BNUMBER:  B-270723
DATE:  April 15, 1996
TITLE:  Navajo Nation Oil & Gas Company

**********************************************************************

Matter of:Navajo Nation Oil & Gas Company

File:     B-270723

Date:April 15, 1996

Thomas M. Barba, Esq., and David A. Stein, Esq., Steptoe & Johnson, 
for the protester.
Ron R. Hutchinson, Esq., Doyle & Bachman, for Barrett Refining 
Corporation; Joseph P. Hornyak, Esq., and Debra A. McGuire, Esq., 
Sonnenschein, Nath & Rosenthal, for Navajo Refining Company; James J. 
McCullough, Esq., and Anne B. Perry, Esq., Fried, Frank, Harris, 
Shriver & Jacobson, for Refinery Holding Company, L.P., intervenors.
Howard M. Kaufer, Esq., Defense Logistics Agency, for the agency.
John L. Formica, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest that the Defense Fuel Supply Center improperly excluded from a 
solicitation issued in fiscal year 1996 a provision giving small 
disadvantaged preference to Indian Tribal corporations furnishing fuel 
from small business manufacturers/refiners is denied, where the 
provision was contained in the Department of Defense's (DOD) 
appropriations act for fiscal year 1995, DOD Appropriations Act, 1995,  sec.  
8012, Pub. L. No. 103-355, 108 Stat. 2599, 2619 (1994), was 
non-permanent in nature, and no similar provision is contained in the 
DOD Appropriations Act, 1996, Pub. L. No. 104-61, 109 Stat. 636 
(1995).

DECISION

Navajo Nation Oil & Gas Company (NNOGC) protests the terms of request 
for proposals (RFP) No. SPO600-96-R-0030 (RFP-0030), issued by the 
Defense Fuel Supply Center (DFSC), Defense Logistics Agency, for fuel.  
NNOGC contends that a provision of the RFP pertaining to the 
eligibility of small disadvantaged business (SDB) concerns for an 
evaluation preference is inconsistent with section 8012 of the 
Department of Defense (DOD) Appropriations Act, 1995, Pub. L. No. 
103-355, 108 Stat. 2599, 2619 (1994).

We deny the protest.

On March 31, 1995, DFSC issued RFP No. SPO600-95-R-0161 (RFP-0161), 
which provided for multiple awards of fixed-price indefinite quantity 
contracts with economic price adjustments for the supply of 
approximately 1.6 billion gallons of fuel for nearly 200 using 
activities.[1]  The solicitation contained an evaluation preference 
for SDB concerns applicable to certain items set forth in the 
solicitation.  
The RFP also included a clause that set forth certain special 
standards of responsibility applicable to non-refiner/non-manufacturer 
offerors.  NNOGC, an Indian Tribal Corporation owned and controlled by 
the Navajo Nation (a federally recognized Native American tribe), 
filed a protest with our Office on May 8, 1995, contending, among 
other things, that the agency had no reasonable basis for any of this 
clause's special standards of responsibility, and that the clause was 
thus unduly restrictive of competition.

In Navajo Nation Oil & Gas Co., B-261329, Sept. 14, 1995, 95-2 CPD  para.  
133, we sustained NNOGC's protest because the record provided no basis 
to conclude that the protested clause was reasonably related to the 
agency's minimum needs.  We recommended that the agency determine from 
the protester which of the line items the protester was interested in 
competing for under an amended solicitation, refrain from ordering 
under the existing contracts for these line items any more fuel than 
was required, resolicit for these line items without the protested 
clause and in a manner consistent with our decision, and terminate the 
contract(s) if the current contractor(s) is/are not the successful 
offeror(s) under the resolicitation.[2]

In response to our recommendation, DFSC contacted NNOGC to determine 
which line items NNOGC was interested in and, on November 24, issued 
RFP-0030 (which did not include the clause that was the subject of the 
prior protest) for a total fuel requirement of more than 165 million 
gallons for 12 using activities. 

NNOGC protests the inclusion of a provision in RFP-0030, which states 
that "[SDB] concerns who are not manufacturers of the product offered 
are reminded that their source refinery must be a [SDB] concern in 
order for their offer to be eligible" for an SDB concern evaluation 
preference.[3]  NNOGC asserts that the inclusion of this provision in 
the RFP is inconsistent with section 8012 of the 1995 Department of 
Defense Appropriations Act, which states:

     "Notwithstanding any other provision of law, a qualified Indian 
     Tribal corporation or Alaska Native Corporation furnishing the 
     product of a responsible small business concern shall not be 
     denied the opportunity to compete for and be awarded a 
     procurement contract pursuant to section 2323 of title 10, United 
     States Code, solely because the Indian Tribal corporation or 
     Alaska Native Corporation is not the actual manufacturer or 
     processor of the product to be supplied under the contract."

