B-113739, APRIL 3, 1953, 32 COMP. GEN. 427

B-113739, APRIL 3, 1953, 32 COMP. GEN. 427

PERSONAL SERVICES - PRIVATE CONTRACT V. GOVERNMENT PERSONNEL - STATUTORY EMPLOYMENT CEILINGS WHERE CONGRESS IN APPROPRIATING FUNDS FOR DEPARTMENTS AND AGENCIES IMPOSED A CEILING ON THE NUMBER OF GRADED CIVILIAN EMPLOYEES THAT COULD BE EMPLOYED DURING A FISCAL YEAR THE PROCUREMENT BY CONTRACT OF EMPLOYEES FROM OUTSIDE SOURCES IS UNAUTHORIZED AND IN CONTRAVENTION OF THE INTENT OF CONGRESS AND THE RULE THAT PURELY PERSONAL SERVICES FOR THE GOVERNMENT ARE REQUIRED TO BE PERFORMED BY FEDERAL EMPLOYEES UNDER GOVERNMENT SUPERVISION.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF THE ARMY, APRIL 3, 1953:

REFERENCE IS MADE TO A LETTER RECEIVED IN THIS OFFICE FEBRUARY 9, 1953, FROM THE ASSISTANT CHIEF OF ENGINEERS FOR MILITARY SUPPLY, REQUESTING A DECISION AS TO THE PROPRIETY OF CONTINUING CONTRACT NO. DA 49-129-ENG-196, DATED MAY 19, 1952, WITH ROYER AND ROGER, INC., FOR THE PROCESSING OF SHIPPING ORDERS AND PURCHASE REQUISITIONS.

IN THE LETTER IT IS STATED THAT, AS A CONSEQUENCE OF THE IMPOSITION OF THE CIVILIAN PERSONNEL CEILING IN THE DEPARTMENT OF DEFENSE APPROPRIATIONS ACT, 1952, THE ENGINEER SUPPLY CONTROL OFFICE, ST. LOUIS, MISSOURI, COULD NOT SECURE SPACES FOR THE ADDITIONAL PERSONNEL REQUIRED TO HANDLE THE GREATLY INCREASED WORK LOAD WITH WHICH THE OFFICE WAS FACED AS A RESULT OF THE KOREAN SITUATION, AND THAT, IN ORDER THAT ESSENTIAL MILITARY OPERATIONS MIGHT BE CARRIED ON, THE INSTANT CONTRACT WAS ENTERED INTO. THIS CONNECTION, THE ASSISTANT CHIEF OF ENGINEERS STATES THAT HIS OFFICE IS AWARE OF THE PROHIBITION AGAINST PROCUREMENT BY CONTRACT OF SERVICES NORMALLY PERFORMED BY GOVERNMENT PERSONNEL, AS SET FORTH IN PREVIOUS DECISIONS OF THIS OFFICE, BUT THAT THE ASSISTANT SECRETARY OF DEFENSE FOR MANPOWER AND PERSONNEL INDICATED IN HER TESTIMONY BEFORE THE SUBCOMMITTEE OF THE SENATE COMMITTEE ON APPROPRIATIONS, PAGE 1716 OF THE 1952 HEARINGS, THAT "CONTRACT SERVICES" WOULD BE UTILIZED IN LIEU OF PLACING CIVILIAN EMPLOYEES ON GOVERNMENT PAY ROLLS WHEREVER POSSIBLE. ALSO, THE ASSISTANT CHIEF OF ENGINEERS STATES IT TO BE HIS UNDERSTANDING THAT ONE OF THE BASIC CONSIDERATIONS GOVERNING THE IMPOSITION OF THE CIVILIAN PERSONNEL CEILING AT A TIME WHEN IT WAS OBVIOUS THAT THE SCOPE OF THE DEFENSE PROGRAM WAS RAPIDLY INCREASING WAS A RECOGNITION OF THE DIFFICULTY OF REDUCING CIVILIAN PAY ROLLS PROMPTLY AFTER THE NEED FOR THE ADDITIONAL SERVICES HAD EXPIRED, AND THAT IT WOULD BE MORE EFFICIENT AND MORE ECONOMICAL IN THE LONG RUN TO CONTRACT OUT WHEREVER POSSIBLE THOSE ADDITIONAL SERVICES NECESSITATED SOLELY BY THE EMERGENCY. IN VIEW THEREOF, HE CONTENDS THAT THE RULE AGAINST CONTRACTING FOR PERSONAL SERVICES SHOULD BE RELAXED UNDER CIRCUMSTANCES SUCH AS HERE INVOLVED.

