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[House Report 106-581]
[From the U.S. Government Publishing Office]

                                                                       
106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     106-581

======================================================================

 
             FOR THE RELIEF OF AKAL SECURITY, INCORPORATED

                                _______
                                

  April 13, 2000.--Referred to the Private Calendar and ordered to be 
                                printed

                                _______
                                

 Mr. Hyde, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                        [To accompany H.R. 3363]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 3363) for the relief of Akal Security, Incorporated, 
having considered the same, reports favorably thereon without 
amendment and recommends that the bill do pass.

                           TABLE OF CONTENTS

                                                                  

                                                                 Page
Purpose and Summary........................................           1
Background and Need for the Legislation....................           2
Hearings...................................................           2
Committee Consideration....................................           2
Committee Oversight Findings...............................           2
Committee on Government Reform Findings....................           3
New Budget Authority and Tax Expenditures..................           3
Congressional Budget Office Cost Estimate..................           3
Agency Views...............................................           4

                          Purpose and Summary

    H.R. 3363 would pay Akal Security $10,208.74 for security 
guard services rendered in 1991 and relieve the company's 
liability to repay the U.S. $57,771.29 it was already paid for 
such services.

                Background and Need for the Legislation

    In response to an official warning of possible terrorist 
activities during Operations Desert Shield and Desert Storm, 
the Army Reserve Personnel Center in St. Louis, Missouri, 
contracted with a private security firm to provide guard 
service at a leased storage facility for approximately 8 
months. Payment of $57,771.29 was made for the 7 months covered 
by written contracts. During consideration of the contractor's 
claim for payment for guard service provided during a month in 
which there was no written contract, the Army discovered that 
contracting for security guard services at the Personnel Center 
was prohibited by section 2645 of title 10. The Army, 
therefore, was required to claim a refund of the amounts 
already paid to Akal Security, and it denied payment of 
$10,208.74 for the services provided during the 1 month not 
covered by the written contract. Under the law, the Department 
could not remedy this problem.
    The company appealed to the DOD Claims Appeal Board asking 
that its claim for retention of the amounts already paid and 
for payment for the unpaid month be submitted for consideration 
by the Congress under the Meritorious Claims Act. The Claims 
Appeal Board agreed that such action should be taken, and the 
claim was forwarded to the Congress for introduction of a 
private bill.
    The Meritorious Claims Act is the mechanism for the 
Executive Branch to refer to the Congress claims that they 
cannot pay under the law, but that they believe should be paid 
as a matter of equity through private legislative relief.
    The Department of Defense wrote when forwarding the claim 
to Congress that ``we recommend Congressional approval of the 
payment of the claim . . . pursuant to the Meritorious Claims 
Act (31 U.S.C. 3702(d)).'' They further stated that ``we 
believe that Akal Security, Inc.'s claim contains such elements 
of equity as to be deserving of consideration by the Congress 
as a meritorious claim.''

                                Hearings

    The committee's Subcommittee on Immigration and Claims held 
no hearings on H.R. 3363.

                        Committee Consideration

    On March 1, 2000, the Subcommittee on Immigration and 
Claims met in open session and ordered favorably reported the 
bill H.R. 3363, without amendment, by voice vote, a quorum 
being present.
    On March 30, 2000, the Committee on the Judiciary met in 
open session and ordered reported favorably the bill H.R. 3363, 
without amendment, by voice vote, a quorum being present.

                      Committee Oversight Findings

    In compliance with clause 3(c)(l) of rule XIII of the Rules 
of the House of Representatives, the committee reports that the 
findings and recommendations of the committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

                Committee on Government Reform Findings

    No findings or recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 3(c)(4) of rule XIII of the Rules of the House of 
Representatives.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of House Rule XIII is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the committee sets forth, with 
respect to the bill, H.R. 3363, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, April 7, 2000.
Hon. Henry J. Hyde, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3363, a bill for 
the relief of Akal Security, Incorporated.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is John R. 
Righter, who can be reached at 226-2860.
            Sincerely,
                                  Dan L. Crippen, Director.

Enclosure

cc:
        Honorable John Conyers Jr.
        Ranking Democratic Member
H.R. 3363--A bill for the relief of Akal Security, Incorporated.
    H.R. 3363 would require the Security of the Treasury to pay 
Akal Security $10,208.74 for security guard services provided 
to the Department of Defense in 1991. CBO expects the payment 
would occur in fiscal year 2000. In addition, the bill would 
extinguish a federal claim against Akal Security of $57,771.29. 
That claim is for services paid for by the Department of 
Defense that it did not have the proper authority to pay. It is 
uncertain, however, when or if Akal Security will return the 
funds to the government under current law. Because the bill 
would affect direct spending, pay-as-you-go procedures would 
apply.
    The CBO staff contact is John R. Righter, who can be 
reached at 226-2860. This estimate was approved by Peter H. 
Fontaine, Deputy Assistant Director for Budget Analysis.

