[House Report 106-581]
[From the U.S. Government Publishing Office]
106th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 106-581
======================================================================
FOR THE RELIEF OF AKAL SECURITY, INCORPORATED
_______
April 13, 2000.--Referred to the Private Calendar and ordered to be
printed
_______
Mr. Hyde, from the Committee on the Judiciary, submitted the following
R E P O R T
[To accompany H.R. 3363]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 3363) for the relief of Akal Security, Incorporated,
having considered the same, reports favorably thereon without
amendment and recommends that the bill do pass.
TABLE OF CONTENTS
Page
Purpose and Summary........................................ 1
Background and Need for the Legislation.................... 2
Hearings................................................... 2
Committee Consideration.................................... 2
Committee Oversight Findings............................... 2
Committee on Government Reform Findings.................... 3
New Budget Authority and Tax Expenditures.................. 3
Congressional Budget Office Cost Estimate.................. 3
Agency Views............................................... 4
Purpose and Summary
H.R. 3363 would pay Akal Security $10,208.74 for security
guard services rendered in 1991 and relieve the company's
liability to repay the U.S. $57,771.29 it was already paid for
such services.
Background and Need for the Legislation
In response to an official warning of possible terrorist
activities during Operations Desert Shield and Desert Storm,
the Army Reserve Personnel Center in St. Louis, Missouri,
contracted with a private security firm to provide guard
service at a leased storage facility for approximately 8
months. Payment of $57,771.29 was made for the 7 months covered
by written contracts. During consideration of the contractor's
claim for payment for guard service provided during a month in
which there was no written contract, the Army discovered that
contracting for security guard services at the Personnel Center
was prohibited by section 2645 of title 10. The Army,
therefore, was required to claim a refund of the amounts
already paid to Akal Security, and it denied payment of
$10,208.74 for the services provided during the 1 month not
covered by the written contract. Under the law, the Department
could not remedy this problem.
The company appealed to the DOD Claims Appeal Board asking
that its claim for retention of the amounts already paid and
for payment for the unpaid month be submitted for consideration
by the Congress under the Meritorious Claims Act. The Claims
Appeal Board agreed that such action should be taken, and the
claim was forwarded to the Congress for introduction of a
private bill.
The Meritorious Claims Act is the mechanism for the
Executive Branch to refer to the Congress claims that they
cannot pay under the law, but that they believe should be paid
as a matter of equity through private legislative relief.
The Department of Defense wrote when forwarding the claim
to Congress that ``we recommend Congressional approval of the
payment of the claim . . . pursuant to the Meritorious Claims
Act (31 U.S.C. 3702(d)).'' They further stated that ``we
believe that Akal Security, Inc.'s claim contains such elements
of equity as to be deserving of consideration by the Congress
as a meritorious claim.''
Hearings
The committee's Subcommittee on Immigration and Claims held
no hearings on H.R. 3363.
Committee Consideration
On March 1, 2000, the Subcommittee on Immigration and
Claims met in open session and ordered favorably reported the
bill H.R. 3363, without amendment, by voice vote, a quorum
being present.
On March 30, 2000, the Committee on the Judiciary met in
open session and ordered reported favorably the bill H.R. 3363,
without amendment, by voice vote, a quorum being present.
Committee Oversight Findings
In compliance with clause 3(c)(l) of rule XIII of the Rules
of the House of Representatives, the committee reports that the
findings and recommendations of the committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
Committee on Government Reform Findings
No findings or recommendations of the Committee on
Government Reform and Oversight were received as referred to in
clause 3(c)(4) of rule XIII of the Rules of the House of
Representatives.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of House Rule XIII is inapplicable because
this legislation does not provide new budgetary authority or
increased tax expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the committee sets forth, with
respect to the bill, H.R. 3363, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, April 7, 2000.
Hon. Henry J. Hyde, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3363, a bill for
the relief of Akal Security, Incorporated.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is John R.
Righter, who can be reached at 226-2860.
Sincerely,
Dan L. Crippen, Director.
Enclosure
cc:
Honorable John Conyers Jr.
Ranking Democratic Member
H.R. 3363--A bill for the relief of Akal Security, Incorporated.
H.R. 3363 would require the Security of the Treasury to pay
Akal Security $10,208.74 for security guard services provided
to the Department of Defense in 1991. CBO expects the payment
would occur in fiscal year 2000. In addition, the bill would
extinguish a federal claim against Akal Security of $57,771.29.
