B-192406 October 12, 1978

B-192406 October 12, 1978

The Honorable Newton I. Steers, Jr. House of Representatives

Dear Mr. Steers

This is in response to your request for our opinion on the legality of a contract between the Civil Service Commission and the law firm of Rogovin, Stern and Huge (Rogovin), for Rogovin to investigate alleged merit system abuses by officials of the Commission. You particularly requested that we consider the contract in light of Federal Records Act Sept 5, 1950, Ch 049 64 stat. 583 sec. 502 provisions which prohibit the destruction of documents which might be used in judical proceedings.

We requested that the Chairman of the Commission send us a copy of the contract, as modified by the parties on June 22, 1978, and a report containing his views on the legal authority for the terms of the contract and subsequent modifications. We received this information in a report dated August 9, 1978, from the Acting Deputy General Counsel of the Commission. We have analyzed the documents, and have determined that the terms of the contract are legally supportable, except insofar as they may be asserted to bar this Office from access to all of the contractor's records for audit purposes.

The Contract

The original contract between the Civil Service Commission and Rogovin was negotiated without advertising pursuant to 41 U.S.C. Sec. 252(c)(10), which permits such contracts "for property or services for which it is impracticable to secure competition. "

The stated purpose of the contract was as follows.

"The Contractor will serve as Special Counsel* to the Chairman of the Civil Service Commission in connection with an inquiry concerning alleged violations of merit and equal Employment Opportunity Laws, Regulations and Policies by employees of the Civil Service Commission.

"*Throughout this document the term Special Counsel shall include those persons designated by Special Counsel to act on his behalf.

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"At the conclusion of the inquiry, the contractor will submit a written report containing his findings and recommendations.

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"Special Counsel will then advise the Chairman in writing whether in Special Counsel's opinion any further inquiry potentially leading to disciplinary, , legal or other personnel action with regard to Commission staff should be undertaken. * * *"

The applicable appropriation act--Pub. L. No. 95-81, 91 Stat. 341, July 31, 1977--provides for necessary expenses of the Commission and "services as authorized by 5 U.S.C. Sec. 3109." Under 5 U.S.C. Sec. 3109, the services of experts or consultants may be obtained either on an independent contract or employment basis. In our opinion, since the contract at issue does not appear to involve matters covered by 5 U.S.C. Sec. 3106 (which prohibits agencies other than the Department of Justice from employing attorneys for the conduct of litigation) or which are otherwise under the jurisdiction of the Department of Justice, the contract for the services of Rogovin for the purposes indicated by the Commission would appear to be authorized by 5 U.S.C. Sec. 3109.

Section B of the contract was modified by the addition of a new paragraph (c). As amended, this section states as follows:

"B. Methods and Procedures

"1. The Contractor will designate Mr. Mitchell Rogovin to act as Special Counsel to the Commission. The inquiry shall be conducted by the Special Counsel, independently of the Civil Service Commission, with the assistance of attorneys selected from the contractor's firm.

"(a) Initial Steps.

"Initially, Special Counsel will do each of the following:

"(1) Assemble a staff;

"(2) Collect and review all written materials relevant to the inquiry;

(3) Identify individuals Who need to be interviewed and subject matter that needs to be explored, and

"(4) Follow the requirement of the Privacy Act of. 1974, Public Law 93-579, December 31, 1974 (5 U.S.C. 552a) and applicable agency regulations.

"(b) Subsequent Steps

"Subsequently, Special Counsel will do each of the following:

"(1) Interview individuals, including present Civil Service Commission officers and employees or anyone else who may have knowledge relevant to the inquiry;

"(2) Where appropriate, take testimony under oath or affirmation from individuals who may have knowledge relevant to the inquiry;

"(3) Collect and review any additional documents relevant to the inquiry;

"(4) Identify any additional individuals who need to be interviewed and subject matter that needs to be explored as part of the inquiry; and