SECTION 632 OF THE DEPARTMENT OF DEFENSE APPROPRIATIONS ACT, 1952, APPROVED OCTOBER 18, 1951, 65 STAT. 423, 450, PROVIDES:

* * * NO FUNDS APPROPRIATED IN TITLES II, III, IV, AND V OF THIS ACT SHALL BE USED FOR THE PAYMENT IN EXCESS OF 500,000 FULL-TIME GRADED CIVILIAN EMPLOYEES (INCLUDING (A) THE FULL-TIME EQUIVALENT OF PART-TIME EMPLOYMENT, (B) PERSONS WHO ARE DESCRIBED AS "CONSULTANTS" OR WHO ARE COMPENSATED ON A "WHEN ACTUALLY EMPLOYED" BASIS IF SUCH PERSONS ARE EMPLOYED ON A CONTRACT BASIS OR ARE PAID ON A PER DIEM BASIS, AND (C) PERSONS EMPLOYED WITHOUT COMPENSATION IF THEY ARE REIMBURSED FOR EXPENSES) AT ANY TIME DURING THE CURRENT FISCAL YEAR.

AN IDENTICAL LIMITATION IS CONTAINED IN SECTION 630 OF THE DEPARTMENT OF DEFENSE APPROPRIATIONS ACT, 1953, APPROVED JULY 10, 1952, 66 STAT. 517, 536.

WHEN SECTION 632 FIRST APPEARED IN H.R. 5054, WHICH, WITH AMENDMENTS, BECAME THE DEPARTMENT OF DEFENSE APPROPRIATIONS ACT, 1952, IT PROVIDED THAT NO FUNDS APPROPRIATED THEREIN WERE TO BE USED FOR THE PAYMENT IN EXCESS OF 530,000 FULL-TIME GRADED CIVILIAN EMPLOYEES AT ANY ONE TIME DURING THE FISCAL YEAR. IN REPORT NO. 730 DATED SEPTEMBER 7, 1951, ON THE BILL, THE SENATE COMMITTEE ON APPROPRIATIONS MADE THE FOLLOWING STATEMENT WITH REFERENCE TO SECTION 632:

IN ORDER TO PREVENT THE UNNECESSARY EXPANSION OF THE EMPLOYMENT OF CIVILIAN EMPLOYEES IN THE DEPARTMENT OF DEFENSE * * * IT WAS DEEMED DESIRABLE TO INSERT AN AMENDMENT TO PROVIDE A CEILING ON GRADED CIVILIAN EMPLOYMENT. THE HOUSE MADE A GENERAL CUT OF 80,000 EMPLOYEES OF WHICH 29,600 WERE GRADED. THE DEPARTMENT OF DEFENSE REQUESTED THE RESTORATION OF 20,000 POSITIONS OF WHICH 7,400 WERE IN THE CATEGORY OF GRADED CIVILIAN WORKERS. THE BILL AS PASSED BY THE HOUSE PROVIDED FOR 516,000 GRADED CIVILIAN EMPLOYEES AND, WITH THE ADDITION OF 7,400 AS REQUESTED BY THE DEPARTMENT OF DEFENSE, THE NUMBER CARRIED IN THIS BILL IS 523,400. VIEW OF THE FACT, HOWEVER, THAT THE COMMITTEE HAS RECOMMENDED THE EXPANSION OF AIR POWER AND ADDITIONAL CIVILIAN EMPLOYMENT MAY THEREBY BE REQUIRED, IT WAS DEEMED THAT THE CEILING COULD PROPERLY BE FIXED AT 530,000.

IT IS TO BE NOTED THAT THE COMMITTEE HAS NOT FIXED ANY CEILING ON THE UNGRADED OR SO-CALLED BLUE-COLLAR WORKERS FOR THE REASON THAT IT IS NOT POSSIBLE AT THIS TIME TO ESTIMATE HOW MANY ADDITIONAL WORKERS IN ARSENALS AND NAVAL YARDS AND ELSEWHERE MAY BE REQUIRED BY REASON OF THE EXPANSION OF MILITARY FORCES.

