B-180708, MAR 25, 1974, 53 COMP GEN 702

B-180708, MAR 25, 1974, 53 COMP GEN 702

PERSONAL SERVICES - PRIVATE CONTRACT V. GOVERNMENT PERSONNEL - FORMER EMPLOYEES ALTHOUGH THE FEDERAL COMMUNICATIONS COMMISSION LACKS SPECIFIC AUTHORITY TO EMPLOY EXPERTS AND CONSULTANTS PURSUANT TO 5 U.S.C. 3109, IN VIEW OF THE FUNDS PROVIDED IN ITS CURRENT APPROPRIATION FOR "SPECIAL COUNSEL FEES," THE COMMISSION MAY PROCURE THE SERVICES OF A RETIRED GOVERNMENT ATTORNEY IN CONNECTION WITH THE INVESTIGATION AND PROCEEDINGS HE DIRECTED PRIOR TO RETIREMENT, AND THE AMOUNT PAYABLE TO HIM IS NOT SUBJECT UNDER 5 U.S.C. 8344(A) TO SET-OFF BY THE AMOUNT OF HIS RETIREMENT ANNUITY SINCE THE RETIREE'S EXPERTISE AND THOROUGH KNOWLEDGE IN THE MATTER WILL ENABLE HIM TO PERFORM THE FUNCTIONS DESCRIBED IN THE "STATEMENT OF WORK" CONTAINED IN THE PROPOSED CONTRACT INDEPENDENTLY RATHER THAN UNDER AN EMPLOYER-EMPLOYEE RELATIONSHIP.

IN THE MATTER OF LEGAL SERVICES OF A RETIRED ANNUITANT, MARCH 25, 1974:

BY HIS LETTER DATED FEBRUARY 22, 1974, THE CHAIRMAN OF THE FEDERAL COMMUNICATIONS COMMISSION (FCC) REQUESTS OUR OPINION TO THE PROPRIETY OF A PROPOSED CONTRACTUAL ARRANGEMENT WITH THE CONSULTING FIRM OF ASHER ENDE ASSOCIATES. SPECIFICALLY, OUR ADVICE IS SOUGHT IN REGARD TO THE FOLLOWING THREE QUESTIONS:

1. WHETHER, UNDER THE CIRCUMSTANCES, THE FCC IS AUTHORIZED TO ENTER INTO A CONTRACT WITH THE CONSULTING FIRM TO FURNISH REPORTS AND RECOMMENDATIONS AS WELL AS CERTAIN SPECIALIZED LEGAL SERVICES CONSISTING PRIMARILY OF CROSS-EXAMINATION OF WITNESSES;

2. WHETHER THE HIGHEST RATE SPECIFIED BY THE CLASSIFICATION ACT IS THE MAXIMUM AMOUNT THAT MAY BE PAID FOR SUCH SERVICES UNDER THE AUTHORIZATION OF THE COMMUNICATIONS ACT OF 1934, AS AMENDED, 47 U.S. CODE 154(G), AS IMPLEMENTED BY THE CURRENT APPROPRIATION ACT, PUBLIC LAW 93-137, OCTOBER 26, 1973, 87 STAT. 491; AND

3. WHETHER, IN VIEW OF THE FACT THAT THE PROPOSED CONTRACTOR IS A GOVERNMENT ANNUITANT, THE AMOUNT AWARDED UNDER THE CONTRACT IS SUBJECT TO REDUCTION BY THE AMOUNT OF HIS RETIREMENT ANNUITY.

THE CHAIRMAN EXPLAINS THAT THE COMMISSION IS CURRENTLY ENGAGED IN AN INVESTIGATION OF WESTERN ELECTRIC AND ITS RELATIONSHIP TO THE OPERATIONS OF THE BELL SYSTEM OPERATING COMPANIES AND THEIR PARENT CORPORATION, AT&T, AND THAT THE COMMISSION'S AT&T TASK FORCE HAS THE BASIC RESPONSIBILITY FOR DEVELOPING THE RECORD IN THE INVESTIGATION AND PRESENTING IT TO THE COMMISSION FOR DETERMINATION. MR. ENDE OF ASHER ENDE ASSOCIATES IS THE RECENTLY RETIRED MANAGING COUNSEL FOR THE TASK FORCE, AND HIS HIGHLY SPECIALIZED TECHNICAL ASSISTANCE IS CONSIDERED CRITICAL TO THE CONTINUITY OF THE INVESTIGATION.

