B-128808, I-19431, AUG. 29, 1957

B-128808, I-19431, AUG. 29, 1957

TO THE SECRETARY OF THE ARMY:

THIS REFERS TO THE SITUATION AT THE BROOKLYN ARMY TERMINAL WHICH INVOLVES THE REPLACEMENT OF CERTAIN CIVIL SERVICE EMPLOYEES WITH CONTRACTOR PERSONNEL IN THE CARGO PLANNING SECTION AND THE CARGO MANIFEST SECTION.

ON AUGUST 31, 1956, WE WROTE YOU CONCERNING THIS SITUATION AND SUGGESTED THAT IN VIEW OF THE POSSIBLE CONTRAVENTION OF THE WELL ESTABLISHED RULE THAT PURELY PERSONAL SERVICES FOR THE GOVERNMENT ARE REQUIRED TO BE PERFORMED BY FEDERAL PERSONNEL UNDER GOVERNMENT SUPERVISION YOU MGHT WISH TO CONSIDER DEFERRING THE CONTEMPLATED REPLACEMENT ACTION PENDING A DECISION BY US IN THE MATTER. YOUR DEPARTMENT PROCEEDED WITH THE CONTEMPLATED CHANGE, HOWEVER.

WE HAVE NOW INVESTIGATED THE MATTER AND OUR INVESTIGATION DISCLOSES THE FOLLOWING FACTS: THE ARMY NEGOTIATED CONTRACT NO. BA-30-182-400 TC 1143 WITH THE MORACE STEVEDORING CORPORATION OF NEW YORK FOR THE FURNISHING OF TERMINAL SERVICES AT BROOKLYN ARMY TERMINAL INSTALLATIONS IN THE NEW YORK HARBOR AREA COVERING THE PERIOD JULY 1, 1956, TO JUNE 30, 1957, WITH PROVISION FOR MONTH TO MONTH EXTENSION THEREAFTER NOT TO EXCEED THREE MONTHS. MODIFICATIONS OF THAT CONTRACT, ORIGINALLY EFFECTIVE OCTOBER 1, 1956, PROVIDED THAT MORACE WOULD ASSUME RESPONSIBILITY FOR THE PREPARATION OF OCEAN CARGO MANIFESTS, CARGO STOWAGE PLANS, AND HATCH LISTS. THIS WORK WHICH WAS TAKEN OVER BY THE CONTRACTOR WAS ESSENTIALLY THE SAME AS THAT PREVIOUSLY PERFORMED BY CIVIL SERVICE PERSONNEL. THE CONTRACTOR WAS NOT REQUIRED TO USE ANY SPECIAL KNOWLEDGE OR CONTRACTOR-FURNISHED EQUIPMENT NOT OTHERWISE POSSESSED OR USED BY CIVIL SERVICE EMPLOYEES UNDER THE FORMER OPERATION. AS A MATTER OF FACT THE CONTRACTOR'S PERSONNEL WERE TRAINED TO DO THE JOB BY THE GOVERNMENT AT ITS EXPENSE. THE GOVERNMENT ALSO FURNISHED THE CONTRACTOR WITHOUT CHARGE A TOTAL OF 3,200 SQUARE FEET OF OFFICE SPACE, AND OFFICE EQUIPMENT HAVING AN ACQUISITION VALUE OF APPROXIMATELY $20,000. THE COST PER MEASUREMENT TON OF PERFORMING THE DOCUMENTATION FUNCTIONS (PREPARATION OF MANIFESTS, STOWAGE PLANS, AND HATCH LISTS) WERE FOUND TO EXCEED THE ESTIMATED COST UNDER THE CIVIL SERVICE EMPLOYEE OPERATION. THIS IS DUE IN PART TO THE FACT THAT THE CONTRACTOR'S WAGE RATES WERE SUBSTANTIALLY ABOVE CIVIL SERVICE RATES, AND IN PART TO THE FACT THAT THE CONTRACTOR'S OPERATION INVOLVED GREATER USE OF OVERTIME SERVICES.

THUS, IT WOULD APPEAR THAT THE GOVERNMENT IN FACT FURNISHED SUBSTANTIALLY EVERYTHING NECESSARY FOR THE PREPARATION OF THE MANIFESTS, STOWAGE PLANS, AND HATCH LISTS, EXCEPT THE EMPLOYEES AND THEIR SUPERVISION AND THAT THE EMPLOYEES COULD HAVE BEEN HIRED AND SUPERVISED BY THE GOVERNMENT IN THE USUAL MANNER. THE SERVICES ARE OF THE CHARACTER THAT WERE USUALLY PERFORMED BY CLASSIFIED EMPLOYEES AT THE BROOKLYN ARMY TERMINAL AND THEY ARE OF CONTINUING DURATION. FURTHERMORE, IT SEEMS CLEAR THAT THE TRANSFER OF SUCH FUNCTIONS TO CONTRACTOR PERSONNEL RESULTED IN CONSIDERABLE INCREASED COSTS TO THE GOVERNMENT WITHOUT ANY OTHERWISE COMPENSATING FEATURES AND THERE DOES NOT APPEAR TO BE ANY REASONABLE PROSPECT THAT THE COSTS WILL DECLINE IN THE FUTURE TO THE EXTENT THAT IT WILL RESULT IN A SAVINGS TO THE UNITED STATES.

