B-179501, FEB 28, 1974

B-179501: Feb 28, 1974

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IS APPLICABLE TO AIR FORCE SOLICITATION FOR DATA IN FORM OF REPRODUCIBLE AND BLUE LINE COPY. SINCE THAT DEPARTMENT IS CHARGED WITH RESPONSIBILITY OF INTERPRETING AND ADMINISTERING ACT. WHILE GAO AGREES WITH AIR FORCE THAT RFP PROVISION STATING IMPOSSIBILITY OF VERIFYING ACCURACY OF DATA FURNISHED UNDER THE CONTRACT DOES NOT MEAN CONTRACT IS IMPOSSIBLE OF PERFORMANCE. 1973 WAS SET FOR RECEIPT OF PROPOSALS AND WAS LATER EXTENDED TO AUGUST 30. INCORPORATED (HEWES ENGINEERING) PROTEST WAS RECEIVED BY THE CONTRACTING OFFICER ON AUGUST 21. THE PROTEST IS GROUNDED PRINCIPALLY UPON THE AIR FORCE'S FAILURE TO INCLUDE IN THE SOLICITATION PROVISIONS ENCOMPASSING THE SERVICE CONTRACT ACT OF 1965. THE PROTESTER ASSERTS THAT THIS OMISSION "IS OF CRITICAL IMPORTANCE TO THE VALIDITY OF ANY RESULTING CONTRACT.".

B-179501, FEB 28, 1974

ASSERTION BY PROTESTER BEFORE DATE SET FOR RECEIPT OF INITIAL PROPOSALS THAT SERVICE CONTRACT ACT OF 1965, 41 U.S.C. 351 ET SEQ., IS APPLICABLE TO AIR FORCE SOLICITATION FOR DATA IN FORM OF REPRODUCIBLE AND BLUE LINE COPY, AND PHOTOLITHOGRAPHIC NEGATIVES, SHOULD BE REFERRED TO DEPARTMENT OF LABOR, SINCE THAT DEPARTMENT IS CHARGED WITH RESPONSIBILITY OF INTERPRETING AND ADMINISTERING ACT, AND PROTESTER HAS PUT CONTRACTING OFFICER ON NOTICE OF POSSIBLE SERVICE CONTRACT ACT APPLICABILITY BY REFERRING TO DEPARTMENT OF LABOR'S RULING IN SIMILAR ARMY PROCUREMENT. WHILE GAO AGREES WITH AIR FORCE THAT RFP PROVISION STATING IMPOSSIBILITY OF VERIFYING ACCURACY OF DATA FURNISHED UNDER THE CONTRACT DOES NOT MEAN CONTRACT IS IMPOSSIBLE OF PERFORMANCE, GAO SUGGESTS REVISION OF THE PROVISION.

TO HEWES ENGINEERING COMPANY, INC.:

SOLICITATION NO. F09603-74-R-0085, ISSUED BY THE DEPARTMENT OF THE AIR FORCE, ROBINS AIR FORCE BASE, GEORGIA, ON JULY 19, 1973, CALLED FOR THE FURNISHING OF TECHNICAL DATA TO BE DELIVERED IN THE FORM OF REPRODUCIBLE COPY, PHOTOLITHOGRAPHIC NEGATIVES, AND BLUE LINE COPY, SUITABLE FOR USE IN WORLD-WIDE SUPPORT OF PRIME EQUIPMENT AND COMMODITIES. THE DATE OF AUGUST 20, 1973 WAS SET FOR RECEIPT OF PROPOSALS AND WAS LATER EXTENDED TO AUGUST 30, 1973 BY AMENDMENT 0001 TO THE SOLICITATION. THE HEWES ENGINEERING COMPANY, INCORPORATED (HEWES ENGINEERING) PROTEST WAS RECEIVED BY THE CONTRACTING OFFICER ON AUGUST 21, 1973, WHICH PRECIPITATED AN INDEFINITE EXTENSION OF THE DATE FOR RECEIPT OF PROPOSALS.