THE PURPOSE OF THE AMENDMENT MADE ON THE FLOOR OF THE SENATE, WHICH ADDED THE LANGUAGE APPEARING IN THE SECTION AT THE TIME OF ITS ENACTMENT, WAS STATED BY SENATOR BYRD, CO-SPONSOR THEREOF, TO BE ( CONGRESSIONAL RECORD-- - SENATE--- SEPTEMBER 12, 1951, P. 11408) AS FOLLOWS:

THE COMMITTEE AMENDMENT IS WIDE OPEN WITH RESPECT TO "PART-TIME EQUIVALENTS OF FULL-TIME EMPLOYEES," PERSONS EMPLOYED AS "CONSULTANTS" ON A CONTRACT BASIS, PERSONS EMPLOYED ON A PER DIEM BASIS WHEN ACTUALLY WORKING, AND PERSONS DESCRIBED AS EMPLOYED "WITHOUT COMPENSATION," BUT WHO ARE PAID LAVISHLY FOR THEIR EXPENSES.

THIS AMENDMENT MERELY PROVIDES THAT FOR CEILING PURPOSES THESE PERSONS SHOULD BE COUNTED WITHIN THE 530,000 CEILING.

IT SHOULD BE NOTED THAT AS IN THE CASE OF THE COMMITTEE AMENDMENT THIS AMENDMENT APPLIES ONLY TO GRADED CIVILIAN EMPLOYEES, AND DOES NOT AFFECT WAGE BOARD EMPLOYEES, SUCH AS THOSE ENGAGED IN CONSTRUCTION AND OTHER INDUSTRIAL WORK WITH SUCH DEFENSE ESTABLISHMENTS AS NAVY YARDS, ARSENALS, AND SO FORTH.

LIKE THE COMMITTEE, IT MAKES NO REFERENCE TO "TEMPORARY EMPLOYEES" WHO MAY BE REQUIRED TO MEET EMERGENCIES.

AT THE SAME TIME, THE CEILING OF 530,000 EMPLOYEES CONTAINED IN SECTION 632 WHEN IT WAS REPORTED OUT BY THE SENATE COMMITTEE ON APPROPRIATIONS WAS REDUCED TO 500,000 BY AN AMENDMENT SPONSORED BY SENATOR DIRKSEN. REFERENCE TO THE DISCUSSION WHICH PRECEDED THE ADOPTION OF THIS AMENDMENT, BEGINNING AT PAGE 11408 OF THE REFERRED-TO CONGRESSIONAL RECORD, SHOWS THAT SUCH ACTION WAS TAKEN ON THE BASIS THAT THE NEW CEILING WOULD BE ADEQUATE INSOFAR AS THE MILITARY REQUIREMENTS WERE CONCERNED AND WOULD BE MORE IN LINE WITH THE 10 PERCENT REDUCTION WHICH HAD BEEN PROPOSED WITH RESPECT TO OTHER APPROPRIATION BILLS WHICH HAD COME BEFORE THE COMMITTEE ON APPROPRIATIONS.

SINCE SECTION 632 WAS INSERTED IN H.R. 5054 BY THE SENATE, NOTHING ESPECIALLY HELPFUL IS TO BE FOUND IN THE HOUSE HEARINGS WITH RESPECT THERETO. HOWEVER, ON PAGES 4 AND 5 OF THE " EXPLANATORY NOTES" DATED APRIL 7, 1952, PREPARED BY THE HOUSE COMMITTEE ON APPROPRIATIONS ON H.R. 7391, WHICH, WITH AMENDMENTS, BECAME THE DEPARTMENT OF DEFENSE APPROPRIATIONS ACT, 1953, 66 STAT. 517, IT WAS STATED:

UNDER THE PROVISIONS OF PUBLIC LAW 179, 81ST CONGRESS A CIVILIAN PERSONNEL CEILING OF NOT TO EXCEED 500,000 FULL-TIME GRADED CIVILIAN EMPLOYEES WAS ESTABLISHED. THE OVERALL CEILING FOR GRADED AND UNGRADED EMPLOYEES WAS FIXED AT 1,369,552. AS OF JANUARY 31, 1952, THERE WAS EMPLOYED IN DEPARTMENT OF DEFENSE ACTIVITIES APPROXIMATELY 1,290,000 OF WHICH 1,230,000 ARE PAID FROM FUNDS FOR REGULAR MILITARY FUNCTIONS. APPROXIMATELY 490,000 OF THESE EMPLOYEES ARE GRADED. IT IS ANTICIPATED THAT THE JUNE 30, 1952, EMPLOYMENT WILL EQUAL THE ESTABLISHED CEILINGS. FOR FISCAL YEAR 1953 REQUEST IS MADE FOR AN INCREASE OVER THE PRESENTLY ESTABLISHED CEILING FOR GRADED EMPLOYEES OF 64,640, MAKING THE REQUEST FOR THE GRADED EMPLOYEES CEILING 564,640, AND AN UNGRADED CEILING OF 905,800.

COMPENSATION FOR THE EMPLOYEES REQUESTED FOR FISCAL YEAR 1953, AND THE SIMILAR OBLIGATIONS FOR THE NUMBERS ESTIMATED FOR FISCAL YEAR 1952 ARE AS FOLLOWS: ** * * * * * *

THE COMMITTEE RECOMMENDS THE RETENTION IN THE BILL OF THE SECTION LIMITING FULL-TIME GRADED CIVILIAN EMPLOYEES TO NOT TO EXCEED 500,000. THE 4.2 BILLION DOLLAR REDUCTION IN THE OVERALL BUDGET REQUEST WILL RESULT IN A MARKED REDUCTION IN CIVILIAN PERSONNEL BELOW THE NUMBERS ESTIMATED IN THE FISCAL YEAR 1953 BUDGET.

THUS, THE LEGISLATIVE HISTORY OF SECTIONS 632 AND 630 OF THE APPROPRIATION ACTS INVOLVED AFFORDS NO BASIS FOR ANY ASSUMPTION THAT ONE OF THE BASIC CONSIDERATIONS GOVERNING THE IMPOSITION OF THE PERSONNEL CEILING WAS THE RECOGNITION OF THE DIFFICULTY OF REDUCING CIVILIAN PAY ROLLS PROMPTLY AFTER THE NEED FOR THE SERVICES OF EMPLOYEES HAS EXPIRED. ON THE CONTRARY, SUCH HISTORY INDICATES THAT THE LEGISLATION WAS ENACTED FOR THE PURPOSE OF INSURING THAT EMPLOYMENT OF "WHITE COLLAR" CIVILIAN WORKERS IN THE DEPARTMENT OF DEFENSE WAS NOT EXPANDED BEYOND THE LIMITS WHICH CONGRESS HAD DETERMINED TO BE ADEQUATE, TAKING INTO CONSIDERATION THE DEFENSE EFFORT. IT IS NOT UNDERSTOOD WHY THE SUBCOMMITTEE OF THE SENATE COMMITTEE ON APPROPRIATIONS DID NOT ASK THE ASSISTANT SECRETARY OF DEFENSE FOR MANPOWER AND PERSONNEL FOR AN EXPLANATION OF HER STATEMENT AT THE HEARINGS HELD ON DEPARTMENT OF DEFENSE APPROPRIATIONS, 1952, THAT "CONTRACT SERVICES" WOULD BE UTILIZED IN LIEU OF PLACING CIVILIAN EMPLOYEES ON GOVERNMENT PAY ROLLS WHEREVER POSSIBLE BUT ITS FAILURE TO DO SO MAY NOT BE ACCEPTED AS EVIDENCE THAT CONGRESS INTENDED, IN THE ENACTMENT OF THE LEGISLATION INVOLVED, TO AUTHORIZE A DEPARTURE FROM THE LONG-STANDING RULE THAT PERSONS PERFORMING PURELY PERSONAL SERVICES FOR THE GOVERNMENT BE PLACED ON GOVERNMENT PAY ROLLS AND MADE SUBJECT TO ITS SUPERVISION. MOREOVER, IT WOULD BE UNREASONABLE IN THE EXTREME TO PRESUME THAT THE CONGRESS, WHILE IMPOSING A CEILING ON THE NUMBER OF GRADED CIVILIAN EMPLOYEES THAT COULD BE EMPLOYED IN THE DEPARTMENT OF DEFENSE, INTENDED TO AUTHORIZE THE PROCUREMENT BY CONTRACT FROM OUTSIDE SOURCES OF SERVICES WHICH WOULD BE PERFORMED BY EMPLOYEES OF THE TYPE INVOLVED BUT FOR THE PERSONNEL CEILING. OTHERWISE THE LIMITATION WOULD BE MEANINGLESS.