"(5) Report in writing as provided in Section |C. infra

"(c) At all stages of the investigation and thereafter, the Special Counsel and those under his direction agree to take all reasonable precautions to avoid unwarranted invasions of the personal privacy of individuals by protecting the confidentiality of the information obtained during the investigation. This includes, but is not limited to, the process of reviewing and gathering personal information, collected and developed, preparing reprints, and the disclosure of said information. It is in the discretion of the special counsel to, either at the conclusion of its project or as it proceeds, destroy those documents for which there is clearly no relevance to the findings; with respect to documents obtained from the Commission, such destruction would only apply to copies of documents or documents for which there is at least one additional copy located somewhere in the Commission. All fir-es shall remain intact, secured, and located in the Commission under the control of the contractor for a period of three years after the date of the Special Counsel's Final Report, with the contractor having sole access to the files, At the end of the three year period the files will return to the control of the Commission. At that time the contractor is to either destroy documents which were copied from documents obtained from the Commission or inform the Commission in which Commission Offices the remaining documents originated. "

This section establishes the high degree of independence to be exercised by the Special Counsel as an independent contractor. However, it is also the basis for the questions that have been raised about the legality of the contractor's unfettered control over documents in paragraph (c), particularly the provisions allowing the contractor to maintain sole control of and access to all files for 3 years after the submission of a final report, and "to destroy those documents for which there is clearly no relevance to the findings" and which, in the case of documents obtained from the Commission, are copies of documents remaining in the Commission's possession.

In order to determine the legality of these provisions, and to respond to your expressed concern about documents which might be used in judicial proceedings, it is necessary to distinguish between Government documents or records and the contractor's own files and work products, since all relevant legislation pertains only to Government documents. The primary responsibility for records management is vested in the head of each Federal agency by 44 U.S.C. Sec. 3101, which states:

"The head of each Federal agency shall make and preserve records containing adequate and proper documentation of the organization, functions, policies, decisions, procedures, and essential transactions of the agency and designed to furnish the information necessary to protect the legal and financial rights of the Government and of persons directly affected by the agency's activities. "

Additional records management, storage, and disposal functions are vested in the Administrator of General Services. 44 U.S.C. Secs. 2901 et seq., 3301 et seq.

As defined in 44 U.S.C. Sec. 3301 (Supp. V. 1975)

"records' includes all books, papers, maps, photographs, machine readable materials, or other documentary materials, regardless of physical form or characteristics, made or received by an agency of the United States Government under Federal law or in connection with the transaction of public business and preserved or appropriate for preservation by that agency or its legitimate successor as evidence of the organization, functions, policies, decisions, procedures, operations, or other activities of the Government or because of the informational value of data in them. Library and museum material made or acquired and preserved solely for reference or exhibition purposes, extra copies of documents preserved only for convenience of reference, and stocks of publications and of processed documents are not included. ''

Under this definition (which is made applicable to 44 U.S.C. Secs. 3101 et seq. and 3301 et seq. by the terms of 44 U.S.C. Sec. 2901). it is clear that only those documents made or received by a Federal agency are subject to the procedures set forth in the maintenance and disposal statutes cited above. On this basis, any Federal agency records that are loaned outside the agency retain their character as records made by the agency, and the lending agency must insure that they are maintained intact.

On the other hand, copies of agency documents, where the original (or another copy) is retained by the agency, do not appear to us to retain this official character, and may be kept or destroyed by the recipient, unless specific contract terms provide otherwise.

Similarly, documents produced by a contractor according to the terms of the contract, and submitted to the concerned agency, become records "received by" tile agency within the meaning of 44 U.S.C. Sec. 3301, and are subject to the Federal Records Act management and disposal pro-visions discussed above. However, documents produced by a contractor but not submitted or required to be submitted to the agency by the terms of the contract retain their character as private files or work product of the contractor. Such documents are not subject to the provisions of the Federal Records Act, or to other Federal legislation dealing with Federal records.

