Skip to main content

B-152306, DECEMBER 19, 1966, 46 COMP. GEN. 573

B-152306 Dec 19, 1966
Jump To:
Skip to Highlights

Highlights

THE STATUTORY FEE LIMITATION APPLICABLE TO THE PROCUREMENT OF A-E SERVICES BY THE GENERAL SERVICES ADMINISTRATION (GSA) IS CONTAINED IN SECTION 304 (B) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949. OF THE PROJECT TO WHICH SUCH FEE IS APPLICABLE IS AUTHORIZED IN CONTRACTS FOR ARCHITECTURAL OR ENGINEERING SERVICES RELATING TO ANY PUBLIC WORKS OR UTILITY PROJECT). SECTION 304 (B) WAS ENACTED USING THE EXACT LANGUAGE OF SECTION 4 (B) OF THE 1947 ACT. THE COMMISSIONER'S LETTER RECOGNIZES THAT THE STATUTORY LIMITATIONS CONTAINED IN SECTIONS 4 (B) AND 304 (B) APPLY TO ALL TYPES OF CONTRACTS AND ARE NOT RESTRICTED SOLELY TO CONTRACTS ON A COST-PLUS-FIXED-FEE BASIS. IT IS MAINTAINED.

View Decision

B-152306, DECEMBER 19, 1966, 46 COMP. GEN. 573

CONTRACTS - ARCHITECT, ENGINEERING, ETC., SERVICES - FEES - LIMITATIONS COMPUTATION THE 6-PERCENT FEE LIMITATION PRESCRIBED FOR ARCHITECT-ENGINEER (A-E) CONTRACTS EXECUTED BY THE GENERAL SERVICES ADMINISTRATION NOT ONLY APPLIES TO ALL TYPES OF CONTRACTS, BUT ALSO INCLUDES ALL COSTS INCURRED IN THE PERFORMANCE OF A-E CONTRACTS, AND 41 U.S.C. 254 (B) NOT LIMITING COSTS TO THE PROFESSIONAL SERVICES REQUIRED IN THE PREPARATION OF DESIGNS, PLANS, DRAWINGS, AND SPECIFICATIONS, OR ANY COSTS CATEGORIZED AS ENGINEERING SERVICES, BUT IMPOSING A LIMITATION ON THE TOTAL COMPENSATION PAYABLE FOR ALL SERVICES PERFORMED UNDER A-E CONTRACTS, REGARDLESS OF WHETHER THE COST REPRESENTS TRAVEL EXPENSES, CONSULTANT FEES, REPRODUCTION EXPENSES, SUPERVISION OF CONSTRUCTION, PRELIMINARY ENGINERING EFFORT, OR THE LIKE, NO COST EXCLUSIONS MAY BE PERMITTED IN COMPLYING WITH THE FEE LIMITATION IN SECTION 254 (B).

TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, DECEMBER 19, 1966:

WE REFER TO A LETTER DATED NOVEMBER 8, 1966, WITH ENCLOSURES, FROM THE COMMISSIONER, PUBLIC BUILDINGS SERVICE, IN RESPONSE TO OUR REQUEST FOR COMMENTS ON CERTAIN MATTERS PERTINENT TO OUR CURRENT GOVERNMENT WIDE REVIEW OF THE APPLICATIONS AND INTERPRETATIONS OF THE STATUTORY FEE LIMITATION ON ARCHITECT-ENGINEER (A-E) CONTRACTS.

THE STATUTORY FEE LIMITATION APPLICABLE TO THE PROCUREMENT OF A-E SERVICES BY THE GENERAL SERVICES ADMINISTRATION (GSA) IS CONTAINED IN SECTION 304 (B) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 41 U.S.C. 254 (B). THAT SUBSECTION PROVIDES, IN PERTINENT PART, AS FOLLOWS:

* * * A FEE INCLUSIVE OF THE CONTRACTOR'S COSTS AND NOT IN EXCESS OF 6 PER CENTUM OF THE ESTIMATED COST, EXCLUSIVE OF FEES, AS DETERMINED BY THE AGENCY HEAD AT THE TIME OF ENTERING INTO THE CONTRACT, OF THE PROJECT TO WHICH SUCH FEE IS APPLICABLE IS AUTHORIZED IN CONTRACTS FOR ARCHITECTURAL OR ENGINEERING SERVICES RELATING TO ANY PUBLIC WORKS OR UTILITY PROJECT).