AS IS EXPLAINED BY THE CHAIRMAN, MR. ENDE IS PARTICULARLY QUALIFIED IN THE CIRCUMSTANCES FOR WHICH HIS SERVICES ARE SOUGHT. AMONG HIS EXTENSIVE QUALIFICATIONS, THE CHAIRMAN REPORTS THAT:

*** MR. ENDE HAS HAD TWENTY SEVEN YEARS OF EXPERIENCE IN THE TELECOMMUNICATIONS AREA. FOR THE LAST 10 YEARS HE HAS BEEN THE DEPUTY CHIEF OF THE COMMON CARRIER BUREAU AND DURING THE PAST TWO YEARS, HE HAS ALSO BEEN THE MANAGING COUNSEL OF THE AT&T TASK FORCE. IN ADDITION TO CONSIDERABLE EXPERIENCE IN PUBLIC UTILITY REGULATION HE HAS A COMPLETE MASTERY OF THE COMMISSION'S RATE RULES AND PROCEDURES GOVERNING RATE CASES. HE POSSESSES A THROUGH KNOWLEDGE OF THE BACK GROUND OF THE AT&T RATE PROCEEDING AS WELL AS DETAILED KNOWLEDGE ABOUT THE OPERATIONS OF THE WESTERN ELECTRIC COMPANY AND THE RELATIONSHIP BETWEEN WESTERN ELECTRIC AND THE OTHER ELEMENTS OF THE BELL SYSTEM.

THE STATEMENT OF WORK CONTAINED IN THE PROPOSED CONTRACT, A COPY OF WHICH IS PROVIDED WITH THE CHAIRMAN'S LETTER, CALLS FOR THE CONTRACTOR,S PERFORMANCE AS FOLLOWS:

1. CONTRACTOR WILL REVIEW AND ANALYZE DRAFT REPORT SUBMITTED BY TOUCHE ROSS, INC. UNDER CONTRACT RC-10195, AND WILL PREPARE A CRITIQUE OF THE DRAFT REPORT WITH SUCH RECOMMENDATIONS AS MAY BE NECESSARY AND APPROPRIATE.

CONTRACTOR WILL ALSO REVIEW FINAL REPORT OF TOUCHE ROSS WHEN SUBMITTED, AND WILL PREPARE RECOMMENDATIONS AS TO THE USE TO BE MADE OF SUCH REPORT IN DOCKET NO. 19129, INCLUDING CLARIFYING QUESTIONS AND OTHER APPROPRIATE QUESTIONS OF COURSES OF ACTION.

2. IN CONNECTION WITH THE HEARING STAGE OF THE PROCEEDING, CONTRACTOR WILL PERFORM THE FOLLOWING TASKS:

A. REVIEW AND ANALYZE THE DIRECT TESTIMONY AND SUPPLEMENTAL MATERIALS FOR THE 8 WITNESSES ADDRESSING THE WESTERN ELECTRIC ISSUES SUBMITTED BY AT&T IN ITS FILING OF NOVEMBER 15, 1973 AS WELL AS THE DIRECT TESTIMONY OF THE 7 WITNESSES ORIGINALLY ADDRESSING THE WESTERN ELECTRIC ISSUES PRESENTED IN AT&T'S FILING OF NOVEMBER 20, 1970.

B. PREPARE A WRITTEN REPORT ANALYZING THE SUBMISSIONS AND RECOMMENDING THE MANNER IN WHICH THESE SUBMISSIONS SHOULD BE TREATED IN THE CONTEXT OF THE HEARINGS THEREON.