THE PROTEST IS GROUNDED PRINCIPALLY UPON THE AIR FORCE'S FAILURE TO INCLUDE IN THE SOLICITATION PROVISIONS ENCOMPASSING THE SERVICE CONTRACT ACT OF 1965. THE PROTESTER ASSERTS THAT THIS OMISSION "IS OF CRITICAL IMPORTANCE TO THE VALIDITY OF ANY RESULTING CONTRACT." THE AIR FORCE DENIED THE APPLICABILITY OF THE SERVICE CONTRACT ACT TO THIS PROCUREMENT, FINDING THE PROCUREMENT SUBJECT ONLY TO THE PROVISIONS OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT, 41 U.S.C. 35 ET SEQ. THE PROTESTER ALSO QUESTIONS SEVERAL PROVISIONS INCLUDED IN THE REQUEST FOR PROPOSALS.

THE SERVICE CONTRACT ACT OF 1965, AS AMENDED, 41 U.S.C. 351 ET SEQ. PROVIDES THAT EVERY CONTRACT ENTERED INTO BY THE UNITED STATES IN EXCESS OF $2500 "THE PRINCIPAL PURPOSE OF WHICH IS TO FURNISH SERVICES IN THE UNITED STATES THROUGH THE USE OF SERVICE EMPLOYEES, AS DEFINED HEREIN" MUST CONTAIN PROVISIONS SPECIFYING THE MINIMUM MONETARY WAGES TO BE PAID AND THE FRINGE BENEFITS TO BE FURNISHED TO SERVICE EMPLOYEES. 41 U.S.C. 353 GIVES THE SECRETARY OF LABOR AUTHORITY TO MAKE RULES AND REGULATIONS UNDER THIS ACT, TO ISSUE ORDERS, AND TO RENDER DECISIONS THEREON. PURSUANT TO THIS GRANT OF AUTHORITY, DEPARTMENT OF LABOR REGULATIONS REQUIRE A CONTRACTING OFFICER TO FILE WITH THE DEPARTMENT OF LABOR A STANDARD FORM 98, NOTICE OF INTENT TO MAKE A SERVICE CONTRACT, AT LEAST 30 DAYS PRIOR TO THE ISSUANCE OF A SOLICITATION FOR ANY CONTRACT "WHICH MAY BE SUBJECT TO THE ACT" AND TO INCLUDE SERVICE CONTRACT ACT CLAUSES IN FEDERAL SERVICE CONTRACTS. 29 CFR 4.4-4.6.

IN A RECENT DECISION, 53 COMP. GEN. (B-178773, DECEMBER 6, 1973), WE HELD THAT A CONTRACTING OFFICER DID NOT VIOLATE THE ACT OR THE REGULATIONS BY NOT HAVING SUBMITTED THIS FORM OR INCLUDING A SERVICE CONTRACT ACT CLAUSE IN THE SOLICITATION SINCE HE HAD A REASONABLE BASIS FOR BELIEVING THE PROPOSED PROCUREMENT WAS NOT SUBJECT TO THE ACT. IN THAT CASE, HOWEVER, THE QUESTION OF APPLICABILITY OF THE SERVICE CONTRACT ACT TO THE PROCUREMENT HAD NOT BEEN RAISED UNTIL AFTER CONTRACT AWARD, AND WE FOUND THAT THE DEPARTMENT OF LABOR HAD NOT PUT THE CONTRACTING OFFICER ON NOTICE THAT IT VIEWED THAT PROCUREMENT AS COMING WITHIN THE COVERAGE OF THE SERVICE CONTRACT ACT UNTIL AFTER THE CONTRACT HAD BEEN AWARDED.

