B-178956, B-179672, JAN 31, 1974, 53 COMP GEN 522

B-178956,B-179672: Jan 31, 1974

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THE GAO POLICY IS NOT TO ISSUE A DECISION ON THE MERITS OF A PROTEST WHERE THE ISSUES INVOLVED ARE LIKELY TO BE DISPOSED OF IN LITIGATION BEFORE A COURT OF COMPETENT JURISDICTION. THE PROTEST IS NONETHELESS FOR CONSIDERATION ON THE MERITS BECAUSE THE COURT SEEKS GAO'S EXPERTISE PRIOR TO FURTHER LITIGATION DEVELOPMENTS. WHICH ARE THE SUBJECT OF A SEPARATE SUIT IN THE SAME COURT. ARE ALSO FOR CONSIDERATION ON THE MERITS. SOURCE DATA CONVERSION THAT HAVE AS THEIR PRINCIPAL PURPOSE PROVIDING SERVICES ARE NOT EXCLUDED FROM THE COVERAGE OF THE SERVICE CONTRACT ACT AS PROCUREMENTS OF SUPPLIES. THE APPLICABILITY OF THE ACT IS DOUBTFUL FOR A DIFFERENT REASON. THAT IS THE WORKERS COVERED BY WAGE DETERMINATIONS ARE CLERICAL EMPLOYEES.

B-178956, B-179672, JAN 31, 1974, 53 COMP GEN 522

CONTRACTS - PROTESTS - ABEYANCE PENDING COURT ACTION - CONSIDERATION NONETHELESS BY GENERAL ACCOUNTING OFFICE WHERE A PROTESTER FILED A COMPLAINT WITH THE UNITED STATES DISTRICT COURT, DISTRICT OF DELAWARE, GROUNDED ON THE SAME CONTENTIONS RAISED IN THE PROTEST, AND SOUGHT INTER ALIA A PRELIMINARY INJUNCTION, WHILE THE COURT'S ORDER DENYING THE INJUNCTION DID NOT SPECIFICALLY MENTION THE GENERAL ACCOUNTING OFFICE (GAO), AND THE GAO POLICY IS NOT TO ISSUE A DECISION ON THE MERITS OF A PROTEST WHERE THE ISSUES INVOLVED ARE LIKELY TO BE DISPOSED OF IN LITIGATION BEFORE A COURT OF COMPETENT JURISDICTION, THE PROTEST IS NONETHELESS FOR CONSIDERATION ON THE MERITS BECAUSE THE COURT SEEKS GAO'S EXPERTISE PRIOR TO FURTHER LITIGATION DEVELOPMENTS. SIMILAR ISSUES IN A SECOND PROTEST, WHICH ARE THE SUBJECT OF A SEPARATE SUIT IN THE SAME COURT, ARE ALSO FOR CONSIDERATION ON THE MERITS. CONTRACTS - LABOR STIPULATIONS - SERVICE CONTRACT ACT OF 1965 - APPLICABILITY OF ACT - KEYPUNCH OPERATORS, ETC SOLICITATIONS FOR KEYPUNCHING, VERIFYING SERVICES, DOCUMENT SORTING, AND SOURCE DATA CONVERSION THAT HAVE AS THEIR PRINCIPAL PURPOSE PROVIDING SERVICES ARE NOT EXCLUDED FROM THE COVERAGE OF THE SERVICE CONTRACT ACT AS PROCUREMENTS OF SUPPLIES, BUT THE APPLICABILITY OF THE ACT IS DOUBTFUL FOR A DIFFERENT REASON, THAT IS THE WORKERS COVERED BY WAGE DETERMINATIONS ARE CLERICAL EMPLOYEES, AND ACCORDING TO THE HOLDING IN 53 COMP. GEN. 370 THE ACT AND ITS LEGISLATIVE HISTORY INDICATE THE "SERVICE EMPLOYEE" CONCEPT COVERS ONLY "BLUE COLLAR" WORKERS. HOWEVER, SINCE THE ACT DOES NOT SPECIFICALLY PROHIBIT THE CLASSIFICATION OF CLERICAL WORKERS AS SERVICE EMPLOYEES, THE PRESENT PROTEST ALSO IS DENIED. CONTRACTS - LABOR STIPULATIONS - SERVICE CONTRACT ACT OF 1965 - MINIMUM WAGE, ETC., DETERMINATIONS - LOCALITY BASIS FOR DETERMINATION A BIDDER THAT IS NOT LOCATED IN GOVERNMENT FACILITIES AREAS FOR WHICH A SERVICE CONTRACT ACT WAGE DETERMINATION HAS BEEN PROVIDED IS NEVERTHELESS BOUND BY THE DETERMINATION, SINCE THE SOLICITATION TERMS INDICATE THAT WAGE OBLIGATIONS ARE FIXED BY WHATEVER DETERMINATION IS ATTACHED TO THE SOLICITATION, AND AN EXEMPTION FOR AN "OUTSIDE" BIDDER IS LACKING, AND ALTHOUGH THE DEPARTMENT OF LABOR'S VIEW THAT "LOCALITY" MEANS THE LOCALITY OF A GOVERNMENT INSTALLATION IN A PROCUREMENT OF THIS TYPE WAS CRITICIZED IN 53 COMP. GEN. 370, THIS VIEW REMAINS THE SETTLED INTERPRETATION OF THE ISSUE AT PRESENT. BIDDERS - QUALIFICATIONS - GEOGRAPHICAL LOCATION REQUIREMENT THE CONTENTION THAT THE CONTRACTING AGENCY'S NEEDS DO NOT JUSTIFY THE SCOPE OF THE 75-MILE GEOGRAPHICAL RESTRICTION IN THE INVITATION FOR BIDS AND THE ALLEGATIONS THAT PROTESTER'S PAST EXPERIENCE SHOWS IT CAN MEET THE REQUIREMENTS OF THE SPECIFICATIONS DO NOT FURNISH THE BASIS TO CONCLUDE THE USE OF THE LIMITATION WAS AN ABUSE OF DISCRETION, SINCE STATING THE RESTRICTION IN TERMS OF A MILEAGE RADIUS RATHER THAN HIGHWAY MILES REPRESENTS A REASONABLE APPROACH, AND THE FACT THAT THE PROTESTER MIGHT BE ABLE TO MEET THE REQUIREMENTS DOES NOT PER SC RENDER THE RESTRICTION UNREASONABLE, AS DETERMINING WHETHER CERTAIN NEEDS JUSTIFY A PARTICULAR RESTRICTION IS A MATTER OF AGENCY JUDGMENT, AND ADEQUATE COMPETITION WAS APPARENTLY GENERATED.

