B-222095, SEP 24, 1986

B-222095, SEP 24, 1986

EXPERTS AND CONSULTANTS - STATUS - CONTRACTOR OR EMPLOYEE DIGEST: CONGRESSMAN QUESTIONS HIRING OF PANEL OF EXPERTS AT $1,000 PER DAY BY THE STRATEGIC DEFENSE INITIATIVE ORGANIZATION (SDIO) AS AN IMPROPER PERSONAL SERVICES CONTRACT IN EXCESS OF THE NORMAL COMPENSATION LIMITATION FOR HIRING EXPERTS AND CONSULTANTS. WE CONCLUDE THAT THE SERVICES OF THESE PANEL MEMBERS WERE PERFORMED ON AN INDEPENDENT CONTRACTOR BASIS AND THUS DID NOT INVOLVE AN IMPROPER CONTRACT FOR PERSONAL SERVICES. WE ALSO HOLD THAT EXPERT OR CONSULTANT SERVICES OBTAINED THROUGH AN INDEPENDENT CONTRACT ARE NOT SUBJECT TO THE NORMAL LIMITATION ON COMPENSATION FOR EXPERTS OR CONSULTANTS.

THE HONORABLE ROBERT J. MRAZEK:

HOUSE OF REPRESENTATIVES

THIS IS IN RESPONSE TO YOUR LETTER OF JANUARY 29, 1986, CONCERNING CERTAIN HIRING PRACTICES USED BY THE STRATEGIC DEFENSE INITIATIVE ORGANIZATION (SDIO) TO EMPLOY EXPERTS AND CONSULTANTS. SPECIFICALLY, YOU QUESTION HIRING CONSULTANTS FOR A SPECIAL MILITARY CONSULTING PANEL FOR $1,000 PER DAY WHEN IT APPEARS SUCH ACTION INVOLVES THE IMPROPER USE OF PERSONAL SERVICES CONTRACTS.

FOR THE REASONS SET FORTH BELOW, WE CONCLUDE THAT THIS ACTION DID NOT INVOLVE AN IMPROPER USE OF PERSONAL SERVICES CONTRACTS AND DID NOT CIRCUMVENT THE LIMITATION ON COMPENSATION FOR EXPERTS AND CONSULTANTS.

BACKGROUND

THE RECORD BEFORE US SHOWS THAT IN 1985 THE STRATEGIC DEFENSE INITIATIVE ORGANIZATION, DEPARTMENT OF DEFENSE, ORGANIZED A PANEL OF EXPERTS TO REVIEW EXISTING SDIO STUDIES AND TO PREPARE A REPORT ON THE SUBJECT OF COMPUTING IN SUPPORT OF BATTLE MANAGEMENT. MEMBERS OF THE PANEL RECEIVED $1,000 PER DAY FOR THEIR SERVICES, PLUS TRAVEL EXPENSES, AND YOU QUESTION WHETHER THIS IS CONSISTENT WITH THE APPLICABLE LAWS GOVERNING THE HIRING OF EXPERTS AND CONSULTANTS.

SDIO COMMENTS

IN RESPONSE TO OUR REQUEST FOR COMMENTS, THE STRATEGIC DEFENSE INITIATIVE ORGANIZATION EXPLAINED THAT, IN APRIL 1985, THEY IDENTIFIED A NEED TO EVALUATE COMPUTER SUPPORT OF THE BATTLE MANAGEMENT ASPECT OF TEN ARCHITECTURAL STUDIES WHICH WERE AWARDED BY SDIO IN 1984. THE SDIO REPORT EXPLAINS FURTHER THAT THIS REVIEW WAS PERFORMED AS NON-PERSONAL SERVICES BASED ON FINDINGS THAT (1) THE DUTIES TO BE PERFORMED WOULD BE TEMPORARY OR INTERMITTENT, (2) PROCUREMENT OF THE SERVICES WOULD BE ADVANTAGEOUS TO THE NATIONAL DEFENSE, (3) EXISTING FACILITIES WERE INADEQUATE TO FURNISH THE SERVICES, AND (4) IT WAS NOT FEASIBLE TO OBTAIN PERSONNEL WITH THE NECESSARY SKILLS THROUGH THE NORMAL CIVIL SERVICE APPOINTMENT PROCESS.