THE CONTRACT INVOLVED PROVIDED THAT THE CONTRACTOR WOULD FURNISH ALL SERVICES AND PERFORM ALL WORK NECESSARY TO PREPARE SHIPPING ORDERS, NOTICES OF DELAYED ITEMS AND OTHER FORMS CONNECTED WITH SHIPPING ORDERS AT THE ENGINEER SUPPLY CONTROL OFFICE, ST. LOUIS, MISSOURI, ALL AS DIRECTED BY THE CONTRACTING OFFICER, DURING THE PERIOD MAY 19, 1952 THROUGH JUNE 30, 1953, FOR THE UNIT PRICES STIPULATED. IT WAS ESTIMATED THAT THE CONTRACTOR WOULD BE REQUIRED TO FURNISH 5,734 " DISTRIBUTION DOCUMENTS" AND 2,037 " PURCHASE DOCUMENTS" MONTHLY DURING THE PERIOD, FOR WHICH PAYMENT WAS TO BE MADE AT THE RATE OF $1.71 AND $1.42, RESPECTIVELY, PER UNIT. PARAGRAPH 2 OF THE SPECIAL CONDITIONS OF THE CONTRACT PROVIDED THAT "ALL HEAT, OFFICE SPACE, UTILITIES, OPERATING SUPPLIES AND MISCELLANEOUS EQUIPMENT REQUIRED IN THE PERFORMANCE OF THIS CONTRACT SHALL BE FURNISHED BY THE GOVERNMENT.'

IN VIEW OF THE PROVISIONS CONTAINED IN PARAGRAPH 2 OF THE SPECIAL CONDITIONS OF THE CONTRACT, SUPRA, THE STATEMENT IN THE ASSISTANT CHIEF OF ENGINEERS' LETTER, TO THE EFFECT THAT THE SERVICES INVOLVED WERE PROCURED BY CONTRACT BECAUSE SPACES FOR THE ADDITIONAL GOVERNMENT PERSONNEL WHO WOULD HAVE TO BE HIRED TO PERFORM THEM COULD NOT BE SECURED, IS NOT UNDERSTOOD. IT WOULD APPEAR THAT THE GOVERNMENT FURNISHES EVERYTHING NECESSARY FOR THE PERFORMANCE OF THE SERVICES EXCEPT THE EMPLOYEES, AND IT IS NOT CONTENDED THAT THE LATTER COULD NOT HAVE BEEN HIRED BY THE GOVERNMENT IN THE USUAL MANNER. THE SERVICES ARE OF THE CHARACTER USUALLY PERFORMED BY CLASSIFIED EMPLOYEES, AND THEY ARE OF A CONTINUING OR, AT LEAST, OF INDETERMINATE DURATION.

UNDER THE CIRCUMSTANCES, IT MUST BE HELD THAT THE PROCUREMENT OF THE SERVICES INVOLVED BY CONTRACT WAS UNAUTHORIZED, AS BEING IN CONTRAVENTION OF THE ABOVE-MENTIONED GENERAL RULE THAT PURELY PERSONAL SERVICES FOR THE GOVERNMENT ARE REQUIRED TO BE PERFORMED BY FEDERAL PERSONNEL UNDER GOVERNMENT SUPERVISION. SEE 32 COMP. GEN. 18. ACCORDINGLY, THE CONTRACT SHOULD BE TERMINATED AT THE EARLIEST PRACTICABLE DATE, HAVING IN MIND THE ESSENTIAL NATURE OF THE SERVICES AND THE NECESSITY FOR THEIR PERFORMANCE WITHOUT INTERRUPTION.

THE COPY OF THE CONTRACT WHICH WAS TRANSMITTED WITH THE ASSISTANT CHIEF OF ENGINEERS' LETTER IS RETURNED HEREWITH.