B-317249, Natural Resources Conservation Service--Obligating Orders with GSA's AutoChoice Summer Program, July 1, 2009
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Decision
Matter of: Natural Resources Conservation Service—Obligating Orders with GSA’s AutoChoice Summer Program
DIGEST
The General Services Administration (GSA) instructs agencies to obligate current year appropriations for orders of next year model motor vehicles submitted through GSA’s AutoChoice Summer Program, even though such orders cannot be finalized until the next fiscal year when vendors first make available the requisite information on next year models. The Natural Resources Conservation Service requested an advance decision on whether orders submitted through GSA’s AutoChoice Summer Program constitute a valid obligation of the current fiscal year. We conclude that they do not, because, until finalized in October, they are tentative and incomplete.
DECISION
The Chief Financial Officer
(CFO) of the Natural Resources Conservation Service (NRCS), United States
Department of Agriculture (USDA), requests an advance decision under 31 U.S.C.
sect. 3529 on whether NRCS may properly obligate current year appropriations to buy
next year model motor vehicles (cars)[1]
through the General Services Administration’s (GSA) AutoChoice Summer
Program. Letter from E. Steven
Butler, CFO, NRCS, to Gary L. Kepplinger, General Counsel, GAO, Sept. 24, 2008
(NRCS Request). In this program, while NRCS
may submit an order to GSA in the summer of one fiscal year, it must wait until
the next fiscal year for the information on next year model cars that it needs to
finalize its order; at that time, GSA will award NRCS’s order to a vendor for
manufacture and delivery. NRCS
Request. For the reasons stated below,
we conclude that an order submitted through GSA’s AutoChoice Summer Program does
not constitute an obligation of the current fiscal year. GSA has informed us that it is in the process
of retooling GSA AutoChoice to eliminate its Summer Program. Teleconference between Nathan C. Guerrero, Assistant
General Counsel, Personal Property Division, GSA, Susan A. Poling, Managing
Associate General Counsel, GAO, and Lauren S. Fassler, Senior Attorney, GAO,
June 30, 2009.
Our practice when rendering decisions is to obtain the
views of the relevant agencies to establish a factual record and elicit the
agencies’ legal positions on the matter.
GAO, Procedures and Practices for Legal Decisions and Opinions,
GAO-06-1064SP (Washington, D.C.: Sept. 2006), available at www.gao.gov/legal/resources.html. In this regard, we requested clarification on
facts and legal issues from GSA’s General Counsel. Letter from Thomas H. Armstrong, Assistant
General Counsel for Appropriations Law, GAO, to Leslie A. Nicholson, General
Counsel, GSA, Oct. 20, 2008. We received
GSA’s response on November 24, 2008. Letter
from Janet L. Harney, Acting Associate General Counsel, Personal Property
Division, GSA, to Thomas H. Armstrong, GAO, Nov. 24, 2008 (GSA Response Letter). See
also E-mail from Nathan C. Guerrero, GSA, to Neill W. Martin-Rolsky, Senior
Attorney, GAO, Jan. 22, 2009 (GSA Response E-mail); Teleconference between Nathan
C. Guerrero, GSA, Lauren S. Fassler, GAO, and Thomas H. Armstrong, GAO, Feb. 3,
2009.
BACKGROUND
NRCS is a USDA agency established to “provide national
leadership in the conservation, development, and productive use of the Nation’s
natural resources,” including working with private landowners to conserve soil,
water, air, plant, and animal resources.
7 C.F.R. sect. 600.1. See also 7 U.S.C. sect. 6962. In general, to buy new cars NRCS enters into
an interagency agreement with GSA, obligating the costs of the car order to current
appropriations. GSA is an executive branch agency that was
established under the Federal Property and Administrative Services Act of 1949,
as amended, to provide the federal government with an economical and efficient
system for procuring and supplying property and certain services. 40 U.S.C. sections 301, 101. GSA is required to procure and supply certain
property and services for executive agencies, as well as issue regulations prescribing
implementing policies and methods. 40
U.S.C. sect. 501. Under the Federal
Procurement Policy Act, executive agencies are required to make purchases and
contracts consistent with GSA regulations.
41 U.S.C. sect. 252. In its Federal
Property Management Regulations (FPMR or Property Regulations), GSA requires federal
civilian executive agencies, such as NRCS, to submit to GSA all of their
procurement orders for new cars to be bought in the United States. FPMR, 41 C.F.R sect. 101-26.501-1.
