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more weight than factor (b); that factors (c), (d), and (e) would be considered to have approximately the same importance; and that the aggregate of factors (c), (d), and (e) would be approximately the weight of factor (b). August 19, 1970, was specified as the closing date for submission of proposals.

On July 21 and 22, 1970, prospective offerors were provided a tour of the KSC facilities which would be involved in the performance of the required services, and a preproposal conference was held, during which various questions relating to the contract were raised by participants in the conference and were answered by NASA. Subsequently, NASA distributed to interested parties a list of the questions and answers with a letter dated July 31. Question 56 and NASA's answer, with which your protest is concerned to a great extent, read as follows:

Question 56. 1. Is it NASA's opinion that successful bidders will be required to assume employee representation by incumbent unions?

2. (a) If the answer to Question 1 is 'yes, is the basis for this opinion 'no significant change in work scope'? (6) If the answer to Question 1 is 'no,' is the basis for this opinion 'a significant change in work scope'?

3. If the answer to Question 1 is 'yes,' does NASA KSC plan to provide contents of the current union agreement as well as specific employee rates and benefits costs to enable bidders to submit competitive bids?

"Answer. 1. The NLRB has held that when an employer assumes the operations of another employer without change in employees, jobs or methods, the successor-employer is obligated to bargain with the union before changing wages and other conditions of employment. Under a recent series of cases, the NLRB has held that the successor-employer must assume the predecessor's collective bargaining agreement. It is NASA's position that the offerors make themselves familiar with the NLRB cases covering this issue namely, The William J. Burns International Detective Agency, Inc., 74 LRRM 1098; Chemrock Corp., 58 LRRM 1582; John Wiley & Sons vs Livingston, U.S. Sup. Ct. 55 LRRM 2769.

2. The offeror will have to apply the NLRB's reasoning in the previously mentioned cases to the scope of the RFP in relation to method in which the work has been performed and to its own intended mode of operation.

3. It is not our policy to supply any offerors with any copies of labor agreements covering units of employees coming within the scope of the RFP.”

By August 19, NASA had received basic proposals from seven companies including your company, Boeing and Pan Am. Boeing also submitted an alternate proposal covering a lesser number of employees than specified by NASA as required staffing. Only the basic Boeing proposal is involved in your protest.

Boeing proposed to recognize the bargaining representatives of the incumbent employees but not to assume your existing labor agreements. Instead, Boeing stated its intent to bring the incumbent IAM employees of your firm under Boeing's company-wide labor agreement with Lodge 2061 of IAM, with which Boeing has had a very good relationship. This agreement covers employees at Boeing's main aircraft and aerospace manufacturing operation, as well as in the KSC area under Boeing's Apollo V stage contract, and the wage rates are considerably lower than the rates paid by your company to incumbent employees performing similar work.

The record indicates that Boeing will accept the "successor employer" doctrine with respect to the security employees currently represented by the UPGWA and the fire protection employees represented by the TWU, but proposes to subcontract the janitorial function, NASA's Industrial Relations Officer expressed the opinion that no major labor problems would seem to be associated with Boeing's basic proposal, but the alternate proposal, which proposed fewer employees, might give rise to a problem of convincing the IAM that a smaller number of employees was needed.

Pam Am proposed to operate under the Railway Labor Act (RLA), 44 Stat. 577, as amended, pursuant to which Pan Am has operated as a contractor for the Department of the Air Force at the nearby Air Force Eastern Test Range, Patrick Air Force Base, Florida. Pan Am considers itself not subject to NLRB and court decisions espousing the "successor employer" doctrine since Pan Am is an airline operation coming under the RLA and also views the incumbent employees as an accretion to existing bargaining units covering employees in Pan Am's overall company operations. These Pan Am bargaining units are represented by the TWU, the IBT, and the UPGWA, and all have been approved by the National Mediation Board (NMB) established under the RLA. (Under the “accretion" doctrine, the accreted incumbent employees would have no choice over whether they want to be included in Pan Am's existing bargaining units. . Pan Am, therefore, would endeavor to persuade the incumbent employee members of IAM to transfer to the TWC and the IBT and to accept reduced wage rates applieable under Pan Am's bargaining agreements with such units.

NASA's Industrial Relations Officer expressed doubt about the proposed Pan Am agreements with the TWU and IBT since they will involve a major turnover of collective bargaining representation of incumbent employees, whieb, upon challenge by IAM, may not stand up.