THE PANEL'S REVIEW WAS INITIATED ON JUNE 10, 1985, BUT SDIO CONCEDES THAT THE NECESSARY CONTRACTUAL ARRANGEMENTS WERE NOT COMPLETED UNTIL NOVEMBER 1, 1985, WITH A MODIFICATION TO AN EXISTING CONTRACT WITH THE UNIVERSITY OF MARYLAND FOR EVALUATION OF RESEARCH IN THE AREAS OF MATHEMATICAL AND INFORMATION SCIENCES RESEARCH. THE PANEL'S REPORT (THE "EASTPORT REPORT") WAS ISSUED IN DECEMBER 1985, AND IT APPEARS THAT THE PANEL MEMBERS WERE REIMBURSED BY THE UNIVERSITY OF MARYLAND IN DECEMBER 1985 AT A RATE OF $1,000 PER DAY, PLUS TRAVEL EXPENSES. THE SDIO REPORT TO OUR OFFICE STATES THAT THIS RATE OF COMPENSATION WAS DETERMINED TO BE FAIR AND REASONABLE AND WAS SPECIFICALLY APPROVED UNDER REGULATIONS BY THE AIR FORCE OFFICE OF SCIENTIFIC RESEARCH, THE PROCURING ACTIVITY FOR THIS SDIO PANEL.

DISCUSSION

THE FIRST QUESTION TO BE ADDRESSED IS WHETHER THESE EXPERTS AND CONSULTANTS WERE EMPLOYED BY SDIO BY MEANS OF AN IMPROPER PERSONAL SERVICES CONTRACT. OUR DECISIONS HAVE HELD THAT "PERSONAL SERVICES GENERALLY MAY NOT BE OBTAINED ON A CONTRACTUAL BASIS AND MUST BE PERFORMED BY (GOVERNMENT EMPLOYEES) ***." U.S. ADVISORY COMMISSION ON PUBLIC DIPLOMACY, 61 COMP.GEN. 69 (1981), AND DECISIONS CITED THEREIN. HOWEVER, WHERE IT IS MORE FEASIBLE, MORE ECONOMICAL, OR NECESSARY TO ACCOMPLISH THE AGENCY'S TASK, A "PROPER CONTRACT" FOR SERVICES IS PERMISSIBLE SO LONG AS THE RELATIONSHIP BETWEEN THE GOVERNMENT AND THE CONTRACTING PERSONNEL IS NOT THAT OF EMPLOYER AND EMPLOYEE. PUBLIC DIPLOMACY, CITED ABOVE, AND 51 COMP.GEN. 561 (1972).

AS TO WHETHER THE RELATIONSHIP IS THAT OF AN INDEPENDENT CONTRACTOR OR EMPLOYER-EMPLOYEE, OUR DECISIONS HAVE LOOKED TO THE DEGREE OF SUPERVISION BY A FEDERAL OFFICER OR EMPLOYEE. FOR EXAMPLE, IN T. C. ASSOCIATES, B-193035, APRIL 12, 1979, WE STATED THAT IF THE GOVERNMENT TAKES OVER THAT DEGREE OF SUPERVISION THAT THE CONTRACTOR WOULD OTHERWISE PERFORM WITH RESPECT TO ITS EMPLOYEE, THE RELATIONSHIP MUST BE CONSTRUED AS THAT OF EMPLOYER AND EMPLOYEE. WITH RESPECT TO THE EMPLOYMENT OF EXPERTS AND CONSULTANTS, WE STATED IN T. C. ASSOCIATES THAT THE TOUCHSTONE OF IMPROPRIETY IS SUPERVISION BY A FEDERAL EMPLOYEE.