IN THIS CASE, THE PROTEST WAS FILED BEFORE THE CLOSING DATE FOR RECEIPT OF PROPOSALS AND CAME ON THE HEELS OF A DETERMINATION BY THE DEPARTMENT OF LABOR IN A DEPARTMENT OF THE ARMY PROCUREMENT (U.S. ARMY AVIATION SYSTEMS COMMAND RFP NO. DAAJ01-73-R-0568/P3L/) THAT CERTAIN EMPLOYEES WITH DUTIES SIMILAR TO THOSE INVOLVED HERE WERE "SERVICE EMPLOYEES" WITHIN THE MEANING OF THE ACT. MOREOVER, THE PROTESTER HAS CALLED THE AIR FORCE'S ATTENTION TO THIS SPECIFIC DEPARTMENT OF LABOR RULING.

THE AIR FORCE CLAIMS, HOWEVER, THAT THE DEPARTMENT OF LABOR'S OPINION IN THE ARMY CASE SHOULD NOT "NECESSARILY SET A PRECEDENT FOR ALL SUBSEQUENT CASES OF A SIMILAR NATURE." IT REFERS TO THE GENERAL RULE THAT IT IS PRIMARILY FOR THE CONTRACTING AGENCY TO DECIDE WHAT PROVISIONS SHOULD BE INCLUDED IN A PARTICULAR CONTRACT, AND ASSERTS ITS BELIEF THAT SINCE THE WORK TO BE ACCOMPLISHED INVOLVES PROFESSIONAL AND WHITE COLLAR WORKERS, SERVICE CONTRACT ACT PROVISIONS ARE NOT APPLICABLE, CITING 53 COMP. GEN. (B-178400, NOVEMBER 28, 1973) AND GENERAL ACCOUNTING OFFICE REPORT B- 151261, "PROPRIETY OF MINIMUM WAGE DETERMINATIONS FOR CLERICAL AND OTHER OFFICE EMPLOYEES UNDER THE SERVICE CONTRACT ACT," NOVEMBER 30, 1973.

IN B-178773, SUPRA, WE RECOGNIZED THAT ASPR PROVISIONS AND DEPARTMENT OF LABOR REGULATIONS CONTEMPLATE AN INITIAL DECISION BY A CONTRACTING AGENCY AS TO THE POSSIBLE APPLICABILITY OF THE SERVICE CONTRACT ACT TO A PROCUREMENT, AND THAT THIS IS CONSISTENT WITH THE GENERAL RULE THAT THE PROVISIONS TO BE INCLUDED IN A CONTRACT ARE TO BE DETERMINED "PRIMARILY" BY THE CONTRACTING AGENCY. SEE, E.G., 44 COMP. GEN. 498 (1965). HOWEVER, THE SECRETARY OF LABOR IS RESPONSIBLE FOR ADMINISTERING THE ACT AND FOR PROMULGATING RULES AND REGULATIONS UNDER THE ACT. 41 U.S.C. 353; 29 CFR 4.101 ET SEQ. THUS, IN DETERMINING WHETHER OR NOT SERVICE CONTRACT ACT PROVISIONS ARE APPLICABLE TO A GIVEN PROCUREMENT, WE THINK IT IS REASONABLY CLEAR THAT CONTRACTING AGENCIES MUST TAKE INTO ACCOUNT THE VIEWS OF THE DEPARTMENT OF LABOR UNLESS THOSE VIEWS ARE CLEARLY CONTRARY TO LAW.