IN THE MATTER OF DESCOMP, INC., JANUARY 31, 1974:

ON JUNE 8, 1973, THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD) ISSUED INVITATION FOR BIDS (IFB) H-2-74, WHICH SOLICITED BIDS ON TWO SEPARATE REQUIREMENTS, EACH INVOLVING AN INDEFINITE QUANTITY OF KEYPUNCHING AND VERIFYING SERVICES FOR BOTH CARDS AND MAGNETIC TAPES. AUGUST 31, 1973, THE UNITED STATES CIVIL SERVICE COMMISSION (CSC) ISSUED SOLICITATION CS-IFB-04-74, WHICH SOLICITED BIDS FOR DATA CONVERSION SERVICES OF CENTRAL PERSONNEL DATA FILE MATERIAL (APPROXIMATELY 3.3 MILLION DOCUMENTS) TO EITHER PUNCHED CARDS OR MAGNETIC TAPE AT THE BIDDER'S OPTION. BOTH IFB'S CONTAINED SERVICE CONTRACT ACT PROVISIONS AND ATTACHED WAGE DETERMINATIONS, DISCUSSED INFRA.

BY LETTER OF JUNE 20, 1973, DESCOMP PROTESTED AGAINST CERTAIN TERMS OF THE HUD SOLICITATION AND BY LETTER OF SEPTEMBER 13, 1973, COUNSEL FOR DESCOMP PROTESTED AGAINST CERTAIN TERMS OF THE CSC SOLICITATION. THE ISSUES RAISED IN THE PROTESTS ARE SIMILAR AND INVOLVE, INTER ALIA, THE SERVICE CONTRACT ACT OF 1965, 41 U.S.C. 351 NOTE. ESSENTIALLY, DESCOMP HAS CONTENDED THAT BECAUSE THE SOLICITATIONS CALL FOR SUPPLIES, NOT SERVICES, THE ACT IS INAPPLICABLE, AND THAT EVEN IF IT IS APPLICABLE, THE ATTACHED WAGE DETERMINATIONS COVERING LOCALITIES IN THE WASHINGTON, D.C., AREA ARE INAPPLICABLE TO DESCOMP, WHICH IS LOCATED IN BEAR, DELAWARE. ADDITION, THE PROTESTOR HAS OBJECTED TO A PROVISION IN THE CSC SOLICITATION WHICH STATES THAT BIDS WILL BE CONSIDERED ONLY FROM CONCERNS WHOSE WORK FACILITIES ARE LOCATED WITHIN 75 MILES OF THE UNITED STATES CAPITOL BUILDING.

BIDS ON THE HUD SOLICITATION WERE OPENED JUNE 25, 1973, AND THE AGENCY PROCEEDED TO AWARD CONTRACTS TO THE LOW BIDDERS ON EACH OF THE TWO SPECIFIED REQUIREMENTS ON JUNE 29, 1973. BIDS ON THE CSC SOLICITATION WERE OPENED SEPTEMBER 14, 1973. IN A LETTER TO THIS OFFICE DATED OCTOBER 16, 1973, THE DIRECTOR OF BUREAU OF MANAGEMENT SERVICES ADVISED THAT CSC INTENDED TO PROCEED TO MAKE AN AWARD TO THE LOW RESPONSIVE BIDDER, MILMARK SERVICES, INC., BY NOVEMBER 1, 1973.

ON OR ABOUT OCTOBER 26, 1973, THE PROTESTOR FILED CIVIL ACTION NO. 4751 (DESCOMP, INC., A DELAWARE CORPORATION, V. ROBERT HAMPTON, CHAIRMAN OF U.S. CIVIL SERVICE COMMISSION) IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE. THE COMPLAINT WAS GROUNDED UPON THE SAME OBJECTIONS TO THE IFB MADE IN THE PROTEST AND PLAINTIFF REQUESTED THAT THE COURT ISSUE A TEMPORARY RESTRAINING ORDER RESTRAINING DEFENDANT FROM AWARDING THE CONTRACT; THAT THE COURT RENDER A DECLARATORY JUDGMENT STATING THAT THE SERVICE CONTRACT ACT IS INAPPLICABLE OR, ALTERNATIVELY, THAT THE WAGE RATE TO BE PAID IS THAT OF THE WILMINGTON, DELAWARE, AREA; AND THAT DEFENDANT BE PRELIMINARILY AND PERMANENTLY ENJOINED FROM IMPOSING THE REQUIREMENT OF THE SERVICE CONTRACT ACT ON PLAINTIFF OR, ALTERNATIVELY, ENJOINED FROM IMPOSING ON PLAINTIFF THE WASHINGTON, D.C., WAGE RATE SCHEDULE.

