Interagency Agreements--Use of an Interagency Agreement between the Counterintelligence Field Activity, Department of Defense, and GovWorks to Obtain Office Space
Highlights
Without a delegation from the General Services Administration or independent statutory authority to enter into a lease, neither GovWorks (a Department of the Interior franchise fund) nor the Counterintelligence Field Activity (CIFA) of the Department of Defense (DOD) had authority to obtain office space through a third- party lease. Unless ratified by an appropriate government official, the agreement for office space is unenforceable against the government. GovWorks and CIFA cannot circumvent federal statutory and regulatory requirements on leasing by bundling the lease agreement in a contract for services. Without ratification, all payments made under this third-party lease are improper payments, and DOD and GovWorks should take appropriate action to resolve them.
There is no evidence to suggest that CIFA violated the Antideficiency Act. Although CIFA and GovWorks entered into an agreement to obtain office space through a third-party lease without requisite authority, CIFA does have an appropriation that is otherwise available for the purpose of leasing office space--the Operation and Maintenance, Defense-wide appropriation. CIFA recorded these costs as obligations of this appropriation and transferred funds to GovWorks to pay for them. There is no indication, however, that CIFA recorded or transferred amounts in excess of or in advance of the appropriation. The conclusion that neither CIFA nor GovWorks violated the Antideficiency Act does not diminish or excuse CIFA's and GovWorks's disregard of federal statutes and policy, involving the government in an unauthorized transaction and millions of dollars of improper payments.
B-309181, Interagency Agreements--Use of an Interagency Agreement between the Counterintelligence Field Activity, Department of Defense, and GovWorks to Obtain Office Space, August 17, 2007
Decision
Matter of: Interagency Agreements—Use of an Interagency Agreement between the Counterintelligence Field Activity, Department of Defense, and GovWorks to Obtain Office Space
DIGEST
Without a delegation from the General Services Administration or independent statutory authority to enter into a lease, neither GovWorks (a Department of the Interior franchise fund) nor the Counterintelligence Field Activity (CIFA) of the Department of Defense (DOD) had authority to obtain office space through a third-party lease. Unless ratified by an appropriate government official, the agreement for office space is unenforceable against the government. GovWorks and CIFA cannot circumvent federal statutory and regulatory requirements on leasing by bundling the lease agreement in a contract for services. Without ratification, all payments made under this third-party lease are improper payments, and DOD and GovWorks should take appropriate action to resolve them.
There is no evidence to suggest that CIFA violated the Antideficiency Act. Although CIFA and GovWorks entered into an agreement to obtain office space through a third-party lease without requisite authority, CIFA does have an appropriation that is otherwise available for the purpose of leasing office space—the Operation and Maintenance, Defense-wide appropriation. CIFA recorded these costs as obligations of this appropriation and transferred funds to GovWorks to pay for them. There is no indication, however, that CIFA recorded or transferred amounts in excess of or in advance of the appropriation. The conclusion that neither CIFA nor GovWorks violated the Antideficiency Act does not diminish or excuse CIFA's and GovWorks's disregard of federal statutes and policy, involving the government in an unauthorized transaction and millions of dollars of improper payments.
DECISION
The Inspector General (IG) for the Department of the Interior requests our decision under 31 U.S.C. sect. 3529 regarding a transaction involving the Department of Defense's (DOD) Counterintelligence Field Activity (CIFA) and GovWorks, a Department of the Interior (Interior) franchise fund, for acquisition of space to consolidate CIFA's activities.[1]
The IG asked whether either CIFA or GovWorks had the authority to obtain office space to consolidate CIFA's activities, and, if not, whether CIFA and/or GovWorks violated the Antideficiency Act, 31 U.S.C. sect. 1341. For the reasons stated below, we conclude that neither CIFA nor GovWorks had independent authority to obtain office space.[2] CIFA desired additional office space, identified the desired space, negotiated terms for the space, and then directed GovWorks to sign a contract with the third party that included all the terms of the lease. GovWorks was acting as CIFA's agent in entering into the contract. Using an interagency agreement and a contract with a third party, CIFA and GovWorks circumvented federal laws and regulations with regard to obtaining office space through a lease. Neither had authority to enter into the multiyear lease that is at the heart of this transaction. Their actions resulted in a void contract, and payments made under it constitute improper payments. CIFA and GovWorks must take appropriate steps to resolve them.
