B-224357.2, Aug 31, 1987, Office of General Counsel

B-224357.2: Aug 31, 1987

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(2) the FAR does not require publication of Class deviations unless they are adopted as FAR revisions. Which was not the case here. John McNerney: This is in response to your letter dated May 11. At issue in Lecher was a clause in an invitation for bids (IFB). We sustained the protest on the basis that the clause was inconsistent with the FAR. Which prohibits administrative profit ceilings except when there are applicable statutory ceilings. Since we concluded that the VA clause was inconsistent with the FAR. Had complied with the Lecher decision by processing a "class deviation" (that is. The approval was made prior to consultation with the CAA Council on the basis of urgency. Thus appears to have been proper.

B-224357.2, Aug 31, 1987, Office of General Counsel

PROCUREMENT - Special Procurement Methods/Categories - Construction contracts - Fixed-price contracts - Profit restrictions DIGEST: In response to allegation of Associated General Contractors of America and former protester that corrective action taken by Veterans Administration (VA) in response to Comptroller General decision, Lecher Construction Co., B-224357, Sept. 30, 1986, 86-2 CPD Para. 369, did not comply with the applicable requirements of the Federal Acquisition Regulation (FAR) for deviation from the FAR, General Accounting Office (GAO) determines that agency actions in processing the class deviation appear to be in compliance with the FAR because (1) in accordance with the FAR exemption from consultation with the Civilian Agency Acquisition Council prior to authorization of the deviation, the agency properly determined that urgent circumstances precluded such consultation, and (2) the FAR does not require publication of Class deviations unless they are adopted as FAR revisions, which was not the case here.

Mr. John McNerney:

This is in response to your letter dated May 11, 1987, in which you maintain that the corrective action taken by the Veterans Administration (VA) in response to our decision, Lecher Construction Co., B-224357, Sept. 30, 1986, 86-2 CPD Para. 369, did not comply with the applicable requirements of the Federal Acquisition Regulation (FAR) for deviation from the FAR. We find that the agency complied with the applicable requirements.

At issue in Lecher was a clause in an invitation for bids (IFB), issued by the VA, for a fixed-price construction contract that limited the allowable percentage of profit for contract price increases resulting from change orders. See 48 C.F.R. Sec. 852.236-88(b) (1985). In the decision, we sustained the protest on the basis that the clause was inconsistent with the FAR, 48 C.F.R. Sec. 15.901(c) (1986), which prohibits administrative profit ceilings except when there are applicable statutory ceilings. Since we concluded that the VA clause was inconsistent with the FAR, we recommended that the VA follow the procedures required for deviating from the FAR in 48 C.F.R. subpart 1.4 or revise the IFB for consistency with the FAR. On December 5, 1986, the VA notified our Office that it chose to continue usage of the clause at issue, and had complied with the Lecher decision by processing a "class deviation" (that is, a deviation affecting more than one contracting action), thereby permitting continued use of the clause.

You maintain in your letter that the VA failed to comply with the FAR's requirements for consultation with the chairperson of the Civilian Agency Acquisition (CAA) Council and publication of the deviation for public comment prior to authorizing the class deviation. Instead, you contend that the VA merely approved the clause at issue internally and then transmitted it to the FAR Secretariat.

The FAR does provide that before authorizing a class deviation, the agency authorizing official generally must consult with the chairperson of the CAA Council. It exempts such consultation, however, when the agency determines that urgency precludes it. 48 C.F.R. Sec. 1.404(a)(1). Here, documents provided us by the VA indicate that on November 24, 1986, the agency approved a class deviation from the FAR for use of the clause at issue for construction contract changes costing less than $500,000. The approval was made prior to consultation with the CAA Council on the basis of urgency, and thus appears to have been proper.

Contrary to your understanding, there is no express requirement that a proposed class deviation be published for comment prior to its adoption. The FAR does provide that "when it is known that a class deviation will be required on a permanent basis, an agency should propose an appropriate FAR revision" (which, if approved, must be published). FAR, 48 C.F.R. Secs. 1.404, 1.501(c). The VA advises us, however, that although it forwarded the class deviation to the FAR Secretariat for approval, the Secretariat did not consider the deviation to warrant a revision to the FAR. Thus, it does not appear publication of the deviation was required. In any case, the VA reports that it published notice of the provision in question in the Federal Register on March 29, 1984, before adopting it as part of the VA supplemental regulations to the FAR, and that no comments were received.

Mr. John J. Lecher:

This is in response to your letter of May 27, 1987 joining in the allegation of the Associated General Contractors of America that the corrective action taken by the Veterans Administration in response to our decision, Lecher Construction Co., B-224357, Sept. 30, 1986, 86-2 CPD Para. 369, did not comply with the applicable requirements of the Federal Acquisition Regulation (FAR) for deviation from the FAR. As fully described in our letter to the Associated General Contractors, copy enclosed, we determined that the agency complied with the applicable requirements.

You further assert that your company filed an additional protest on September 30, 1986 on the Lecher procurement. You now inform us that you have not received a response to that protest.

While your September 30 letter did refer to a protest of award, we did not interpret this as a separate protest, but rather viewed it as additional comments concerning your first protest. We interpreted your request that award be withheld until a decision on the protest to refer to the originally filed protest for which we rendered a decision in Lecher on September 30. While you now claim that our interpretation of your September 30 letter was mistaken, and that you intended to file a separate protest, we believe that bringing the matter to our attention 8 months after the filing, when there had been no response to it from this Office, was not adequate pursuit of the matter.

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