WE HAVE BEEN ADVISED THAT A MOTION FOR A TEMPORARY RESTRAINING ORDER WAS DENIED OCTOBER 31, 1973. ALSO, THE COURT, ON NOVEMBER 13, 1973, ISSUED AN ORDER DENYING THE MOTION FOR A PRELIMINARY INJUNCTION, CONCLUDING THAT PLAINTIFF HAD FAILED TO ESTABLISH A CAUSE OF ACTION UPON WHICH IT HAD A LIKELIHOOD OF SUCCESS. THE ORDER STATED THAT THE COURT WAS CONVINCED THAT THE CONTRACT IS ESSENTIALLY ONE FOR PERFORMING SERVICES; THAT THE COURT BELIEVED THAT THE WAGES WHICH WOULD BE APPLICABLE WOULD BE THOSE WHICH PREVAIL OR ARE MINIMUM WAGES AT THE LOCATION WHERE THE WORK IS BEING PERFORMED; AND THAT DEFENDANTS POSSESSED THE AUTHORITY TO ESTABLISH THE 75 -MILE GEOGRAPHIC LIMITATION AND THE LIMITATION WAS NOT WITHOUT A RATIONAL BASIS. WHILE THE ORDER DID NOT SPECIFICALLY MENTION OUR OFFICE, AND WHILE IT IS OUR POLICY NOT TO ISSUE A DECISION ON THE MERITS OF A PROTEST WHERE THE MATERIAL ISSUES INVOLVED ARE LIKELY TO BE DISPOSED OF IN LITIGATION BEFORE A COURT OF COMPETENT JURISDICTION, WE HAVE RECEIVED A LETTER DATED NOVEMBER 28, 1973, FROM THE CHIEF JUDGE OF THE COURT, STATING THAT THE COURT WOULD APPRECIATE THE EXERCISE OF GAO'S EXPERTISE IN THIS MATTER PRIOR TO ANY FURTHER DEVELOPMENTS IN THE LITIGATION. ACCORDINGLY, WE WILL CONSIDER THIS PROTEST ON THE MERITS AT THIS TIME.

ALSO, WE HAVE BEEN INFORMALLY ADVISED THAT ON DECEMBER 3, 1973, THE PROTESTOR FILED SUIT AGAINST THE HONORABLE JAMES LYNN, SECRETARY OF HUD, IN THE UNITED STATES DISTRICT COURT, DELAWARE. PLAINTIFF SOUGHT DECLARATORY RELIEF, ALLEGING THAT DEFENDANT ABUSED HIS DISCRETION IN REQUIRING PLAINTIFF TO BID ON IFB H-2-74 BASED UPON THE WASHINGTON, D.C., WAGE RATES IN THE SOLICITATION RATHER THAN UPON PREVAILING WAGES IN WILMINGTON, DELAWARE, OR UPON THE FAIR LABOR STANDARDS ACT (29 U.S.C. 201) MINIMUM WAGE. THIS ISSUE IS ALSO RAISED IN DESCOMP'S PROTEST AGAINST THE HUD SOLICITATION. WHILE THE COURT HAS NOT REQUESTED OUR DECISION ON THIS MATTER, SINCE THE ISSUES INVOLVED HERE ARE SIMILAR TO THOSE IN THE CSC PROCUREMENT, WE WILL ALSO CONSIDER THE PROTEST AGAINST THE HUD SOLICITATION ON THE MERITS AT THIS TIME.

FOR THE REASONS WHICH FOLLOW, THE PROTESTS ARE DENIED.

THE INITIAL CONTENTION IS THAT THE SERVICE CONTRACT ACT OF 1965, 41 U.S. CODE, 351, ET SEQ., IS NOT APPLICABLE TO THESE PROCUREMENTS BECAUSE THE SOLICITATIONS DO NOT INVOLVE THE AWARDS OF CONTRACTS FOR SERVICES. THE ACT PROVIDES GENERALLY THAT EVERY CONTRACT (AND ANY BID SPECIFICATION THEREFOR) ENTERED INTO BY THE UNITED STATES OR THE DISTRICT OF COLUMBIA IN EXCESS OF $2,500, WITH CERTAIN EXCEPTIONS, THE PRINCIPAL PURPOSE OF WHICH IS TO FURNISH SERVICES IN THE UNITED STATES THROUGH THE USE OF SERVICE EMPLOYEES, SHALL CONTAIN A PROVISION SPECIFYING THE MINIMUM MONETARY WAGES AND FRINGE BENEFITS TO BE PAID THE VARIOUS CLASSES OF SERVICE EMPLOYEES IN THE PERFORMANCE OF THE CONTRACT AS DETERMINED BY THE SECRETARY OF LABOR IN ACCORDANCE WITH THE PREVAILING RATES FOR SUCH EMPLOYEES IN THE LOCALITY.

DESCOMP BELIEVES THAT THE CURRENT CONTRACTS ARE FOR SUPPLIES - THE PRODUCTION OF PUNCHED CARDS. THE PROTESTOR CITES SEVERAL OF THE DEPARTMENT OF LABOR'S RULES RELATING TO THE ADMINISTRATION OF THE ACT IN THIS REGARD, INCLUDING 29 CFR 4.134(C), WHICH STATES THAT CONTRACTS FOR PRINTING, REPRODUCTION OR DUPLICATING ORDINARILY INVOLVE THE FURNISHING OF MATERIALS, NOT SERVICES.

FROM EXAMINATION OF THE SOLICITATION TERMS STATING THE WORK TO BE PERFORMED, AND FROM THE NATURE OF THE WORK AS INDICATED BY CONSIDERATION OF EACH SOLICITATION AS A WHOLE, WE THINK IT IS CLEAR BEYOND DOUBT THAT THE PRINCIPAL PURPOSE OF THE CONTRACTS AWARDED UNDER THE SOLICITATION IS TO PROVIDE SERVICES. PAGE 1 OF THE HUD SOLICITATION, THE STANDARD FORM 33, STATES THAT THE SOLICITATION IS FOR KEYPUNCHING AND VERIFYING SERVICES, PICKUP AND DELIVERY SERVICES AND SUPPLIES INCIDENTAL TO THE PERFORMANCE OF THESE SERVICES. IN ADDITION, SECTION IV OF THE IFB STATES THAT THE GOVERNMENT WILL FURNISH TO THE CONTRACTOR THE MAGNETIC TAPE. THE CSC SOLICITATION AT PAGE 5 STATES THAT BIDS ARE SOLICITED FOR "DOCUMENT SORTING" AND "SOURCE DATE CONVERSION" OF DOCUMENTS. THE SOLICITATION ALSO STATES AT PAGE 7 THAT IF PERFORMANCE IS BY MAGNETIC TAPE, THE WORK PROCESSED ONTO THE CONTRACTOR'S TAPES WILL BE TRANSFERRED TO CSC'S TAPES, AND THE CONTRACTOR'S TAPES WILL BE RETURNED TO HIM. IN SHORT, THE GOVERNMENT DOES NOT APPEAR TO BE PROCURING A QUANTITY OF PRINTED, REPRODUCED, OR DUPLICATED MATERIAL. RATHER, THE WORK INVOLVES THE TRANSFER OR CONVERSION OF INFORMATION FROM DOCUMENTS INTO PUNCHED CARD OR TAPE FORM. MOREOVER, IT IS APPARENT THAT NO MAGNETIC TAPE AT ALL IS BEING PURCHASED, AND THAT THE PUNCHED CARDS ARE MERELY SUPPLIES FURNISHED INCIDENTAL TO THE SERVICES.

