NATIONAL CANCER INSTITUTE, 1987-SCA-OM-9 (Dep. Sec'y Feb. 28, 1989)
CCASE:
NATIONAL CANCER INSTITUTE
DDATE:
19890228
TTEXT:
~1
[1] U.S. DEPARTMENT OF LABOR
DEPUTY SECRETARY OF LABOR
WASHINGTON, D C.
20210
DATE: February 28, 1989
CASE NO. 87-SCA-OM-9
NATIONAL CANCER INSTITUTE
AND
ADMINISTRATOR, WAGE AND HOUR DIVISION,
U.S. DEPARTMENT OF LABOR.
BEFORE: THE DEPUTY SECRETARY OF LABOR /FN1/
FINAL DECISION AND ORDER
This matter is before me pursuant to the Service Contract Act
of 1965, as amended (SCA or the Act), 41 U.S.C. 351-358 (1982),
and the rules and regulations promulgated thereunder, 29 C.F.R.
Parts 4 and 8 (1988). Petitioner, the National Cancer Institute
(NCI), U.S. Department of Health and Human Services, filed a
Petition for Review of the final decision of the Administrator,
Wage and Hour Division, regarding the application of the Service
Contract Act to Request for Proposal No. NCI-CO-64086-93 dated May
14, 1986.
In her final decision dated August 6, 1987, the Administrator
ruled that the SCA was applicable to this request [1]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ The Deputy Secretary has been designated by the Secretary to
perform the functions of the Board of Service Contract Appeals
pending the appointment of a duly constituted Board. 29 C.F.R.
[sec] 8.0 (1988); Department of Labor Executive Level Conforming
Amendments of 1986, Pub. L. No. 99-619 (November 6, 1986). [1]
~2
[2] for proposal (RFP) and to each of the contracts which may be
awarded thereunder. Administrative Record (A.R.), Tab. 2.
The background for this proceeding is as follows: On
October 30, 1986, Sylvester Green of the Contract Operations
Branch, Wage and Hour Division, wrote to NCI. The letter stated
that Wage and Hour had been informed that NCI had issued a RFP
for five contracts for the management of the Frederick Cancer
Research Facility (FCRF), that NCI had not included SCA
specifications in that RFP, that Wage and Hour considered the
five contracts to be covered by the SCA and that if Wage and
Hour's information was correct, NCI should notify prospective
bidders of the Act's application. A.R., Tab 5.
On November 21, 1986, Mr. Philip D. Amoruso, Associate
Director for Administrative Management, NCI, responded to
Mr. Green's letter stating his views that
[t]he FCRF is a government-owned, contractor-operated (GOCO)
Federally Funded Research and Development Center, the
"principle purpose" of which is to conduct basic research into
the prevention, treatment and cure of cancer. The five FCRF
contracts currently in place form a system of contracts with
each contract in this system interdependent. Without any one
of the five, the other four could not function. . . .
Additionally, as the principle purpose of the system of
contracts is the conduct and support of basic research we find
that the application of the SCA would not be appropriate.
A.R., Tab 4.
In its petition, NCI states that the major point of
disagreement is the interpretation of what constitutes a Government
Owned - Contractor Operated installation contract. NCI asserts
that it "cannot identify any citation in either the [2]
~3
[3] Federal Acquisition Regulations (FAR) or the Office of Federal
Procurement Policy (OFPP) guidance which mandates that only a single
contract can be considered a GOCO."
The pertinent Department of Labor regulations which define
this situation and which were specifically provided to NCI, A.R.,
Tab 2, are at 29 C.F.R. [sec] 4.107(b) (1988) and provide as
follows:
Where a Federal agency exercises its contracting
authority to procure services desired by the Government,
the method of procurement utilized by the contracting
agency is not controlling in determining coverage of the
contract as one entered into by the United States. Such
contracts may be entered into by the United States either
through a direct award by a Federal agency or through the
exercise by another agency (whether governmental or
private) of authority granted to it to procure services
for or on behalf of Federal agency. [*] Thus sometimes
authority to enter into service contracts of the
character described in the Act for and on behalf of the
Government and on a cost-reimbursable basis may be
delegated, for the convenience of the contracting agency,
to a prime contractor which has the responsibility for
all work to be done in connection with the operation and
management of a Federal plant, installation. facility, or
program, together with the legal authority to act as
agency for and on behalf of the Government and to
obligate Government funds in the procurement of all
services and supplies necessary to carry out the entire
program of operation[*]. The contracts entered into by
such a prime contractor with secondary contractors for
and on behalf of the Federal agency pursuant to such
delegated authority which have such services as their
principal purpose are deemed to be contracts entered into
by the United States and contracts with the Federal
Government within the meaning of the Act.
[] Emphasis added [*].
Thus, it is clear that the GOCO principle contemplates a
contracting agency which can delegate its authority, for its
convenience, to a single prime contractor to enter into contracts
with secondary contractors and those secondary contracts are [3]
~4
[4] subject to the SCA. It is only the prime contractor which has
the responsibility for [] all work [*] to be done in connection
with the operation and management of a Federal plant, installation,
etc., which is subject to the exception from coverage. The plain
reading of the regulations limits this exception to no more than
one contractor. As the Administrator states, and I agree,
"[t]hese five contracts are more akin to the secondary contracts
which a true GOCO contractor would enter into and which are
expressly treated as covered under Section 4.107(b)."
Administrator's Statement at 6.
Further, if Petitioner's interpretation that each of the five
contracts could be considered an exempt GOCO contractor were
accepted, it would reduce coverage and not be in accord with the
remedial purpose of the Act, i.e. to protect prevailing labor
standards. Thus, I affirm the Administrator's decision that RFP
No. NCI-CO-64086-93 must contain the stipulations that the SCA is
applicable to subsequent contracts.
Petitioner's argument that the SCA would not apply because the
principle purpose of the system of contracts is the conduct and
support of basic research cannot avail it an exception to coverage.
The Administrator reviewed the RFP and identified a significant
amount of work requiring the use of nonexempt service employees.
A.R., Tab 2, pp. 2-3. Pages 140-170 of the RFP, A.R., Tab 6, show
a breakdown of the labor years effort for each of the contracts.
In each of the contracts, NCI estimated that a [4]
~5
[5] significant amount of labor years effort would be performed by
non-exempt technical and support staff. The SCA regulation at 29 C.F.R.
[sec] 4.113(a)(3) provides expressly that:
[T]he Department does not require application of the Act
to any contract for services which is performed
essentially by bona fide executive, administrative, or
professional employees, with the use of service employees
being only a minor factor in the performance of the
contract. However, [*] the Act would apply to a contract
for services which may involve the use of service
employees to a significant or substantial extent even
though there is some use of bona fide executive
administrative or professional employees [*] in the
performance of the contract.
[*] (emphasis supplied) [*].
Upon review of the RFP, it is clear that the proposed
contracts require significant use of non-exempt employees.
Consequently, the provisions of the SCA are applicable to all
contracts awarded pursuant to this RFP.
For the reasons stated above, the Administrator's decision is
AFFIRMED and the Petition for Review is DISMISSED.
SO ORDERED.
[Dennis Whitfield]
Deputy Secretary of Labor
Washington, D.C. [5]
