14. Should the jurisdiction of contract appeals boards include Issues such as contracting officer actions under the Davis-Bacon Act, Capehart Housing Act, or Contract Work Hours Act of 1962? 15. Do you agree with the existing role of the Comptroller General in contract disputes adjudication? Would you change the degree of review that the Comptroller General presently exercises over decisions of boards of contract appeal? 16. Should boards of contract appeals be given jurisdiction over bid protest and contractor debarment cases? 17. Please add any additional comments that you think might be helpful to the Committee in evaluating the operation and effectiveness of existing boards of contract appeals. APPENDIX I(b) (Reply of the National Security Industrial Association to the subcommittee's Hon. GEORGE SMATHERS, DEAR SENATOR SMATHERS: The National Security Industrial Association is pleased to have the opportunity to respond to the questionnaire which your subcommittee has prepared relating to administrative boards of contract appeals. We believe that a thorough study by your subcommittee can be a great service to Government, industry, and the public. This study is particularly timely in view of the important recent court decisions affecting this area. Although NSIA, as an association, is not directly concerned with the boards of contract appeals, its member companies are-particularly with the Armed Services Board of Contract Appeals. The views expressed herein represent what we believe is a consensus which we are hopeful will be of assistance to your subcommittee. In attempting to reflect a consensus we considered it preferable not to respond on a question-by-question basis. 1. Boards of contract appeals such as the ASBCA have established a good record of independence and impartiality. Continuing effort is necessary to improve the qualitative level of the boards, particularly those which permit parttime board members. 2. We understand that the average disposition time of an ASBCA case is at least twelve months and that of a case in the Court of Claims is about 48 months. Consideration should be given to means to expedite the disposition of these cases. 3. The boards of contract appeals should, to the extent practicable, have uniform rules of procedure and practice. Further, the board rules should provide for discovery procedures commensurate with those of the Federal Rules of Civil Procedure; and express statutory subpena power should be vested in the boards of contract appeals. These changes would enable an appellant to receive a fairer and more complete hearing and would provide the opportunity to establish_a better record for use in any future appeal from an adverse board decision. In our opinion contractors desire only one full opportunity to present their case before a fair and impartial administrative tribunal with the right of judicial appeal based on the administrative record, subject to the "Wunderlich" criteria. 4. A single Government-wide appeals board would not necessarily be a panacea since boards specializing in the problems of a single department or agency would, tend to be more expert and efficient. Also, a single board might be too large to be efficient. On the other hand, it might be helpful to merge some of the smaller. boards into one full-time board. 5. Attention should be given to the concurrent jurisdictional monetary limits of the U.S. district courts. Increasing the present limit of $10,000 would be helpful in relieving the serious congestion in the U.S. Court of Claims. 6. Adoption of adjudication requirements of the Administrative Procedure Act should be unnecessary particularly if the boards of contract appeals had uniform procedures and practices. 7. Thorough consideration should be given to permitting subcontractors to have a right of direct appeal to boards of contract appeals involving disputes 62-084--66- -10 where only the Government and the subcontractor are the actual parties in interest. Such disputes procedures should facilitate relations between the prime and subcontractor and thereby contribute to improved contract performance. 8. Jurisdiction of boards of contract appeals should be enlarged to include cases involving breach of contract. 9. Boards of contract appeals should not be given the equitable jurisidiction presently exercised by contract adjustment boards, but jurisdiction over matters that are susceptible of legal relief, such as mutual mistake, should be vested in the boards of contract appeals. 10. The General Accounting Office should not have juridiction to review decisions of boards of contract appeals and questioning by GAO of payments authorized by such decisions should be prohibited. 11. Bid protest cases should remain with the General Accounting Office. 12. Contractor debarment cases should not be placed in the boards of contract appeals. 