TITLE:  National Parks Service Contract--Payments to Subcontractors,
B-303906, December 7, 2004
BNUMBER:  B-303906
DATE:  December 7, 2004

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   B-303906

   December 7, 2004

   The Honorable Orrin G. Hatch

   United States Senate

   Subject: National Parks Service Contract--Payments to Subcontractors

   Dear Senator Hatch:

   This responds to your letter, dated September 30, 2004, written on behalf
of your constituent, Mr. E. Vernon Snow.  According to your letter, Mr.
Snow was a subcontractor for Pacific General, Inc. (PGI) and performed
work at the Grand Canyon National Park under an Indefinite
Delivery/Indefinite Quantity contract between PGI and the National Parks
Service (Service).  Because PGI has declared bankruptcy, leaving Mr. Snow
with a difficult struggle against the contractor for compensation, Mr.
Snow now seeks reimbursement from the Service.  In your letter, you ask
GAO to give authority to the Service to use appropriated funds to
compensate unpaid subcontractors.

   The purpose of this letter is to advise you that the authority to settle
Mr. Snow's claim lies with the Department of the Interior, not GAO. 
Should Interior decide to settle the subcontractors' claims, we would not
object to Interior's use of the remaining funds, estimated in the amount
of $906,335, to pay Mr. Snow and others similarly situated. 

BACKGROUND

   Staff of the Rocky Mountain Region of Interior's Solicitor's Office, in
informal telephone conversations, told us that between fiscal years 2002
and 2003, the Service awarded approximately 40 task orders to PGI.  The
contract was for construction projects in and around the Grand Canyon
National Park.  The Service believes that PGI subcontracted all of the
projects to about 45 subcontractors, including Mr. Snow. 

   The Service terminated the contract for default.  By the time of
termination, the Service had paid over $10 million to PGI for work
performed.  In April 2003, the Service terminated 17 task orders with
PGI.  In December 2003 and January 2004, the Service received payment
invoices from PGI for work performed under the contract in the amount of
$906,335.  The Service has withheld payment from PGI on these specific
invoices because of PGI's default status of the contract task orders. 
Various subcontractors, including Mr. Snow, now claim nonpayment by PGI. 
The Solicitor's Office is currently entertaining the option of using the
$906,335 to pay these subcontractors. 

CLAIMS SETTLEMENT AUTHORITY

   We do not have the authority to address Mr. Snow's request for payment
from the Service.  The present matter falls under 31 U.S.C. S 3702, the
so-called "claims settlement authority."  Effective June 30, 1996,
Congress transferred our jurisdiction under section 3702 to the Director
of the Office of Management and Budget (OMB).  See 31 U.S.C. S 3702(a)(4)
(2002); B-278805, July 21, 1999.  Congress gave the Director of OMB the
authority to delegate this function to such agencies as he deemed
appropriate.  B-278805, July 21, 1999.  The Director delegated claims
settlement authority to the executive branch agency out of whose activity
the claims arose.  See Jacob J. Lew, Acting Director, OMB, Determination
with Respect to Transfer of Functions Pursuant to Public Law 104-53, June
28, 1996, Attachment A; Franklin D. Raines, Director, OMB, Determination
with Respect to Transfer of Functions Pursuant to Public Law 104-316, Dec.
17, 1996, Attachment A.  Consequently, Interior, not GAO, has the
authority to settle the subcontractors' claims. 

   In your letter, you ask us to give the Service authority, under 31 U.S.C.
S 3529, to use the remaining $906,335 to pay Mr. Snow's claim.  Section
3529 does not address this matter.  Section 3529, together with sections
3523, 3526, and 3527, define the Comptroller General's accounts settlement
authority.  See 31 U.S.C. SS 3523, 3526, 3527, 3529 (2004).  Accounts
settlement refers to GAO's authority to settle all accounts of the United
States government, id. S 3526(a); to audit agency accounts, id.
SA 3523(a); to relieve present or former accountable officials or agents
from liability for physical losses or deficiencies of public money, id. S
3527(a); and to provide decisions to heads of agencies, certifying and
disbursing officers, and other agency officials on the availability and
use of their appropriation, id. S 3529.  As stated above, we have no
objection to Interior's use of the remaining funds to pay the claims of
unpaid subcontractors.  B-210808, May 24, 1984; B-207557, July 11, 1983. 
However, we have no authority to decide whether to pay the subcontractor's
claims or decide how the $906,335 is distributed.  Because claims
settlement authority for this matter now lies with Interior, it is for
Interior to decide whether to pay Mr. Snow. 

   QUANTUM MERUIT CLAIMS

   Interior may find our pre-1996 claims settlement decisions helpful in this
regard.  In some GAO decisions, the Comptroller General, on a case-by-case
basis, authorized reimbursements to persons whose unpaid work benefited
the government, even though no enforceable contract existed with the
government, under the equitable theory of quantum meruit.  See 70 Comp.
Gen. 664 (1991); 69 Comp. Gen. 13 (1989); 66 Comp. Gen. 351 (1987);
B-252778, Aug. 19, 1993; B-214529, Jan. 19, 1988; B-215651, Mar. 15, 1985;
B-210808, May 24, 1984.  Although GAO no longer has claims settlement
authority, agencies exercising their claims settlement authority may find
prior Comptroller General decisions useful. 

   CONCLUSION

   It is for Interior, and not GAO, to decide whether to pay the
subcontractors.  We are sending similar letters to Representatives J. D.
Hayworth and Ed Pastor, who also expressed interest in this matter, and to
Interior.  If you have any questions, please contact Susan A. Poling at
(202) 512-2667.

   Sincerely yours,

        /signed/

   Anthony H. Gamboa

   General Counsel

   DIGEST:

   GAO no longer has claims settlement authority under 31 U.S.C. S 3702. 
Authority to settle claims now lies with the executive branch agency out
of whose activity the claims arose.  Consequently, the Department of the
Interior, not GAO, must decide whether to pay the claims of subcontractors
under an equitable theory of quantum meruit.  In that regard, Interior may
find our past claims settlement decisions helpful.
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