THOUGH IT IS CLEAR THAT THE PRINCIPAL PURPOSE OF THE PRESENT CONTRACTS IS TO PROVIDE SERVICES, THE APPLICABILITY OF THE ACT IS A MATTER OF SERIOUS DOUBT FOR THE REASONS STATED IN OUR PREVIOUS DECISION TO DESCOMP. COMP. GEN. 370 (1973). THAT CASE INVOLVED A KEYPUNCH SOLICITATION WHERE THE DEPARTMENT OF LABOR HAD ISSUED WAGE DETERMINATIONS COVERING THE SAME TYPES OF CLERICAL EMPLOYEES INVOLVED HERE - KEYPUNCH OPERATORS, CLERKS, SECRETARIES, STENOGRAPHERS, SWITCHBOARD OPERATORS, COMPUTER OPERATORS AND DRAFTSMEN. THE DECISION QUESTIONED WHETHER SUCH EMPLOYEES WERE INTENDED TO BE INCLUDED WITHIN THE ACT'S DEFINITION OF "SERVICE EMPLOYEE," SINCE THE STATUTORY LANGUAGE AND LEGISLATIVE HISTORY INDICATE THAT "SERVICE EMPLOYEE" WAS MEANT TO REFER TO WORKERS GENERALLY DESCRIBED AS "BLUE COLLAR." WE RECOMMENDED THAT THE SECRETARY OF LABOR PRESENT THE MATTER TO CONGRESS WITH A VIEW TOWARDS OBTAINING CLARIFYING LEGISLATION. THE POSITION WE EXPRESSED IN THAT DECISION IS FULLY APPLICABLE TO THE INSTANT PROCUREMENTS; HOWEVER, SINCE THE STATUTORY LANGUAGE DOES NOT SPECIFICALLY PROHIBIT THE DEPARTMENT OF LABOR FROM CLASSIFYING CLERICAL WORKERS AS SERVICE EMPLOYEES, WE CONCLUDE HERE, AS WE DID IN 53 COMP. GEN. 370, SUPRA, THAT THE PROTEST ON THIS ISSUE MUST BE DENIED.

THE PROTESTOR ALSO CONTENDS EVEN IF THE PROCUREMENT IS SUBJECT TO THE SERVICE CONTRACT ACT, THE ATTACHED WAGE DETERMINATIONS COVERING LOCALITIES IN THE WASHINGTON, D.C., AREA ARE INAPPLICABLE TO IT. DESCOMP POINTS OUT THAT THE LANGUAGE OF THE ACT AND THE LEGISLATIVE HISTORY INDICATE THAT "LOCALITY" REFERS TO THE AREA WHERE THE CONTRACT IS PERFORMED. THE PROTESTOR ALSO REFERS TO A LABOR DEPARTMENT REGULATION, 29 CFR 4.5, WHICH STATES THAT EVERY CONTRACT SHALL CONTAIN AN ATTACHMENT SPECIFYING THE MINIMUM WAGES AND FRINGE BENEFITS TO BE PAID SERVICE EMPLOYEES THEREUNDER AND TO 29 CFR 4.153, WHICH STATES IN PART THAT A CONTRACT MAY BE EXEMPTED FROM THE WAGE AND FRINGE BENEFIT DETERMINATIONS OF SECTION 2(A) (41 U.S.C. 351(A)) OF THE ACT IF THERE IS NO CURRENTLY APPLICABLE WAGE AND FRINGE BENEFIT DETERMINATION FOR THE "LOCALITY." THE PROTESTOR CONCLUDES THAT, SINCE THE SOLICITATIONS CONTAINED NO ATTACHED WAGE AND FRINGE BENEFIT DETERMINATIONS FOR ITS LOCALITY, DESCOMP, WERE IT AWARDED THE CONTRACT, WOULD BE BOUND TO PAY ONLY THE FAIR LABOR STANDARDS ACT MINIMUM WAGE.

BOTH SOLICITATIONS CONTAINED THE FOLLOWING SERVICE CONTRACT ACT PROVISIONS PRESCRIBED BY SECTION 1-12.904-1 OF THE FEDERAL PROCUREMENT REGULATIONS (FPR), QUOTED HERE IN PERTINENT PART:

THIS CONTRACT, TO THE EXTENT THAT IT IS OF THE CHARACTER TO WHICH THE SERVICE CONTRACT ACT OF 1965 (79 STAT. 1034, 41 U.S.C. 351) APPLIES, IS SUBJECT TO THE FOLLOWING PROVISIONS AND TO ALL OTHER APPLICABLE PROVISIONS OF THE ACT AND REGULATIONS OF THE SECRETARY OF LABOR THEREUNDER.