That claim is for services paid for by the Department of
Defense that it did not have the proper authority to pay. It is
uncertain, however, when or if Akal Security will return the
funds to the government under current law. Because the bill
would affect direct spending, pay-as-you-go procedures would
apply.
The CBO staff contact is John R. Righter, who can be
reached at 226-2860. This estimate was approved by Peter H.
Fontaine, Deputy Assistant Director for Budget Analysis.
Agency Views
The report of the Department of Defense recommending
Congressional approval of the payment of this claim pursuant to
the Meritorious Claims Act is as follows:
General Counsel of the
Department of Defense,
Washington, DC, March 1998.
Hon. Newt Gingrich,
Speaker of the House of Representatives,
Washington, DC.
Dear Mr. Speaker: I am forwarding the appended decision of
the Defense Office of Hearings and Appeals Claims Appeals Board
in Claims Case No. 96081904, which is hereby adopted as a
Department of Defense report in which we recommend
Congressional approval of the payment of the claim addressed
therein pursuant to the Meritorious Claims Act (31 U.S.C.
3702(d)). Pursuant to section 202(n) of the General Accounting
Office Act of 1996 (Public Law 104-316; 110 Stat. 3843-3844)
and a delegation of authority from the Director, Office of
Management and Budget, the authority of the Comptroller General
to submit meritorious claims recommendations under such section
Sec. 3702(d) was transferred to the Secretary of Defense for
claims arising out of activities of the Department of Defense.
In response to an official warning of possible terrorist
activities during Operations Desert Shield and Desert Storm,
the Army Reserve Personnel Center, St. Louis, Missouri,
contracted with a private security firm to provide guard
service at a leased storage facility for approximately eight
months, from January 28, 1991, through September 30, 1991.
Payment of $57,771.29 was made for the seven months covered by
written contracts. During consideration of the contractor's
claim for payment for guard service provided in the one month
without a written contract, it was discovered that contracting
for the security guard services at the Personnel Center was
prohibited by section 2465 of title 10. The Army, therefore,
was required to claim a refund of the amounts already paid to
Akal Security, Inc., and it denied payment of $10,208.74 for
the services provided during the one month not covered by the
written contract.
For the reasons set forth in the Claims Appeals Board
decision, we believe that Akal Security, Inc.'s claim contains
such elements of equity as to be deserving of consideration by
the Congress as a meritorious claim. Provided the Congress
concurs in this recommendation, enactment of the attached draft
legislation would relieve Akal Security, Inc. of the liability
to repay the aforementioned $57,771.29 and would permit payment
of the $10,208.74 to Akal for previously provided but
uncompensated services.
The Office of Management and Budget advises that, from the
standpoint of the Administration's program, there is no
objection to the presentation of these views for the
consideration of the Committee.
Sincerely,
Judith A. Miller
Enclosures:
DOHA Claims Case No. 96081904--In Re Akal Security,
Inc.
Draft Bill
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In Re: Akal Security, Inc.
Claimant
DATE: March 11, 1997
Claims Case No. 96081904
CLAIMS APPEALS BOARD DECISION
Digest
In response to an official warning of possible terrorist
attack during Operations Desert Shield and Desert Storm, the
Army Reserve Personnel Center contracted with a private
security firm to provide guard service at a leased records
storage facility for approximately eight months in 1991.
Payment was made for the seven months covered by written
contracts. During consideration of contractor's claim for
payment for guard service provided in the one month without a
written contract, it was discovered that procurement of a
contracted security guard service at a military installation is
prohibited by 10 U.S.C. Sec. 2465. The Army, therefore, claimed
a refund of the amounts already paid to the security company
and denied payment for the unpaid month. The company requests
that its claim for retention of the amounts already paid, and
for payment for the unpaid month, be submitted for
consideration by the Congress under the Meritorious Claims Act,
31 U.S.C. Sec. 3702(d). The claim is forwarded to the General
Counsel with a recommendation of submission to the Congress.
Decision
This is in response to the request of Akal Security, Inc.
(``Akal''), that its claim be submitted to the United States
Congress for consideration under the Meritorious Claims Act
(MCA), 31 U.S.C. Sec. 3702(d). The claim is for security guard
services provided from January 28, 1991, through September 30,
1991, at a records storage site of the Army Reserve Personnel
Center (ARPERCEN). Pursuant to the Legislative Branch
Appropriations Act, 1996, Pub. L. No. 104-53, Sec. 211, 109
Stat. 514, 535 (1995), the authority of the Comptroller General
to submit a claim under 31 U.S.C. Sec. 3702 was transferred to
the Director, Office of Management and Budget (OMB). Effective
December 18, 1996, the Director of OMB delegated to the
Secretary of Defense the authority to settle general claims
arising out of the activities of the Department of Defense, not
otherwise delegated to the Secretary of Defense under the OMB
Director's Determination of June 28, 1996, or directly
transferred to the Secretary under Public Law No. 104-316.\1\
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\1\ General Accounting Office Act of 1996, Pub. L. No. 104-316, 110
Stat. 3826 (1996).
