production occasioned by changes in production methods, design, tooling, plant layout and rearrangement, and abnormal scrap losses.16 These specifics, however, do not cover all causes of fluctuations from year to year in a contractor's renegotiable profits. In the opinion of contractors, it would be more equitable to average a contractor's good and bad years to determine excess profits. Dissenting Position Some Commissioners,* as an alternative to the foregoing Recommendation 6, recommend that it be supplemented to read as follows: Dissenting Recommendation 6. Expand and clarify the criteria utilized by the Renegotiation Board in determining excess profits and include therein a limitation of renegotiation to cost-type contracts. The added language would exclude fixedprice contracts from the gross amount of a contractor's Government business subject to renegotiation. It is the view of the Commissioners supporting this alternative recommendation that the basic principles and objectives of Government procurement through fixed-price contracting, including contracts arrived at through advertised bids, are violated by the prospect of renegotiation of profits resulting from such procurements. The greater risks which contractors assume under fixed-price contracts warrant their retention of the full profits earned under these contracts. On the other hand, the risks under cost-type contracts are relatively minimal and there is therefore justification for recapture of excess profits accruing thereunder. Furthermore, adoption of a proposed limitation as recommended would have an additional therapeutic value in minimizing cost-type contracts by encouraging suppliers to seek fixed-priced contracts whenever they are appropriate. A change in the act would appear necessary to accomplish the proposed limitation. 16 32 CFR 1460.10 (b) (5). *Commissioners Beamer, Gurney, Horner, and Joers. OTHER STATUTES OF LIMITED APPLICATION As noted below, our recommendations on the following statutes of limited application appear elsewhere in this report. Independent Research and Development Section 203 of Pub. L. 91-441, 84 Stat. 907, imposes restrictions on the payment of Independent Research and Development and Bid and Proposal costs from funds authorized for appropriation to the Department of Defense. See Recommendation 10 in Part B. Architect-Engineer Statutes Five statutes inconsistently regulate the fee payable to architect-engineers." Three of these and two other statutes provide express authority for the Army, Navy, Air Force, GSA, and VA to contract for A-E services.18 One statute requires 30-day advance notice to the congressional Committees on Armed Services before the Army, Navy, or Air Force may spend $150,000 or more for advance planning.19 See Recommendation 4 in Part E. Research Cost Sharing Section 504, Pub. L. 92-78, which was preceded by Pub. L. 91-126, in effect requires cost sharing by a contractor on any research project not specifically solicited by the Government. It applies to HUD and certain other independent agencies. However, OMB Circ. A100 extends these requirements to other agencies. See Recommendation 8 in Part B. 17 10 U.S.C. § 2306 (d); 41 U.S.C. § 254 (b); 10 U.S.C. §§ 4540, 7212, 9540 (1970). See 22 Comp. Gen. 464; 46 Comp. Gen. 183; 46 Comp. Gen. 573, 576; GAO Report B-152306, June 6, 1965. 18 10 U.S.C. 88 4540, 7272, 9540; 40 U.S.C. 609 (a), (b); 38 U.S.C.5002. See also 5 U.S.C. § 3109 (1970). 19 31 U.S.C. § 723a (1970). Although we have not made recommendations concerning them, the following additional statutes should be considered in efforts to achieve Government-wide consistency in procurement policies. Part J means of achieving greater uniformity in the application of cost accounting standards to defense and nondefense contracts. In 1970 the Defense Production Act of 1950 was amended to establish the Cost Accounting Standards Board to promulgate cost accounting standards for use by defense contractors and subcontractors.21 Currently, the Board is developing such cost accounting standards, and it published an initial installment effective July 1, 1972.22 Although under the statute the standards promulgated by the Board apply only to defense contracts and subcontracts, the Federal Procurement Regulations (FPR) prescribe the use of such standards for nondefense contracts.23 A recent supplement to the FPR, which exempts competitively negotiated nondefense contracts, 24 is now being considered by the Cost Accounting Standards Board. Although Study Group 7 (Cost and Pricing Information) examined a number of problems in this area and made several recommendations for change, 25 we believe that operational experience under the standards thus far promulgated is too limited for evaluation and it would be premature to make recommendations at this time as to extent of need for and best 20 See, for example, Defense Appropriations Act, 1971, Pub. L. 91-668, 834; Pub. L. 91-171, § 634; and Pub. L. 90-580, § 533. 21 50 U.S.C.A. App. § 2168. 22 See 4 CFR 331.1 et seq., 37 Fed. Reg. 4143 (1972). 23 FPR Temp. Reg. 27, July 1972. 24 FPR Temp. Reg. 27, Supp. 2, Nov. 4, 1972, 37 Fed. Reg. 23544 (1972). 