AN EXAMINATION OF THE LEGISLATIVE HISTORY OF THAT ACT REVEALS AN INTENT TO EXTEND TO THE GENERAL SERVICES ADMINISTRATION THE SAME FLEXIBLE PROCUREMENT PRINCIPLES OF THE ARMED SERVICES PROCUREMENT ACT OF 1947. SEE S. REPT. NO. 475, 81ST CONG., 1ST SESS., PAGE 5; H. REPT. NO. 670, 81ST CONG., 1ST SESS., PAGE 6. IN CONFORMITY WITH THAT INTENT, SECTION 304 (B) WAS ENACTED USING THE EXACT LANGUAGE OF SECTION 4 (B) OF THE 1947 ACT.

THE COMMISSIONER'S LETTER RECOGNIZES THAT THE STATUTORY LIMITATIONS CONTAINED IN SECTIONS 4 (B) AND 304 (B) APPLY TO ALL TYPES OF CONTRACTS AND ARE NOT RESTRICTED SOLELY TO CONTRACTS ON A COST-PLUS-FIXED-FEE BASIS. IT IS MAINTAINED, HOWEVER, THAT SINCE SECTION 4 (B) OF THE 1947 ACT IS BASED ON THE ACT OF APRIL 25, 1939, 53 STAT. 590, AND THE ACT OF AUGUST 7, 1939, 53 STAT. 1240 (NOW CODIFIED AS 10 U.S.C. 7212 AND 4540, RESPECTIVELY), A-E SERVICES NOT RELATED TO THE ,PRODUCTION AND DELIVERY OF THE DESIGNS, PLANS, DRAWINGS, AND SPECIFICATIONS" ARE NOT SUBJECT TO THE FEE LIMITATION. ON THIS BASIS, IT IS INDICATED THAT IT IS THE PRACTICE OF GSA TO EXCLUDE THE FOLLOWING TYPES OF A-E SERVICES FROM THE FEE LIMITATION PRESCRIBED BY SECTION 304 (B) OF THE 1949 ACT:

A. INVESTIGATIVE SERVICES INCLUDING, BUT NOT LIMITED TO THE FOLLOWING:

DETERMINATION OF PROGRAM OF REQUIREMENTS;

DETERMINATION OF FEASIBILITY OF PROPOSED PROJECT

PREPARATION OF MEASURED DRAWINGS OF EXISTING FACILITY;

SUBSURFACE INVESTIGATION;

STRUCTURAL, ELECTRICAL AND MECHANICAL INVESTIGATIONS OF EXISTING FACILITY;

SURVEYS: TOPOGRAPHIC, BOUNDARY UTILITIES.

B. SPECIAL CONSULTANT SERVICES NOT NORMALLY AVAILABLE IN ORGANIZATIONS OF ARCHITECTS OR ARCHITECT/ENGINEERS. SUCH SERVICES ARE OCCASIONALLY NEEDED IN FUNCTIONAL AREAS WHICH ARE UNUSUAL TO TYPICAL BUILDING DESIGN.

C. OTHER:

REPRODUCTION OF APPROVED DESIGNS THROUGH MODELS, COLOR RENDERINGS, PHOTOGRAPHS OR OTHER PRESENTATION MEDIA;

TRAVEL, PER DIEM;

SUPERVISION OF CONSTRUCTION;

ALL SERVICES THAT ARE NOT INTEGRALLY A PART OF THE PRODUCTION AND DELIVERY OF PLANS, DESIGNS, DRAWINGS AND SPECIFICATIONS.

IN OUR DECISION TO THE SECRETARY OF DEFENSE, DECEMBER 12, 1966, 46 COMP. GEN.---, WE HELD THAT THE ORIGINAL 1939 STATUTES AND THE CODIFICATIONS THEREOF "APPLY TO ALL TYPES OF CONTRACTS AND THAT COSTS WHICH DO NOT RELATE TO THE PREPARATION OF DESIGNS, PLANS, DRAWINGS, AND SPECIFICATIONS MAY BE REGARDED AS NOT SUBJECT TO THE 6-PERCENT LIMITATION IMPOSED BY THOSE STATUTES.'