In this connection NASA refers to the "Jackass Flats" case, Pan Ameriran World Airways, Inc. v. United Brotherhood of Carpenters and Joiner: of Amerira, 324 F. 2d 217 (1963), involving the performance of preventive maintenance work by Pan Am at a nuclear research development station in the State of Nerada, which the court held had nothing to do with transportation by air or rail and was not within the application of the Railway Labor Act, and therefore the airline was not entitled to an injunction restraining the union from striking, picketing or otherwise interfering with the operation. NASA also mentions friction which has been experienced between TWA/Bendix and Pan Am employees because of the rivalry between IAM and TWU/IBT employees, the labor disputes ranging from petty harrassment to threat of work stoppage.

After initial consideration of all proposals, your proposal was ranked highest with Pan Am's proposal a close second and Boeing's basic proposal third. The two proposals which were ranked lowest were eliminated from the competitive range at this stage, and the respective offerors were so notified by letters dated September 18, 1970. The five remaining offerors were then invited to participate in oral discussions of their proposals with attention to be focused on 25 general questions and various specific questions relating to particular proposals. General question No. 18 asked each offeror to what extent labor agreements would be applicable to employees performing on the contract and to explain the types of units and unions involved in the proposal.

Discussions were conducted with the offerors from September 28 to October 1, inclusive, and each offeror was afforded an additional week to further revise or clarify its proposal(s) in light of the discussions. The cut-off date for all offerors was October 19, 1970, as stated in telegraphic amendment No. 3 to the RFP, and no further revisions were received after that date. Further, no changes were made by any offeror in its proposed union structure in response to the questions which had been raised by the Government.

Subsequently, as in the initial assessment, your proposal and Pan Am's proposal were ranked essentially equivalent technically with Boeing's proposal being third. On the business aspects of the evaluation process, however, you rated very high with Boeing nearly as high. Pam Am was rated third on the basis that its proposed wage rates were not realistic, such rates being lower than Pan Am now pays at the nearby Air Force Eastern Test Range and also dependent upon the success of Pan Am's efforts to induce IAM employees to transfer to the TWU and IBT units with which Pan Am has its bargaining agreements, a factor which NASA believes, as stated above, is likely to involve serious labor problems.

After careful reconsideration of all proposals. NASA concluded that the technical superiority of your proposal did not justify its acceptance if the low cost arrangement could be achieved with Boeing, whose technical proposal was entirely acceptable to NASA. NASA accordingly concluded that selection of Boeing's basic proposal would give the Government the best promise of good technical performance and reasonable cost, and the Acting Administrator of NASA directed that negotiations be conducted with Boeing on the basis of the labor plan reflected in Boeing's proposal, with the condition that Boeing show firm agreements with the appropriate unions providing coverage for the work to be performed under the procurement before approval of the contract

As to Pan Am, whose proposal price was close to Boeing's basic proposal price, NASA decided not to risk the labor unrest which was likely to attend its accentance. In view of this rejection of Pan Am's proposal, and our decision of today denying Pan Am's protest against such rejection, it would appear that your protest against consideration of Pan Am's proposal for award has become moot. The remainder of this decision will therefore be confined to your protest against consideration of Boeing's proposal.

Boeing, upon notice from NASA of your protest, submitted a legal memorandum to NASA stating, among other things, that your agreements with the IAM specifically state that they are “in accordance with the provisions of the Railway Labor Act"; therefore, Boeing, not being a carrier subject to the RLA, could not be bound

by your agreements. Further, Boeing raises the question of the legality of your agreements on the basis that the services in question do not relate to transportation, and under the decision in the Jackass Flats case, supra, the National Labor Relations Act is the controlling statute.

Enlarging on its argument that it cannot succeed to your union bargaining agreements, Boeing stated that such agreements are with a nationwide unit which includes individuals employed as guards. While the Railway Labor Act, according to Boeing, permits inclusion of guards in the bargaining units, Section 9(b) of the National Labor Relations Act (29 U.S.C. 159(b)) specifically prohibits certification by the NLRB of any bargaining unit which includes guards.

Boeing also pointed out that your agreements do not provide for arbitration as contemplated by the National Labor Relations Act but rely, rather, upon the provisions of the Railway Labor Act. In this connection, Boeing stated that District Lodge 142 of the IAM, with which you executed an agreement, bargains solely for employees subject to the Railway Labor Act.

Boeing also urged that since it has over 22,000 employees represented by the IAM in a nationwide bargaining unit, the additional 1,000 employees which Boeing might hire from your firm should properly be considered as an "accretion” to Boeing's IAM bargaining agreement in which event the "successor employer" doctrine would have no application.

