Fidelity and Casualty Company of New York, B-281281, January

B-281281 Jan 21, 1999 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Protest that agency improperly deleted Federal Acquisition Regulation (FAR) affirmative action clauses from solicitation is denied where FAR is inapplicable because appropriated funds would not be obligated or expended under the DBA contract to be awarded under the solicitation. Issued by the Department of State (DOS) for selection of an insurance carrier to offer workers' compensation coverage to DOS contractors whose employees are performing contracts outside of the United States. Workers' compensation insurance coverage is required for contractor employees performing public work contracts and certain other contracts outside of the United States. Fidelity and Casualty argues that deletion of the FAR affirmative action clauses from the solicitation was improper because they were required by the FAR. View Decision Matter of: Fidelity and Casualty Company of New York File: B-281281 Date: January 21, 1999 DIGEST Attorneys DECISION Fidelity and Casualty Company of New York protests the terms of request for proposals (RFP) No. S-OPRAQ-98-R-0040, issued by the Department of State (DOS) for selection of an insurance carrier to offer workers' compensation coverage to DOS contractors whose employees are performing contracts outside of the United States. Fidelity and Casualty protests DOS's determination to delete several affirmative action clauses from the solicitation and to exclude coverage of aviation support services from the scope of the contract. We deny the protest. Pursuant to the Defense Base Act (DBA), 42 U.S.C. Sec. 1651(a) (1994), workers' compensation insurance coverage is required for contractor employees performing public work contracts and certain other contracts outside of the United States. By regulation, DOS has extended the required coverage to all service contracts (other than contracts for personal services) which require contractor employees to perform work outside of the United States. 48 C.F.R. Sec. 628.305 (1998). DOS regulations provide for inserting in such solicitations standard clauses requiring the contractor to procure the required DBA insurance coverage pursuant to the terms of DOS's contract with its selected DBA insurance carrier unless the contractor has a DBA self-insurance program approved by the Department of Labor. 48 C.F.R. Sec. 652.228-71, 652.228-72 (1998). The RFP as issued required offerors to furnish rates per $100 of employee remuneration for each of four categories: construction contracts financed by DOS, service contracts financed by DOS, aviation support services contracts financed by DOS, and additional emergency medical evacuation coverage. In addition, the RFP as issued incorporated by reference the following standard affirmative action clauses: (1) Federal Acquisition Regulation (FAR) Sec. 52.222-25, entitled Affirmative Action Compliance; (2) FAR Sec. 52.222-35, Affirmative Action for Special Disabled and Vietnam Era Veterans (Apr 1984) (Deviation); and (3) FAR Sec. 52.222-36, Affirmative Action for Workers with Disabilities. DOS deleted the above FAR affirmative action clauses in RFP amendment No. 0003; based on a number of inquiries from potential offerors, DOS determined that deleting the clauses would increase competition. Agency Report, Nov. 2, 1998, at 3. Fidelity and Casualty argues that deletion of the FAR affirmative action clauses from the solicitation was improper because they were required by the FAR. DOS responds that deletion of the clauses was proper because no funds, appropriated or nonappropriated, will be obligated or expended under the DBA insurance contract to be awarded under the solicitation, and the FAR therefore does not apply here. Id. at 21-22. The agency notes in this regard that the "FAR applies to all acquisitions as defined in Part 2 of the FAR, except where expressly excluded," FAR Sec. 1.104, while "acquisition" is defined in Part 2 of the FAR to mean "the acquiring by contract with appropriated funds of supplies or services (including construction) by and for the use of the Federal Government through purchase or lease . . . ." FAR Sec. 2.101. Fidelity and Casualty acknowledges that there will be no direct expenditure of appropriated funds by DOS under the DBA insurance contract, but argues that: there is a direct expenditure of appropriated funds to DOS contractors that perform work overseas and employ eligible employees. Such direct expenditure by the DOS is comprised, in part, of the cost of DBA insurance purchased from the DBA insurer, for the cost of DBA insurance is one of the cost elements the DOS contractor encounters. . . . Upon payment of the premium to the DBA insurance contract carrier, the contractor, in turn, submits a voucher to the DOS and receives reimbursement for the cost of the premium paid. Protest, Oct.