13. A thorough reexamination should be undertaken of the existing legal obstacles to the recovery of interest by contractors in connection with decisions of boards of contract appeals and consideration should be given to appropriate measures that might be taken to overcome these obstacles in the interests of promoting equity and fair dealing in this area. While we believe that the above views are generally representative of those of our members, it should be recognized that they are based upon a limited number of responses received from our members. Moreover, it should be pointed out that a few divergent comments were received with respect to the views expressed in paragraphs 1, 8, 11, and 12 above. Sincerely, R. N. MCFARLANE, Executive Director. APPENDIX II THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, Re Government Appeal Board. Senator JOSEPH M. MONTOYA, Chairman, Subcommittee on Government Procurement of the Senate Select Committee on Small Business, Old Senate Office Building, Washington, D.C. DEAR SENATOR MONTOYA: The Associated General Contractors of America is a national trade association, with chapters or branches throughout the country. Our membership of almost 8,000 general contractors performs an annual volume of work approximating 80 percent of the contract construction in the United States. We appreciate this opportunity to present a statement for inclusion in the record of your public hearing on Government appeal boards. In our opinion, Government appeal boards can perform a useful function in affording Government contractors a relatively expeditious and inexpensive initial forum at the administrative level for appeals from rulings of contracting officers. As the volume Government contracting increases over the years, the number of disputes arising under Government contracts rises accordingly, and the problem intensifies of handling appeals in a fair and equitable manner. Contrary to widespread present practice, we believe that members of appeal boards should not be employees of the contracting agencies whose determinations they are reviewing. While we do not intend to be critical of existing boards, it seems obvious that the impartiality of appeal boards members would become less of an issue if such members were employees of an independent agency. It is important not only that members of appeal boards be well qualified but also that Government contractors have confidence in their impartiality. This confidence would be enhanced by making the board members no longer accountable to the contracting agencies. We are inclined to believe that the remedies of money payments and extensions of time for contract performance that appeal boards are now empowered to grant are adequate. The additional remedies of injunctive or interlocutory relief should remain in the courts. Also, the equitable jurisdiction presently exercised by contract adjustment boards should remain therein rather than being given to contract appeal boards. In effect, the jurisiction of appeal boards already extends to disputes including subcontractors, as the prime contractors in practice present such disputes on behalf of the subcontractors and the latter freely participate in the presentation if they so desire. Since the prime contractor is responsible to the Government, for the entire contract, whether or not any part is subcontracted, it would appear that he should continue to be the named appellant before the administrative appeal board, either in his own right or on behalf of a subcontractor. Finally, and most importantly, the Associated General Contractors of America submits that the most pressing need for reform in appeals procedure is to restore to Government contractors their day in court, on issues of fact as well as law, in cases arising under disputes clauses. Determinations by appeal boards should not be final, but rather should be fully reviewable by the courts in trials de novo. Administrative records compiled by appeal boards are not an adequate substitute for full court hearings and procedures as developed over the years to safeguard and assure the rights of both parties to litigation. In conclusion, we strongly urge that the Congress act to alleviate the present inequitable situation by enacting legislation to restore to Government contractors the right to judicial review of appeal board decisions, on both questions of law and fact, as proposed in H.R. 289, introduced by the Honorable Emanuel Celler, chairman of the House Judiciary Committee, and in a number of similar bills now pending in the House. Respectfully submitted. WILLIAM E. DUNN, APPENDIX III NATIONAL ELECTRICAL CONTRACTORS ASSOCIATION, INC., Hon. GEORGE A. SMATHERS, Chairman, Subcommittee on Government Procurement, U.S. Senate, Washington, D.C. DEAR SENATOR SMATHERS: Thank you very much for letting us provide this statement to your subcommittee on the subject of the decisions of contract appeals boards. By way of introduction, the National Electrical Contractors Association, which was organized in 1901, is the nationally recognized spokesman for the electrical contracting industry. This industry is composed of small business firms primarily engaged in making on-the-site electrical installations. These concerns individually employ fewer than 10 workmen on the average, although a number have payrolls which average in the hundreds of men. These companies can be found in every community of the United States and are engaged in construction projects which range from wiring of small homes to such highly technical and involved installations as atomic energy plants and missile complexes. It is our belief that first tier contractors in the construction industry should have direct access to the boards. Moreover, we believe the authority and jurisdiction of the boards should be broadened to include first tier subcontractors' claims that are presently based on breach of contract. I believe the reasons for these statements become patent when the problem areas are defined. The subcontract form developed as a guide by the Associated General Contractors of America and the Council of Mechanical Specialty Contracting Industries Inc., of which the National Electrical Contractors Association is a part, Identifies the following: 1. The prime contractor shall pay the subcontractor on a timely bases, but the subcontractor does not always get progress and final payments on a timely basis, although the prime contractor receives money from the Government. 