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Background
This claim arose from the activities of ARPERCEN, 9700 Page
Boulevard, St. Louis, Missouri. To house its records, ARPERCEN
leases several facilities in and around St. Louis, most from
the General Services Administration (GSA). ARPERCEN stored the
only copies of records of World War II Filipino service members
in a facility at 9711 Diehlman Rock Island Road in an
industrial park in Olivette, Missouri, in suburban St. Louis.
Unlike the other storage facilities, this facility was
subleased through the Army Corps of Engineers (ACE) from a
private owner, who has leased it to ACE since August 22, 1988.
This facility was often referred to as the Diehlman Building.
ARPERCEN's records storage facilities were usually
unguarded prior to late 1990. During Operations Desert Shield
and Desert Storm, the Federal Bureau of Investigation (FBI)
advised ARPERCEN of the possibility of an attack by pro-Iraqi
elements and an Iraqi was later arrested in the area. The
ARPERCEN Security Officer found that guards were necessary for
the protection of ARPERCEN employees working at its facilities
away from the headquarters on Page Boulevard. Therefore,
arrangements were made for GSA to provide such protection,
starting January 19, 1991. However, GSA discovered on January
22, 1991, that the Diehlman Building was leased to ACE, and in
turn, to ARPERCEN. Thus, it was not a GSA facility and GSA
therefore lacked jurisdiction to provide security there. GSA
accordingly ended its guard services at that building.
To provide increased security at the Diehlman Building,
ARPERCEN contracted through the U.S. Army Aviation Systems
Command (AVSCOM), Granite City, Illinois, with Akal Security,
Inc., Santa Cruz, New Mexico, to provide guard services there
under the following written contracts:
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Contract no. Date Period Amount
----------------------------------------------------------------------------------------------------------------
DAAJ04-91P-0564* 01-26-91 01-28-91/02-28-91 $12,002.88
DAAJ04-91-P-1141** 04-09-91 04-01-91/06-30-91 15,900.00
DAAJ04-91-P-1886 07-02-91 07-01-91/08-31-91 16,000.00
DAAJ04-91-P-2693 09-06-91 09-01-91/09-30-91 8,000.00
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TOTAL $51,902.88
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*Modified by P0001, 03-22-91, to add $1,002.88 to the initial $11,000.00 amount.
**Modified by P0001, 05-31-91, to extend the period covered from 05-31-91 to 06-30-91.
(SOURCE: Dept. of the Army, Office of the JAG, memorandum dated 05-31-94.)
The guard service provided by Akal at the Diehlman Building
apparently ended when the last contract expired on September
30, 1991. Actual payments to Akal were as follows:
----------------------------------------------------------------------------------------------------------------
Contract no. Voucher no. Date Amount
----------------------------------------------------------------------------------------------------------------
DAAJ04-91-P-0564 265145 05-15-91 $11,870.52
DAAJ04-91-P-1141 265575 06-06-91 7,395.00
`` '' 266361 07-10-91 7,624.25
`` '' 267594 08-20-91 7,690.80
DAAJ04-91-P-1886 268530 09-25-91
7,749.96
`` '' 200752 10-09-91 7,749.96
DAAJ04-91-P-2693 205638 11-25-91 7,694.38
Interest credit -3.58
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TOTAL $57,771.29
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(SOURCE: Letter to Akal dated 06-14-95 from DFAS, St. Louis, Missouri.)
None of these payments was questioned at the time. Akal
provided guard services at the Diehlman Building during the
period of March 1 through 31, 1991, without a written contract
and it later submitted a claim for $10,208.74 for that service.
Upon review of that claim on the basis of quantum meruit/
quantum valebant, it was discovered that the procurement of the
guard services from Akal had been in violation of 10 U.S.C.
Sec. 2465 and the Anti-Deficiency Act. See Memorandum for the
Deputy Assistant Secretary of the Army (Financial Operations)
from the Army Deputy General Counsel (Fiscal Law & Policy)
dated October 22, 1993. Akal's claim was denied and a claim was
asserted against Akal on June 14, 1995, by the Government for
recovery of the $57,771.29 already paid to the firm. Akal
submitted to the U.S. General Accounting Office (GAO) a claim
for both that amount and the unpaid $10,208.74, for a total of
$67,980.03, to be submitted to the Congress under the MCA.
