B-170079, SEP. 15, 1970

B-170079, SEP. 15, 1970

CONTRACTS -- COMMERCIAL V IN-HOUSE OPERATIONS A PROCUREMENT OF A COLOR MOTION PICTURE FILM DEVELOPING MACHINE WHICH WAS DETERMINED TO BE NEEDED BECAUSE THE DEPARTMENT COULD NOT RELY ON THE CAPABILITY OF PRIVATE ENTERPRISE IS NOT IN VIOLATION OF BOB CIR. A 76, ESTABLISHING POLICY REGARDING USE OF PRIVATE ENTERPRISE IN LIEU OF GOVERNMENT FACILITIES. MATTER OF WHETHER AN AGENCY MAY PERFORM "IN HOUSE" RATHER THAN CONTRACT WITH COMMERCIAL COMPANIES IS MATTER FOR OFFICE OF MANAGEMENT AND BUDGET, AND DEPARTMENT.

TO THE ASSOCIATION OF CINEMA LABORATORIES, INC.:

REFERENCE IS MADE TO YOUR LETTERS OF JUNE 11 AND AUGUST 21, 1970, PROTESTING AGAINST THE PROCUREMENT OF A "16 MILLIMETER COMBINATION REVERSAL COLOR MOTION PICTURE FILM DEVELOPING MACHINE" BY THE DEPARTMENT OF AGRICULTURE UNDER INVITATION FOR BIDS NO. INF-23-B-70. ON JUNE 15, 1970, CONTRACT NO. 12-02-06-5-165 WAS AWARDED TO THE FILMLINE CORPORATION OF MILFORD, CONNECTICUT, AS THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER UNDER THE INVITATION.

YOU STATE IN YOUR AUGUST 21 LETTER THAT "THIS PURCHASE IS CLEARLY UNWARRANTED, WASTEFUL OF PUBLIC FUNDS, AND VIOLATIVE OF GOVERNMENT POLICY AS OUTLINED IN BUREAU OF THE BUDGET CIRCULAR A-76."

IN OUR DECISION REPORTED AT 42 COMP. GEN. 640 (1963), WE CONSIDERED A SIMILAR CONTENTION WHICH WAS BASED UPON THE PROVISIONS OF BUREAU OF THE BUDGET (BOB) BULLETIN NO. 60-2, THE PREDECESSOR OF BOB CIRCULAR A-76. HELD AT PAGE 642:

" *** THE PROPRIETY OF A DETERMINATION BY AN EXECUTIVE AGENCY AS TO WHETHER SERVICES OR PRODUCTS SHOULD BE OBTAINED UNDER CONTRACT WITH PRIVATE ENTERPRISE OR THROUGH THE USE OF GOVERNMENT-OWNED FACILITIES IS NOT A MATTER PERMITTING OF A RULING IN TERMS OF LEGAL RIGHTS AND RESPONSIBILITIES. *** "

WE ARE ENCLOSING HEREWITH A COPY OF OUR DECISION B-161862, SEPTEMBER 14, 1967, CONCERNING WHICH YOUR PARTICULAR ATTENTION IS INVITED TO PAGES 9 THROUGH 14. IT IS TO BE OBSERVED, AS IS STATED ON PAGE 14 OF THAT DECISION, THAT:

"THE QUESTION OF WHETHER A DEPARTMENT OR ESTABLISHMENT OF THE EXECUTIVE BRANCH OF THE GOVERNMENT MAY PROPERLY PERFORM 'IN HOUSE' THE TYPE OF OPERATIONS HERE CONCERNED, OR SHOULD CONTRACT WITH COMMERCIAL COMPANIES FOR SUCH SERVICES, IS NOT COVERED BY ANY SPECIFIC STATUTE OF WHICH WE ARE AWARE, OR REGULATION OR INSTRUCTION ISSUED PURSUANT THERETO, WHICH WOULD PLACE THE RESOLUTION OF SUCH QUESTIONS WITHIN THE DECISION FUNCTIONS OF THE GENERAL ACCOUNTING OFFICE. THE DIRECTIVES INCORPORATED IN BUREAU OF THE BUDGET CIRCULAR NO. A-76, ARE MATTERS OF EXECUTIVE POLICY *** "

THE RECORD SHOWS THAT THE OFFICE OF MANAGEMENT AND BUDGET HAS MADE INQUIRY INTO THIS MATTER, AND THAT A RESPONSE TO YOUR INQUIRY WAS MADE BY THE DIRECTOR OF THE GENERAL GOVERNMENT MANAGEMENT DIVISION ON JULY 16, 1970. YOU RESPONDED TO THE OFFICE OF MANAGEMENT AND BUDGET BY LETTER DATED AUGUST 20, 1970, INDICATING THAT YOU ARE STILL OF THE OPINION THAT THE PURCHASE IS NOT IN CONFORMANCE WITH THE POLICY STATED IN CIRCULAR A- 76. IT APPEARS THAT YOU INTEND TO PURSUE THIS MATTER FURTHER WITH OFFICIALS OF THE OFFICE OF MANAGEMENT AND BUDGET. IN VIEW OF OUR PREVIOUSLY EXPRESSED CONCLUSION THAT THE PROVISIONS OF CIRCULAR A-76 ARE MATTERS OF POLICY RATHER THAN OF LEGAL RIGHTS AND OBLIGATIONS, IT WOULD SEEM THAT YOUR PROPOSED COURSE OF ACTION IS APPROPRIATE.

FINALLY, THE DEPARTMENT OF AGRICULTURE HAS DETERMINED THAT IT IS NOT POSSIBLE TO RELY UPON THE CAPABILITIES OF PRIVATE ENTERPRISE TO SATISFY GOVERNMENTAL NEEDS, AND THAT IT WAS JUSTIFIED IN MAKING THIS PURCHASE UNDER PARAGRAPH 5(C) OF CIRCULAR A-76. THIS PARAGRAPH STATES THAT THE GOVERNMENT MAY PROVIDE A COMMERCIAL OR INDUSTRIAL PRODUCT OR SERVICE FOR ITS OWN USE WHEN "A SATISFACTORY COMMERCIAL SOURCE IS NOT AVAILABLE AND CANNOT BE DEVELOPED IN TIME TO PROVIDE A PRODUCT OR SERVICE WHEN IT IS NEEDED." YOUR CONTENTION IS THAT PRIVATE ENTERPRISE DOES INDEED POSSESS THE CAPABILITY TO FULFILL THE FILM PROCESSING REQUIREMENTS OF THE DEPARTMENT OF AGRICULTURE. AS WAS STATED IN B-168603, FEBRUARY 13, 1970:

" *** WE HAVE CONSISTENTLY HELD THAT THE DETERMINATION OF THE GOVERNMENT'S NEEDS AND THE DRAFTING OF SPECIFICATIONS TO MEET THOSE NEEDS ARE PRIMARILY FUNCTIONS OF THE CONTRACTING AGENCY, WHICH SHOULD NOT BE DISTURBED BY OUR OFFICE IN THE ABSENCE OF CLEAR AND CONVINCING EVIDENCE OF ERROR. *** " THERE IS NO SUCH EVIDENCE OF ERROR PRESENTED BY THE RECORD AVAILABLE TO OUR OFFICE.

FOR THESE REASONS, WE ARE UNABLE TO PERCEIVE ANY LEGAL OBJECTION TO THE CONTRACT AWARDED BY THE DEPARTMENT OF AGRICULTURE.