(A) COMPENSATION. EACH SERVICE EMPLOYEE EMPLOYED IN THE PERFORMANCE OF THIS CONTRACT BY THE CONTRACTOR OR ANY SUBCONTRACTOR SHALL BE PAID NOT LESS THAN THE MINIMUM MONETARY WAGE AND SHALL BE FURNISHED FRINGE BENEFITS IN ACCORDANCE WITH THE WAGES AND FRINGE BENEFITS DETERMINED BY THE SECRETARY OF LABOR OR HIS AUTHORIZED REPRESENTATIVE, AS SPECIFIED IN ANY ATTACHMENT TO THIS CONTRACT. ***

(D) MINIMUM WAGE. IN THE ABSENCE OF A MINIMUM WAGE ATTACHMENT FOR THIS CONTRACT, NEITHER THE CONTRACTOR NOR ANY SUBCONTRACTOR UNDER THIS CONTRACT SHALL PAY ANY OF HIS EMPLOYEES PERFORMING WORK UNDER THE CONTRACT (REGARDLESS OF WHETHER THEY ARE SERVICE EMPLOYEES) LESS THAN THE MINIMUM WAGE SPECIFIED BY SECTION 6(A)(1) OF THE FAIR LABOR STANDARDS ACT OF 1938. NOTHING IN THIS PROVISION SHALL RELIEVE THE CONTRACTOR OR ANY SUBCONTRACTOR OF ANY OTHER OBLIGATION UNDER LAW OR CONTRACT FOR THE PAYMENT OF A HIGHER WAGE TO ANY EMPLOYEE.

ATTACHED TO THE HUD IFB WAS WAGE DETERMINATION NO. 72-117 (REV. 3), DATED MAY 15, 1973, COVERING 29 CLASSES OF EMPLOYEES FOR THE DISTRICT OF COLUMBIA LOCALITY. THE DETERMINATION STATES THAT IT IS ALSO APPLICABLE TO TWO OTHER LOCALITIES: A SUBURBAN VIRGINIA AREA (ARLINGTON, FAIRFAX, LOUDOUN AND PRINCE WILLIAM COUNTIES, AND THE INDEPENDENT CITIES OF ALEXANDRIA, FAIRFAX AND FALLS CHURCH), AND A SUBURBAN MARYLAND AREA (CHARLES, MONTGOMERY AND PRINCE GEORGES COUNTIES). ATTACHED TO THE CSC IFB WERE THREE WAGE DETERMINATIONS, EACH COVERING 35 CLASSES OF EMPLOYEES AND EACH DATED AUGUST 27, 1973: NO. 72-117 (REV. 4) (D.C. LOCALITY), NO. 72-118 (REV. 4) (MARYLAND LOCALITY DESCRIBED ABOVE), AND NO. 72-119 (REV. 4) (VIRGINIA LOCALITY DESCRIBED ABOVE). THE MINIMUM HOURLY WAGES APPEAR TO BE IDENTICAL IN THESE THREE DETERMINATIONS AND EACH STATED THAT ITS APPLICABILITY EXTENDED TO THE OTHER TWO LOCALITIES ALSO.

IN ESSENCE, WE BELIEVE DESCOMP'S OBJECTION IS THAT THE PROCURING AGENCIES ERRED IN INTERPRETING THE SERVICE CONTRACT ACT CLAUSES AND WAGE DETERMINATIONS AS BEING BINDING ON BIDDERS LOCATED OUTSIDE THE LOCALITIES FOR WHICH WAGE DETERMINATIONS WERE PROVIDED. IN THIS REGARD, THE PROTESTOR HAS INDICATED THAT IT INQUIRED OF THE PROCURING AGENCIES WHETHER IT SHOULD BID BASED ON THE ASSUMPTION THAT THE ATTACHED WAGE DETERMINATIONS WOULD GOVERN ITS OBLIGATIONS IN RESPECT TO WAGE RATES IF IT WERE AWARDED THE CONTRACTS AND RECEIVED AFFIRMATIVE REPLIES. DESCOMP STATES THAT IT COMPUTED ITS BID PRICES BASED ON THESE ASSUMPTIONS. AS TO THE CSC SOLICITATION, DESCOMP ALLEGES THAT IT COULD HAVE BID $42.90 PER THOUSAND UNITS INSTEAD OF ITS ACTUAL BID, $55 PER THOUSAND UNITS. FROM THE TERMS QUOTED ABOVE AND THE APPLICABLE REGULATIONS, IT IS CLEAR THAT A CONTRACT CAN BE EXEMPTED ENTIRELY FROM THE MINIMUM WAGE REQUIREMENTS OF SECTION 2(A) OF THE ACT WHERE THE SECRETARY HAS PROPERLY DECLINED TO ISSUE A WAGE DETERMINATION. SEE, FOR EXAMPLE, KENTRON HAWAII, LIMITED V. WARNER, 480 F.2D 1166 (D.C. CIR., 1973); 46 COMP. GEN. 278 (1966). THE PRESENT CASES ARE SOMEWHAT DIFFERENT SINCE THEY INVOLVE PROCUREMENTS OF SERVICES TO BE PERFORMED AT THE LOCATION OF THE SUCCESSFUL BIDDERS WHERE WAGE DETERMINATIONS HAVE BEEN ISSUED ONLY FOR LOCALITIES WHEREIN THE GOVERNMENT AGENCIES FOR WHICH THE SERVICES ARE TO BE PERFORMED ARE LOCATED. SOME, BUT NOT ALL, OF THE BIDDERS' WORK FACILITIES ARE WITHIN THESE AREAS. THE QUESTION ARISES AS TO WHETHER A BIDDER, SUCH AS DESCOMP, WHICH IS NOT LOCATED IN ONE OF THE LOCALITIES FOR WHICH DETERMINATIONS HAVE BEEN PROVIDED WOULD BE EXEMPTED FROM THOSE DETERMINATIONS.

IN OUR VIEW, THE SERVICE CONTRACT ACT PROVISIONS BOUND DESCOMP AND SIMILARLY SITUATED BIDDERS TO PAY WAGE RATES IN ACCORDANCE WITH THE ATTACHED WAGE DETERMINATIONS. WE NOTE IN THIS REGARD THAT THE TERMS QUOTED IN PARAGRAPH (A) ABOVE INDICATE THAT THE WAGE RATE OBLIGATIONS ARE FIXED BY WHATEVER DETERMINATIONS ARE ATTACHED TO THE SOLICITATION. MOREOVER, THERE IS NO SPECIFIC PROVISION IN THE CONTRACT TO SUGGEST THAT A BIDDER LOCATED OUTSIDE THE LOCALITIES SPECIFIED IN THE ATTACHED DETERMINATIONS IS NOT BOUND BY THE DETERMINATIONS.