                              Agency Views

    The report of the Department of Defense recommending 
Congressional approval of the payment of this claim pursuant to 
the Meritorious Claims Act is as follows:

                             General Counsel of the
                                     Department of Defense,
                                        Washington, DC, March 1998.
Hon. Newt Gingrich,
Speaker of the House of Representatives,
Washington, DC.
    Dear Mr. Speaker: I am forwarding the appended decision of 
the Defense Office of Hearings and Appeals Claims Appeals Board 
in Claims Case No. 96081904, which is hereby adopted as a 
Department of Defense report in which we recommend 
Congressional approval of the payment of the claim addressed 
therein pursuant to the Meritorious Claims Act (31 U.S.C. 
3702(d)). Pursuant to section 202(n) of the General Accounting 
Office Act of 1996 (Public Law 104-316; 110 Stat. 3843-3844) 
and a delegation of authority from the Director, Office of 
Management and Budget, the authority of the Comptroller General 
to submit meritorious claims recommendations under such section 
Sec. 3702(d) was transferred to the Secretary of Defense for 
claims arising out of activities of the Department of Defense.
    In response to an official warning of possible terrorist 
activities during Operations Desert Shield and Desert Storm, 
the Army Reserve Personnel Center, St. Louis, Missouri, 
contracted with a private security firm to provide guard 
service at a leased storage facility for approximately eight 
months, from January 28, 1991, through September 30, 1991. 
Payment of $57,771.29 was made for the seven months covered by 
written contracts. During consideration of the contractor's 
claim for payment for guard service provided in the one month 
without a written contract, it was discovered that contracting 
for the security guard services at the Personnel Center was 
prohibited by section 2465 of title 10. The Army, therefore, 
was required to claim a refund of the amounts already paid to 
Akal Security, Inc., and it denied payment of $10,208.74 for 
the services provided during the one month not covered by the 
written contract.
    For the reasons set forth in the Claims Appeals Board 
decision, we believe that Akal Security, Inc.'s claim contains 
such elements of equity as to be deserving of consideration by 
the Congress as a meritorious claim. Provided the Congress 
concurs in this recommendation, enactment of the attached draft 
legislation would relieve Akal Security, Inc. of the liability 
to repay the aforementioned $57,771.29 and would permit payment 
of the $10,208.74 to Akal for previously provided but 
uncompensated services.
    The Office of Management and Budget advises that, from the 
standpoint of the Administration's program, there is no 
objection to the presentation of these views for the 
consideration of the Committee.
            Sincerely,
                                           Judith A. Miller
Enclosures:
        DOHA Claims Case No. 96081904--In Re Akal Security, 
        Inc.
        Draft Bill
                              ----------                              

In Re: Akal Security, Inc.
Claimant

DATE: March 11, 1997
Claims Case No. 96081904

                     CLAIMS APPEALS BOARD DECISION

Digest
    In response to an official warning of possible terrorist 
attack during Operations Desert Shield and Desert Storm, the 
Army Reserve Personnel Center contracted with a private 
security firm to provide guard service at a leased records 
storage facility for approximately eight months in 1991. 
Payment was made for the seven months covered by written 
contracts. During consideration of contractor's claim for 
payment for guard service provided in the one month without a 
written contract, it was discovered that procurement of a 
contracted security guard service at a military installation is 
prohibited by 10 U.S.C. Sec. 2465. The Army, therefore, claimed 
a refund of the amounts already paid to the security company 
and denied payment for the unpaid month. The company requests 
that its claim for retention of the amounts already paid, and 
for payment for the unpaid month, be submitted for 
consideration by the Congress under the Meritorious Claims Act, 
31 U.S.C. Sec. 3702(d). The claim is forwarded to the General 
Counsel with a recommendation of submission to the Congress.
Decision
    This is in response to the request of Akal Security, Inc. 
(``Akal''), that its claim be submitted to the United States 
Congress for consideration under the Meritorious Claims Act 
(MCA), 31 U.S.C. Sec. 3702(d). The claim is for security guard 
services provided from January 28, 1991, through September 30, 
1991, at a records storage site of the Army Reserve Personnel 
Center (ARPERCEN). Pursuant to the Legislative Branch 
Appropriations Act, 1996, Pub. L. No. 104-53, Sec. 211, 109 
Stat. 514, 535 (1995), the authority of the Comptroller General 
to submit a claim under 31 U.S.C. Sec. 3702 was transferred to 
the Director, Office of Management and Budget (OMB). Effective 
December 18, 1996, the Director of OMB delegated to the 
Secretary of Defense the authority to settle general claims 
arising out of the activities of the Department of Defense, not 
otherwise delegated to the Secretary of Defense under the OMB 
Director's Determination of June 28, 1996, or directly 
transferred to the Secretary under Public Law No. 104-316.\1\
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    \1\ General Accounting Office Act of 1996, Pub. L. No. 104-316, 110 
Stat. 3826 (1996).
---------------------------------------------------------------------------