Neither CIFA nor GovWorks violated the Antideficiency Act. Although CIFA and GovWorks entered into an agreement to obtain office space through a third-party lease without requisite authority, CIFA does have an appropriation that is otherwise available for the purpose of leasing office space—the Operation and Maintenance, Defense-wide appropriation. CIFA recorded these costs as obligations of this appropriation and transferred funds to GovWorks to pay for them. There is no indication, however, that CIFA recorded or transferred amounts in excess of or in advance of the appropriation. The conclusion that neither CIFA nor GovWorks violated the Antideficiency Act does not diminish or excuse CIFA's and GovWorks's disregard of federal statutes and policy, involving the government in an unauthorized transaction and millions of dollars of improper payments.
Our practice when rendering decisions is to obtain the views of the relevant federal agency to establish a factual record and to elicit the agency's legal position in the matter. GAO, Procedures and Practices for Legal Decisions and Opinions, GAO'06'1064SP (
BACKGROUND
Interior established GovWorks as a franchise fund pursuant to authority of Public Law 104-208, div. A, title I, sect. 113, 110 Stat. 3009, 3009'200--01 (Sept. 30, 1996), and the Government Management Reform Act of 1994 (GMRA), Public Law 103-356, title IV, sect. 403, 108 Stat. 3410, 3413 (
In 2003, CIFA began investigating its options to obtain larger office space to collocate many of its activities. Devaney Letter, exhibit 17. CIFA is a field activity and combat support agency within DOD. The Secretary of Defense established CIFA—
to develop and manage DoD Counterintelligence (CI) programs and functions that support the protection of the Department, including CI support to protect DoD personnel, resources, critical information, research and development programs, technology, critical infrastructure, economic security, and U.S. interests, against foreign influence and manipulation, as well as to detect and neutralize espionage against the Department.
DOD Directive 5105.67 (
In February 2003, the Office of the Assistant Secretary of Defense, Command, Control, Communications, and Intelligence, and GovWorks entered into an interagency agreement to address CIFA's need to consolidate its workforce and work space issues. Interagency Agreement,
On
In a letter dated
On
Task Order 73001 incorporated by reference the lease that
Attached to Task Order 73001 was a schedule for 10 years of rent on the facility lease and 10 years of operating expenses.
From 2003 until the present, CIFA has executed various MIPRs transferring to GovWorks funds from the Operation and Maintenance, Defense-wide appropriation to pay for lease costs on the Crystal Square 5 office space and for GovWorks's administrative fee. Devaney Letter, exhibits 8--13; see also Bernhardt Letter, tab 5. DOD states that the space is currently occupied by both CIFA employees and contractor personnel. Pitkin Letter, addendum. As of 2006, 297 employees and 783 contractor personnel occupied the space at Crystal Square 5, and CIFA had paid more than $26 million in lease costs.[7]
Both the Interior IG and the DOD IG audited the transactions between GovWorks and CIFA that resulted in the lease of property at Crystal Square 5. Interior IG Report at 6--7; DOD IG Report at 49--65. Both IGs concluded that neither CIFA nor GovWorks was authorized to enter into a lease agreement without a delegation of leasing authority from GSA, and they found that GSA has not provided a delegation for this lease arrangement. Interior IG Report at 6; DOD IG Report at 50--51. DOD IG contacted the Director of Leasing Policy and Performance Division of GSA to determine whether GSA would ratify the lease agreement. The Director declined to do so. DOD IG Report at 50. Both IGs also opined that, because both CIFA and GovWorks acted beyond the scope of their authorities, payments on the lease could result in an Antideficiency Act violation. Interior IG Report at 7; DOD IG Report at 52--53. The DOD IG noted that, in addition to acting beyond the scope of its authority, CIFA failed to comply with DOD policy requiring the WHS to coordinate with GSA for leases that exceed certain threshold amounts.
