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
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[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.