U.S. Railway Association's Subsidy for Its Executive Dining Room and Its Award of Two Contracts

CED-78-2: Published: Nov 7, 1977. Publicly Released: Jul 8, 1981.

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The U.S. Railway Association is a nonprofit, mixed-owership government corporation which is free from certain standard government procedures. The financial records of the U.S. Railway Association's executive dining room do not adequately show the extent to which the dining room is self-supporting. Analysis of two contracts awarded by the Association showed that one would not have complied with Federal Procurement Regulations had they been applicable, while the other would have conformed to the regulations.

The Association established the executive dining facility in order to provide a meeting place which was conducive to private, informal discussions and which offered easy accessibility to help insure that the continuity of business discussions was not upset or lost during intermission for meals. The dining room is not a self-supporting operation and depends on financial assistance from the Association's administrative appropriations. The records and financial statements of the dining room do not fully disclose all relevant financial information pertaining to the costs absorbed by the Association. Investigation of one contract showed that the Association gave two firms advance notice of a solicitation, while a competitor, who did not get advance notice, canceled his plan to compete because he could not submit his proposal in time. The advance notice would have violated Federal Procurement Regulations had they applied and was contrary to good procurement practice in general. The Association has since issued a new order on procurement aimed at strengthening the Association's procurement process. (SC)

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