NNOGC asserts that although section 8012 provides that an Indian 
Tribal corporation, such as NNOGC, may be considered an SDB concern 
eligible for an evaluation preference if it supplies fuel refined by a 
small business, the protested provision improperly restricts the 
application of the SDB preference to only those SDB concerns who are 
supplying fuel obtained from SDB manufacturers/refiners. 

We agree that the protested provision is inconsistent with section 
8012.  However, neither this nor any similar provision is included in 
the DOD Appropriations Act, 1996, Pub. L. No. 104-61, 109 Stat. 636 
(1995).  As explained below, section 8012, as part of the DOD 
appropriations act for fiscal year 1995, expired on September 30, 
1995, and is therefore not applicable to this RFP issued during fiscal 
year 1996. 

There is a presumption that any provision in an annual appropriation 
act is effective only for the covered fiscal year.  31 U.S.C.  sec.  
1301(c) (1994); 65 Comp. Gen. 588 (1986).  This is so because 
appropriation acts are by their nature non-permanent legislation.  65 
Comp. Gen 588.  Thus, unless otherwise specified, the provisions of an 
annual appropriation act for a given fiscal year expire at the end of 
that fiscal year.  A provision contained in an appropriation act is 
not permanent legislation unless the language or nature of the 
provision makes it clear that such was the intent of Congress, 62 
Comp. Gen. 54 (1982); 10 Comp. Gen. 120 (1930), or, under certain 
circumstances, where the provision is of a general nature, bearing no 
relation to the object of the appropriation.  See 26 Comp. Gen. 354 
(1946).

Permanency is indicated most clearly when the provision in question 
includes "words of futurity," such as "hereafter" or "after the date 
of approval of this act."  65 Comp. Gen. 588.  Section 8012 includes 
no such words of futurity.  The language used in section 8012, 
"notwithstanding any other provision of law," is language of present 
exclusivity, and not words of futurity.  B-208705, Sept. 14, 1982.  

Additionally, section 8012 cannot properly be considered as general in 
nature, bearing no relation to the object of the appropriation act of 
which it is a part.  This is so because in a statute that otherwise 
provides funding for DOD, section 8012 requires that DOD consider 
certain entities under certain conditions to be SDB concerns, 
effectively rendering the concerns eligible for an evaluation 
preference.  See B-208705, supra.

We also note that the language of section 8012 appeared for the first 
time in, and is identical to that of, section 8051 of the DOD 
Appropriations Act, 1994, Pub. L. No. 103-139, 107 Stat. 1418, 1451 
(1993).  The fact that the provision was repeated in the appropriation 
act for 1995 without change after having been enacted in the 1994 
appropriation act implies that the provision was not considered nor 
intended by Congress to be permanent legislation.  5 Comp. Gen 810 
(1926); see 32 Comp. Gen 11 (1952); 10 Comp. Gen. 120.

In sum, section 8012 cannot properly be construed as permanent 
legislation, and the requirements of the provision thus expired on 
September 30, 1995--at the end of fiscal year 1995.[4]  Inasmuch as 
section 8012 has expired, it is not applicable to RFP-0030 because 
this RFP was issued, and the contract awards that may be made 
thereunder will occur, during fiscal year 1996, and will be funded 
from the Defense Business Operations Fund (DBOF) (a "working capital" 
or "revolving" fund maintained in the United States Treasury).  See 10 
U.S.C.  sec.  2208 (1994).[5]

The protester nevertheless argues that section 8012 should be 
considered applicable to RFP-0030 under the replacement contract 
doctrine.  The replacement contract doctrine is meant to facilitate 
contract administration by allowing funds obligated from annual 
appropriations for a particular contract to remain available should a 
replacement contract be required because, for example, the initial 
contract is terminated for default because of poor performance or is 
terminated for convenience because a court or other competent 
authority determines that a contract was improperly awarded.  68 Comp. 
Gen. 158 (1988).  Absent the replacement contract doctrine, an agency 
which terminates a contract would be required to deobligate the prior 
year funds which support the terminated contract, and reprogram and 
obligate current year funds, even though the particular expenditure 
was budgeted for the prior year.  60 Comp. Gen. 591 (1981).  