“Wherever
practical,” the Property Regulations require agencies to use GSA’s existing
standardized car buying programs to satisfy their new car requirements. FPMR, 41 C.F.R. sect. 101-26.501-2. In its standardized car buying programs, GSA “leverages
its buying power to obtain significant discounts” by competitively awarding
indefinite-delivery, indefinite-quantity contracts for obtaining new cars
directly from original equipment car manufacturers for given periods of time at
stated prices below the dealer invoice prices.[2] The Property Regulations, in certain circumstances,
provide exemptions from the general requirement that agencies must buy their
new cars from GSA. Id. First, GSA will grant
waivers authorizing an agency to buy cars locally when GSA determines that
buying new cars from GSA would offer no advantage over buying them
locally. FPMR, 41 C.F.R. sect.
101-26.501-1(c). Second, GSA will grant
waivers, which are “handled on an individual basis,” that authorize an agency
to buy new cars from a non-GSA source if the agency provides a sufficient
justification, such as “urgency of need.”
FPMR, 41 C.F.R. sect. 101-26.501-1(b).
When it is not practical to use a standardized car buying program, such
as with emergency orders, GSA will procure cars from an alternative source, making
every effort to meet the order’s accelerated delivery date. FPMR, 41 C.F.R. sect. 101-26.501-5(b). For example, in its Express Desk program, GSA
will solicit competitive quotes from car dealerships for emergency orders of
cars to be “delivered within 30 days or less.”
Vehicle Buying Overview, at
11. GSA states that this expedited
procedure is “disfavored, however, because it typically results in prices 30%
to 40% higher than the standard [GSA AutoChoice] contract prices.” GSA Response Letter, at 2 n.1.
Generally,
however, where the exemptions do not apply, an agency buys new cars from GSA by
logging into GSA’s AutoChoice, a Web-based ordering application linked to GSA’s
contracts awarded under its standardized car buying program.[3] GSA’s AutoChoice processes orders placed from
October through May differently from orders placed from June through September. AutoChoice
Tutorial, at 13; Vehicle Buying
Overview, at 7. For orders placed from
October through May, GSA directs the agency to its standard AutoChoice Program (Standard
Program). Vehicle Buying Overview, at 7; AutoChoice
Tutorial. Once logged into the
Standard Program, the agency selects new cars it would like to buy—including
preferred color, equipment, and other options—and adds them to its online
shopping “garage,” which is the “holding area” from which the agency can
retrieve, review, edit, or delete its order before submitting the order to GSA. AutoChoice
Tutorial, at 22. To place an order
with GSA, the agency goes into its “garage,” identifies the cars it wants to
order, and completes a requisition detail screen. Id. at
19. Among the details the agency must
provide to GSA is the fund code for the appropriation the agency is obligating
for the cost of the cars and from which GSA will pay the vendor for the cars. Id. To submit its order, the agency clicks on
the “Finalize Selected Pending Order(s)” button, which prompts a GSA e-mail with
the agency’s order confirmation and GSA’s internal order number. Id. at
22-23. GSA then awards the car order to
a vendor and e-mails the agency the associated vendor delivery order number. Id. at
24. GSA estimates delivery will take 3
months for sedans, vans, sport utility vehicles, and pickup trucks and 5 to 10
months for ambulances, buses, wreckers, and medium and heavy trucks. Vehicle
Buying Overview, at 8.
If, however, an agency places a car order between June and September, the agency can no longer use the Standard Program and is directed instead to GSA’s AutoChoice Summer Program (Summer Program).[4] Vehicle Buying Overview, at 7; AutoChoice Tutorial, at 13. GSA explains that in June, “most vehicles have closed out for ordering as manufacturers are preparing the next model year vehicles.” AutoChoice Tutorial, at 13. Because from June through September no cars are available and GSA and agencies have only an approximate idea of what features manufacturers will offer on the new next year model cars, the agency selects a specific number of cars of a general type and price and parks these cars in its garage. Id. In October, after GSA receives next year model car pricing and specifications from the vendors, the agency must “re-configure and re-submit each vehicle order based on the new . . . model year pricing, equipment options and colors.” Id. Once the agency submits its car order based on next year model information, GSA will award the order to a vendor and obtain a delivery order number. Id. at 24.
