B-308026, National Labor Relations Board�--Improper Obligation of Severable Services Contract, September 14, 2006

B-308026 Sep 14, 2006 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights The National Labor Relations Board (NLRB), which improperly obligated its fiscal year 2005 appropriation for severable services commencing in fiscal year 2006, may not remedy the improper obligation by modifying the contract's period of performance to a previous fiscal year. NLRB's expired appropriations are available only to adjust obligations properly incurred during fiscal year 2005. NLRB must adjust its accounts to record the obligation against its fiscal year 2006 appropriation. View Decision B-308026, National Labor Relations Board---Improper Obligation of Severable Services Contract, September 14, 2006 Decision Matter of: National Labor Relations Board-—Improper Obligation of Severable Services Contract File: B-308026 Date: September 14, 2006 DIGEST The National Labor Relations Board (NLRB), which improperly obligated its fiscal year 2005 appropriation for severable services commencing in fiscal year 2006, may not remedy the improper obligation by modifying the contract's period of performance to a previous fiscal year. NLRB's expired appropriations are available only to adjust obligations properly incurred during fiscal year 2005. NLRB must adjust its accounts to record the obligation against its fiscal year 2006 appropriation. DECISION The Inspector General (IG), National Labor Relations Board (NLRB), requested our decision on whether NLRB can remedy an improper obligation of a severable service contract by modifying the period of performance to a previous fiscal year. The contract in question was for performance entirely in fiscal year 2006, running from October 1, 2005, through September 30, 2006, but NLRB obligated its fiscal year 2005 appropriation.[1] NLRB agrees the obligation is improper but instead of adjusting its accounts to record the obligation against its fiscal year 2006 appropriation, NLRB wants to remedy the improper obligation by modifying the contract's performance period in order to charge its, now expired, fiscal year 2005 expired appropriations. As explained below, NLRB's fiscal year 2005 expired appropriation is not available for this purpose. BACKGROUND NLRB is an independent federal agency established to administer the National Labor Relations Act. 29 U.S.C. sect. 153. Under the Act, it conducts secret ballot elections of employees in a bargaining unit and is charged with the prevention of unfair labor practices. Letter from Robert Battista, Chairman, and Ronald Meisburg, General Counsel, NLRB, to Anthony H. Gamboa, General Counsel, GAO, July 7, 2006 (Battista Letter). NLRB carries out its duties by acting as a quasi-judicial body that decides cases based upon formal records in administrative proceedings. Id. NLRB manages its caseload using its Case Activity Tracking System (CATS), which collects, processes, and stores case activity and status information on new and closed cases. Id. In September 2001, NLRB entered into a contract with Electronic Data Systems (EDS) for the acquisition of ongoing support for CATS. Under the contract, EDS schedules, produces, tests and deploys software upgrades, as well as providing daily operational support. Id. The contract's initial performance period was October 1, 2001, through September 30, 2002, with options through September 30, 2015. Letter from Jane E. Altenhofen, Inspector General, NLRB, to Anthony H. Gamboa, General Counsel, GAO, June 27, 2006 (Altenhofen Letter). The period of performance for option three ran from October 1, 2004, through September 30, 2005. On September 30, 2005, NLRB exercised option four, specifying a performance period of October 1, 2005, through September 30, 2006. Contract No. GS-35F-0323J, sect. 6.0 (Sept. 30, 2005). See also Altenhofen Letter, at 1. NLRB's obligation for option four was $758,875. NLRB charged its obligation to its fiscal year 2005 appropriation. Altenhofen Letter, at 1. In June 2006, the NLRB Office of Inspector General issued a report on its evaluation of NLRB's acquisition process for information technology related services, including the EDS contract. Information Technology Procurement Actions, Report No. OIG-AMR-51-06-02 (June 29, 2006) (IG Report). The report concluded that the agency's obligation of fiscal year 2005 funds for the fourth option violated the bona fide needs rule –[b]ecause all services provided by EDS under the FY 2006 contract option are for maintenance and support in FY 2006.— Id. at 12. The IG recommended that NLRB –[c]orrect the recording of the EDS contract obligation so that the $758,875 is recorded against the FY 2006 appropriation.— Id. at 15. In responding to the IG Report, NLRB proposed a different remedy.