WE DID UPHOLD THE AGENCY'S INITIAL DETERMINATION IN B-178773, SUPRA, AS NOT INCONSISTENT WITH ANY LEGAL OR REGULATORY REQUIREMENT BECAUSE THE AGENCY WAS NOT ON ANY KIND OF EFFECTIVE NOTICE UNTIL AFTER CONTRACT AWARD THAT THE DEPARTMENT OF LABOR MIGHT VIEW THE PROCUREMENT AS SUBJECT TO THE ACT. SIMILARLY, WE DO NOT QUESTION HERE THE CONTRACTING OFFICER'S INITIAL DETERMINATION THAT THE SERVICE CONTRACT ACT IS NOT APPLICABLE. BELIEVE, HOWEVER, THAT THE CONTRACTING OFFICER NOW IS ON NOTICE THAT THE DEPARTMENT OF LABOR MAY REGARD THIS PROCUREMENT AS SUBJECT TO THE ACT. SINCE THE DATE FOR RECEIPT OF INITIAL PROPOSALS HAS BEEN INDEFINITELY SUSPENDED, WE THINK THE ACT AND THE REGULATORY SCHEME CONTEMPLATE SUBMISSION OF THE MATTER BY THE AIR FORCE TO THE DEPARTMENT OF LABOR, AND WE ARE SO RECOMMENDING TO THE SECRETARY OF THE AIR FORCE. IN SO RECOMMENDING, WE RECOGNIZE THAT THE DEPARTMENT OF LABOR'S RULING IN THE ARMY PROCUREMENT HAS NOT NECESSARILY ESTABLISHED THE APPLICABILITY OF THE SERVICE CONTRACT ACT TO THIS PROCUREMENT, BUT SERVES TO INDICATE TO THE CONTRACTING OFFICER THAT THIS PROCUREMENT "MAY BE SUBJECT TO THE ACT."

WE ALSO RECOGNIZE THAT THE AIR FORCE APPARENTLY IS OF THE VIEW THAT A DEPARTMENT OF LABOR RULING THAT THE SERVICE CONTRACT ACT IS APPLICABLE TO THIS PROCUREMENT MAY BE CONTRARY TO LAW. HOWEVER, IN BOTH B-178400, SUPRA, AND THE GENERAL ACCOUNTING OFFICE REPORT CITED BY THE AIR FORCE, WHILE WE EXPRESSED DOUBT THAT THE LEGISLATIVE HISTORY OF THE ACT SUPPORTS THE DEPARTMENT OF LABOR'S CURRENT PRACTICE OF TREATING "WHITE COLLAR" WORKERS AS SUBJECT TO THE ACT, WE CONCLUDED THAT THE PRACTICE WAS NOT PROHIBITED BY THE ACT. THEREFORE, WE RECOMMENDED THAT THE MATTER BE REFERRED TO CONGRESS FOR CLARIFYING LEGISLATION. WE BELIEVE THAT UNTIL SUCH CLARIFICATION IS OBTAINED, CONTRACTING AGENCIES MUST GIVE DUE REGARD TO THE DEPARTMENT OF LABOR'S POSITION WHEN DETERMINING WHETHER A PARTICULAR PROCUREMENT "MAY BE SUBJECT" TO THE SERVICE CONTRACT ACT.

HEWES ENGINEERING ALSO PROTESTS THAT RFP PROVISION C-36, CAPTIONED DEMONSTRATION OF RESPONSIBILITY, WHICH PROVIDES THAT A CONTRACTOR RECEIVING AWARD "WILL BE HELD FULLY RESPONSIBLE FOR PROPER PERFORMANCE OF ALL THE CONTRACT REQUIREMENTS," MAKES ANY RESULTING CONTRACT ILLEGAL AND IMPOSSIBLE BECAUSE THE PROVISION STATES: "OFFERORS ARE CAUTIONED THAT IT IS IMPOSSIBLE TO DEVELOP AND EMPLOY GOVERNMENT INSPECTION AND ACCEPTANCE CRITERIA THAT IS ADEQUATE TO INSURE REMOVAL OF ERRONEOUS DATA FROM DELIVERED PRODUCTS." HEWES ENGINEERING ASKS: "HOW CAN THE GOVERNMENT CONTRACT FOR SOMETHING IT RECOGNIZES IS IMPOSSIBLE?"

