Service Deli, Inc.

B-276251 Published: Mar 14, 1997. Publicly Released: Mar 14, 1997. Jump To HIGHLIGHTS VIEW DECISION Highlights A firm protested a Defense Commissary Agency (DCA) contract award for personnel, supervision, food products and supplies for commissary deli-bakeries, contending that DCA unreasonably evaluated its bid. GAO held that: (1) DCA reasonably determined that the protester was not responsible due to its recent conviction on fraud charges steming from a false statement made to DCA; and (2) the protester was not sufficiently interested to protest the contract award, since it would not be eligible for award even if its protest was sustained. Accordingly, the protest was dismissed. View Decision B-219236.2, NOV 26, 1985, OFFICE OF GENERAL COUNSEL OFFICERS AND EMPLOYEES - HEALTH INSURANCE - BLUE CROSS-BLUE SHIELD - FUNDS DIGEST: GAO AND DEPARTMENT OF JUSTICE APPROVED OFFICE OF PERSONNEL MANAGEMENT'S PROPOSAL TO ACCEPT PREMIUM REFUND FROM BLUE CROSS/BLUE SHIELD IN THE FEDERAL EMPLOYEE HEALTH BENEFITS FUND'S CONTINGENCY RESERVE. B-219136, JULY 31, 1985, AND 5 U.S.C. SEC. 8909 (1982). OPM NOW PROPOSES THAT, WHEN EMPLOYEE REFUND CHECKS ARE DRAWN ON THE CONTINGENCY RESERVE ACCOUNT, THE GOVERNMENT'S SHARE OF THE RETURNED PREMIUMS BE DEPOSITED IN THE TREASURY'S GENERAL FUND. THIS PLAN WOULD EFFECT A NET SAVINGS TO THE GOVERNMENT, BUT WOULD ALSO VIOLATE THE CONTINGENCY RESERVE STATUTE, WHICH PERMITS THE RESERVE FUND TO BE USED ONLY TO DEFRAY RATE INCREASES, LOWER PREMIUM CONTRIBUTIONS OR INCREASE BENEFITS. LEGISLATIVE HISTORY SHOWS THAT REFUNDS OF THIS TYPE WERE PLANNED FOR IN THE ORIGINAL STATUTE, ALTHOUGH THEY WERE THOUGHT TO BE UNLIKELY TO OCCUR. DEPOSIT IN THE GENERAL FUND WOULD ALSO VIOLATE 31 U.S.C. SEC. 1532 PROHIBITING TRANSFERS BETWEEN APPROPRIATION ACCOUNTS. THE HONORABLE WILLIAM D. FORD: CHAIRMAN, COMMITTEE ON POST OFFICE AND CIVIL SERVICE HOUSE OF REPRESENTATIVES YOUR LETTER OF NOVEMBER 20, 1985, ASKED FOR OUR OPINION ON THE OFFICE OF PERSONNEL MANAGEMENT'S (OPM) PROPOSAL TO TRANSFER THE GOVERNMENT'S SHARE BY THE BLUE CROSS/BLUE SHIELD PREMIUM REBATE FROM THE FEDERAL EMPLOYEE HEALTH BENEFITS PLAN (FEHBP) FUND'S CONTINGENCY RESERVE ACCOUNT TO THE GENERAL FUND OF THE TREASURY. OPM'S PLAN WOULD BE IMPROPER FOR THE REASONS EXPLAINED BELOW. BACKGROUND ON JULY 10, 1985, THE JUSTICE DEPARTMENT APPROVED A PROPOSAL BY OPM TO ACCEPT A REFUND OF EXCESS PREMIUM CONTRIBUTIONS ACCUMULATED BY BLUE CROSS AND BLUE SHIELD (BC/BS) IN THE SERVICE BENEFIT PLAN DURING FISCAL YEARS 1984 AND 1985. BC/BS HAD BEEN MAINTAINING THE EXCEPTIONAL ACCUMULATION IN ITS SPECIAL RESERVE FUND (SEE 41 C.F.R. SEC. 16-4.152 (1984)), BUT OFFERED A REFUND WHEN THE EXCESS BECAME TOO GREAT. AFTER REJECTING AN EARLIER BLUE CROSS PROPOSAL TO REFUND DIRECTLY TO AFFECTED EMPLOYEES AND TO THE TREASURY, OPM PROPOSED ACCEPTING THE REBATE IN THE CONTINGENCY RESERVE FROM WHICH FUND INDIVIDUAL REBATES WOULD BE DISBURSED DIRECTLY TO EMPLOYEES. ACCORDING TO THE OPM PROPOSAL REVIEWED BY JUSTICE, THE GOVERNMENT'S SHARE OF THE REBATE WAS TO REMAIN IN THE CONTINGENCY RESERVE. MEMO TO THE ATTORNEY GENERAL FROM RALPH W. TARR, JULY 9, 1985 AT 19. WE CONCURRED IN THE JUSTICE DEPARTMENT'S APPROVAL OF THE OPM PROPOSAL. B-219236, JULY 31, 1985. SUBSEQUENT TO OUR DECISION, OPM CHANGED ITS PLAN FOR DISTRIBUTION OF THE GOVERNMENT'S SHARE OF THE REBATE. IT NOW PLANS TO DEPOSIT THE ENTIRE REBATED AMOUNT (LESS THE EMPLOYEES' SHARE) DIRECTLY TO THE GENERAL FUND OF THE TREASURY, RATHER THAN RETAINING IT IN THE CONTINGENCY RESERVE. IF THERE WERE NO STATUTORY AUTHORITY TO ACCEPT THE FUNDS IN THE CONTINGENCY RESERVE, OPM'S ACTION WOULD BE CORRECT. HOWEVER, THERE IS A STATUTE GOVERNING BOTH THE ACCEPTANCE OF FUNDS AND THEIR PERMISSIBLE USES. 5 U.S.C. SEC. 8909 (1982). WE THINK OPM'S PROPOSAL WOULD VIOLATE THAT STATUTE. HISTORY OF FEHBP FUND AND POTENTIAL REFUNDS THE FEDERAL EMPLOYEE HEALTH BENEFITS PLAN (FEHBP) WAS ESTABLISHED IN 1959. PUB.L. NO. 86-382, 73 STAT. 708. IT IS NOW CODIFIED AT 5 U.S.C. SECS. 8901-13 (1982). THE STATUTE ESTABLISHED A FEHBP FUND, MANAGED BY THE CIVIL SERVICE COMMISSION (NOW OPM), TO CUMULATE AND HOLD THE PREMIUM CONTRIBUTIONS OF ALL THE PARTICIPATING GOVERNMENT ENTITIES AND OF ALL THE ENROLLED EMPLOYEES AND ANNUITANTS FOR TIMELY DISBURSEMENT TO THE INSURANCE CARRIERS. THE ORIGINAL SENATE VERSION OF THE LEGISLATION CALLED FOR THE FUND MANAGERS TO SET ASIDE A CONTINGENCY RESERVE COMPOSED ENTIRELY OF "DIVIDENDS, PREMIUM RATE CREDITS OR OTHER REFUNDS." THE CIVIL SERVICE COMMISSION WAS HIGHLY CRITICAL OF THE SENATE PROPOSAL. NOTING A GENERAL AND PERVASIVE TREND TOWARD ESCALATING HEALTH CARE COSTS, THE DIRECTOR WROTE: "THESE REFUNDS (AND THERE IS NOTHING TO GUARANTEE THAT ANY WILL BE MADE BY THE CARRIERS) ARE COMPLETELY INADEQUATE FOR USE AS A CONTINGENCY RESERVE." H.R. REP. NO. 957, 86TH CONG., 1ST SESS. 22. HE THEN SUGGESTED THAT 10 PERCENT OF PREMIUMS BE SET ASIDE AS A CONTINGENCY RESERVE.