TITLE: B-308822, National Archives and Records Administration--Damage to Revolving Fund Records Caused by Building Failure, May 2, 2007
BNUMBER: B-308822
DATE: May 2, 2007
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B-308822, National Archives and Records Administration--Damage to Revolving Fund Records Caused by Building Failure, May 2, 2007

   Decision

   Matter of: National Archives and Records Administration--Damage to
   Revolving Fund Records Caused by Building Failure

   File: B-308822

   Date:  May 2, 2007

   DIGEST

   The Federal Property and Administrative Services Act of 1949, as amended,
   governs the interagency occupancy agreement between the General Services
   Administration (GSA) and the National Archives and Records Administration
   (NARA) for the Washington National Records Center building. Consistent
   with the Act and our past decisions involving GSA and the Federal
   Buildings Fund, we find that the interdepartmental waiver rule applies and
   GSA is not required to reimburse NARA for property damage. 57 Comp. Gen.
   130 (1977). Operating reserves in NARA's records center revolving fund are
   available to cover the costs of repairing water damage to records that
   NARA stores for its federal agency customers caused by a building failure.

   DECISION

   The General Counsel of the National Archives and Records Administration
   (NARA) has requested an advance decision under 31 U.S.C. sect. 3529 on
   whether the General Services Administration (GSA) should bear the cost of
   repairing damage caused by a GSA building failure to records and property
   maintained by the NARA Federal Records Center Program. Letter from Gary M.
   Stern, General Counsel, NARA, to Susan Poling, Managing Associate General
   Counsel, GAO, Jan. 3, 2007 (Stern Letter). As we explain below, the
   Federal Property and Administrative Services Act of 1949, as amended,
   governs the interagency occupancy agreement between GSA and NARA for the
   Washington National Records Center building. Consistent with the Act and
   our past decisions involving GSA and the Federal Buildings Fund, we find
   that the interdepartmental waiver rule applies and GSA is not required to
   reimburse NARA for property damage. Operating reserves in NARA's records
   center revolving fund are available to cover the costs of repairing water
   damage to records that the NARA Federal Records Center Program stores for
   its federal agency customers in a GSA-owned building.

   Our practice when rendering decisions is to obtain the views of the
   relevant federal agency to establish a factual record and to elicit the
   agency's legal position on the matter. GAO, Procedures and Practices for
   Legal Decisions and Opinions, GAO-06-1064SP (Washington, D.C.: Sept.
   2006), available at www.gao.gov/legal/d061064sp-web.pdf. In this case, we
   received NARA's legal position in its request letter. See Stern Letter. We
   also solicited GSA's legal position on whether it should bear the cost of
   repairing the damages in question. Letter from Thomas H. Armstrong,
   Assistant General Counsel for Appropriations Law, GAO, to Lennard S.
   Loewentritt, Acting General Counsel, GSA, Jan. 16, 2007. We received GSA's
   response on February 16, 2007. Letter from Sharon A. Roach, Regional
   Counsel, GSA, to Pedro E. Briones, Senior Staff Attorney, GAO, Feb. 16,
   2007 (Roach Letter). We obtained further factual information from NARA in
   response to facts raised in GSA's letter. Telephone Conversation between
   Jeffrey Landou, Assistant General Counsel, GSA; Pedro E. Briones, Senior
   Staff Attorney and Thomas H. Armstrong, Assistant General Counsel, GAO,
   Mar. 8, 2007 (Landou Teleconference).

   BACKGROUND

   NARA operates federal records centers across the country that house
   temporary and pre-archival records belonging to other federal agencies.
   Stern Letter. NARA records centers provide storage services to federal
   agencies on a standard price, reimbursable basis. Id. Records center
   operations are financed through the "Records Center Revolving Fund"
   established by Congress to cover expenses and necessary equipment without
   the need for further appropriations. Treasury and General Government
   Appropriations Act, 2000, Pub. L. No. 106-58, title IV, 113 Stat. 430,
   460--61 (Sept. 29, 1999). See also B-302962, June 10, 2005 (discussing
   NARA's Records Center Program and the legislative history of the Records
   Center Revolving Fund). NARA's Washington National Records Center (WNRC),
   located in Suitland, Maryland, provides records storage services to
   federal agencies located in and around Washington, D.C. See
   www.archives.gov/dc-metro/suitland/ (last visited May 1, 2007).