Akal's claim was forwarded from GAO to our Office due to the
transfer of the claims settlement and submission functions
under Public Law Nos. 104-53 and 104-316.
At our request, an administrative report was furnished to
us by the Defense Finance & Accounting Service (DFAS), Defense
Accounting Office-Indianapolis Center, St. Louis, Missouri
(whose functions have since been transferred to Indianapolis).
That report recommended submission of Akal's claim to the
Congress.
Discussion
As amended \2\, 10 U.S.C. Sec. 2465 provides that:
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\2\ The 1996 amendment is irrelevant to the issue, and a 1988
amendment renumbered this statute to the current section from 10 U.S.C.
Sec. 2693.
``(a) Except as provided in subsection (b), funds
appropriated to the Department of Defense may not be
obligated or expended for the purpose of entering into
a contract for the performance of firefighting or
security-guard functions at any military installation
or facility.'' [Emphasis added]
``(b) The prohibition in subsection (a) does not
apply--(1) to a contract to be carried out at a
location outside the United States (including its
commonwealths, territories,
and possessions) at which members of the armed forces
would have to be used for the performance of a function
described in subsection (a) at the expense of unit
readiness; (2) to a contract to be carried out on a
Government-owned but privately operated installation;
or (3) to a contract (or the renewal of a contract) for
the performance of a function under contract on
September 24, 1983.''
The emphasized language, which applies to the instant case,
was added by Public Law No. 100-180 \3\ three years before the
period at issue. Its relatively recent addition could explain
why ARPERCEN, AVSCOM, and ACE personnel were unaware of the
statute's prohibition on contracted security services. Also,
there is some indication that these personnel may have believed
that the Diehlman Building was not a military installation or
facility. In any case, after some discussion, the Army's
General Counsel decided that the Diehlman Building was a
``military installation or facility'' subject to 10 U.S.C.
Sec. 2465. None of the exceptions in 10 U.S.C. Sec. 2465(b)
apply: the Diehlman Building is in the United States; the site
is not owned by the Government; and Akal's first contract
regarding the site was issued on January 26, 1991.
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\3\ Public Law 100-180, Div. A, Title XI, Sec. 1112(a), December 4,
1987, 101 Stat. 1147.
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Thus, Akal's claim cannot be considered on the basis of
quantum meruit/quantum valebant because it does not meet the
first requirement, that the procurement would have been valid
had the proper procedures been followed. Graphic Creations.
Inc., 72 Comp. Gen. 291 (1993). Therefore, Akal has asked that
its claim be forwarded to the Congress for consideration under
the MCA.
The MCA \4\, now codified at 31 U.S.C. Sec. 3702(d),
states:
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\4\ Act of April 10, 1928, Ch. 334, 45 Stat. 413; formerly codified
at 31 U.S.C. Sec. 236.
``The official responsible under subsection (a) for
settling the claim shall report to Congress on a claim
against the government that is timely presented under
this section that may not be adjusted by using an
existing appropriation, and that the official believes
Congress should consider for legal or equitable
reasons. The report shall include recommendations of
---------------------------------------------------------------------------
the official.''
DOHA has not yet rendered any determinations or decisions
concerning the MCA. However, there are a number of decisions
issued by GAO that provide guidance. When the MCA was under the
jurisdiction of GAO, only a few of the many claims presented
for submission to the Congress under that statute were actually
submitted. GAO had no ``ground rules'' for considering such
claims; rather, each claim was to be considered on its own
merits. B-137604, Feb. 13, 1959. Besides the statutory
requirement of ``legal and equitable reasons,'' a claim had to
be ``unusual or extraordinary'' to warrant submission. Marvin
K. Eilts, 63 Comp.Gen. 93 (1983). In 53 Comp.Gen. 157 (1973),
the Comptroller General stated:
``The remedy afforded by the Act [MCA] is limited to
extraordinary circumstances, and the cases reported by
the GAO to the Congress generally have involved
equitable circumstances of an unusual nature and which
are unlikely to constitute a recurring problem, since
to report to the Congress a particular case when
similar equities exist or are likely to arise with
respect to other claimants would constitute
preferential treatment over others in similar
circumstances.''