THERE IS NO INDICATION IN THE RECORD BEFORE US THAT THE PANEL MEMBERS PERFORMED THEIR SERVICES UNDER THE DEGREE OF SUPERVISION NORMALLY ASSOCIATED WITH THAT OF EMPLOYER-EMPLOYEE OR EMPLOYER EXPERT/CONSULTANT. IT APPEARS THAT SDIO ASSEMBLED A PANEL OF EXPERTS IN COMPUTER SCIENCES TO REVIEW EXISTING WORK AND ADVISE SDIO HOW TO DEVELOP THE NECESSARY COMPUTER SUPPORT FOR THE STRATEGIC DEFENSE INITIATIVE PROGRAM. SINCE THE CONTRACT REQUIRED THE PERFORMANCE OF A DISCRETE TASK, THE REVIEW OF THE ARCHITECTURAL STUDIES AWARDED IN 1984, WE CONCLUDE THAT THE SERVICES WERE PERFORMED ON AN INDEPENDENT CONTRACTOR BASIS AND DID NOT CONSTITUTE AN IMPROPER PERSONAL SERVICES CONTRACT. SEE 50 COMP.GEN. 553 (1971); AND 42 COMP.GEN. 395 (1963).

THE NEXT QUESTION CONCERNS THE RATE OF COMPENSATION FOR THESE SERVICES. WE NOTE THAT EXPERTS OR CONSULTANTS EMPLOYED UNDER THE AUTHORITY OF 5 U.S.C. SEC. 3109 (1982) ARE LIMITED TO A RATE OF COMPENSATION NOT TO EXCEED THE PAY SCHEDULE OF GRADE GS-18 UNLESS A HIGHER RATE OF PAY IS SPECIFICALLY AUTHORIZED. SEE 55 COMP.GEN. 1237 (1976). HOWEVER, WE HAVE CONSISTENTLY HELD THAT THE MAXIMUM COMPENSATION LIMITATION OF 5 U.S.C. SEC. 3109 APPLIES ONLY TO SERVICES OBTAINED ON AN EMPLOYER-EMPLOYEE BASIS, NOT TO EXPERT OR CONSULTANT SERVICES OBTAINED THROUGH AN INDEPENDENT CONTRACTOR RELATIONSHIP. 26 COMP.GEN. 188 (1946); AND CHARLES R. HOBBS CORP., B-191865, NOVEMBER 13, 1978.

SINCE WE HAVE CONCLUDED THAT THESE SERVICES WERE OBTAINED ON AN INDEPENDENT CONTRACTOR BASIS, THE PANEL MEMBERS WOULD NOT BE SUBJECT TO THE STATUTORY LIMITATION ON THE COMPENSATION OF EXPERTS AND CONSULTANTS.

FINALLY, WE NOTE THAT ALTHOUGH THE WORK OF THIS PANEL APPEARS TO BE WITHIN THE SCOPE OF THE CONTRACT OF THE UNIVERSITY OF MARYLAND TO PROVIDE RESEARCH EVALUATION SERVICES IN THE AREAS OF MATHEMATICAL AND INFORMATION SCIENCES, THE CONTRACT WAS MODIFIED SO THAT THE UNIVERSITY WOULD "ACT AS (AN) AGENT" TO PAY FOR THE FEES FOR THE PARTICIPANTS OF THIS PANEL.

OUR OFFICE HAS QUESTIONED IN THE PAST THE ACTIONS OF THE FEDERAL AGENCIES TO USE EDUCATIONAL INSTITUTIONS AS INTERMEDIARIES IN PROCURING THE SERVICES OF EXPERTS OR CONSULTANTS. SEE USE OF CONTRACTS WITH UNIVERSITIES AND OTHER ORGANIZATIONS TO EMPLOY EXPERTS AND CONSULTANTS, B-169475, APRIL 13, 1971. WE CONTINUE TO BELIEVE THAT CONTRACTS WITH EDUCATIONAL INSTITUTIONS SHOULD NOT BE USED FOR THE PROCUREMENT OF THE SERVICES OF EXPERTS AND CONSULTANTS.

WE TRUST THIS IS RESPONSIVE TO YOUR INQUIRY.