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B-152142-O.M. 1 (1963-07-29)

handle is hein.gao/gaobadqeb0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WA79HINGTON 25, D.C. CIVIL ACCOUNTING AND AUDITING DIVISION JUL 29 9 The Comptroller General The Agricultural Research Service (ARS) entered into a contract ,with the Potomac Electric Power Company (PEPCO) whereby PEPCO agreed to build and maintain an electric substation at the Agricultural Research Center, Beltsville, Maryland, and to furnish the Center with additional electric power through this facility. ARS agreed to lease, with an option to buy, the substation and to purchase the electric power. We question the authority of the agency to negotiate and enter into this contract without utilizing the services of the General ServI ices Administration (GSA). Further, we question whether this contract is for an indefinite term and therefore may be in violation of the law. The enclosed copy of a contract (Exhibit A) entered'into in November 1960 provides for (1) the construction of an electric sub- station by PEPCO at the Center to be leased to the agency at an annual rental of 16-1/2 percent of the original cost of construction and, (2) the furnishing of high voltage electric power by PE CO to the substation for distribution throughout the Center. Construction of the substation was completed in July 1961 at a cost of $94,900 and the annual rental was set at $15,600. Rates to be charged the agency for electric service were to be determined in accordance with the company's regularly sched- uled charges for this class of service but-were not to be in excess of the lowest available rates for similar conditions of service. The law as contained in 41 U.S.C. 4.&1 (a)(4) provides that GSA should represent executive agencies in negotiations with public utili- ties. Pursuant to this authority a provision of GSA General Regulation 7, as contained in 16 Fed. Reg. 2796, March 29, 1951, provides that executive agencies shall procure needed public utility services and facilities for such services under applicable GSA area-wide contracts. GSA has an area- wide contract with PEPCO to provide for public utility services and facilities in the Washington, D. C., metropolitan area, including the Center. Agency officials have informed us that the services of GSA were not used in negotiating the contract with PEPCO because the agency believes that the law and regulation only pertain to contracts where electricity is readily available and not to contracts which provide for the acquisi- tion of new sources of electric power. Neither the law nor the regulation appearsto us to make this distinction. Further, it appears to us that the regulation requires the agency to use the services of GSA not only in negotiating for electric service but also in negotiating for the construc- tion of any electric service facility, such as, the substation.

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