   On Sunday, July 2, 2006, at approximately 1:00 p.m., an 8-inch water pipe
   connected to the WNRC building's fire alarm system ruptured, activating
   the fire alarm. Roach Letter. According to GSA, GSA staff arrived at 1:05
   p.m. to investigate the alarm, followed by Prince George's County,
   Maryland, firefighters at approximately 1:11 p.m.[1] Roach Letter. A GSA
   Supervisor Engineer arrived at 2:07 p.m., followed by a second engineer at
   2:47 p.m. Id. Neither GSA staff nor the county firefighters, however,
   could gain access to "Vault 6," the records storage bay where the pipe had
   ruptured. Because it houses classified records, Vault 6 is a locked,
   restricted area of the WNRC to which GSA has no independent access. Id.;
   Landou Teleconference. Although GSA personnel and the firefighters could
   observe water seeping out from under the vault door, they did not want to
   shut off water to the fire alarm system in case there was an actual fire
   inside the vault. Roach Letter. At 3:05 p.m., a NARA employee arrived to
   unlock Vault 6. Roach Letter; Landou Teleconference. Once they learned
   that there was no actual fire in the vault, GSA personnel and the fire
   fighters turned off the water. Roach Letter. In the 2 hours between the
   pipe rupture and the arrival of the NARA employee, Vault 6 flooded and
   over 18,000 boxes of records belonging to 22 federal agencies were
   damaged. Stern Letter. See also Fax from Jeffrey Landou, Assistant General
   Counsel, NARA to Pedro E. Briones, Senior Staff Attorney, GAO, Feb. 28,
   2007.

   Immediately following the pipe rupture, GSA procured emergency services to
   remove the waterlogged records, to repair the broken water pipe, and to
   specially clean Vault 6.[2] Roach Letter. Also, B.M.S. Catastrophe (BMS),
   a disaster recovery company, provided recovery and freeze-drying services
   to salvage the waterlogged records. Stern Letter; Roach Letter. NARA and
   GSA dispute which agency actually obtained, directed, and supervised the
   services provided by BMS and which agency should pay the vendor. Stern
   Letter; Roach Letter. The total cost for BMS's document recovery services
   is estimated to be $650,000. Stern Letter; Roach Letter. NARA believes
   that GSA should bear the cost. Stern Letter.

   DISCUSSION

   At issue here is the application of the so-called interdepartmental waiver
   rule and its statutory exception. The interdepartmental waiver rule--the
   general rule governing interagency property damage claims--is that where
   one federal agency damages property of another federal agency, funds
   available to the former may not be used to pay claims for damages to the
   latter. 65 Comp. Gen. 910, 911 (1986); 46 Comp. Gen. 586, 587 (1966). The
   rule is based on the concept that property of the various agencies is not
   the property of separate entities but rather of the government as a single
   entity, and there can be no reimbursement by the government for damages to
   or loss of its own property. 46 Comp. Gen. at 586--87.

   A major exception to the interdepartmental waiver rule is where
   reimbursement for damages has been provided for in an interagency
   agreement under the Economy Act (31 U.S.C. sect. 1535) or similar
   statutory authority, such as a reimbursable or revolving fund. 65 Comp.
   Gen. at 911. The rule may not apply, for example, where the agency
   suffering damages is operated out of a revolving fund. See, e.g.,
   B-302962, June 10, 2005 (NARA should collect amounts sufficient to repair
   damages to facilities financed by the Records Center Revolving Fund,
   whether that damage is caused by NARA's federal agency customer, the
   customer's contractor, or NARA's own contractors, and should deposit those
   amounts into the revolving fund); 65 Comp. Gen. 910 (1986) (Soil
   Conversation Service may pay for repairs to a boat borrowed from the
   Bureau of Land Management under an Economy Act agreement which provided
   that the Service return the boat in as good condition as when received);
   3 Comp. Gen. 74 (1923) (agency borrowing equipment from the Reclamation
   Fund may pay depreciation costs). With most revolving fund activities,
   Congress intends that the activity operate like a self-sufficient
   business, charging rates to recover its costs of operations. B-302962,
   June 10, 2005. This exception to the interdepartmental waiver rule
   recognizes that to require the revolving fund to cover damages for which
   the activity was not responsible would impose on the fund's customers a
   cost unrelated to the service they received from the fund. Id. Application
   of the rule and its exception is complicated here, however, by the fact
   that GSA's management of federal buildings, like NARA records centers,
   operates out of a revolving fund.

   When considering exceptions to the interdepartmental waiver rule, we look
   to the statute that establishes and governs the interagency relationship.
   See, e.g., 9 Comp. Gen. 263 (1930) (Panama Canal and U.S. Navy). See also
   71 Comp. Gen. 1 (1991) (Bonneville Power Administration and National
   Weather Service). Here, the Federal Property and Administrative Services
   Act of 1949, as amended, governs the relationship between GSA and its
   federal agency customers who occupy GSA-owned and -operated buildings. 40
   U.S.C. sections 581--593. See generally 41 C.F.R. pt. 102-85. GSA's use of
   its revolving fund is also subject to limitations imposed by that Act. Id.

   The Federal Property and Administrative Services Act authorizes GSA to
   "operate, maintain, and protect" federal buildings, 40 U.S.C. sect.
   582(a), and to assign space to executive agencies, 40 U.S.C. sect. 584(a).
   Like most federal agencies, NARA has an occupancy agreement for building
   space. Both the occupancy agreement and the statute are silent with regard
   to which party should be responsible for these kinds of expenses. See
   Occupancy Agreement.