In 42 Comp. Gen. 1 (1962), we had occasion to consider whether the Department of Defense and NASA could properly include in missile construction contrácts at Cape Canaveral and Patrick Air Force Base the terms of a labor management project agreement which would require payment of specified wages and fringe benefits to laborers and mechanics, which had been approved by the Secretary of Labor but which were not prescribed pursuant to statute. At page 2 of our decision, we made the following pertinent statements :

"Our Office has considered many proposals to incorporate in Government contracts conditions or requirements concerning wages and other employment conditions and practices, and has in a long series of decisions adhered to the principle that contract stipulations tending to restrict competition and to increase the cost of performance are unauthorized unless reasonably requisite to the accomplishmen of the legislative purposes of the contract appropriation involved, or unless such stipulations are expressely authorized by statute; and that when the Congress has legislated on the subject it is not open to administrative discretion to stipulate conditions beyond or at variance with those specifically directed by the statute."

In line with the above statements, which were followed by citations to pertinent decisions of our Office, such as 10 Comp. Gen. 294 (1931) relating to the need for specific statutory authority to prescribe in a Government contract minimum wage rates to be paid by a contractor, and for the other reasons stated in our decision, we held that a clause in the construction contracts in question which would require adherence to the project agreement would not be in conformity with the general statutes governing Government contracting. We did, however, point out that if a determination were made pursuant to the act of August 28, 1958, Public Law 85–804, 50 U.S.C. 1431–35, and Execuive Order 10789, November 14, 1958, that the national defense would be facilitated by the inclusion of such a provision in the contracts in question, the contracts could be executed or modified accordingly.

We are not aware of any statute which imposes a requirement that a contractor who succeeds a prior contractor in the performance of services for the Government at a Government installation is required to assume the predecessor contractor's bargaining agreements with its union employees. Nor are we aware of any court decision to such effect. Neither the Wiley nor the Burns cases cited by NASA in its answer to question 56 at the preproposal conference, nor any of the other cases which you have cited for the proposition that the “successor employer" doctrine applies to the proposed contract, involved services at a Government installation. Nor did consideration of the statutes governing Government contracting enter into the making of any such decisions.

Further, we believe that in the case of Potter v. Emerald Maintenance, Civil Action 70-L-36, Southern District of Texas, October 29, 1970, relating to contracts for the performance of service and maintenance work for the Air Force, the United States District Court raised some objections to application of the successor contractor theory, as espoused in Burns, to Government procurements.

Turning now to the effect of the language which NASA used in the RFP and in its response to question 56 respecting your bargaining agreements with incum

bent employees, we are unable to concur with your position that such statements constituted a requirement that offerors consent to be bound by such agreements. The language in the RFP simply called for a statement of the offeror's undertsanding of the impact, if any, of such agreements upon the offeror's assumption of the contract responsibilities, and the reply to question 56 merely placed offerors on notice of the "successor employer" doctrine as applied by NLRB in the Burns and Wiley cases but left to the offerors the interpretation of such decisions. That such interpretations could vary, depending upon the nature of each offeror's proposal, is apparent from NASA's answer numbered 2. While it is evident that your commitment to wage rates which were higher than those apparently available to Boeing and Pan Am placed you in a poor competitive position if you proposed only on the basis of paying such rates, that fact alone presents no adequate basis for requiring all other bidders to adopt your wage rates.

In line with the foregoing, it is our view that NASA was not obliged to include in the RFP a requirement that offerors agree to accept the "successor employer" doctine as to incumbent employees covered by union bargaining agreements, and it is our further view that the language which NASA used in the RFP and in its response to question 56 at the preproposal conference did not state such a requirement but properly left the decision to the offerors. In the circumstances, we are unable to accept your position that the Government was deprived of meaningful competition under the solicitation so as to justify resolicitation of the procurement, as you have suggested as an alternative to elimination of Boeing and Pan Am from consideration for award.

Nor can we accept your argument that Boeing, which has proposed to abide by its own bargaining agreement with the IAM, has offered a price that is less than reasonably anticipated costs, contrary to the provisions of NASA Procurement Regulation (NASA PR) 1-311 relating to "buying in” at low cost with expectation of recovering additional amounts after award. Not only has there been no authoritative determination that your employer bargaining agreements are applicable to any successor contractor, which will be performing services in addition to those currently performed by you, but the Acting Administrator of NASA has conditioned the award to Boeing on a showing by Boeing of firm agreements with the appropriate unions providing coverage for the work to be performed under the proposed contract. It is our opinion that Boeing's proposal, when supported by such agreements, may properly be considered reasonable as to anticipated costs.