THE AIR FORCE ACKNOWLEDGES THAT THE WORD "IMPOSSIBLE" IN THE CLAUSE MAY NOT HAVE BEEN THE BEST WORD TO USE, BUT POINTS OUT THAT THE FACT THAT THE GOVERNMENT IS UNABLE OR UNWILLING TO CONDUCT A COMPLETE TECHNICAL VERIFICATION OF THE DATA PRIOR TO ACTUAL USE IN NO WAY IMPLIES THAT THE CONTRACT IS IMPOSSIBLE TO PERFORM. THE AIR FORCE ALSO STATES THAT COMPLETE TECHNICAL VERIFICATION OF THE DATA BY THE GOVERNMENT DURING PERFORMANCE OF THE CONTRACT WOULD NOT ONLY RESULT IN DUPLICATION OF EFFORT FOR WHICH THE CONTRACTOR IS BEING PAID BUT WOULD ALSO IN EFFECT SHIFT THE BURDEN OF RESPONSIBILITY FOR SUCCESSFUL PERFORMANCE FROM THE CONTRACTOR TO THE GOVERNMENT. THE AIR FORCE POSITION IS THAT VERIFICATION MAY BE ACCOMPLISHED THROUGH ACTUAL APPLICATION OF THE DATA, AND TO HOLD THE CONTRACTOR RESPONSIBLE UNTIL THAT TIME IS NEITHER IMPOSSIBLE NOR ILLEGAL.

WE AGREE WITH THE AIR FORCE THAT THE CLAUSE DOES NOT EXPLICITLY STATE THAT PERFORMANCE IS IMPOSSIBLE, BUT ONLY THAT THE CORRECTNESS OF THE DATA SUPPLIED UNDER THE CONTRACT CANNOT BE VERIFIED AT THE USUAL ACCEPTANCE TIME. HOWEVER, SINCE THE AIR FORCE ACKNOWLEDGES THAT THE CLAUSE COULD BE BETTER WORDED, WE ARE SUGGESTING THAT THE CLAUSE BE REVISED THROUGH THE ISSUANCE OF AN AMENDMENT TO THE RFP.

THE REMAINING ALLEGATIONS OF HEWES ENGINEERING CONCERN THE VALIDITY OF SPECIAL PROVISIONS J-3 THROUGH J-8 OF THE RFP. THESE CLAUSES PROVIDE FOR EXERCISING OPTIONS TO EXTEND THE CONTRACT AND THE POSSIBLE AWARDING OF FOLLOW-ON CONTRACTS TO A SATISFACTORY INCUMBENT CONTRACTOR UNDER CERTAIN CIRCUMSTANCES. SECTION J-8 PROVIDES THAT IN THE EVENT THE GOVERNMENT SEEKS TO NEGOTIATE A FOLLOW-ON CONTRACT, THE CONTRACTOR WILL NOT PROPOSE TO INCREASE ITS COMPOSITE HOURLY RATE BY MORE THAN 5 PERCENT ANNUALLY. HEWES ASSERTS THAT SINCE THE RATE INCLUDES DIRECT LABOR, THIS RESTRICTION IS INVALID BECAUSE IT DOES NOT ALLOW FOR THE POSSIBLE WAGE INCREASES BROUGHT ABOUT BY THE DEPARTMENT OF LABOR WAGE DETERMINATIONS. AS NOTED ABOVE, THE GOVERNMENT VIEWED THIS PROCUREMENT AS SUBJECT TO THE WALSH- HEALEY ACT. IF IT IS SUBSEQUENTLY DETERMINED THAT THE SERVICE CONTRACT ACT IS APPLICABLE, THEN THE WAGE DETERMINATIONS WOULD BE CONTROLLING WITH RESPECT TO WAGES. IN THAT SITUATION, WE WOULD EXPECT THE AIR FORCE TO MODIFY CLAUSE J-8 ACCORDINGLY.

WITH RESPECT TO THE OTHER CLAUSES, THE AIR FORCE REPORTS THAT CLAUSE J-6 IS BEING DELETED. HEWES HAS NOT STATED ANY SPECIFIC OBJECTIONS TO THE REMAINING CLAUSES, AND WE SEE NOTHING IN THEM TO WHICH WE MAY PROPERLY OBJECT.