B-145878, SEP. 1, 1961

B-145878: Sep 1, 1961

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

SMITHSONIAN INSTITUTION: REFERENCE IS MADE TO YOUR LETTER OF MAY 15. THAT THE PRIMARY INTEREST OF THE GOVERNMENT IS TO SECURE A TROUBLE-FREE OPERATION SERVING GOOD FOOD AT REASONABLE PRICES. THAT IT IS NOT CONSIDERED THAT THE PURPOSES AND INTERESTS TO BE SERVED REQUIRE THAT THE FINANCIAL RETURN TO THE GOVERNMENT. WHICH OPERATES CAFETERIAS IN MANY OF THE GOVERNMENT BUILDINGS IN THE DISTRICT OF COLUMBIA AND WHICH IS ONE OF THE POSSIBLE SUPPLIERS WITH WHICH YOU WOULD LIKE TO NEGOTIATE. WILL NOT AS A MATTER OF POLICY ENTER INTO COMPETITIVE BIDDING FOR OPERATING SUCH SERVICES. THIS POSITION WAS BASED UPON THE BUDGETARY PRINCIPLE THAT AS GREAT CARE SHOULD BE TAKEN IN SECURING FOR THE GOVERNMENT THE MAXIMUM IN RECEIPTS AS IN KEEPING EXPENDITURES TO A MINIMUM.

B-145878, SEP. 1, 1961

TO HONORABLE LEONARD CARMICHAEL, SECRETARY, SMITHSONIAN INSTITUTION:

REFERENCE IS MADE TO YOUR LETTER OF MAY 15, 1961, REQUESTING ADVICE AS TO THE PROPRIETY OF YOUR PROPOSED NEGOTIATION OF CONTRACTUAL ARRANGEMENTS FOR THE OPERATION OF CAFETERIA SERVICES IN THE MUSEUM OF HISTORY AND TECHNOLOGY, NOW UNDER CONSTRUCTION, FOR THE PROVISION OF ADEQUATE AND WHOLESOME FOOD AT REASONABLE PRICES FOR THE VISITING PUBLIC AND MEMBERS OF YOUR STAFF.

IN JUSTIFICATION OF THE PROPOSAL TO NEGOTIATE, YOU POINT OUT THAT THE PROTECTION OF THE VISITING PUBLIC REQUIRES ADHERENCE TO THE HIGHEST STANDARDS OF SANITATION AND SKILLED OPERATION, WHICH IN TURN REQUIRES THAT THE CONCESSIONAIRE BE EXPERIENCED, OF PROVEN CAPABILITY, AND DEDICATED TO HIGH IDEALS OF SERVICE WITH ONLY A FAIR MARGIN OF PROFIT; THAT THE PRIMARY INTEREST OF THE GOVERNMENT IS TO SECURE A TROUBLE-FREE OPERATION SERVING GOOD FOOD AT REASONABLE PRICES; AND THAT IT IS NOT CONSIDERED THAT THE PURPOSES AND INTERESTS TO BE SERVED REQUIRE THAT THE FINANCIAL RETURN TO THE GOVERNMENT, OVER AND ABOVE THE COST OF PROVIDING SPACE AND UTILITIES, BE REGARDED AS A MAJOR FACTOR IN THE AWARD OF THE CONCESSION.

YOU INDICATE THE VIEW THAT THESE CONSIDERATIONS MAKE IT IMPRACTICABLE TO DRAFT DEFINITE SPECIFICATIONS AND STANDARDS OF EVALUATION WHICH COULD BE USED AS THE BASIS FOR COMPETITIVE BIDDING FOR THE CONCESSION. YOU ALSO POINT OUT THAT GOVERNMENT SERVICES, INC., WHICH OPERATES CAFETERIAS IN MANY OF THE GOVERNMENT BUILDINGS IN THE DISTRICT OF COLUMBIA AND WHICH IS ONE OF THE POSSIBLE SUPPLIERS WITH WHICH YOU WOULD LIKE TO NEGOTIATE, WILL NOT AS A MATTER OF POLICY ENTER INTO COMPETITIVE BIDDING FOR OPERATING SUCH SERVICES. FOR THESE REASONS YOU STATE THE BELIEF THAT YOUR CONTEMPLATED CONCESSION SHOULD BE EXEMPT FROM ADVERTISING AND COMPETITIVE BIDDING REQUIREMENTS, AND THAT THE BEST RESULTS COULD BE OBTAINED BY NEGOTIATING WITH A SELECTED GROUP OF PROSPECTIVE CONCESSIONAIRES AND ENTERING INTO A CONTRACT WITH THE ONE DETERMINED TO BE BEST QUALIFIED AS TO EXPERIENCE, CAPABILITY AND PROVEN PUBLIC SERVICE.