DISCUSSION
Authority to Lease
According to the IG reports, both GovWorks and CIFA described the interagency agreement and Contract 70941 as agreements obligating the government to an IDIQ service contract and not to a lease. Interior IG Report at 6; DOD IG Report at 49. Although GovWorks and
Accordingly, we turn to the Interior IG question regarding whether CIFA and/or GovWorks had the authority to lease office space. GSA holds general leasing authority for government agencies. Section 1 of the Reorganization Plan No. 18 of 1950, 5 U.S.C. app. 1, 40 U.S.C. sect. 301 note, transferred from federal agencies to the Administrator of GSA authority for all functions with respect to acquiring space in buildings by lease . . . . The Administrator has authority to enter into a lease on behalf of the government for a period not to exceed 20 years. 40 U.S.C. sect. 585. The Administrator may delegate this authority to an official in GSA or to the head of another federal agency. 40 U.S.C. sect. 121(d). Without specific statutory authority and absent GSA's delegation of authority, a federal agency may not enter into a lease on its or the government's behalf. B'202206,
Our research found no statutory authority that would allow GovWorks to obligate the
Also, the Secretary of Defense is authorized to lease facilities under 10 U.S.C. sect. 2661(b), and DOD has indicated that this authority could apply to acquiring space for contractor personnel required to be collocated with DOD employee personnel. Pitkin Letter at 1. Section 2661(b) provides, in relevant part: The Secretary of Defense . . . may provide for . . . [t]he leasing of buildings and facilities. Nevertheless, there is no need to dwell on this potential source of authority. CIFA in fact failed to follow agency policy and procedures in leasing under this statute. The Secretary of Defense has delegated his leasing authority to WHS. DOD Directive 5110.4, para. E2.1.1.20 (
Regardless, DOD could not have used section 2661(b) for this lease, because it was a lease for 10 years and 7 months and section 2661(b) does not provide the authority to enter into a multiyear agreement. A lease under authority of section 2661(b) would have had to have been structured differently; instead of a 10-year lease, a section 2661(b) lease would have had to have been structured as a 1-year lease with options to renew for future years. See Leiter v.
For GovWorks or CIFA officials to have authority to enter into this 10-year lease, GSA would have had to delegate its leasing authority. As noted in both IG Reports, GSA has stated that it did not delegate authority to CIFA or GovWorks. Interior IG Report at 6; DOD IG Report at 50. GSA regulations set out various standing delegations that may give an agency authority to enter into a lease independent of GSA, including (1) categorical space delegations, (2) agency special purpose delegations, and (3) a delegation of authority under a program known as Can't Beat GSA Leasing. 41 C.F.R. sect. 102-72.30. None of them apply to this transaction, however.
Categorical space delegation applies to specific types of space outlined in 41 C.F.R. sect. 102-73.155. None of these types apply to CIFA's use of the Crystal Square 5 space. The agency special purpose delegations are standing delegations of authority from the Administrator to specific federal agencies to lease their own special purpose space. 41 C.F.R. sect. 102-73.160. Both DOD and Interior have special purpose delegations, 41 C.F.R. sections 102-73.180,[8] 102-73.200;[9] however, none of the special purpose delegations would allow either CIFA or GovWorks to enter into a lease for office space to consolidate CIFA's operations.
Under the third type of delegation, the Can't Beat GSA Leasing program, GSA has delegated to the heads of all federal agencies the authority to enter into a lease for up to 20 years as long as the annual rent is below threshold amounts determined annually by GSA. 41 C.F.R. sect. 102-72.30(b). As noted above, the annual rent of the lease in question far exceeded the annual threshold amounts. Accordingly, neither CIFA nor GovWorks could have entered into this leasing arrangement pursuant to a standing delegation under the Can't Beat GSA Leasing program.
Consequently, because neither CIFA nor GovWorks had authority to enter into the lease transaction, the government is not bound by the contract. See B'306353,
Payments made by the government pursuant to void or otherwise unenforceable contracts are improper payments that should be recovered from the contractor. See 62 Comp. Gen. 337, 338--39 (1983) (the Department of Labor must recover payments made on contract provisions that were unenforceable because they violated a federal statute). See also Sutton v.
Application of the Antideficiency Act
The Interior IG also asked whether CIFA and/or GovWorks violated the Antideficiency Act by entering into a lease without proper authority. The Antideficiency Act prohibits a government official or employee from making an expenditure or an obligation that exceeds or is in advance of available appropriations. 31 U.S.C. sect. 1341(a). See also B'302710,
The appropriation used to make the lease payments, the Operations and Maintenance, Defense-wide appropriation, is available for lease payments. This appropriation is available for expenses . . . necessary for the operation and maintenance of activities and agencies of the Department of Defense . . . as authorized by law. See, e.g., Pub. L. No. 107-248, title II, 116 Stat. 1519, 1522--23 (
While there is no authority for the underlying lease transaction, and, consequently, the lease is not enforceable against the government, CIFA and GovWorks did intend to commit the government to pay for the lease costs. An agency accounting records should reflect the agency's actions. In that regard, CIFA recorded these costs as an obligation of the Operation and Maintenance, Defense-wide appropriation. Notwithstanding the fact that the obligation was not enforceable against the government, CIFA's actions from an Antideficiency Act perspective, burdened the appropriation to the same extent. From the date that CIFA and GovWorks entered into the interagency transaction, CIFA has transferred to GovWorks funds from this appropriation to pay for lease costs. There is no evidence, however, that CIFA transferred or recorded amounts in excess of or in advance of the Operation and Maintenance, Defense-wide appropriation for any fiscal year since CIFA began occupying the space in 2003. Thus, neither CIFA nor GovWorks violated the Antideficiency Act.