Over the years, GAO repeatedly emphasized that preferential
treatment of one claimant from many similarly situated
claimants (actual or potential) should not be afforded under
the MCA. Control Data Corporation, B-201284, Apr. 21, 1981.
The well-established rule is that the Government is not
bound or made liable by the erroneous advice or actions of its
officers, employees, and agents, even if given or made in the
course of their official duties. DOHA Claims Case No. 97012101
(February 6, 1997). The record is mixed as to how that rule was
applied to requested MCA submissions. In B-168300, December 4,
1969, the Comptroller General denied a request in the case of
supplies and services advanced by a cooperative to an
unsuccessful farmer based on assurances made by a Farmers Home
Administration employee without authority to make such
assurances. But in B-136117, June 6, 1958, GAO acted favorably
in the case of a timber company for losses it sustained due to
an erroneous Bureau of Land Management computation of
merchantable timber in its contracted area. The Comptroller
General noted that the error was the largest such mistake in
the history of the agency, that the contractor diligently
performed the work, and that the Government received a benefit
from that work. In Campanella Construction Co., Inc., B-
194135(1), Nov. 19, 1979, GAO submitted a claim for a
contracted upgrade of a wastewater treatment plant that,
unknown to the Army and the contractor, had already been deeded
over to the local school board from the Federal Government.
The record is also mixed as to submitting claims based on
work done under contract for the Government in violation of a
statutory provision. In B-147086, Sept. 20, 1961, the request
was denied in the case of a construction contract for an amount
in excess of the statutory limit. However, submission was
approved in the cases of newspaper advertisements procured
without proper authorization in The Florida Times-Union and The
Jacksonville Journal, B-208306, Aug. 18, 1982, and in The
Virginian-Pilot and The Ledger-Star, B-205094(1), Nov. 24,
1981. In both cases, the Comptroller General noted that the
Government received a benefit, that the newspapers acted in
good faith, and that the amounts were reasonable.
The instant case may be considered extraordinary in that it
involved the expeditious procurement of additional security
services at a possible terrorist target during a national
emergency. Both ARPERCEN and DFAS agree that the Government
received a benefit from Akal's work, enhanced security during a
national emergency in which there were official warnings of
possible terrorist attacks on Federal buildings, including a
specific warning from the FBI; that Akal acted in good faith;
and that the amounts claimed by Akal are reasonable. Similar
circumstances existed in B-136117, B-205094(1), and B-208306,
supra. The work at issue was instigated by Government employees
or officials who were unaware of the statutory prohibition
against it, as in B-194135(1), B-205094(1), and B-208306,
supra. Thus, a strong case based on equity can be made. The
persons and offices responsible for this pro-
curement have since been made aware of the prohibitions
effected by 10 U.S.C. Sec. 2465; no similar cases seem to have
been received by our Office; and nine years have now elapsed
since the prohibition against contracted security guard
services was enacted. Thus, a recurrence of this type of claim
does not seem likely, frequent, or numerous.
Conclusion
We recommend to the General Counsel that the claim of Akal
Security, Inc., for payment for security guard services
provided to the Army Reserve Personnel Center, be submitted to
the United States Congress for consideration under the
Meritorious Claims Act, 31 U.S.C. Sec. 3702(d), with a
favorable recommendation.
Michael D. Hipple, Chairman, Claims Appeals Board
Christine M. Kopocis, Member, Claims Appeals Board
Jean E. Smallin, Member, Claims Appeals Board.
----------
A BILL
To relieve, under the Meritorious Claims Act, Akal Security,
Inc. of New Mexico of responsibility to repay the Army for
security guard services provided the Army Personnel Center
in St. Louis, Missouri.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. RELIEF OF LIABILITY FOR REPAYMENT.
Notwithstanding the provisions of section 2465 of title 10,
United States Code, or any other provision of law, Akal
Security, Inc. of Santa Cruz, New Mexico, is relieved of all
liability to repay $57,771.29 to the United States for security
guard services performed but not authorized in 1991 at the Army
Reserve Personnel Center in St. Louis, Missouri.
SEC. 2. PAYMENT FOR SERVICES PERFORMED BUT NOT PAID.
The Secretary of the Treasury is authorized and directed to
pay, out of any money in the Treasury not otherwise
appropriated, $10,208.74 to Akal Security, Inc. of Santa Cruz,
New Mexico, provided such Akal Security, Inc. agrees that the
relief of liability in section 1 and such payment are in full
satisfaction of its claim against the United States for
security guard services provided by Akal Security, Inc. to the
Army Reserve Personnel Center in 1991.
-