C. PREPARE AND SUBMIT RECOMMENDATIONS AS TO APPROPRIATE TYPE, NATURE AND NUMBER OF EXHIBITS TO BE OFFERED BY THE STAFF.

D. PREPARE AND SUBMIT RECOMMENDATIONS WITH REGARD TO THOSE ISSUES TO BE ADDRESSED THROUGH DIRECT TESTIMONY ON BEHALF OF THE TRIAL STAFF.

E. PREPARE RECOMMENDED CROSS-EXAMINATION OF THE BELL SYSTEM WITNESSES PRESENTED WITH RESPECT TO THE WESTERN ELECTRIC ISSUES.

F. ASSIST THE MANAGING COUNSEL IN THE ACTUAL CONDUCT OF CROSS EXAMINATION ON WESTERN ELECTRIC ISSUES OF SUCH BELL SYSTEM WITNESSES AND OTHER WITNESSES (E.G., ITT, TOUCHE ROSS).

G. PREPARE SUGGESTIONS AND, IF REQUIRED, OUTLINES OF PROPOSED REBUTTAL TESTIMONY AND SUPPORTING EXHIBITS TO BE SUBMITTED ON BEHALF OF TRIAL STAFF WITH RESPECT TO WESTERN ELECTRIC ISSUES.

THE WORK TASKS SHALL BE PERFORMED IN A PROFESSIONAL MANNER SATISFACTORY TO THE COTR.

THE CONTRACTOR SHALL PROVIDE AN ORIGINAL AND ONE COPY OF ALL ANALYSES, RECOMMENDATIONS WITH RESPECT TO EXHIBITS, TESTIMONY, AND OTHER REPORTS AND DOCUMENTATION, IN ACCORDANCE WITH THE FOLLOWING SCHEDULE:

A. CRITIQUE ON THE TOUCHE ROSS DRAFT REPORT WITHIN 20 DAYS AFTER RECEIPT OF SUCH REPORT, OR 20 DAYS AFTER CONTRACT IS SIGNED, WHICHEVER IS LATER.

B. RECOMMENDATIONS ON THE FINAL TOUCHE ROSS REPORT WITHIN 30 DAYS AFTER RECEIPT OF THAT REPORT.

C. RECOMMENDATIONS WITH RESPECT TO EXHIBITS AND TESTIMONY 30 DAYS BEFORE THEIR SCHEDULED SUBMISSION TO OTHER PARTIES.

D. PROPOSED CROSS-EXAMINATION 15 DAYS BEFORE SUCH CROSS-EXAMINATION IS SCHEDULED TO START ON DIRECT CASE AND ONE DAY BEFORE CROSS EXAMINATION IS SCHEDULED TO START ON REBUTTAL WITNESSES.

WITH REGARD TO HIS FIRST QUESTION CONCERNING THE AUTHORITY OF THE FCC TO ENTER INTO A CONTRACT FOR THE ABOVE-DESCRIBED LEGAL SERVICES, THE CHAIRMAN EXPLAINS THAT TITLE II OF THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, SPACE, SCIENCE, VETERANS, AND CERTAIN OTHER INDEPENDENT AGENCIES APPROPRIATION ACT, 1974, PUBLIC LAW 93-137, 87 STAT. 491, 494, PROVIDES FOR NECESSARY EXPENSES OF THE FCC INCLUDING "SPECIAL COUNSEL FEES." THE CHAIRMAN STATES THAT HE IS UNAWARE OF ANY OPINION OF THIS OFFICE DEALING WITH THE USE OF APPROPRIATED FUNDS FOR PAYMENT OF SPECIAL COUNSEL FEES TO PROCURE LEGAL SERVICES SUCH AS ARE HERE INVOLVED.

IN OUR OPINION THE LANGUAGE CONTAINED IN TITLE II OF THE APPROPRIATION ACT, 1974, SUPRA, APPROPRIATING FUNDS FOR THE PAYMENT OF SPECIAL COUNSEL FEES CONSTITUTES AUTHORITY TO ENTER INTO THE PROPOSED CONTRACT.