FOR MANY YEARS THIS OFFICE HAS ADHERED TO THE VIEW THAT THE OPERATION OF A CONCESSION UTILIZING GOVERNMENT-OWNED FACILITIES CONSTITUTES A VALUABLE PRIVILEGE FOR WHICH THE GOVERNMENT SHOULD BE COMPENSATED, AND THAT CONTRACTUAL OR OTHER ARRANGEMENTS RELATING TO THE ESTABLISHMENT AND OPERATION OF SUCH ACTIVITIES SHOULD BE SUBJECT TO STATUTORY PROVISIONS GOVERNING THE AWARD OF PUBLIC CONTRACTS. SEE 7 COMP. GEN. 806; 19 ID. 887. THIS POSITION WAS BASED UPON THE BUDGETARY PRINCIPLE THAT AS GREAT CARE SHOULD BE TAKEN IN SECURING FOR THE GOVERNMENT THE MAXIMUM IN RECEIPTS AS IN KEEPING EXPENDITURES TO A MINIMUM, AND THE CONCLUSION THEREFROM THAT THE ADVERTISING REQUIREMENTS OF SECTION 3709 OF THE REVISED STATUTES SHOULD BE OBSERVED AS WELL WHERE THE GOVERNMENT WAS SELLER AS WHERE IT WAS BUYER. A-19335, NOVEMBER 15, 1927. BY THE ACT OF AUGUST 2, 1946, 60 STAT. 809, THAT SECTION (41 U.S.C. 5) WAS AMENDED TO PROVIDE SPECIFICALLY THAT ,SALES AND CONTRACTS OF SALE" SHOULD BE GOVERNED BY ITS PROVISIONS.

HOWEVER, THERE IS FOR CONSIDERATION IN THIS INSTANCE THE UNIQUE NATURE OF THE SMITHSONIAN INSTITUTION AND OF THE PROPERTY APPROPRIATED FOR ITS USES AND PURPOSES. THE INSTITUTION WAS CREATED BY THE ACT OF AUGUST 10, 1846 (9 STAT. 102) TO ADMINISTER THE CHARITABLE TRUST CREATED BY THE WILL OF JOHN SMITHSON, WHO BEQUEATHED THE BULK OF HIS ESTATE "TO THE UNITED STATES OF AMERICA, TO FOUND AT WASHINGTON, UNDER THE NAME OF THE SMITHSONIAN INSTITUTION, AN ESTABLISHMENT FOR THE INCREASE AND DIFFUSION OF KNOWLEDGE AMONG MEN.' BY THAT ACT, THE PRESIDENT AND VICE-PRESIDENT, THE HEADS OF THE EXECUTIVE DEPARTMENTS, THE CHIEF JUSTICE, THE COMMISSIONER OF THE PATENT OFFICE, AND THE MAYOR OF THE CITY OF WASHINGTON, DURING THEIR TERMS OF OFFICE, WITH SUCH OTHER PERSONS AS THEY MIGHT ELECT AS HONORARY MEMBERS, WERE CONSTITUTED AN "ESTABLISHMENT," TO HAVE PERPETUAL SUCCESSION,"WITH THE POWERS, LIMITATIONS, AND RESTRICTIONS, HEREINAFTER CONTAINED, AND NO OTHER.' CONDUCT OF THE BUSINESS OF THE INSTITUTION WAS VESTED IN A BOARD OF REGENTS, COMPOSED OF THE VICE-PRESIDENT, THE CHIEF JUSTICE, THE MAYOR OF WASHINGTON, THREE MEMBERS OF EACH HOUSE OF THE CONGRESS, AND SIX OTHER PERSONS TO BE CHOSEN BY JOINT RESOLUTION OF CONGRESS. THE PRINCIPAL OF THE SMITHSON BEQUEST (WHICH HAD BEEN PAID INTO THE TREASURY IN 1838) WAS REQUIRED TO BE LENT TO THE UNITED STATES TREASURY AT SIX PERCENT INTEREST, WHICH WAS APPROPRIATED TO THE PERPETUAL MAINTENANCE AND SUPPORT OF THE INSTITUTION. A TRACT OF PUBLICLY OWNED LAND WAS APPROPRIATED TO THE INSTITUTION, AND CONSTRUCTION OF A SUITABLE BUILDING THEREON FOR A MUSEUM, LABORATORY, LIBRARY, ART GALLERY, AND LECTURE ROOMS WAS AUTHORIZED, AUTHORITY BEING VESTED IN THE REGENTS TO CONTRACT FOR THE BUILDING UPON SUCH PLAN AS THEY MIGHT DIRECT, TAKING SUFFICIENT SECURITY FOR THE PERFORMANCE OF THE CONTRACT. PAYMENT OF THE DEBTS OR UPON CONTRACTS INCURRED OR ENTERED INTO IN CONFORMITY WITH THE ACT WAS AUTHORIZED TO BE MADE UPON CERTIFICATION OF THE CHANCELLOR AND SECRETARY. A REPORT OF THE OPERATIONS, EXPENDITURES, AND CONDITION OF THE INSTITUTION WAS REQUIRED TO BE MADE TO CONGRESS AT EACH SESSION.