WHILE THIS RESULT IS SOMEWHAT ANOMALOUS, IT IS SUPPORTED NOT ONLY BY THE CONTRACT TERMS BUT ALSO BY THE DEPARTMENT OF LABOR'S INTERPRETATION OF THE "LOCALITY" BASIS OF WAGE DETERMINATIONS. THIS ISSUE WAS CONSIDERED IN 53 COMP. GEN. 370, SUPRA, WHERE WE POINTED OUT THAT IN A PROCUREMENT OF SERVICES WHICH CAN BE RENDERED AT THE LOCATION OF THE SUCCESSFUL BIDDER, WHEREVER IT MAY BE, IT IS THE DEPARTMENT OF LABOR'S PRACTICE TO ISSUE WAGE DETERMINATIONS BASED ON THE LOCATION OF THE GOVERNMENT FACILITY FOR WHICH THE SERVICES ARE BEING PERFORMED. SINCE NEITHER THE LANGUAGE OF THE ACT NOR THE LEGISLATIVE HISTORY OFFERS SUPPORT FOR THIS INTERPRETATION, OUR DECISION CRITICIZED THIS PRACTICE AND RECOMMENDED THAT THE DEPARTMENT PRESENT THE ISSUE TO CONGRESS WITH A VIEW TOWARDS OBTAINING CLARIFYING LEGISLATION. HOWEVER, WE CONCLUDED THAT THE ACT DID NOT SPECIFICALLY PROHIBIT THE PRACTICE. THUS, THIS APPROACH TO THE "LOCALITY" PROBLEM REPRESENTS THE SETTLED INTERPRETATION OF THIS ISSUE AT THE PRESENT TIME. THE REGULATIONS DESCOMP HAS CITED, FOR EXAMPLE, 29 CFR 4.153, ARE NOT INCONSISTENT WITH THE PROCURING AGENCIES' INTERPRETATION OF THE SOLICITATION TERMS WHEN READ IN LIGHT OF THE DEPARTMENT OF LABOR'S CONSTRUCTION OF THE TERM "LOCALITY."

THE FOREGOING INTERPRETATION WAS ADOPTED BY THE DEPARTMENT OF LABOR IN A SERVICE CONTRACT ACT OPINION DATED DECEMBER 19, 1967, AND, TO OUR KNOWLEDGE, HAS BEEN FOLLOWED SINCE THAT TIME. THE GENERAL COUNSEL OF HUD, IN HIS LETTER TO OUR OFFICE DATED AUGUST 10, 1973, CITED THE LABOR DEPARTMENT PRACTICE OF ISSUING WAGE DETERMINATIONS BASED ON THE LOCATION OF THE GOVERNMENT FACILITY IN HIS RESPONSE TO THE PROTEST. HOWEVER, THE APPLICATION OF THIS PRACTICE IS APPARENTLY A MATTER OF CONFUSION ON THE PART OF CSC. THE CSC CONTRACTING OFFICER, IN A STATEMENT DATED OCTOBER 15, 1973, INDICATES THAT IT IS HIS BELIEF THAT THE ATTACHED WAGE DETERMINATIONS WERE NOT BINDING ON DESCOMP.

IT IS NOTED THAT THE GENERAL SERVICES ADMINISTRATION SOLICITATION CONSIDERED IN 53 COMP. GEN. 370, SUPRA, INCLUDED A SPECIFIC STATEMENT THAT THE WAGE RATE PAID MUST CORRESPOND TO THE LOCATION OF THE AGENCY AND NOT TO THE LOCATION OF THE CONTRACTOR. WHILE WE DO NOT FIND THAT THE LACK OF A SPECIFIC PROVISION OF THIS KIND IN THE INSTANT SOLICITATIONS MISLED BIDDERS OR RENDERED THE ATTACHED WAGE DETERMINATIONS NOT BINDING ON DESCOMP, IN OUR VIEW, IT WOULD HAVE BEEN BETTER TO INCLUDE A PROVISION OF THIS KIND IN THE SOLICITATIONS.

AS FOR THE OBJECTION TO THE 75-MILE GEOGRAPHIC RESTRICTION CONTAINED IN THE CSC SOLICITATION, WE NOTE THAT THE BASIC PRINCIPLE UNDERLYING FEDERAL PROCUREMENT IS THAT FULL AND FREE COMPETITION IS TO BE MAXIMIZED TO THE FULLEST EXTENT POSSIBLE IN ORDER TO PROVIDE QUALIFIED SOURCES WITH AN EQUAL OPPORTUNITY TO COMPETE FOR GOVERNMENT CONTRACTS. SEE 41 U.S.C. 253 AND FPR SEC. 1-1.301-1. HOWEVER, IT IS WELL ESTABLISHED THAT LEGITIMATE RESTRICTIONS ON COMPETITION MAY BE IMPOSED WHERE THE NEEDS OF THE PROCURING AGENCY SO REQUIRE. 42 COMP. GEN. 102 (1962). IT HAS LONG BEEN THE RULE THAT IT IS THE PROVINCE OF THE INDIVIDUAL AGENCY TO DETERMINE ITS NEEDS AND DRAFT PROPER SPECIFICATIONS REFLECTING THOSE NEEDS. 17 COMP. GEN. 554 (1938). WE HAVE STATED THAT SUCH DETERMINATIONS WILL NOT BE QUESTIONED BY OUR OFFICE IN THE ABSENCE OF DEMONSTRATED FRAUD OR CLEARLY CAPRICIOUS ACTION. 49 COMP. GEN. 857, 862 (1970).