We have noted that the award of cost reimbursement contracts requires exercise by procurement personnel of informed judgments whether submitted proposals are realistic as to proposed costs as well as to technical approach. B-152039, January 20, 1964. Further, we believe that such judgment properly should be left to the discretion of the contracting agencies concerned since they are in the best position to assess "realism” of costs and technical approaches and must bear the major criticism for any difficulties or expenses experienced by reason of a defective cost analysis. B–171076, December 16, 1970, 50 Comp. Gen.

On the record before us, we are unable to conclude that NASA's selection of Boeing for negotiation of a contract for this procurement, under the conditions stipulated by the Acting Administrator of NASA as set out above, was other than a valid exercise of the discretion granted to NASA, as the contracting agency, to make the award which will be most advantageous to the Government as contemplated by the provisions of NASA PR 3-805.2. Your protest is therefore denied. Very truly yours,

ELMER B. STAATS, Comptroller General of the United States.



Cocoa Beach, Fla., May 11, 1971. Mr. Hugh DUFFY, Counsel, House Special Labor Subcommittee, U.S. House of Representatives,

Rayburn Building, Washington, D.O. DEAR MR. DUFFY: In response to your letter of May 4, 1971, I feel that one of the things happenning in the Cape Kennedy area today that could be violating

the Service Contract Act of 1965 is the suddenness of the Government using Section 8A of the Small Business Act in the letting of contracts.

Recently the Air Force notified Pan American World Airways that their services would no longer be needed at the "Tech Lab" at Patrick Air Force Base, Florida, and that it would be put out for bid under the above mentioned Act. The janitors at Pan Am are earning an average of $3.85 an hour plus fringe benefits. The small contractors bidding on this job have been told that they can not bid for less than $2.50.

It is my understanding that according to the local newspapers NASA let the Library and Information Service contract out under the same Act. This contract had been, previous to April 1, 1971, a part of the TWA master contract at the Kennedy Space Center. This contract went to a Company called the New World Service, Inc., in Orlando, Florida. At the time the job was let, a check was made with Dun and Bradstreet and it was discovered that they had no listing for the Company. It was later learned that this Corporation had been formed only a few days prior to the closing of the bids.

I feel that Congress should run a more extensive investigation and some of its members should come to Brevard County to investigate this situation. Very truly yours,

E. D. DISHONG, President.


Washington, D.C., May 14, 1971. Hon. FRANK THOMPSON, Jr., Chairman, Special Subcommittee on Labor, Committee on Education and Labor,

House of Representatives. DEAR MR. CHAIRMAN: By letter dated May 5, 1971, you requested us to furnish your Committee information on the current practice of limiting the term of most or all service contracts awarded by the Federal Government to 1 year and our recommendations on existing alternatives to such practice. We apprised your office on May 13, 1971, that the information which you also requested relating to the terms of other than service contracts could not be provided to you by May 14, the date specified in your letter. In view of the urgency of your request, it was agreed that the information herein be limited to a discussion of service contracts.

Our inquiries with four Federal agencies which contract extensively for services (Department of Defense, General Services Administration, National Aeronautical and Space Administration, and the Post Office Department), revealed that generally, service contracts are awarded for 1-year periods because the appropriations from which they are funded are generally available for only 1 year. There are various exceptions, however, to this general practice. The Post Office Department, for example, has specific legal authority to make 4-year service contracts for mail hauling—see 39 U.S.C. 6405 (a). Also, the General Services Administration has authority to enter into contracts for periods not exceeding 3 years for the inspection, maintenance, and repair of fixed equipment in buildings which are federally owned and for which the Administration has the responsibility for maintenance and operations and protection (40 U.S.C. 490 (a) (14)).

Officials of the Department of Defense and the National Aeronautical and Space Administration advised us that they have been incorporating into the terms of some of their 1-year service contracts, options to renew the contracts for an additional 1 to 4 years, subject to the availability of appropriations in the succeeding years. One of the reasons for including renewal options, they stated, was to reduce the various administrative costs that arise from "closing out" with one contractor and "starting up" with another.

We are enclosing a copy of our decision, B-144641, dated November 30, 1962. Also enclosed is a copy of our decision, B-160576, and related correspondence, dated June 13, 1967. Our decision of November 30, 1962, and the correspondence related to our June 13, 1967, decision were directed to the funding of multiyear service contracts with 1-year funds. Subsequently, the Department of Defense requested legislation to permit the use of multiyear contracts both domestically and abroad. As a result, Public Law 90-378 was enacted to permit the use by the military departments of multiyear service contracts abroad; the Congress, however, did not see fit to grant such authority with respect to domestic service contracts.

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