Use of Appropriated Funds to Pay for the Relocation of Utilities, B-300538, March 24, 2003

B-300538 Mar 24, 2003 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Appropriated funds may be used to pay for the costs of relocating utility facilities when utility facilities are located on federal lands in order to serve the federal government and are not present as part of the utility company's general operating network pursuant to a right-of-way requested by the company. 10 Comp. The amount specified by Pepco as a "gross-up" fee represents the cost of Pepco's additional income taxes and is not a direct tax upon the AOC. To the extent Pepco is permitted by the D.C. Appropriated funds are available to pay such a fee. When the federal government seeks to relocate utility facilities that are and will continue to be on federal lands in order to serve federal customers. View Decision Use of Appropriated Funds to Pay for the Relocation of Utilities, B-300538, March 24, 2003 DIGEST DECISION The Architect of the Capitol (AOC) requested our opinion on the availability of appropriated funds to pay utilities for the relocation of their facilities on the Capitol grounds and to pay a "gross-up" fee assessed on the costs of relocation. As a general proposition and consistent with our prior decisions, unless otherwise specified by statute, regulation, or governing agreement, utilities must bear the costs of relocating their facilities from a federal right-of-way whenever requested to do so by the federal government. However, when the federal government seeks to relocate utility facilities that are and will continue to be on federal lands in order to serve federal customers, appropriated funds may be used to pay for the cost of the relocation of utility facilities necessary to accommodate changing federal needs unless a statute, regulation, or governing agreement provides otherwise. In addition, appropriated funds are available to pay the "gross-up" fee assessed by the Potomac Electric Power Company (Pepco) because the "gross-up" fee represents the cost of additional income taxes to Pepco that Pepco is attempting to recover through a regulatory approved charge and is not a direct tax upon the federal government. Background The AOC advised in his letter of January 27, 2003, that he has been requested to expend and has expended significant appropriated funds for the relocation of facilities of Pepco and the D.C. Water and Sewer Authority in connection with the construction of the new Capitol Visitor Center and the West Refrigeration Plant at the Capitol Power Plant. The AOC's specific inquiry concerns a pending request by the AOC that Pepco relocate its facilities in connection with an AOC contractor's work on the West Refrigeration Plant. Pepco demanded payment in advance of performing the work and requested that the AOC pay approximately $144,000 for the relocation of Pepco facilities. This figure represents approximately $104,000 for the cost of the actual work and $40,000 for a "gross-up" fee assessed by Pepco. The AOC did not provide a specific example of utility relocation work associated with the CVC. Through follow-up conversations with an AOC official, /1/ we learned that the work on the West Refrigeration Plant involves the construction of an underground tunnel connecting to the Capitol Power Plant. The AOC has requested that Pepco relocate Pepco's high-voltage feeders that bring power into the Capitol Power Plant in order to accommodate the location of the underground tunnel. Pepco's high-voltage feeders only serve the Capitol Power Plant, which in turn only serves the buildings and facilities that are on Capitol grounds. These high-voltage feeders do not provide power to any other customer. /2/ The AOC objected to Pepco's request for payment on the basis of two Comptroller General opinions, 10 Comp. Gen. 331 (1931) and 51 Comp. Gen. 167 (1971). These decisions held that absent specific statutory authority, appropriations made to the AOC for certain Capitol construction projects were not available for utility relocation costs as utilities must bear the cost of relocating their facilities pursuant to the terms of the right-of-way or franchise granted to public utility companies in the District of Columbia. In its response to the AOC's denial of its request for payment for utility relocation costs associated with the West Refrigeration Plant project, Pepco asserts that the authority absent when our decisions were issued now exists. /3/ Pepco points to the Federal Acquisition Regulation (FAR) and the terms of the General Services Administration (GSA)-Pepco Areawide Public Utility Contract /4/ as the authority for the AOC to bear such costs. The GSA-Pepco Areawide Contract specifically provides that ordering agencies shall pay for the costs of the relocation of Pepco's facilities required or requested by the ordering agency.