IN ACCORDANCE WITH THESE PRINCIPLES, WE HAVE HELD THAT GEOGRAPHIC RESTRICTIONS NEED NOT BE REGARDED AS UNDULY RESTRICTIVE WHERE THEY REPRESENT THE ACTUAL NEEDS OF THE PROCURING AGENCY. B-157053, AUGUST 2, 1965. FOR EXAMPLE, IN B-160571, JANUARY 4, 1967, WHERE THE IFB CALLED FOR PRINTING AND BINDING SERVICES AND STATED THAT ONLY BIDS FROM FIRMS IN WASHINGTON, D.C., "OR CONTIGUOUS AREAS" WOULD BE CONSIDERED, WE DENIED THE PROTEST OF A BIDDER LOCATED IN GAMBRILLS, ANNE ARUNDEL COUNTY, MARYLAND, IN VIEW OF THE AGENCY'S ASSERTIONS THAT CLOSE PERSONAL CONTACT WITH THE PRINTER WAS REGARDED AS ESSENTIAL, AND THAT THE MINIMUM 45 MINUTES' COMMUTING TIME TO GAMBRILLS WAS EXCESSIVE. DECISION B-178600, AUGUST 16, 1973, INVOLVED A SOLICITATION CALLING FOR AUTOMATIC DATA PROCESSING SERVICES AND STATING THAT BIDS SPECIFYING PERFORMANCE OUTSIDE THE METROPOLITAN WASHINGTON, D.C., AREA (AN AREA IDENTICAL IN SIZE WITH THE THREE SERVICE CONTRACT ACT LOCALITIES SPECIFIED IN THE INSTANT CSC PROCUREMENT) WOULD BE REJECTED AS NONRESPONSIVE. THE PROTESTOR QUESTIONED THE NECESSITY OF THE RESTRICTION AND CONTENDED IT COULD PERFORM FROM A LOCATION OUTSIDE THE DESIGNATED AREA. HOWEVER, WE CONCLUDED THAT IN VIEW OF THE REASONS CITED BY THE AGENCY, INCLUDING THE NEED FOR CLOSE LIAISON BETWEEN THE GOVERNMENT AND THE CONTRACTOR AND THE NEED FOR ADEQUATE CONTROL OVER SOURCE DOCUMENTS, A REASONABLE BASIS HAD BEEN ESTABLISHED FOR THE RESTRICTION.

IN THE PRESENT CASE, THE CONTRACTING OFFICER HAS INDICATED THAT THE USE OF THE 75-MILE LIMITATION WAS BASED ON THE FOLLOWING REASONS:

1. SOURCE DOCUMENTS TO BE CONVERTED ARE SENSITIVE AND ARE NOT REPLACEABLE. THEY MUST BE MAINTAINED UNDER RIGID AND CONSTANT CONTROLS. BECAUSE OF THE HIGH VOLUME OF SOURCE DOCUMENTS FLOWING TO AND FROM CONTRACTOR FACILITIES, THE ABILITY TO EXERCISE THE DEGREE OF CONTROL WHICH IS ESSENTIAL TO PREVENT DOCUMENT LOSS IS RELATABLE TO THE DISTANCE OF CONTRACTOR FACILITIES FROM THE COMMISSION BUILDING.

2. WHENEVER CONTROL PROCEDURES DETECT A SUSPECTED LOSS OF DOCUMENTS, THE CIRCUMSTANCES MUST BE INVESTIGATED AND EVERY EFFORT MUST BE MADE TO LOCATE AND RECOVER ANY LOST DOCUMENTS. THIS INCLUDES TRAVEL TO THE CONTRACTOR'S SITE. THE COST OF WHICH IS DIRECTLY RELATABLE TO THE DISTANCE OF CONTRACTOR FACILITIES FROM THE COMMISSION BUILDING.

3. SPECIFICATIONS FOR DATA CONVERSION ARE SUBJECT TO CHANGE. THE TECHNICAL ASPECTS OF SPECIFICATION CHANGES MUST BE COORDINATED PERSONALLY BY OUR PEOPLE WITH CONTRACTOR PERSONNEL. HERE AGAIN, THE GREATER THE DISTANCE TO CONTRACTOR FACILITIES, THE GREATER THE COST.

4. CONTROL OF SOURCE DOCUMENTS AND DATA CONVERSION MEDIA REQUIRES DAILY TELEPHONE CONVERSATIONS BETWEEN OUR CONTROL CLERKS AND CONTRACTOR CONTROL AND SUPERVISORY PERSONNEL. A CONTRACTOR PAYING LONG DISTANCE RATES MIGHT BE INCLINED TO LIMIT CALLS ARBITRARILY. THIS COULD LEAD TO UNRESOLVED MISUNDERSTANDINGS RELATIVE TO THE WORK IN PROGRESS AT THE CONTRACTOR'S SITE, THE RESULTS OF WHICH COULD BE DISASTROUS IN TERMS OF MEETING CRITICAL DUE DATES.

5. DURING PRIOR USE OF THE 75 MILE LIMIT, ADEQUATE COMPETITION HAS BEEN EXPERIENCED AS IN THE CASE OF SOLICITATION CS-IFB-04-73 WHICH COVERED FISCAL YEAR 1973 CPDF REQUIREMENTS AND RESULTED IN RECEIPT OF TWELVE (12) BIDS.

