE TO EMPLOYEES OF THE GOVERNMENT. SEE 23 COMP. GEN. 99, 101. NOR HAS THE ACT BEEN UNDERSTOOD TO AUTHORIZE ANY DEPARTURE FROM ANY LAWS NOT RELATING TO CONTRACT PROCUREMENT. FOR EXAMPLE, IT HAS BEEN HELD THAT THE ACT DOES NOT AUTHORIZE AN AGENCY TO DISREGARD LIMITATIONS UPON EXPENDITURES OF PUBLIC MONEYS. SEE 21 COMP. GEN. 273; ID. 35; COMPARE 21 ID. 1019; 22 ID. 862.

I AGREE WITH THE VIEW EXPRESSED IN YOUR LETTER TO THE EFFECT THAT SUCH LAWS AS THE CIVIL SERVICE LAWS, 5 U.S.C. 631-654, THE CLASSIFICATION ACT OF 1949, APPROVED OCTOBER 28, 1949, PUBLIC LAW 429, AS AMENDED, 5 U.S.C. 1071-1153, AND OTHER LAWS GENERALLY APPLICABLE TO FEDERAL EMPLOYEES, ARE NOT LAWS RELATING TO THE MAKING, PERFORMANCE, AMENDMENT OR MODIFICATION OF CONTRACTS WHICH MAY BE DISREGARDED SOLELY BY REASON OF SECTION 201 OF THE FIRST WAR POWERS ACT, AS AMENDED. SOME OF THE OTHER LAWS WHICH ARE APPLICABLE GENERALLY TO FEDERAL EMPLOYEES AND WHICH MAY NOT BE DISREGARDED ARE THE PROVISIONS OF 5 U.S.C. 71, PROHIBITING THE RECEIPT OF COMPENSATION IN EXCESS OF THE COMPENSATION AUTHORIZED BY LAW; SECTION 604 OF THE FEDERAL EMPLOYEES PAY ACT OF 1945, AS AMENDED, 5 U.S.C. 944, RELATING TO THE ESTABLISHMENT OF A BASIC WORK WEEK, PAY PERIODS, AND PAY COMPUTATION METHODS; SECTION 15 OF THE ACT OF AUGUST 2, 1946, PUBLIC LAW 600, 60 STAT. 810 (5 U.S.C. 55A), AND, IN THE CASE OF THE DEPARTMENT OF DEFENSE, SECTION 601 OF THE DEPARTMENT OF DEFENSE APPROPRIATION ACT, 1952, 65 STAT. 444, BOTH RELATING TO THE TEMPORARY EMPLOYMENT OF EXPERTS AND CONSULTANTS, AND THE PROVISIONS OF 18 U.S.C. 1914 (FORMERLY 5 U.S.C. 66), PROHIBITING A GOVERNMENT EMPLOYEE FROM RECEIVING ANY SALARY IN CONNECTION WITH HIS GOVERNMENT SERVICES FROM ANY SOURCE OTHER THAN THE GOVERNMENT OF THE UNITED STATES.

ACCORDINGLY, IT IS MY VIEW THAT NEITHER SECTION 201 OF THE FIRST WAR POWERS ACT, AS AMENDED, NOR THE EXECUTIVE ORDERS THEREUNDER, EMPOWER ANY AGENCY TO SECURE PERSONNEL FOR THE PERFORMANCE OF THE REGULAR DUTIES OF THE AGENCY WITHOUT REGARD TO THE STATUTORY MANDATES AND RESTRICTIONS APPLICABLE TO FEDERAL EMPLOYMENT GENERALLY.

IN THE CASE OF A CONTRACT DIRECTLY WITH AN INDIVIDUAL FOR THE PERFORMANCE OF PERSONAL SERVICES, SUCH AS REFERRED TO IN YOUR LETTER, IT DOES NOT APPEAR THAT SECTION 201 OF THE FIRST WAR POWERS ACT, AS AMENDED, AND THE APPLICABLE EXECUTIVE ORDER, EMPOWER AND AGENCY TO ENTER INTO SUCH A CONTRACT WITHOUT REGARD TO THE CLASSIFICATION LAWS AND THE CIVIL SERVICE LAWS AND REGULATIONS WHICH PROVIDE, IN EFFECT, THAT REGULAR FULL-TIME POSITIONS BE SET UP UNDER THE CLASSIFICATION ACT OF 1949, AND ALLOCATED TO THE APPROPRIATE SALARY GRADE, AND THAT THE APPOINTEES TO SUCH POSITIONS BE LIMITED TO THE SALARY RATES PROVIDED FOR THE GRADE IN WHICH THE POSITION IS ALLOCATED (30 COMP. GEN. 495, 497), OR IN LIEU THEREOF, WITHOUT REGARD TO SECTION 15 OF THE ACT OF AUGUST 2, 1946, 60 STAT. 810, RELATIVE TO THE TEMPORARY EMPLOYMENT OF EXPERTS AND CONSULTANTS. SEE 30 COMP. GEN. 375.

NEITHER WOULD SECTION 201 OF THE FIRST WAR POWERS ACT, AS AMENDED, AND THE APPLICABLE EXECUTIVE ORDER EMPOWER AN AGENCY TO HAVE A COST PLUS-A- FIXED-FEE CONTRACTOR PLACE A GOVERNMENT EMPLOYEE ON ITS PAY ROLL WITHOUT REGARD TO THE CLASSIFICATION OR CIVIL SERVICE LAWS. IN ADDITION, THE LATTER PRACTICE, IN SOME CASES, DOUBTLESS WOULD RESULT IN AN EMPLOYEE'S RECEIVING COMPENSATION IN EXCESS OF THAT AUTHORIZED BY LAW FOR HIS SERVICES AS A GOVERNMENT EMPLOYEE, CONTRARY TO 5 U.S.C. 71, AND, IN OTHER CASES, WOULD RESULT IN REIMBURSEMENT FROM A CONSTRUCTION APPROPRIATION, OR SOME OTHER APPROPRIATION, NOT AVAILABLE FOR THE PAYMENT OF THE SALARY OF A GOVERNMENT EMPLOYEE, WHICH WOULD BE CONTRARY TO THE PROVISIONS OF SECTION 3678, REVISED STATUTES, 31 U.S.C. 628, REQUIRING APPROPRIATIONS TO BE EXPENDED SOLELY FOR THE OBJECTS FOR WHICH THEY ARE MADE. ALSO, SUCH PRACTICE WOULD APPEAR TO BE CONTRARY TO THE POLICY ESTABLISHED BY THE PROVISIONS OF 18 U.S.C. 1914 AGAINST A GOVERNMENT EMPLOYEE RECEIVING COMPENSATION FOR HIS SERVICES FROM ANY SOURCE OTHER THAN THE GOVERNMENT. COMPARE INTERNATIONAL RAILWAY COMPANY V. DAVIDSON, 257 U.S. 506, 515, 43 AM. JUR., PUBLIC OFFICERS, 365; ID. 389; 2 COMP. GEN. 775; 3 ID. 128; 18 2D. 460.

IN LIGHT OF THE FOREGOING, I AM REQUIRED TO ANSWER YOUR QUESTION IN THE NEGATIVE.

A COPY OF THIS DECISION IS BEING FORWARDED TO THE SECRETARY OF THE NAVY.