B-199939(2),L/M, MAR 13, 1981

B-199939(2),L/M: Mar 13, 1981

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SECRETARY: WE ARE ENCLOSING A COPY OF OUR DECISION IN THE PROTEST FILED BY PIKES PEAK COMMUNITY COLLEGE CONCERNING THE ARMY'S REQUEST FOR PROPOSALS DAKF57- 80-R-0106 TO FURNISH A BASIC SKILLS EDUCATION PROGRAM OF INSTRUCTION AT FORT LEWIS. WE ARE CONCERNED. DAR SEC. 12-1007 IS ENTITLED "PROCEDURES FOR EVALUATING PROFESSIONAL EMPLOYEE COMPENSATION FOR SERVICE CONTRACTS.". WHILE SEC. 12 1007.2 STATES THAT IT NEVERTHELESS WILL BE THE POLICY OF THE GOVERNMENT "THAT ALL SERVICE EMPLOYEES. WE RECOGNIZE THAT IT IS A LEGITIMATE PRACTICE TO COMPARE SALARIES PROPOSED BY COMPETING OFFERORS FOR THE PURPOSE OF EVALUATING COST REALISM. THE RESULT MAY WELL BE AN EXTENSION OF THE "SUCCESSOR CONTRACTOR" CONSIDERATIONS REFLECTED IN THE SERVICE CONTRACT ACT OF 1965 TO EMPLOYEES WHO ARE EXPRESSLY EXCLUDED FROM THE ACT'S COVERAGE.

B-199939(2),L/M, MAR 13, 1981

PRECIS-UNAVAILABLE

CASPAR W. WEINBERGER, THE SECRETARY OF DEFENSE:

MR. SECRETARY:

WE ARE ENCLOSING A COPY OF OUR DECISION IN THE PROTEST FILED BY PIKES PEAK COMMUNITY COLLEGE CONCERNING THE ARMY'S REQUEST FOR PROPOSALS DAKF57- 80-R-0106 TO FURNISH A BASIC SKILLS EDUCATION PROGRAM OF INSTRUCTION AT FORT LEWIS, WASHINGTON.

THE PROTEST HAS BEEN DENIED. WE ARE CONCERNED, HOWEVER, THAT DEFENSE ACQUISITION REGULATION (DAR) SEC. 7-2003.79 (1976 ED.) IF APPLIED TO ACHIEVE THE PURPOSE AND POLICY EXPRESSED IN DAR SECS. 12 1007.1 AND 12- 1007.2 MAY LEAD TO ABUSE IN SOME INSTANCES.

DAR SEC. 12-1007 IS ENTITLED "PROCEDURES FOR EVALUATING PROFESSIONAL EMPLOYEE COMPENSATION FOR SERVICE CONTRACTS." SECTION 12-1007.1 RECOGNIZES THAT THE SERVICE CONTRACT ACT OF 1965, 41 U.S.C. SEC. 351 ET SEQ. (1976), DOES NOT PROTECT PROFESSIONAL EMPLOYEES, WHILE SEC. 12 1007.2 STATES THAT IT NEVERTHELESS WILL BE THE POLICY OF THE GOVERNMENT "THAT ALL SERVICE EMPLOYEES, INCLUDING PROFESSIONAL EMPLOYEES, EMPLOYED BY CONTRACTORS *** BE FAIRLY AND PROPERLY COMPENSATED." WE RECOGNIZE THAT IT IS A LEGITIMATE PRACTICE TO COMPARE SALARIES PROPOSED BY COMPETING OFFERORS FOR THE PURPOSE OF EVALUATING COST REALISM, MANAGEMENT JUDGMENT AND UNDERSTANDING. NONETHELESS, THE DAR SEC. 7 2003.79 TEST FOR SOUND MANAGEMENT JUDGMENT AND UNDERSTANDING MAY TEND TO BE EQUATED WITH WHETHER EACH OFFEROR PROPOSES TO PAY COMPENSATION AT A LEVEL WHICH, FOR LACK OF A FORMAL WAGE DETERMINATION, EQUALS OR EXCEEDS THAT PAID BY THE INCUMBENT. THE RESULT MAY WELL BE AN EXTENSION OF THE "SUCCESSOR CONTRACTOR" CONSIDERATIONS REFLECTED IN THE SERVICE CONTRACT ACT OF 1965 TO EMPLOYEES WHO ARE EXPRESSLY EXCLUDED FROM THE ACT'S COVERAGE.

SINCE THERE IS NO STATUTORY REQUIREMENT THAT THE SUBJECT CLASS OF EMPLOYEES BE PROTECTED, WE QUESTION WHY PROFESSIONAL EMPLOYEE WAGE SCALES HAVE BEEN SINGLED OUT FOR THIS PROTECTION AND THE LEGAL AUTHORITY OF THE DEPARTMENT OF DEFENSE TO ATTEMPT TO DO SO. SEE 51 COMP.GEN. 72 (1971); 50 COMP.GEN. 592 (1971).

IN ADDITION, THE DAR SEC. 7-2003.79 CLAUSE CREATES POTENTIAL PROBLEMS IF PROPOSALS ARE SCORED BY TREATING THE RATES PAID BY AN INCUMBENT AS A MINIMUM STANDARD FOR PROFESSIONAL COMPENSATION SINCE THERE IS NO ASSURANCE THAT THESE RATES ARE THEMSELVES REASONABLE OR "FAIR" AND SINCE IT MAY NOT BE POSSIBLE TO RELEASE A PREDECESSOR CONTRACTOR'S RATE SCHEDULE IN A COMPETITION.

WE ARE AWARE THAT THE PROVISIONS IN QUESTION WERE INCLUDED IN THE DAR TO CONFORM WITH OFFICE OF FEDERAL PROCUREMENT POLICY LETTER NO. 78-2. IT IS POSSIBLE AS A RESULT THAT THEY DID NOT RECEIVE THE SAME SCRUTINY THEY WOULD HAVE UNDERGONE HAD THEY BEEN IMPLEMENTED TO CORRECT A PROBLEM WHICH HAD ARISEN IN CONNECTION WITH A DEPARTMENT OF DEFENSE PROCUREMENT.

IN THE CIRCUMSTANCES, THEREFORE, WE SUGGEST THAT IT MIGHT BE APPROPRIATE TO FURTHER EXAMINE AND REVISE THESE PROVISIONS TO ASSURE THAT OFFERORS ARE NOT MISLED, THAT EVALUATIONS WILL BE EQUITABLE, AND THAT ADEQUATE PROPOSAL PREPARATION INFORMATION WILL BE FURNISHED TO OFFERORS WHERE THE DAR PROVISION IS TO BE APPLIED.

WE WOULD APPRECIATE BEING ADVISED OF THE ACTION TAKEN IN THIS REGARD.

DIGEST

REVIEW OF REGULATION REQUIRING COMPARISON OF PROPOSED COMPENSATION LEVELS WITH COMPENSATION PAID BY INCUMBENT IS INDICATED, SINCE IN THE ABSENCE OF STATUTORY AUTHORITY THE RATIONALE FOR THE REGULATION IS UNCLEAR AND SINCE THE REGULATION CREATES POTENTIAL PROBLEMS. IN THIS CONNECTION, THERE IS NO ASSURANCE THAT RATES PAID BY AN INCUMBENT ARE FAIR OR THAT AN INCUMBENT'S RATE SCHEDULE CAN BE RELEASED IN A COMPETITION.