oversight

Allegations Relating to Contracts With Systems Research Laboratories, Inc., of Dayton, Ohio

Published by the Government Accountability Office on 1971-11-22.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

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                                       . ..--                  COMPTROLLER                GENERAL   OF
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                                                                                        WASHiNGTO




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                 Cl         Dear Mr.            Brown:
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                                   On March 26, 1971, you requested              that the General Ac-          JyJJ   __
                           counting    Office   offer     advice   and comment on a complaint          by           2
                           Captain    Gary M. Johnson against           the Aerospace      Research Lab-           &
                         i oratories     (ARL), Wright-Patterson           Air Force Base, Ohio.          $ 01: '3
                           Captain    Johnson's     allegations     relate     to contracts     with Sys- _ .,,.
                         6 terns Research Laboratories,          Inc.,     of Day%%., Ohio, for per- *' I" -'
                        X- forming    seAx.ch     tasks for the Ener etics            Research Laboratory
                           (the name was changed to the                       Conversion    Laboratory    in
                           December 1970) of ARL.

                                   Captain      Johnson's        original     allegations       pertained     to a
                            contract      now terminated          which were found by the Air Force
                            Systems Command Inspector                 General     in December 1970 to be
                            essentially        valid.       As a result       the Commander, ARL, was di-
                            rected      to review,       correct,      and improve       his contractual         prac-
                            tices    and relationships.               We did not reexamine           these allega-
                            tions.       We concentrated          our examination          on the practices         and
                            procedures       in effect       under the current           contract      to identify
                            any corrective          actions.

                                    Captain    Johnson,     in his letter       to you, contended         that
                            ARL was using a contract            awarded for independent           research      to
                            obtain     the services      of technicians,        draftsmen,     and other
                            skilled      employees.     Captain    Johnson also stated         that,    to pre-
                            sent the appearance          of conducting       independent     research,       the
                            contractor      routinely     reported,    the results      of research       con-
                            ducted by Government          personnel      as its own.       We are unable        to
                            respond to the second statement               because we found that a fi-
                            nal report      under the contract         is not due until        1973 and that
                            no interim      technical     reports     are required.      ,
                                   In considering        the validity     of the allegations,     we in-
                            terviewed     Captain     Johnson,      Air Force personnel     of the Ener-
                            getics     Research Laboratory,          Air Force procurement     and legal
                            personnel,      and personnel        of Systems Research Laboratories,
                            Inc.     We also examined the conlract             files and other related
                            documents,      including      information    furnished   by the Air Force
                            Systems Command Inspector             General relating    to his review.



                                                                       50 TH ANNIVERSARY                 1921-   1971
B-172602



        The Price Negotiation         Memorandum states       that the present
contract    (F-33615-70-6-1515)         represents     a continuation    of the
same work ‘and effort       by Systems Research Laboratories            as un-
der the prior     3-year    contract.        The period   of performance    is
36 months of research        effort     and 4 months more for a final
report.     The contract     completion       date is March 16, 1973.

       The contract      requires      both research          effort     and support
services.    The    “Statement        of Work” states          that:

      I’*** The contractor            shall    provide     the Government
      with the required          scientific,         engineering        and
      technical       support    to further        and enhance the ARE
       [Energetics      Research       Laboratory]       research       program.
      Most of the manhours to be expended will                       be in the
      technical       support    area, but it is most important
      that the contractor             employ qualified         scientific         and
      engineering       personnel       to supervise         and serve as
      liaison      between the contractorfs              support     personnel
      and Government         personnel.         More specific        require-
      ments for the technical               support     personnel       are in-
      cluded     in Section      III,      Other Requirements.             A
      close ‘liaison       and spirit        of cooperation        will      have
      to be maintained          by contractor’s          personnel        to ef-
      fect the timely         exchange of information              and data,
      the desired       and required         design of research             appa-
      ratus and its instrumentation,                   and the planning
      and programming         of resources         for most effective             use
      thereof.     If

       The characterization         of portions      of the work as indepen-
dent research       or support    services      would not appear to be crit-
ical,   since    the  basic   issue    is  whether     the work is being
performed     under circumstances         creating    a relationship    between
Government     personnel    and contractor         employees    which is tanta-
mount to that of employer           and employee.

        The criteria   basic to any determination         of whether    an
individual      is a Federal   employee are set forth        in the United
States     Code (5 LJIT”“c. 2lU5 (i?>‘)“:“~The same criteria      are used              to
establish     whether,   under a contract,     the relationship      which

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exists   between the Government       and contractor     employees     is
tantamount     to that of employer      and employee and thus would
require    that the services     under consideration       be obtained     in
accordance     with Federal   personnel    laws.     The tests   determine
whether    the employee    is

        --appointed     in the       civil     service     by a Federal         officer
           or employee,

        --engaged      in    the performance  of a Federal                function        under
           authority        of law or an Executive  act,

        --subject   to the supervision  of a Federal  officer    or
           employee while  engaged in the performance     of the
           duties  of his position.

        In applying         these criteria      there is seldom any dispute                    as
to whether         the individuals       are engaged in a Federal               function.
There may be no direct              or positive       appointment       by a Federal
officer       which would formally          establish       an employer-employee
relationship,          but the presence        of facts      establishing         the
third     criterion,        that of detailed        supervision,        ordinarily        will
constitute         evidence     that such an appointment             should have oc-
curred.        In our opinion,        the evidence        in this case tends to
establish        this    sort of supervision.