2. The prime contractor asks the subcontractor to perform (a) additional work or (b) changes due to condition, design, or specification. No written document is provided by the prime contractor to the subcontractor. The prime contractor is paid and the subcontractor is not under, at least, the following circumstances: (1) Government negotiates a change with the prime contractor. (2) The prime contractor expects the subcontractor to fill voids in the prime contractor's original estimates. 3. Instructions, orders, or directions are frequently given directly to employees or workmen of the subcontractor. Work is performed by the subcontractor's workmen. No record is available of the order and payment is not made then by the prime contractor. 4. Article 27 of the subcontract form provides that the contractor shall give the subcontractor an opportunity to be present and to submit evidence in any arbitration involving his rights. If this provision is desirable for private construction work, it is even more desirable that subcontractors be granted hearings before boards of contract appeals for Federal Government construction since subcontractors generally feel they are working for the Government. We hope that you will be able to help make the appeal process more palatable and effective for the construction industry subcontractor. Thank you again for your consideration. Sincerely yours, RUFUS W. MANDERSON, 144 APPENDIX IV SMALL BUSINESS ADMINISTRATION, Hon. JOSEPH M. MONTOYA, Chairman, Subcommittee on Government Procurement, Select Committee on Small Business, U.S. Senate, Washington, D.C. DEAR SENATOR MONTOYA: We appreciate the opportunity to comment for the record regarding Government boards of contract appeals upon which subject hearings were held on March 8 and 9. Our interest and concern in this subject is wholly from the viewpoint of and on behalf of the small business community. Small business concerns are often at a disadvantage in disputes with the contracting officer. They frequently cannot afford to retain experienced procurement counsel and lack the financial resources to engage in protracted procedures of a highly formalized nature. They are often compelled by practical economics to compromise their claims and accept less than that to which they may be properly entitled. Hence, the small business community is vitally interested in fair and impartial procedures which are free from undue formality and which will resolve disputes under Government contracts quickly and inexpensively. Nowhere is the ancient adage "Justice delayed is justice denied" more apropos. One of the problems encountered by a small business concern is the lack of uniformity among the various boards of appeals. A concern having contracts with more than one agency of the Government has to acquaint itself with the regulations, policies, and disputes procedures of each agency. Differences between the agencies increase the complexity and expense to the small business concern. Accordingly, it is in the best interests of the small business community that the policies and rules of procedure of the various boards be made as uniform as possible. Some have suggested replacing the numerous present boards of contract appeals by two or three Government-wide boards which would hear all appeals. While this would seemingly be beneficial to small business concerns in that it would reduce the number of forums for contract appeals and thereby promote uniformity of procedures, it could easily result in more formal quasi-judicial procedures which, when considered with the larger number of appeals such agencywide boards would have, would be laborious of procedure and slow of decision with resultant increase in expense to. and pressure on, the small business concern. Accordingly, we have grave doubt whether the creation of a few Governmentwide boards of contract appeals on balance would be helpful to small business concerns. It is well known that small business concerns are least able to afford the expense of and the time required for the litigation of disputes or controversies in the courts. Small business concerns are at a disadvantage, therefore, when evaluating the wisdom of asserting their rights by proceeding against the Governments in the courts for breach of contract or accepting whatever the contracting agencies offer in settlement of the dispute. The suggestion that the authority and jurisdiction of the boards be broadened to include claims based on breach of contract would be beneficial to small business concerns, provided that this increase in the boards' jurisdiction is not accompanied by an increase in the formalities and legalism of the boards' procedures so that the boards in effect become courts, albeit specialized courts of experts. Small business concerns sometimes find it necessary to file an appeal to the boards of contract appeals in order to protect their rights against overcautious and erroneous decisions by contracting officers. Pending the disposition of the |