Management of Pentagon Restaurants on A Concession Basis

Reference is made to the letter of September 26, 1956 requesting our views on the legal authority of the Department of Defense (DOD) to award a contract to Knott Hotels Corporation for management of the Pentagon Restaurants on a concession basis and the validity of the contention that bids were not required to be made public prior to such award since the contract involved non-appropriated funds. DOD has advised that there is no explicit Congressional enactment under which the Pentagon Building Concession and food operation contracts are awarded by that Department, but that it is the view of the Department that such authority may be implied from the right of the Army to operate post exchanges and from the statues appropriating monies for the erection of the Pentagon Building.

It is our opinion that the arrangement under the present contract constitutes the grant of a privilege substantially equivalent to a lease of Government-owned property by the Department of Defense, for a compensation in the nature of rent, estimated by the Committee at $199,400 per year. The Secretaries of the Army, Navy, and Air Force are required to come into agreement with the Committee on Armed Services of the House and Senate with respect to leases of Government-owned real property where the estimated annual rental is in excess of $25,000.