As explained by DFSC, should contracts be awarded under RFP-0030, DFSC 
will obligate the necessary funds against the DBOF, and will 
deobligate the funds supporting any contracts awarded under RFP-0161 
that will be terminated.[6]  Consequently, contracts awarded under 
RFP-0030 will not be "replacement contracts" under the replacement 
contract doctrine in the obligational sense simply because the funds 
to support those contracts will not be from the specific obligations 
supporting the contracts awarded under RFP-0161.  In any event, since 
the replacement contract doctrine simply provides a mechanism to allow 
agencies to administer their contract effectively when there is a 
reason to terminate a contract, its use is solely at the government's 
discretion; we are aware of no law or regulation that requires an 
agency to avail itself of the doctrine.   

NNOGC nevertheless argues that DFSC, by not implementing section 8012 
in RFP-0030, has "frustrated" Congress' goal in enacting that section, 
and that DFSC's actions here constitute "a cynical attempt to profit 
from its own improper conduct and delaying tactics."  These 
contentions are without merit.  As explained above, section 8012, as 
part of the 1995 DOD Appropriations Act, was applicable to fiscal year 
1995, and expired at the end of fiscal year 1995, and neither it, nor 
any similar language, was included in the 1996 DOD Appropriations Act.  
Thus, we see no basis to conclude that any purpose of Congress has 
been frustrated.  Nor does the record support NNOGC's assertions that 
DFSC's actions were cynically dilatory.  We previously sustained 
NNOGC's protest that a clause setting forth special standards of 
responsibility was improperly included in RFP-0161, not that any 
violation of section 8012 occurred, and DFSC has not included the 
protested clause in RFP-0030. 

NNOGC also protests that the agency did not fully comply with our 
recommendation because it failed to include in RFP-0030 certain items 
from RFP-0161 in which the protester expressed interest.  Because the 
protester concedes that without the application of section 8012 to 
RFP-0030 there is "no prospect of an award to NNOGC," we no longer 
consider NNOGC to be an interested party eligible to challenge the 
agency's determination not to resolicit the items in question.  Bid 
Protest Regulations, section 21.0(a), 60 Fed. Reg. 40,737, 40,739 
(Aug. 10, 1995) (to be codified at 4 C.F.R.  sec.  21.0(a)); Space Commerce 
Corp., 68 Comp. Gen. 646 (1989), 89-2 CPD  para.  186.

Finally, in view of NNOGC's representation that it has no prospect for 
award under RFP-0030, we modify the recommendation in our prior 
decision Navajo Nation Oil & Gas Co., supra, to provide that the 
agency need not resolicit the items in which the protester expressed 
interest.
 
The protest is denied.

Comptroller General
of the United States

f:\projects\pl\270723.wp5

1. RFP-0161, as well as RFP-0030, are part of DFSC's Bulk Fuels 
program, wherein DFSC procures large quantities of fuel for use at 
numerous Department of Defense installations.

2. On August 25, 1995, the agency informed our Office that it was 
proceeding with contract award and performance based upon a written 
determination that urgent and compelling circumstances will not permit 
waiting for our decision.  See 31 U.S.C.  sec.  3553(d)(2) (1988).

3. The standard DOD clause requires SDB concerns to provide a product 
manufactured by SDB concerns in order to qualify for the SDB 
preference.  Defense Federal Acquisition Regulation Supplement  sec.  
252.219-7001(f)(2); 252.219-7006(d)(2). 

4. There is no legislative history which would support the view that 
section 8012 was meant as permanent legislation.  

5. As explained by DFSC, it obligates funds from the DBOF as it awards 
fuel contracts, such as those under this RFP.  The using activities 
reimburse the fund from their appropriations after the contracts are 
in place and the activities have ordered fuel for delivery and been 
billed by DFSC.  According to DFSC, because any contracts under 
RFP-0030 will be awarded in fiscal year 1996, DFSC will obligate the 
funds against the DBOF, and using activities will order fuel and 
obligate funds for reimbursement of the DBOF, in fiscal year 1996.

6. Because contracts awarded by DFSC for fuel are funded by the DBOF, 
which is a working capital or revolving fund, and not an annual 
appropriation, the administrative problems necessitating the 
replacement contract doctrine do not exist.