25 Study Group 7 (Cost and Pricing Information), Final Report, Feb. 1972, pp. 465, 466. Contracting Across Fiscal Years As a rule, service contracts funded by annual appropriations must be for terms within the current fiscal year.26 However, in a few cases, Congress has granted exceptions authorizing an agency to contract across fiscal years, for example: • NASA contracts for support services and maintenance and operation of facilities 27 • DOD contracts for tool and facility maintenance and leases for real and personal property 28 • Army contracts for fuel.29 An Army provision, 31 U.S.C. § 668a, although not directly related to contracting across fiscal years, authorizes payment of metered services from fiscal year funds current at the end of the period of service, if the period of service extends across fiscal years. Under 22 U.S.C. § 2351(b)(8), use of costplus-incentive-fee (CPIF) contracts are required in preference to any other types in connection with the conduct of certain foreign programs of the Agency for International Development. However, there are no laws which prohibit the use of CPIF contracts, and the Federal Procurement Regulations, which AID follows,35 specifically set forth the CPIF contract as a legitimate type of contract form.36 Ailanthus Trees Under 40 U.S.C. § 102, ailanthus trees may 33 26 U.S.C. § 4181 (1970), tax on sale of firearms; 26 U.S.C. 5801, special occupational tax for importers, manufacturers, and dealers in firearms; 26 U.S.C. § 5821, tax on the manufacture of a firearm. It is noted that the term firearm is defined differently for the purpose of 26 U.S.C. § 4181 than it is for the other three provisions, but this difference is not germane to this discussion. 410 U.S.C. § 2385, 14 U.S.C. § 655, 26 U.S.C. § 4182(b), 26 U.S.C. 5851(a), 26 U.S.C. § 5852(a), and 26 U.S.C. § 5852 (b) (1970). 35 41 CFR 7-1.103. 38 FPR 1-3.405-4. Interdepartmental Orders Under the "Economy Act," 38 only the Army, Navy, Treasury, FAA, and Maritime Commission are authorized to place orders on other agencies to be fulfilled by contracts. In individual cases, separate statutes give other agencies the same authority.39 Under 10 U.S.C. § 2309, the military departments and NASA, in connection with interdepartmental orders, may directly obligate the ordering department's funds, while with other agencies the funds must first be transferred and credited to special working funds. Under some special statutes, interdepartmental orders may be filled on a nonreimbursable basis.11 37 Pub. L. 92-204, § 724, 85 Stat. 716. 38 31 U.S.C. § 686. 39 For example, 23 U.S.C. § 308; 22 U.S.C. § 2509 (f), (g); 31 U.S.C. § 660; 40 U.S.C. § 356; 40 U.S.C. § 759; 42 U.S.C. § 1870 (j); 42 U.S.C. 1873 (g); 44 U.S.C. § 1121. See also 14 U.S.C. § 145: 23 U.S.C. § 308; 39 U.S.C. § 411; 40 U.S.C. § 481(d); 42 U.S.C. § 2473(b) (6) (1970). 40 31 U.S.C. § 686 (b) (1970). 41 For example, 14 U.S.C. § 145; 40 U.S.C. § 481(d); 42 U.S.C. § 2942 (1970). CHAPTER 5 Redundant Statutes This chapter discusses statutes that, for the most part, are redundant to and in some cases are inconsistent with other statutes. STATUTES REDUNDANT TO ASPA AND FPASA For many years, the basic statute governing the procedures for the award of Government contracts was R.S. § 3709.1 This statute required (and still requires when applicable) 2 advertisement of contracts except in rather limited circumstances. As a result, many separate statutes were enacted over the years which granted exceptions to the requirements of R.S. § 3709 specifically, or to advertising requirements in general. With the enactment in 1947 and 1949 of ASPA and FPASA with their built-in exceptions authorizing negotiation, the need for many of these special statutes vanished. Nevertheless, all of these were not repealed at the time ASPA and FPASA were passed. Indeed, as a safeguard, a provision was included in FPASA providing that such exceptions to R.S. § 3709 would also be exceptions to the advertising requirements of FPASA. ASPA does not contain a similar provision. A "clean-up" bill, eliminating many of the superseded special statutes other than those making exceptions to R.S. § 3709, was passed in 1951. The discussion below identifies addi tional possibilities for "clean-up," including statutes making exceptions to R.S. § 3709, a few not repealed in 1951, and a few statutes enacted since then. Most of these special statutes were referred to the agencies involved for comment concerning the effect that repeal or amendment would have. In all but one case, as noted below, they interposed no objection to elimination of these provisions as redundant. Subsequently, we added a few statutes on which we did not receive agency comments. Exceptions to R.S. § 3709 12 U.S.C. § 1701c(b) (2), HUD national housing contracts 12 U.S.C. § 1701z-2(e), HUD research contracts 12 U.S.C. § 1747g (h), HUD moderate-income housing contracts under $1,000 12 U.S.C. § 1788(b), National Credit Union Administration insurance contracts under $1,000 15 U.S.C. § 634(b)(4), SBA insurance contracts under $1,000 16 U.S.C. § 580c, Agriculture contracts for Forest Service test materials and devices 16 U.S.C. § 1052(b)(1), Department of the Interior contracts for research vessels 20 U.S.C. § 331a (a) (1), HEW contracts for educational research 20 U.S.C. § 331a (b) (1), HEW contracts for educational research training 20 U.S.C. § 1034(a), HEW contracts for library improvement research and train ing |