This conclusion does not in any way diminish or excuse CIFA's or GovWorks's violation of law. The record in this case suggests that officials of both agencies acted in disregard of both statute and policy, effectively circumventing the statutory and regulatory framework for obtaining office space by lease, and DOD and Interior should take appropriate steps to address the accountability of those CIFA and GovWorks officials involved in this unauthorized transaction.
CONCLUSION
Regardless of how CIFA and GovWorks label the contract between GovWorks and
There is no evidence to suggest that either CIFA or GovWorks violated the Antideficiency Act. Although CIFA and GovWorks entered into an agreement to obtain office space through a third-party lease without requisite authority, CIFA does have an appropriation that is otherwise available for the purpose of leasing office space—the Operation and Maintenance, Defense-wide appropriation. CIFA recorded these costs as obligations of this appropriation and transferred funds to GovWorks to pay for them. There is no indication, however, that CIFA recorded or transferred amounts in excess of or in advance of the appropriation. The conclusion that neither CIFA nor GovWorks violated the Antideficiency Act does not diminish or excuse CIFA's and GovWorks's disregard of federal statutes and policy, involving the government in an unauthorized transaction and millions of dollars of improper payments.
Gary L. Kepplinger
General Counsel
[1] Letter from Earl E. Devaney, Inspector General, Office of the Inspector General, Department of the Interior, to David M. Walker, Comptroller General of the United States, Jan. 22, 2007 (Devaney Letter). This request arose out of the Inspector General's report on an audit of transactions between DOD and Interior.
[2] In response to the Interior IG request, we issued two other decisions—B-308969, May 31, 2007, relating to obligation of funds under an indefinite delivery, indefinite quantity contract, and B-308944, July 17, 2007, relating to GovWorks's use of expired DOD funds.
[3] Section 8(a) of the Small Business Act established a program that authorizes the Small Business Administration (SBA) to enter into contracts with other agencies and award contracts to eligible subcontractors on a noncompetitive basis. 15 U.S.C. sect. 637(a). Under this program, SBA grants a preference to small businesses owned and controlled by socially and economically disadvantaged individuals.
[4] WHS is a DOD field activity established to provide operational support and administrative services to specified DOD components, including facilities management and space acquisition for all DOD-occupied administrative space in the National Capital Region. DOD Directive 5110.4, para. 5.3.7 (
[5] GovWorks, on behalf of CIFA, entered into two contracts with
[6] The award names SBA as the prime contractor and
[7] Other agencies and DOD components presently occupy Crystal Square 5 space and pay CIFA for use of the space. This decision does not address the appropriateness of others' occupying and paying for the space in question.
[8] GSA has delegated to DOD the authority to lease the following special purpose space: the Civil Air Patrol Liaison Offices, armories, a film library in the vicinity of
[9] GSA has delegated to Interior the authority to lease the following special purpose space: space in buildings and land incidental thereto used by field crews of the Bureau of Reclamation, the Bureau of Land Management, and the Geological Survey in areas where no other government agencies are quartered; and National Parks/Monuments Visitors Centers that are not general office or administrative space. 41 C.F.R. sect. 102-73.200.
[10] In resolving the issue of an improper payment, GovWorks may consider whether it may waive collection of some or all of the payments on the basis of the equitable theories of quantum meruit or quantum valebant. See, e.g., 62 Comp. Gen. 337, 339 (1983). These theories require four findings. First, the contract would have been a permissible procurement had the proper procedures been followed. Second, the government must have received and accepted a benefit. Third, the claimant must have acted in good faith. Fourth, the amount to be paid must not exceed the reasonable value of the benefit received. See B-271163,