Although GSA cannot place the order with a vendor until October, GSA advises agencies that “the AutoChoice Summer Program will permit you to obligate current year funds to purchase new model year vehicle(s) in the fall.” Vehicle Buying Overview, at 7. To do so, the agency completes the same requisition detail screen used for the Standard Program. Id. GSA instructs the agency, when it completes the requisition detail screen, to add 5 percent of the current year model price to estimate possible increases in the price of next year model cars. AutoChoice Tutorial, at 13. GSA states that once the agency clicks on the “finalize” button, “[y]ou will receive an e-mail acknowledgement stating that your funds have been obligated to GSA.” Id.
It is this feature of the Summer Program that gives rise to NRCS’s question: that is, notwithstanding GSA’s notice that a Summer Program order obligates the agency’s appropriation, the agency is required to reconfigure and resubmit its order at the beginning of the next fiscal year and the agency does not receive delivery of a car until at least 3 months into the next fiscal year.
DISCUSSION
In order to establish an obligation that may be charged
against an appropriation, an agency must have documentary evidence of a
“binding agreement” for “specific
goods to be delivered . . . or work . . . to be provided.” 31
U.S.C. sect. 1501(a)(1) (the so-called Recording Statute). With the Recording Statute, Congress
established that it did not want agencies to record obligations against current
appropriations based on inchoate agreements.
B-308944, July 17, 2007. Before
an agency may consider an order as legally obligating the appropriation of the
fiscal year in which it issued the order, that order must state the specific
goods or services ordered: that is, the
agency’s order must be firm and complete.
Id.; 44 Comp. Gen. 695, 697 (1965); B-196109, Oct. 23, 1979. An order that lacks a specific, definite
description of the goods or services to be provided is not firm and
complete. B-308944.
In circumstances similar to those at issue here, the United
States Travel Service (USTS) submitted a printing order to the Government
Printing Office (GPO) on
June 16, 1964, near the end of the fiscal year ending June 30, 1964, but
without the manuscripts or other copy to be printed; USTS did not supply the
copy to GPO until February 1, 1965 (fiscal year 1965). 44 Comp. Gen. at 695, 696, 698. We concluded that the June 1964 order did not
constitute an obligation against fiscal year 1964 appropriations because the
order was incomplete. Id. at 698. Instead, USTS incurred an obligation in
fiscal year 1965 when it completed its order.
Id. We opined that the only objective USTS had
accomplished was a prima facie
invalid attempt to obligate fiscal year 1964 appropriations. Id.
at 696. Similarly, in a 1979 decision,
we concluded that the National Park Service (NPS) incurred an obligation on
December 22, 1978 (fiscal year 1979) when it provided Federal Prison
Industries, Inc., with descriptions of signs, thereby completing the order NPS
had submitted on September 13, 1978 (fiscal year 1978), without specific
descriptions. B-196109. Recently, we concluded that the Department of
Defense did not incur an obligation on March 24, 2004, when it submitted an
order to GovWorks (then a Department of the Interior franchise fund) for “the
procurement and fielding of AT/FP shipboard equipment utilized for the
protection of Navy afloat assets” because the order lacked specificity. B-308944.
Instead, Defense incurred an obligation on May 16, 2005, when it e-mailed
its specific requirements to GovWorks: “50 sets of T1 Special Body Armor and 100 Gamma
Plates.” Id.
We see no substantial difference between these three cases
and GSA’s AutoChoice Summer Program. Applying
that case law to GSA’s AutoChoice, we view a Summer Program order as tentative and
incomplete for the very reason that the agency cannot, and does not, finalize
the order until October when the next year model car information first becomes
available. GSA argues that, with a Summer
Program order, the ordering agency “has taken
steps indicating the certainty of the order.”
GSA Response E-mail. We disagree. While we view these steps as a close
approximation of what the agency wants to buy, these steps do not amount to a
firm and complete order. Indeed, the
agency may decide to edit or even delete its order in October when it receives
the new model year car information. As
GSA notes, “the order is placed on hold by GSA until the new models, features,
and prices are confirmed.” Id. Without that confirmation, GSA
does not proceed with the order.
GSA points out that when an executive agency places an order for a car from GSA, the order falls within the coverage of 31 U.S.C. sect. 1501(a)(3). GSA Response Letter, at 4. GSA states that section 1501(a)(3) “provides that an agency will incur an obligation when it places an order required by law to be made from another agency,” and notes that GSA is the mandatory source of supply for new cars. Id. GSA concludes that if an agency has a “genuine” bona fide need[5] for a new car, the bona fide need “is not negated by the fact that the agency must order vehicles through GSA via the AutoChoice Summer Program and wait upon delivery of the vehicle into the next fiscal year.” GSA Response Letter, at 6.