HOWEVER, WE DO NOT FEEL THAT THIS CONCLUSION SHOULD BE REACHED WITH REGARD TO THE LIMITATION CONTAINED IN SECTION 304 (B). THIS SECTION ESTABLISHES A MAXIMUM FEE "IN CONTRACTS FOR ARCHITECTURAL OR ENGINEERING SERVICES" WITHOUT LIMITATION OR REFERENCE TO THE "PRODUCTION AND DELIVERY OF THE DESIGNS, PLANS, DRAWINGS AND SPECIFICATIONS.' APART FROM THE BROAD LANGUAGE OF THAT SECTION, THE OMISSION OF THE SPECIFIC LANGUAGE CONTAINED IN THE 1939 ACT IS ITSELF A SIGNIFICANT INDICATION THAT NO EXCLUSIONS FROM APPLICATION OF THE FEE LIMITATION WERE INTENDED BY THE CONGRESS. MOREOVER, AN ANALYSIS OF SECTION 4 (B) PREPARED BY THE THEN WAR DEPARTMENT WHICH, TOGETHER WITH THE DEPARTMENT OF THE NAVY, DRAFTED THE LEGISLATION STATES THAT "THE LIMITATION OF THE FEE TO THE CONTRACTOR IS INCLUSIVE OF ALL COSTS INCURRED BY HIM IN THE PERFORMANCE OF THE CONTRACT.' SEE PAGE 33 OF H. REPT. NO. 109, 80TH CONG., 1ST SESS.

IN OUR OPINION, SECTION 304 (B) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT IS NOT LIMITED SOLELY TO THE COSTS OF PROFESSIONAL SERVICES INCURRED IN THAT SEGMENT OF THE CONTRACT REQUIRING THE PREPARATION OF DESIGNS, PLANS, ETC. RATHER, IT IMPOSES A LIMITATION ON THE TOTAL COMPENSATION PAYABLE FOR ALL SERVICES PERFORMED UNDER THE ARCHITECT-ENGINEER CONTRACT, REGARDLESS OF WHETHER THE COST OF THESE SERVICES REPRESENTS TRAVEL EXPENSES, CONSULTANT FEES, REPRODUCTION EXPENSES, SUPERVISION OF CONSTRUCTION, PRELIMINARY ENGINEERING EFFORT, OR THE LIKE. FURTHERMORE, IT IS QUITE CLEAR THAT THE EXPLICIT LANGUAGE OF THE STATUTORY LIMITATION REQUIRES THE INCLUSION OF ALL COSTS CATEGORIZED AS ENGINEERING SERVICES IN COMPUTING COMPLIANCE WITH THE FEE LIMITATION. THEREFORE, THE HOLDING IN OUR DECISION TO THE SECRETARY OF DEFENSE THAT 10 U.S.C. 2306 (D) PERMITS NO COST EXCLUSIONS FROM APPLICATION OF THE 6- PERCENT FEE LIMITATION IS EQUALLY APPLICABLE HERE IN THE CASE OF 41 U.S.C. 254 (B).

THE COMMISSIONER MAKES REFERENCE TO OUR DECISIONS IN 21 COMP. GEN. 580 AND 22 ID. 464 AS SUPPORTING THE COST EXCLUSION PRACTICE. BUT THESE DECISIONS, LIKE THE ADMINISTRATIVE PRACTICE OF EXCLUDING CERTAIN CONTRACT COSTS, WERE BASED SOLELY ON THE RESTRICTIVE LANGUAGE OF THE 1939 ACTS. WHILE WE AFFIRM THESE DECISIONS INSOFAR AS THE CODIFICATIONS OF THE 1939 ACTS ARE CONCERNED, THEY ARE NOT DISPOSITIVE OF THE QUESTION WHETHER COST EXCLUSIONS ARE PERMISSIBLE UNDER THE ALL INCLUSIVE LANGUAGE OF SECTION 254 (B).

ALTHOUGH WE ARE OF THE OPINION THAT SECTION 254 (B) OF THE PROPERTY ACT PERMITS NO EXCLUSIONS OF COSTS IN DETERMINING COMPLIANCE WITH THE 6- PERCENT FEE LIMITATION, NO PRESENT ACTION WITH REFERENCE THERETO WILL BE TAKEN BY OUR OFFICE. THE VIEWS AND COMMENTS OF THE COMMISSIONER AS EXPRESSED IN HIS LETTER AND ENCLOSURES THERETO WILL BE APPROPRIATELY RECOGNIZED IN OUR PROPOSED REPORT TO THE CONGRESS.

WE WISH TO EXPRESS OUR APPRECIATION FOR THE ASSISTANCE RENDERED TO USIN CONNECTION WITH OUR CURRENT REVIEW.

GAO Contacts

Office of Public Affairs