BY SECTIONS 602, 603, AND 604 OF THE COMMUNICATIONS ACT OF 1934, PUBLIC LAW 416, 48 STAT. 1064, 1102, AND 1103, THE RADIO ACT OF 1927, PUBLIC LAW 632, 44 STAT. 1162, WAS REPEALED AND THE FCC SUCCEEDED TO THE RESPONSIBILITIES OF THE FEDERAL RADIO COMMISSION (FRC) AND OTHERS. SINCE ITS CREATION IN THAT YEAR, ANNUAL APPROPRIATION ACTS FOR THE COMMISSION HAVE CONSISTENTLY PROVIDED FOR PAYMENT OF SPECIAL COUNSEL FEES. SEE, FOR EXAMPLE, THE INDEPENDENT OFFICES APPROPRIATION ACT, 1936, PUBLIC LAW 2, 49 STAT. 6, 9. WE BELIEVE THAT THE LEGISLATIVE PURPOSE IN INCLUDING SUCH A PROVISION IN THE APPROPRIATION ACTS OF THE FCC AND CERTAIN OTHER AGENCIES IS CLEAR.

IN A-27566, JUNE 29, 1929, COPY ENCLOSED, THIS OFFICE ADDRESSED THE ISSUE OF THE FRC'S AUTHORITY TO DESIGNATE A FORMER GENERAL COUNSEL OF THE COMMISSION TO ACT AS SPECIAL COUNSEL IN CONNECTION WITH A CASE WHICH HAD BEEN PENDING PRIOR TO HIS RESIGNATION. ON THE BASIS OF THE RADIO ACT OF 1927, SECTION 3, AUTHORIZING THE COMMISSION TO APPOINT SUCH SPECIAL COUNSEL AS IT MIGHT FROM "TIME TO TIME" FIND NECESSARY, AS WELL AS THE APPROPRIATION CONTAINED IN THE INDEPENDENT OFFICES ACT, 1929, PUBLIC LAW 400, 45 STAT. 573, 579, THIS OFFICE FOUND THAT EXPRESS PROVISION HAD BEEN MADE FOR PAYMENT OF SUCH SPECIAL COUNSEL FEES AS WERE THERE INVOLVED. SEE ALSO 24 COMP. GEN. 216 (1944).

THEREAFTER, APPROPRIATIONS FOR THE FRC AND ITS SUCCESSOR COMMISSION, THE FCC, EXPRESSLY PROVIDED FOR PAYMENT OF SPECIAL COUNSEL FEES. SEE, FOR EXAMPLE, FRC APPROPRIATION, 1930, PUBLIC RESOLUTION NO. 35, 46 STAT. 63, AND INDEPENDENT OFFICES APPROPRIATION ACT, 1933, PUBLIC LAW 228, 47 STAT. 452, 459, AND 460. IN VIEW OF THIS EXPLICIT HISTORY, WE CONCLUDE THAT THE LANGUAGE OF THE FCC'S CURRENT APPROPRIATION PROVIDING FUNDS FOR PAYMENT OF SPECIAL COUNSEL FEES IS CLEARLY ADDRESSED TO THE SITUATION AT HAND AND FIND THAT IT CONSTITUTES AUTHORITY TO ENTER INTO THE PROPOSED CONTRACT WITH ASHER ENDE ASSOCIATES.

THE CHAIRMAN'S SECOND QUESTION CONCERNS THE MAXIMUM AMOUNT WHICH MAY BE PAID UNDER THE PROPOSED CONTRACT. INASMUCH AS WE HAVE FOUND AUTHORITY FOR THE FCC'S PROCUREMENT OF LEGAL SERVICES ON AN INDEPENDENT CONTRACT BASIS UNDER ITS SPECIFIC APPROPRIATION FOR THE PAYMENT OF SPECIAL COUNSEL FEES AND SINCE AS CONCLUDED HEREAFTER THE SERVICES WERE IN FACT PROCURED ON SUCH BASIS NEITHER THE SALARY LIMITATION IN 5 U.S.C. 3109 NOR ANY OTHER STATUTORY PROVISION OF WHICH WE ARE AWARE WOULD LIMIT THE AMOUNT PAYABLE UNDER THE CONTRACT AS PROPOSED.

