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B-252378 1 (1993-09-21)

handle is hein.gao/gaobacwlb0001 and id is 1 raw text is: United States GAO General Accounting Off1ce Washington, D.C, 20548 Oftrfe of the General Counsel B-252378 September 21, 1993 Mr. James K. White Assistant General Counsel for Finance and Litigation Office of the General Counsel Department of Commerce Dear Mr. White: This is in response to your request for our advise on whether a contract between the National Oceanic and Atmospheric Administration, National Marine Fisheries Service (NMFS) and the Manomet Bird Observatory Trust (Manomet) violated the prohibition in 41 U.S.C. § 254(b) (1988) against the cost-plus-a-percentage-of-cost system of contracting and, if so, whether Manomet may be reimbursed on a quantum meruit basis. For the reasons stated below, we agree that the contract provides for a method of payment prohibited by 41 U.S.C. § 254(b). Manomet, however, may be reimbursed on a quantum meruit basis. The contract called for services to be performed pursuant to the Magnuson Fishery Conservation and Management Act, 16 U.S.C. § 1801 et seq. The work consisted of providing supplementary observer services aboard foreign fishing vessels. The agreement provided that the owners and operators of foreign fishing vessels would pay Manomet on a cost reimbursement (no fee) basis, Payment was to include all supplemental observer program direct costs, which included salaries and observer related expenses, plus overhead. The agreement also provided for payment to Manomet of a pre-determined, fixed, 54-percent overhead rate. Moreover, the agreement had no ceiling on the amount of indirect costs that could be recovered with the 54-percent rate. The agreement expired on March 31, 1991, and Manomet completed all required services. In 1992, the Office of the Inspector General (OIG), U.S. Department of Commerce, reported the results of its audit of the contract between NMFS and Manomet. The OIG found that the contract had attributes of a prohibited cost-plus-a- percentage-of-cost contract and recommended that NMFS seek a legal opinion from Commerce's Office of General Counsel on this matter. In response to NMFS request, your Office I/ a

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