       The Civil  Service  Commission     has listed    six elements,                               ’
the cumulative    presence   of which ordinarily       will  constitute
the procurement    of personal   services    proscribed     by the per-
sonnel   laws.   They are:

        1. Performance         is   on site.

       2. Principal   tools          and equipment         are furnished         by the
          Government.

       3. Services are applied      directly     to integral                   effort    of
          agencies or to an organizational            subpart                in further-
          ance of assigned   function        or mission.



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       4. Comparable     services, meeting   comparable   needs, are
          performed    in the same or similar    agencies   using civil
          service   personnel.

       5. The need for the             type of service              provided       can reason-
          ably be expected             to last beyond              1 year.

       6. The inherent      nature   of the services     or the manner in
          which they are,provided         reasonably   require  direct    or
          indirect     Government    guidance   or supervision    of con-
          tract    employees    in order to

              --adequately         protect        the    Government        interest,

              --retain       control     of   the       function       involved,       or

              --retain     full    personal  responsibility                    for the func-
                 tion    supported     in a duly authorized                    Federal of-
                 ficer    or employee.

         In our opinion,       the first     five    elements      are evidenced,
to a substantial       degree,       in the contractual          arrangements     with
Systems Research Laboratories               and in its operation.            With re-
gard to the sixth        criterion--      that of the necessity           for super-
vision-    -an effort    has been made to correct              the situation      found
by the Inspector       General of the Air Force Systems Command.
As written,      however,      the current       contract    affords     a degree of
latitude      in the assignment        of work which could easily             permit
Air Force personnel          to directly       supervise     the work of con-
tractor     employees.       The contract       provides     that:

       “The contractor      must provide        complete     management
       capability     for the performance         of the,subject         con-
       tract.     The work requirements,          specifying      the work
       to be performed      by the contractor,          will   be pre-
       sented to the contractor          in written       or verbal      form.
       Design,    development,    installation,         checkout      and op-
       erational    phases shall     be planned       and executed         un-
       der the direction       of the contractor’s           supervision
       with specified      ARE [Energetics        Research Laboratory]

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               coordination       and approvals    strictly          complied     with
               at critical       points .I’  (Underscoring           supplied)

                 We noted that instructions            were promulgated,           following
        the Inspector        General’s     report,     which prescribed          the form and
        method for issuing          formal    task assignments.            These instruc-
        tions      call  for the responsible          Government     scientists          to pre-
        pare and include         work descriptions         which are complete              and
        definitive’       enough to allow the contractor             to carry        out the
        work without        Government     supervision.         In particular          the as-
        signments       are to spell      out, as required,         details      of the work
        to be performed;         to prescribe       the procedures         to be used; and
        to set forth        any special      data requirements.            These procedures
        represent       an attempt     on the part of the Government                 personnel
        concerned       to comply with their          understanding        of the require-
        ments for administering            a contract      on a proper        task-order
        basis.

                Our review,      however,       indicated     that the procedures
        failed     to satisfy      their     intended     purpose of maintaining            a
        contractual       arm’s length         between the parties.           The task as-
        signments      do not appear to give a sufficiently                   adequate      de-
        scription      of the work to be performed               to permit      the contrac-
        tor or its employees             to proceed without         further     direction      or
        guidance.       Some task assignments             contemplate       additional,      yet
        undefined,      follow-on       work.      One task assignment          designates       a
        particular      Government         employee for coordination,             while   others,
        by their     terms,     refer      to further     designation       or specification
        of details.

               The contract    work statement     recognizes    that,   in the               re-
        search environment,       a responsive    cooperation     is required
        which cannot be prescribed         in terms of a task assignment.                          It
        is introduced     as follows:                         ,

               “The inherent     uncertainty    of research     work and pro-
               grams precludes      setting  forth   a detailed      descrip-
               tion of the work to be performed.            However,     the
               paragraphs    below prescribe      in some detail      the re-
               search programs     with which the contractor          must

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       interact.       Many changes are expected                to take place
       in regard      to the specifics       of the research             but the
       nature    of the contractor’s         efforts        and the close
       liaison     that will     be maintained       will       preclude
       these variations        from being a problem               to either
       the contractor        or the Government.           ***I’

        Thus, although       we found no direct           evidence       of actual
Government       supervision     or control        of contractor         employees,     we
believe      that such supervision          is implicit       in the complex char-
acter of the work and in the broad fashion                       in which it is di-
rected     in the task assignments            reviewed.       The degree to which
Government       and contractor      personnel        apparently      are physically
intermingled         in the laboratory,         the close relationship             that
exists     between projects        and must necessarily            exist    among the
personnel       performing    them, together          with the fact that the
contractor       and many of his employees              have been working          in the
laboratory       for nearly     6 years,      all contribute        to the appear-
ance that the contractual            personnel        are simply      an augmenta-
tion of the Government           laboratory        staff.

        The presence        of all six aforementioned          Civil      Service    Com-
mission      elements     in such substantial        degree may be viewed,            in
effect,      as establishing       a rebuttable      presumption        that super-
vison     exists.      The issuance      of task orders      to a contractor          may
ordinarily        serve to overcome this presumption,                but, by their
vagueness,        the task orders      in this    instance     appear only to
contribute        to the conclusion        that the services         acquired     are
still     being performed       under an arrangement         that may well be
proscribed        by the personnel       laws.

       In view of the indications          of a possible   violation   of
civil    service    laws and regulations,      we are furnishing     a copy
of this     letter    to the Civil   Service   Commission    for such fur-
ther investigation,         views, and action    as it deems necessary.




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We are also furnishing     copies  to Systems Research   Laborato-
ries,  Inc., the Secretary     of Defense,  and the Secretary    of
the Air Force.

                                     Sincerely   yours,




                           ’ ~~~~~~~~ Comptroller   General
                                      of the United   States

The Honorable  Clarence     J.   Brown
House of Representatives




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