THE CHAIRMAN'S THIRD QUESTION CONCERNS POSSIBLE SETOFF OF MR. ENDE'S RETIREMENT ANNUITY AGAINST AMOUNTS DUE HIM UNDER THE PROPOSED CONTRACT. SECTION 8344(A) OF TITLE 5 OF THE U.S.C. RESTRICTS THE PAY AN ANNUITANT MAY RECEIVE IF REEMPLOYED BY THE GOVERNMENT AS FOLLOWS:

IF AN ANNUITANT RECEIVING ANNUITY FROM THE FUND ***BECOMES EMPLOYED AFTER SEPTEMBER 30, 1956, OR ON JULY 31, 1956 WAS SERVING, IN AN APPOINTIVE OR ELECTIVE POSITION, HIS SERVICE ON AND AFTER THE DATE HE WAS OR IS SO EMPLOYED IS COVERED BY THIS SUBCHAPTER. *** AN AMOUNT EQUAL TO THE ANNUITY ALLOCABLE TO THE PERIOD OF ACTUAL EMPLOYMENT SHALL BE DEDUCTED FROM HIS PAY ***.

WE HAVE HELD THAT PAYMENTS UNDER A CONTRACT WHICH, AS BETWEEN THE GOVERNMENT AND THE CONTRACTOR, CREATES A RELATIONSHIP TANTAMOUNT TO THAT OF EMPLOYER AND EMPLOYEE, IS WITHIN THE PURVIEW OF THE ABOVE PROVISION REQUIRING SETOFF OF ANNUITY PAYMENTS AGAINST AMOUNTS RECEIVED UNDER THE CONTRACT. ON THE OTHER HAND, WHERE, UNDER A CONTRACT, THE RETIRED ANNUITANT FUNCTIONS ON A TRULY INDEPENDENT BASIS, CONTRACTUAL PAYMENTS ARE NOT SUBJECT TO SETOFF BASED UPON THE AMOUNT OF HIS ANNUITY. 39 COMP. GEN. 681 (1960), B-154204, SEPTEMBER 4, 1964, B 176681, OCTOBER 27, 1972, 53 COMP. GEN. 542 (1974).

THUS, WHETHER THE CONTRACT PRICE TO BE NEGOTIATED IS SUBJECT TO SETOFF BY THE AMOUNT OF MR. ENDE'S ANNUITY TURNS UPON WHETHER THE CONTRACTUAL ARRANGEMENT AS PROPOSED AND AS IN FACT EXECUTED EVIDENCES A TRUE CONTRACTUAL RELATIONSHIP OR WHETHER THEREUNDER MR. ENDE WILL FUNCTION ESSENTIALLY AS WOULD AN EMPLOYEE OF THE GOVERNMENT.

AS DISCUSSED AT LENGTH IN 53 COMP. GEN. 542, SUPRA, THE MOST SIGNIFICANT TEST OF WHETHER A PARTICULAR CONTRACT CONTEMPLATES OR WILL IN FACT ELICIT THE LATTER SORT OF RELATIONSHIP, IS THAT OF SUPERVISION OF A CONTRACTOR OR CONTRACTOR EMPLOYEE BY A FEDERAL OFFICER OR EMPLOYEE. IN THAT DECISION, WE QUOTED THE "MONDELLO OPINION" AS FOLLOWS:

FOR THE PURPOSE OF SATISFYING THE "SUPERVISION" TEST OF THE STATUTE, IT MUST BE SHOWN THAT THERE IS SUCH CLOSE AND CONTINUOUS GOVERNMENT CONTROL OVER THE WORK PERFORMED BY THE INDIVIDUAL CONTRACTOR EMPLOYEES THAT THE CONTRACTOR DOES NOT HAVE THE INDEPENDENCE OF ACTION, NOR THE INITIATIVE OR DECISION-MAKING AUTHORITY, NORMALLY ASSOCIATED WITH PERFORMANCE BY CONTRACT. THE ESSENCE OF THIS TEST IS THAT THE GOVERNMENT EMPLOYEE, ON A CLOSE AND CONTINUOUS BASIS, NOT ONLY CONTROLS WHAT THE INDIVIDUAL CONTRACTOR EMPLOYEE DOES, BUT HOW HE DOES IT, TO SUCH AN EXTENT THAT THIS CONTROL NULLIFIES THE INDEPENDENCE OF PERFORMANCE OF THE CONTRACTOR THAT IS ESSENTIAL WHEN THE GOVERNMENT CONTRACTS FOR SERVICES.

WE HAVE REVIEWED THE PROPOSED CONTRACT WITH A VIEW TO DETERMINING WHETHER THE RELATIONSHIP CONTEMPLATED THEREBY AND THE RELATIONSHIP IT WILL ELICIT AS BETWEEN THE CONTRACTOR, ASHER ENDE ASSOCIATES, AND THE FCC IS LIKELY TO HAVE THOSE ASPECTS OF AN EMPLOYER-EMPLOYEE RELATIONSHIP AS WILL NECESSITATE SETOFF OF MR. ENDE'S ANNUITY PAYMENTS UNDER THE PROVISIONS OF 5 U.S.C. 8344(A) QUOTED ABOVE. IN DOING SO WE HAVE CONSTRUED THE CONTRACT IN LIGHT OF THE ENTIRE ARRANGEMENT EXISTING BETWEEN THE PARTIES WHICH NECESSARILY TAKES INTO ACCOUNT MR. ENDE'S VERY THOROUGH KNOWLEDGE OF ALL ASPECTS OF THE INVESTIGATION AND PROCEEDINGS TO DATE.

THE SERVICES WHICH ASHER ENDE ASSOCIATES WOULD BE REQUIRED TO PROVIDE UNDER THE CONTRACT AS PROPOSED ARE DESCRIBED IN THE STATEMENT OF WORK QUOTED ABOVE. THE CHAIRMAN STATES THAT THE CONTRACT WOULD ALSO CONTAIN A PROVISION STATING THAT THE CONTRACTOR IS EXPECTED TO WORK ON HIS OWN WITHOUT ANY SUPERVISION FROM THE COMMISSION OR ITS STAFF AND THAT IT WILL REMAIN THE PREROGATIVE OF THE MANAGING COUNSEL TO DECIDE WHETHER TO USE THE CONTRACTOR'S REPORT AND RECOMMENDATIONS.

WHILE AN ATTORNEY UNFAMILIAR WITH THE INVESTIGATION WOULD MOST LIKELY BE HARD-PRESSED TO PERFORM THE DUTIES CALLED FOR BY THE PROPOSED STATEMENT OF WORK IN A MANNER ESSENTIALLY INDEPENDENT OF THE TASK FORCE AND WITHOUT GOVERNMENT SUPERVISION, WE FEEL SATISFIED THAT AN ATTORNEY HAVING SUCH EXPERIENCE AS MR. ENDE, WHO ALREADY HAS CLOSELY PARTICIPATED THROUGHOUT THE ENTIRE COURSE OF THE INVESTIGATION, WOULD BE CAPABLE OF PERFORMING ALL TASKS AND SERVICES SPECIFIED IN THE CONTRACT WITHOUT THE CLOSE AND CONTINUOUS SUPERVISION OR DIRECTION THAT WOULD TEND TO NULLIFY HIS INDEPENDENCE AS A CONTRACTOR. WE THEREFORE FIND THAT THE CONTRACT PRICE TO BE NEGOTIATED IS NOT SUBJECT TO SETOFF BY THE AMOUNT OF THE ANNUITY PAYABLE TO MR. ENDE AS A RETIRED ANNUITANT.