We are not aware of any cases construing the pertinent portions of the Federal Records Act discussed above, although there are some recent decisions involving a definition of "Federal records" for purposes of the Freedom of Information Act (FOIA), 5 U.S.C. Sec. 552. Since the FOIA is directed at Government agencies and gives those seeking access to Federal records a judicial forum in which the release of the records may be compelled (5 U.S.C. Sec. 552(a)(4)(B), Soucie v. David, 448 F. 2d 1067 (D.C, Cir. 1971)), these decisions are relevant insofar as they set forth standards for determining what records can be characterized as Govenrment agency records,

In most cases involving the records of private consultants or grantees, the characterization of those records by the courts has depended on the degree to which the organization is acting in a private capacity in creating the documents, and on the use of the documents by the agency involved. In a recent case involving a request for the underlying data of a group of National Institutes of Health grantees (CIBA-GEIGY Corp. v. Mathews, 480 F. Supp. 523 (S.D. N.Y., 1977)), the plaintiff asserted that even though the defendant grantee was not a Government agency, its records nevertheless were agency records, subject to the FOIA. The Court held otherwise, stating:

"***Implicitly, the FOIA's purpose of disclosing Government agency records reaches only those records which are owned or controlled by the Government agency and thus used in the performance of its public business.

"In evaluating whether these records are agency records, this Court holds that the goals and purposes of the Act [FOIA] would be served best by imposing a standard which calls for proof that the records were either Government-owned or subject to substantial Government control or use. In other words, it must appear that there was significant Government involvement with the records themselves in order to deem them agency records. " 428 F. Supp., at 529.

The Court additionally held that the [act or amount of Federal funding of a research project does not determine the character of the work produced; and that Government access to and reliance upon information provided by the grantee does not signify Government ownership or control of such information. Id., at 530. The Court concluded:

"In sum, the Court finds that the UGDP [grantee] functioned as a private organization. The raw data of the research organization's study was its own private property and not Government property. Because there has not been an adequate showing that the underlying data of the researchers was directly controlled or utilized by a Government-agency in the performance of governmental operations, the records cannot be deemed 'agency records' for the purposes of disclosure under the FOIA. " Id., at 532.

In consonance with this decision, it is our belief that the contractor here is functioning as a private, independent organization, and that the records and work papers generated by it as part of its investigation are its own private property (since the contract does not provide otherwise) unless they are submitted to the Commission with the final report which the contractor is obligated to provide.

Any research or background materials generated by the contractor and not "directly controlled or substantially utilized" by the Commission cannot, therefore, be deemed "agency records" for purposes of the FOIA, (CIBA- GEIGY, supra) and in addition are not, in our view, subject to the Federal Records Act. Thus if the documents which the Special Counsel has produced in support of his final report are not voluntarily submitted to the Commission with the report, all of these materials will remain the private property of the contractor.

Discussion

1. Governmental Access to Records

As indicated above, we do not believe that Section B. 1. (c) of the contract restricts any right of access to Government documents which the Government otherwise would possess. Although the August 9 report from the Commission failed to address the status of the Commission's own records, and the extent to which they would be subject to the provisions of the contract, we have been advised informally that the contractor obtained only copies of Commission documents--with one exception. The contractor has been loaned some voluminous case files dealing with discrimination complaints which would be burdensome to reproduce, but we have been advised that all of these files will be returned to the Commission intact at the completion of the contract, and will not be included in the files to be "embargoed" for 3 years. Thus, following submission of the contractor's final report, all Government records will be under the control of the Commission.

On the other hand, documents generated by the contractor and not submitted or required to be submitted to the Commission, retain their private character, and absent an express contractual provision, there is no legal right of access to them. tender the terms of the contract, the contractor is not explicitly required to provide the Commission with supporting documents for the final written report it submits, and such documents, even though generated by the investigation and paid for by the Government, do not become Government documents. Thus there is no general right of governmental access to them unless they pass into the control of the Commission.

The contract does contain one express provision for access, however, which states in pertinent part:

"10, Examination of Records by Comptroller General

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"(b) The Contractor agrees that the Comotroller General of the United States or any of his duly authorized representatives shall, until the expiration of 3 years after final payment under this contract or such lesser time specified in either Appendix M of the Armed Services Procurement Regulation or the Federal Procurement Regulations Part 1-20, as appropriate, have access to and the right to examine any directly pertinent books, documents, papers, and records of the Contractor involving transactions related to this contract. " General Provisions, paragraph 10(b),

As the contract was negotiated without advertising pursuant to 41 U.S.C. Sec. 2 52 (c ) no ), this access -to- records provision was required to be included by 41 U.S.C. Sec. 254(c). Under the terms of this contractual provision, it is our position that we have the right of access to all the "books, documents, papers, or records" of the contractor that we consider to be "directly pertinent" to "transactions related to this contract. " See, Eli Lilly and Company v. Staats, 574 F.2d 304 (7th Cir. 1978).