IN AFFIDAVITS AND A LEGAL MEMORANDUM SUBMITTED TO THE DISTRICT COURT IN CONNECTION WITH THE LITIGATION DESCRIBED ABOVE, DESCOMP OFFERED EVIDENCE REFUTING THE CONTRACTING OFFICERS' JUSTIFICATION. THE PROTESTOR CONTENDS THAT CONTROL OF DOCUMENTS CANNOT BE SO CRITICAL A NEED IF THE AGENCY ALLOWS THEM TO BE SHIPPED UP TO 75 MILES, AND THAT THERE IS NO REASON WHY THE LIMIT COULD NOT BE EXTENDED FURTHER; IT POINTS OUT THAT THE TOWN OF BRIDGEVILLE, DELAWARE, IS WITHIN THE 75 MILE RADIUS BUT IS 93 HIGHWAY MILES FROM THE CAPITOL; IT CONTENDS THAT SOLICITATIONS ISSUED BY OTHER GOVERNMENT AGENCIES HAVE NOT CONTAINED THIS LIMITATION; AND IT BELIEVES THE RESTRICTION MAY RESULT IN INADEQUATE COMPETITION. FURTHER, DESCOMP POINTS OUT THAT IT CAN MEET THE AGENCY'S NEED FOR CLOSE CONTACT SINCE IT MAKES DAILY PICKUP AND DELIVERY TRIPS TO WASHINGTON; THAT IT HAS PERFORMED CONTRACTS REQUIRING HANDLING OF SECRET DEPARTMENT OF DEFENSE DOCUMENTS; AND THAT IT HAS NEVER LOST A GOVERNMENT DOCUMENT.

INITIALLY, WE THINK THAT A GEOGRAPHIC RESTRICTION STATED IN TERMS OF A CERTAIN RADIUS OF MILES FROM A WELL-KNOWN POINT SUCH AS THE CAPITOL BUILDING REPRESENTS A REASONABLE APPROACH. THIS METHOD ENABLES PROSPECTIVE BIDDERS TO READILY ASCERTAIN WHETHER THEY CAN COMPLY WITH THE REQUIREMENT AND PROVIDES A CLEAR STANDARD FOR AGENCY DETERMINATION OF WHETHER A PARTICULAR BIDDER IS IN COMPLIANCE. A RESTRICTION STATED IN TERMS OF HIGHWAY MILES, FOR EXAMPLE, WOULD NOT SERVE THESE ENDS NEARLY AS WELL.

AS FOR THE ALLEGATIONS THAT DESCOMP IS ABLE TO MEET THE AGENCY NEEDS FOR CLOSE CONTACT AND DOCUMENT CONTROL, WE DO NOT BELIEVE THAT THESE CONTENTIONS, EVEN IF TRUE, ESTABLISH THAT CSC ACTED ARBITRARILY OR CAPRICIOUSLY IN ESTABLISHING THE 75-MILE LIMITATION. WHEREVER A LIMITATION OF THIS TYPE IS USED THERE EXISTS THE POSSIBILITY THAT ONE OR MORE POTENTAL BIDDERS BEYOND THE LIMIT COULD MEET THE GOVERNMENT'S NEEDS. AGENCY OFFICIALS SHOULD, OF COURSE, GIVE CONSIDERATION TO EXTENDING THE LIMIT TO THE BROADEST SCOPE CONSISTENT WITH THEIR NEEDS. IT IS APPARENT, HOWEVER, THAT AS THE LIMIT IS EXTENDED, THE PROBABILITY INCREASES THAT AT SOME POINT A CONTRACT WILL BE AWARDED, THE PERFORMANCE OF WHICH ENTAILS THE ADMINISTRATIVE DIFFICULTIES WHICH HAVE BEEN ENVISIONED.

DETERMINING THE PROPER SCOPE OF A PARTICULAR GEOGRAPHIC RESTRICTION WHICH IS BELIEVED TO BE REQUIRED BECAUSE OF CERTAIN ADMINISTRATIVE NEEDS IS A MATTER OF JUDGMENT AND DISCRETION INVOLVING CONSIDERATION OF THE SERVICES BEING PROCURED, PAST EXPERIENCE, MARKET CONDITIONS AND OTHER FACTORS. VIEW OF THE REASONS CITED BY THE CONTRACTING OFFICER, AND THE FACT THAT 17 BIDS WERE RECEIVED AND AWARD WAS MADE AT A PRICE OF $43 PER THOUSAND AS COMPARED TO $51.65 PER THOUSAND UNDER THE PREVIOUS YEAR'S CONTRACT, WE SEE NO BASIS TO CONCLUDE THAT THE USE OF THE 75-MILE LIMITATION WAS AN ABUSE OF DISCRETION.

LASTLY, THE PROTESTOR HAS RAISED A QUESTION WHETHER OBLIGATING IT TO PAY WAGE RATES IN ACCORDANCE WITH THE SERVICE CONTRACT ACT WAGE DETERMINATIONS WOULD RESULT IN A VIOLATION OF EXECUTIVE ORDER 11615, AUGUST 15, 1971, WHICH STABILIZED WAGES AND SALARIES. SINCE DESCOMP WAS NOT AWARDED THE CONTRACTS, THE QUESTION OF ITS POSSIBLE VIOLATION OF STABILIZATION STANDARDS - A MATTER FOR DETERMINATION BY THE COST OF LIVING COUNCIL - WOULD NOT ARISE IN THE PRESENT CASE. IN THIS CONNECTION, THE ECONOMIC STABILIZATION ACT OF 1970, AS AMENDED (PUBLIC LAW 92-210, DECEMBER 22, 1971, 85 STAT. 743), WHICH IS THE BASIS OF EXECUTIVE ORDER 11615 AND SUPERSEDING EXECUTIVE ORDERS, SPECIFICALLY PROVIDES IN SECTION 203(F)(2) (12 U.S.C. 1904) THAT THE AUTHORITY CONFERRED SHALL NOT BE EXERCISED TO PRECLUDE THE PAYMENT OF ANY INCREASE IN WAGES REQUIRED IN ORDER TO COMPLY WITH WAGE DETERMINATIONS MADE BY ANY AGENCY IN THE EXECUTIVE BRANCH OF THE GOVERNMENT PURSUANT TO LAW FOR WORK PERFORMED UNDER CONTRACTS WITH THE UNITED STATES. THE REGULATIONS OF THE COST OF LIVING COUNCIL ARE CONSISTENT WITH THE STATUTE IN THIS RESPECT. SEE 6 CFR 101.103(A)(2)(I). IN VIEW OF THE PROVISIONS OF THE ACT AND THE REGULATION, IT APPEARS DOUBTFUL THAT A VIOLATION WOULD BE FOUND UNDER THE CIRCUMSTANCES.