FROM TIME TO TIME THE FUNCTIONS OF THE SMITHSONIAN HAVE BEEN INCREASED BY LAWS PLACING UNDER ITS CONTROL ADDITIONAL ESTABLISHMENTS OR AUTHORIZING IT TO EXTEND ITS ACTIVITIES INTO ADDITIONAL FIELDS, BUT ITS ORGANIZATION AND POWERS WITH RESPECT TO THE SUBJECT MATTER OF ITS CREATION HAVE REMAINED SUBSTANTIALLY UNCHANGED. (SEE 20 U.S.C. 41 57).

BY THE ACT OF JUNE 28, 1955, 69 STAT. 189, THE CONGRESS AUTHORIZED THE CONSTRUCTION OF "A SUITABLE BUILDING FOR A MUSEUM OF HISTORY AND TECHNOLOGY * * * FOR THE USE OF THE SMITHSONIAN INSTITUTION," AT A COST NOT TO EXCEED $36,000,000. WHILE THE COST OF THIS BUILDING IS COVERED ENTIRELY BY APPROPRIATIONS FROM THE GENERAL TREASURY, WE FIND NOTHING IN THE ACT TO INDICATE ANY INTENTION THAT THE BUILDING WHEN COMPLETE SHALL NOT BE AS MUCH THE PROPERTY OF THE INSTITUTION, AND SUBJECT TO ITS CONTROL TO THE SAME EXTENT, AS THE BUILDINGS ORIGINALLY CONSTRUCTED FROM FUNDS OF THE SMITHSON TRUST. IN EFFECT, THE BUILDING IS APPROPRIATED TO THE INSTITUTION AND DEDICATED TO THE TRUST PURPOSES, WITHOUT QUALIFICATION OR RESTRICTION. CF. 20 COMP. GEN. 581; 16 COMP. GEN. 887. IN THE ABSENCE OF ANY LIMITATIONS IN THE AUTHORIZING ACT UPON THE POWERS AND AUTHORITY OF THE REGENTS WITH RESPECT TO THE COMPLETED BUILDING, WE CONCLUDE THAT THE REGENTS HAVE PLENARY AUTHORITY TO ENTER INTO WHATEVER LEASES OR CONCESSION AGREEMENTS THEY MAY DEEM PROPER FOR THE ACCOMMODATION OF THE PUBLIC FOR WHOSE BENEFIT THE MUSEUM IS PROVIDED, AND ARE NOT IN THAT RESPECT SUBJECT TO ANY LAWS REQUIRING ADVERTISING OF GOVERNMENT CONTRACTS.