Section B. 1, (c) appears, at first glance, to be inconsistent with 41 U.S.C. Sec. 254(c) insofar as it gives the contractor sole access to all of his filed for a period which may be, in whole or in part, coterminous with this Office's right of access to these records for audit purposes. On this point, the contract provides:

"1. Special Provisions

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"2. In the event of any, inconsistency between the provisions of this contract,- the inconsistency shall be resolved by giving precedence in the following order (a) the Description and Specifications(b) General Provisions; (c) Supplemental General Provisions; (d) Other provisions of the contract, whether incorporated by reference or otherwise; (e) The Contractor's agreements." Description and Specifications, Section I, 2.

However, in our opinion, Section I. 2 does not give precedence to section B. 1. (c) of the contract over GAO's right of access to contractor documents relating to the contract. As our right of access to contractor records is required by statute (a fact known and agreed to by the parties), it is reasonable to assume that section B. 1. (c) of the contract was not intended by the parties to apply to GAO, since it would conflict with a contract provision explicity worded to the contrary. For this reason, we believe that our right of access to all contractor records is unimpaired by the contract provision at issue. The Commission and other governmental bodies, on the contrary, do appear to be subject to the provisions of section I. 2.

2. Destruction of Documents

Under the terms of this contract, no documents subject to the provisions of the Federal Records Act will be destroyed by the contractor unless copies exist in Commission files. In addition, no documents that the contractor considers relevant to the final report and that ultimately may satisfy the definition of agency records will be destroyed by the contractor, but rather are to be retained under conditions of limited access for 3 years.

The remaining documents, which are not public property and have not been made part of the supporting documentation to be held under the control of the contractor as provided by the contract, could be destroyed by the contractor under the terms of section B.1. (c) of the contract. However; the Chairman does not have the authority to give the Special Counsel, by the contract provision at issue, the power to destroy documents he considers irrelevant to his findings, since such power is in direct contravention of GAO's statutory right of access to all of the materials of the contractor that are directly pertinent to the contract. It is not inconceivable that documents deemed irrelevant to the conclusions of the contractor might at the same time he highly and directly pertinent to transactions related to the contract for purposes of a GAO audit. he destruction of any documents generated by the contractor in carrying out the terms of the contract, therefore, would impair GAO's statutory right of access for 3 years to that information, and our ability to evaluate the contractor's compliance with the terms of the contract.

For this reason, we believe that the contractor should maintain these records--segregated from those records that he considers related or relevant to the contract, if preferable--for the same period as the documents that support the findings of the final report. This would permit GAO to have access to all of the contractor's records, and would allow this information to be examined as part of any further or follow-up investigation, at a time when the persons who supplied the information might no longer be available.

We shall inform the Commission of our position on this issue, and that the contractor is to be instructed to destroy no records or documents related in any way to the contract.

Conclusion

You also requested that we evaluate, at the completion of the Rogovin investigation, whether the conclusions contained in the contractor's final report are supported by the preponderance of the evidence. We have been informed that the contract duration was extended to September 30. After steps have been taken by the Commission in resolving the alleged merit system abuses of its officials, we will begin our appraisal, which will consider the work of Rogovin and the action of the Commission on the recommendation of its Special Counsel.

In this connection, we would like to express a serious reservation about the future implementation by the Chairman of any of the recommendations of the contractor. We question whether the Chairman will be able to act on the findings and recommendations of the contractor before the 3-year period expires, since any disciplinary proceedings that might be instituted on the basis of unsupported recommendations would be subject to challenge on due process grounds.

We trust that this information will be helpful to you.

Sincerely yours,

ELMER B. STAATS Comptroller General of the United States