   Under the Act, GSA imposes a charge on NARA and other federal agencies for
   furnishing building space and related services. 40 U.S.C. sect. 586(b).
   The rates are required to approximate commercial charges for comparable
   space and services. Id. User charges are deposited into the Federal
   Buildings Fund, a revolving fund. 40 U.S.C. sect. 592(b). Deposits in the
   Federal Buildings Fund are available for real property management and
   related activities in the amounts specified in annual appropriations laws.
   40 U.S.C. sect. 592(c)(1). For fiscal year 2006, Congress appropriated
   amounts for, among other things--

     "necessary expenses of real property management and related activities
     not otherwise provided for, including operation, maintenance, and
     protection of federally owned and leased buildings; . . . contractual
     services incident to cleaning or servicing buildings, and moving; repair
     and alteration of federally owned buildings . . . maintenance,
     preservation . . ."

   Transportation, Treasury, Housing and Urban Development, the Judiciary,
   the District of Columbia, and Independent Agencies Appropriations Act,
   2006, Pub. L. No. 109-115, 119 Stat. 2396, 2479--82 (Nov. 30, 2005).

   Notwithstanding that GSA activities here operate out of a revolving fund,
   which suggests a business-like operation, and that its charges are to
   "approximate commercial charges," neither those charges nor GSA's
   responsibilities are identical to those of a commercial landlord.[3] Some
   of the expenditures that go into a commercial rental charge for space that
   are not applicable to GSA are taxes, depreciation, interest on a long-term
   debt, and profit, as well as liability insurance. 57 Comp. Gen. 130
   (1977). In circumstances similar to the case at issue, we recognized that
   the Federal Property and Administrative Services Act did not impose on GSA
   all of the responsibilities of a commercial landlord, and on that basis we
   held that GSA was not required to reimburse the Department of Defense
   (DOD) for damage to furniture, furnishings, or equipment caused by a
   building failure. Id.

   The purpose behind requiring rental rates to approximate commercial
   charges was twofold: the first, not relevant here, was to encourage
   agencies to consolidate or reduce space requirements. The second was to
   generate extra funds to be used by GSA to finance construction of new
   buildings. 57 Comp. Gen. at 132, and references cited therein. Requiring
   GSA to reimburse another agency for damages it incurred or reduce the
   rental charges to cover the damages would reduce amounts available to
   finance new construction, undermining one of the purposes of the Act. Id.
   See also 59 Comp. Gen. 515 (1980) (GPO may not reduce its payment to GSA
   to pay for damages suffered by GPO when its paper supplies were damaged by
   a roof leak at a GSA building).

   The circumstances of this case are very similar. Here, another federal
   agency--NARA--housed in a GSA building has suffered water damage from a
   building failure and is seeking recovery from the Federal Buildings Fund
   to repair the personal property damage. Consistent with our past decisions
   involving GSA and the Federal Buildings Fund, we find that the
   interdepartmental waiver rule, not its exception, applies and that GSA is
   not required to reimburse NARA for recovery of the damaged records. 57
   Comp. Gen. 130 (1977); 59 Comp. Gen. 515 (1980).

   NARA is permitted to retain an operating reserve in the Records Center
   Revolving Fund not to exceed 4 percent of the total annual income from the
   federal Records Center Program. Pub. L. No. 106-58, title IV, sect.
   (d)(1), 113 Stat. 461. The operating reserve is available to pay the costs
   of BMS's document recovery services arising from the building failure. Cf.
   B-301714, Jan. 30, 2004 (administrative fees collected by the Library of
   Congress's Federal Library and Information Network revolving fund are
   available to cover losses from a defaulting contractor).

   CONCLUSION

   The Federal Property and Administrative Services Act of 1949, as amended,
   governs the interagency occupancy agreements between GSA and NARA for the
   Washington National Records Center building. Consistent with the Act and
   our past decisions involving GSA and the Federal Buildings Fund, we find
   that the interdepartmental waiver rule applies and GSA is not required to
   reimburse NARA for property damage. Operating reserves in NARA's record
   center revolving fund are available to cover the costs of repairing water
   damage to records that the NARA Federal Records Center Program stores for
   its federal agency customers caused by a building failure.

   Gary L. Kepplinger
   General Counsel

   ------------------------

   [1] Like most NARA records centers, the WNRC is housed in a federal
   building owned and maintained by GSA. Stern Letter; Occupancy Agreement
   between Washington  National  Records  Center and General Services
   Administration, No. OA023502, July 1, 2003 (Occupancy Agreement).

   [2] Under the Federal Property and Administrative Services Act of 1949,
   discussed infra, GSA is responsible for repairing, and did repair, the
   WNRC building. See 40 U.S.C. sect. 582(a).

   [3] We do not address whether in fact NARA could recover from a commercial
   landlord under the facts of this case.