The fact that GSA is a mandatory source of supply for new
cars does not permit an agency to obligate expiring appropriations on the basis
of an incomplete order. Section
1501(a)(3) permits an agency, for interagency orders required by law, to
obligate those orders as it does contracts with private vendors: that is, when the agency places the
order. Section 1501(a)(3), however, does
not obviate the requirement of specificity.
We agree with GSA that delivery of an order in a subsequent fiscal year
does not necessarily mean that the agency must obligate the order against the
appropriation current at the time of delivery;[6]
that presumes, however, that the order was valid—that is, firm and complete,
defining specific requirements. These
are not the facts here. An agency that
submits an order to the Summer Program (during June through September) cannot,
and does not, finalize that order until October, at the earliest. Indeed, if an agency actually requires a car
during the summer months, GSA has offered four ways the agency can obtain the
car: (1) buy a used car; (2) lease a
car; (3) request a GSA Express Desk emergency order for a new current year model
car; or (4) obtain a GSA waiver to buy a new current year model car from a car
dealer. That is not to say, however,
that the Summer Program serves no purpose.
Because it takes GSA at least 3 months to deliver a car after an order
is finalized in October, the Summer Program permits an agency to identify its
need for next year model cars (during the summer) and finalize its order at the
earliest possible time (October) so as not to delay delivery in the next fiscal
year. That said, an agency may not use
the Summer Program to invalidly obligate expiring fiscal year appropriations.
CONCLUSION
GSA established GSA AutoChoice to provide agencies, such as
NRCS, with an efficient method for buying new cars, and GSA has instructed
agencies to obligate current year appropriations when submitting their car
orders through GSA’s AutoChoice Summer Program.
To properly obligate appropriations for interagency agreements, such as
Summer Program orders, an agency must submit a firm and complete order that
establishes a valid obligation consistent with the Recording Statute’s
specificity requirement. Summer Program
orders are not valid obligations until agencies—using next year model car
information first made available in October—complete and finalize their orders. Orders should be charged to appropriations available
when the order is finalized. Consequently,
NRCS may not properly obligate a Summer Program order to current year
appropriations.
Daniel I. Gordon
Acting General Counsel
[1] For purposes of this decision, we use the term “cars” to refer to “motor vehicles” as defined in 40 U.S.C. sect. 102(7), which includes “any vehicle, self-propelled or drawn by mechanical power, designed and operated principally for highway transportation of property or passengers” and excludes certain vehicles used for military, investigative, law enforcement, or intelligence duties. Thus, “cars” would include sedans, vans, sport utility vehicles, and pickup trucks, as well as such special-purpose vehicles as medium and heavy trucks, buses, ambulances, firefighting trailers, and wreckers.
[2] See GSA Response Letter, at 1-2; see also FPMR, 41 C.F.R. sect. 101-26.501-2; GSA, Vehicle
Buying Overview: GSA Automotive, at 2, available
at www.gsa.gov/Portal/ gsa/ep/contentView.do?contentType=GSA_BASIC&contentId=8161 (last visited
June 30, 2009).
[3] See GSA, AutoChoice
Tutorial, at 2, available at www.gsa.gov/Portal/gsa/ep/
contentView.do?contentType=GSA_BASIC&contentId=8161 (last visited June 30, 2009).
[4] As noted above, GSA has informed us that it is in the process of retooling GSA AutoChoice to eliminate its Summer Program.
[5] The bona fide needs rule provides that an appropriation is available for obligation only to fulfill a genuine, legitimate, and otherwise bona fide need arising during the period of availability of the appropriation. The rule is derived from the so-called Time Statute, a law that was first enacted in 1789 (1 Stat. 95) and is now codified at 31 U.S.C. sect. 1502(a): “The balance of an appropriation or fund limited for obligation to a definite period is available only for payment of expenses properly incurred during the period of availability . . . [and] is not available for expenditure for a period beyond the period otherwise authorized by law.”
[6] In our bona
fide needs case law, we have long held that an agency has a bona fide need in the current fiscal
year to place orders for goods to be delivered in the next fiscal year to (1)
replace used inventory or (2) procure goods requiring lead times that are
necessary for manufacture and delivery. See, e.g., 73 Comp. Gen. 259 (1994);
B-308944, July 17, 2007.