�Use of Fiscal Year 2003 Funds for Boeing 737 Aircraft Lease Payments, B-300222, March 28, 2003

B-300222 Mar 28, 2003 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Is authorized to use fiscal year 2003 funds to incur or liquidate obligations for lease payments for Boeing 737 aircraft. " on the basis that "[t]he Boeing Company is the manufacturer of the C-40B and C-40C special mission aircraft and the only contractor that has demonstrated the expertise and working knowledge necessary to provide these aircraft.". The J&A justified use of noncompetitive procedures on the basis that Boeing was the only source capable of furnishing the aircraft and services. The DOD Appropriations Act for Fiscal Year 2003 was enacted. The Department of Defense is authorized to use fiscal year 2003 funds to incur or liquidate obligations for lease payments for Boeing 737 aircraft. View Decision Use of Fiscal Year 2003 Funds for Boeing 737 Aircraft Lease Payments, B-300222, March 28, 2003 The Honorable John McCain United States Senate Dear Senator McCain: This responds to your letter of October 28, 2002, concerning section 8147 of the Department of Defense Appropriations Act for Fiscal Year 2003, Pub. L. No. 107-248, 116 Stat. 1519, 1572 (2002). Section 8147 provides that none of the funds appropriated by the Department of Defense Appropriations Act for Fiscal Year 2003 may be used for leasing of transport/VIP aircraft "under any contract entered into under any procurement procedures other than pursuant to the Competition [in] Contracting Act." You asked whether the Department of Defense, in light of section 8147, is authorized to use fiscal year 2003 funds to incur or liquidate obligations for lease payments for Boeing 737 aircraft. For the reasons given below, we conclude that section 8147 does not preclude the Department of Defense from using fiscal year 2003 funds to incur or liquidate obligations for lease payments for Boeing 737 aircraft since DOD conducted the procurement under the provisions of the Competition In Contracting Act of 1984 (CICA), /1/ which by its own terms authorizes the use of noncompetitive procedures. BACKGROUND Section 8159 of the Department of Defense (DOD) Appropriations Act for Fiscal Year 2002 provided as follows: The Secretary of the Air Force may, from funds provided in this Act or any future appropriations Act, establish and make payments on a multi-year pilot program for leasing general purpose Boeing 767 aircraft and Boeing 737 aircraft in commercial configuration. Defense Appropriations Act for Fiscal Year 2002, Pub. L. No. 107-117, Sec. 8159(a), 115 Stat. 2230, 2284 (2002). On March 15, 2002, the Air Force synopsized /2/ its intent to award under section 8159 a sole-source contract to the Boeing Company for the lease of, and maintenance support for, "four commercial Boeing 737 special mission aircraft (C-40B/C)," on the basis that "[t]he Boeing Company is the manufacturer of the C-40B and C-40C special mission aircraft and the only contractor that has demonstrated the expertise and working knowledge necessary to provide these aircraft." Federal Business Opportunities (FedBizOpps), Mar. 15, 2002. On June 5, 2002, the Assistant Secretary of the Air Force for Acquisition executed a justification and approval (J&A) for award of a contract to Boeing on a sole-source basis for up to four Boeing 737 (C-40) aircraft. The J&A justified use of noncompetitive procedures on the basis that Boeing was the only source capable of furnishing the aircraft and services. On September 17, 2002, the agency awarded a contract to Boeing for the lease of two C-40 aircraft, with options for two additional aircraft. On October 23, 2002, the DOD Appropriations Act for Fiscal Year 2003 was enacted. Section 8147 of that Act provides that: "None of the funds appropriated by this Act may be used for leasing of transport/VIP aircraft under any contract entered into under any procurement procedures other than pursuant to the Competition [in] Contracting Act." Pub. L. No. 107-248, Sec. 8147, 116 Stat. 1519, 1572 (2002). On October 28, 2002, you requested our opinion on whether, in light of section 8147, the Department of Defense is authorized to use fiscal year 2003 funds to incur or liquidate obligations for lease payments for Boeing 737 aircraft. By letter of November 4, 2002, we asked the General Counsel of DOD for his opinion on the question and for further information regarding the Air Force's lease of the Boeing 737 aircraft. /3/ Letter from Susan A. Poling, Managing Associate General Counsel, GAO, to William J. Haynes III, General Counsel, DOD, Nov. 4, 2002. On December 23, 2002, EADS North America, Inc. filed a bid protest with GAO under authority of CICA, 31 U.S.C. Secs. 3551-3556, /4/ alleging, in part, that DOD's obligation of fiscal year 2003 funds for the lease payments to Boeing for Boeing 737 aircraft violated section 8147. In both its response to our letter on January 14, 2003, and in its reply to the EADS protest required by CICA, 31 U.S.C. Sec.