SENATE REPORT NO. 2260, 84TH CONGRESS, 2ND SESSION, PAGE 8, IS AS FOLLOWS:

"THE COMMITTEE HAS TAKEN NO ACTION TO RESTORE SECTION 638 OF THE 1956 ACT IDENTICAL WITH SECTION 633 OF THIS BILL AS REPORTED TO THE HOUSE.

"THIS WOULD HAVE PERMITTED COMMITTEE ACTION, EITHER APPROVING OR DISAPPROVING, THE DISPOSAL OR TRANSFER BY CONTRACT OR OTHERWISE OF WORK THAT HAS BEEN FOR A PERIOD OF 3 YEARS OR MORE PERFORMED BY CIVILIAN PERSONNEL OF THE DEPARTMENT OF DEFENSE. HOWEVER, THE COMMITTEE DIRECTS THE DEPARTMENT OF DEFENSE TO MAINTAIN ALL SUCH FACILITIES AND ACTIVITIES WITHIN THE DEPARTMENT UNLESS SUCH DISPOSAL OR TRANSFER IS ECONOMICALLY JUSTIFIED, AND UNLESS NO INCREASED COSTS RESULT. THE DEPARTMENT OF DEFENSE IS DIRECTED TO REPORT PERIODICALLY TO THIS COMMITTEE ON ACTIONS TAKEN REGARDING SUCH DISPOSAL OR TRANSFER.'

WE HAVE INFORMALLY ASCERTAINED FROM THE OFFICE OF THE ASSISTANT SECRETARY OF DEFENSE (SUPPLIES AND LOGISTICS, ASSISTANT GENERAL COUNSEL), THAT NO REPORT OF THE TRANSFER ACTIVITIES AT THE BROOKLYN ARMY TERMINAL TO MORACE STEVEDORE COMPETITION HAS BEEN MADE IN ACCORDANCE WITH SENATE REPORT NO. 2260. APPARENTLY THIS IS BECAUSE THE DEPARTMENT OF DEFENSE VIEWS THE REPLACEMENT OF CIVILIAN PERSONNEL BY CONTRACTOR PERSONNEL IN THIS CASE AS NOT COMING WITHIN THE CATEGORY OF A ,COMMERCIAL OR INDUSTRIAL ACTIVITY" AND THUS NOT SUBJECT TO THE DIRECTIVES OF THE DEPARTMENT AND THE BUREAU OF THE BUDGET OR THE MANDATE IN SENATE REPORT NO. 2260. IT MUST BE POINTED OUT, HOWEVER, THAT THE REPORTING REQUIREMENT WAS NOT INTENDED TO APPLY TO THE TRANSFER OF CIVIL-SERVICE TYPE ACTIVITIES FOR THE OBVIOUS REASON THAT SUCH TRANSFERS WERE NOT CONSIDERED AS BEING PROPER AND THEREFORE SUBJECT TO APPROVAL BY THE SENATE COMMITTEE. WE MUST OBSERVE ALSO THAT EVEN IN THE CASE OF COMMERCIAL-TYPE ACTIVITIES A TRANSFER TO BE APPROVED MUST BE ECONOMICALLY JUSTIFIED AND NOT RESULT IN ANY INCREASED COSTS TO THE GOVERNMENT.

ON THE BASIS OF THE INFORMATION NOW BEFORE OUR OFFICE AS SET OUT ABOVE, IT APPEARS THAT THE TRANSFER OF THE SERVICES IN QUESTION TO THE TERMINAL CONTRACTOR NOT ONLY WAS AGAINST THE GOVERNMENT'S INTEREST FROM THE STANDPOINT OF COST BUT ALSO WAS CONTRARY TO THE 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. ALSO AS WE POINTED OUT IN OUR LETTER OF APRIL 3, 1953, TO YOUR DEPARTMENT, 32 COMP. GEN. 427, TRANSFERS OF SERVICES OF THIS KIND CAN RESULT IN CIRCUMVENTION OF THE LIMITATION ON THE NUMBER OF GRADED CIVILIAN PERSONNEL WHICH CAN BE EMPLOYED, AS IMPOSED BY YOUR DEPARTMENT'S ANNUAL APPROPRIATION ACTS.

IT IS THEREFORE OUR VIEW THAT THE DOCUMENTATION FUNCTION SHOULD BE TRANSFERRED BACK TO CIVIL SERVICES PERSONNEL AT THE EARLIEST PRACTICABLE DATE.

PLEASE INFORM US OF THE ACTION TAKEN OR CONTEMPLATED IN THIS MATTER.