                               Background

    This claim arose from the activities of ARPERCEN, 9700 Page 
Boulevard, St. Louis, Missouri. To house its records, ARPERCEN

leases several facilities in and around St. Louis, most from 
the General Services Administration (GSA). ARPERCEN stored the 
only copies of records of World War II Filipino service members 
in a facility at 9711 Diehlman Rock Island Road in an 
industrial park in Olivette, Missouri, in suburban St. Louis. 
Unlike the other storage facilities, this facility was 
subleased through the Army Corps of Engineers (ACE) from a 
private owner, who has leased it to ACE since August 22, 1988. 
This facility was often referred to as the Diehlman Building.
    ARPERCEN's records storage facilities were usually 
unguarded prior to late 1990. During Operations Desert Shield 
and Desert Storm, the Federal Bureau of Investigation (FBI) 
advised ARPERCEN of the possibility of an attack by pro-Iraqi 
elements and an Iraqi was later arrested in the area. The 
ARPERCEN Security Officer found that guards were necessary for 
the protection of ARPERCEN employees working at its facilities 
away from the headquarters on Page Boulevard. Therefore, 
arrangements were made for GSA to provide such protection, 
starting January 19, 1991. However, GSA discovered on January 
22, 1991, that the Diehlman Building was leased to ACE, and in 
turn, to ARPERCEN. Thus, it was not a GSA facility and GSA 
therefore lacked jurisdiction to provide security there. GSA 
accordingly ended its guard services at that building.
    To provide increased security at the Diehlman Building, 
ARPERCEN contracted through the U.S. Army Aviation Systems 
Command (AVSCOM), Granite City, Illinois, with Akal Security, 
Inc., Santa Cruz, New Mexico, to provide guard services there 
under the following written contracts:

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             Contract no.                         Date                          Period                  Amount
----------------------------------------------------------------------------------------------------------------
DAAJ04-91P-0564*                       01-26-91                   01-28-91/02-28-91                   $12,002.88
DAAJ04-91-P-1141**                     04-09-91                   04-01-91/06-30-91                    15,900.00
DAAJ04-91-P-1886                       07-02-91                   07-01-91/08-31-91                    16,000.00
DAAJ04-91-P-2693                       09-06-91                   09-01-91/09-30-91                     8,000.00
----------------------------------------------------------------------------------------------------------------
TOTAL                                                                                                 $51,902.88
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*Modified by P0001, 03-22-91, to add $1,002.88 to the initial $11,000.00 amount.
**Modified by P0001, 05-31-91, to extend the period covered from 05-31-91 to 06-30-91.
(SOURCE: Dept. of the Army, Office of the JAG, memorandum dated 05-31-94.)

    The guard service provided by Akal at the Diehlman Building 
apparently ended when the last contract expired on September 
30, 1991. Actual payments to Akal were as follows:

----------------------------------------------------------------------------------------------------------------
              Contract no.                         Voucher no.                      Date                Amount
----------------------------------------------------------------------------------------------------------------
DAAJ04-91-P-0564                          265145                        05-15-91                      $11,870.52
DAAJ04-91-P-1141                          265575                        06-06-91                        7,395.00
``          ''                            266361                        07-10-91                        7,624.25
``          ''                            267594                        08-20-91                        7,690.80
DAAJ04-91-P-1886 268530 09-25-91
 7,749.96
``          ''                            200752                        10-09-91                        7,749.96
DAAJ04-91-P-2693                          205638                        11-25-91                        7,694.38
Interest credit                                                                                            -3.58
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TOTAL                                                                                                 $57,771.29
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(SOURCE: Letter to Akal dated 06-14-95 from DFAS, St. Louis, Missouri.)

    None of these payments was questioned at the time. Akal 
provided guard services at the Diehlman Building during the 
period of March 1 through 31, 1991, without a written contract 
and it later submitted a claim for $10,208.74 for that service. 
Upon review of that claim on the basis of quantum meruit/
quantum valebant, it was discovered that the procurement of the 
guard services from Akal had been in violation of 10 U.S.C. 
Sec. 2465 and the Anti-Deficiency Act. See Memorandum for the 
Deputy Assistant Secretary of the Army (Financial Operations) 
from the Army Deputy General Counsel (Fiscal Law & Policy) 
dated October 22, 1993. Akal's claim was denied and a claim was 
asserted against Akal on June 14, 1995, by the Government for 
recovery of the $57,771.29 already paid to the firm. Akal 
submitted to the U.S. General Accounting Office (GAO) a claim 
for both that amount and the unpaid $10,208.74, for a total of 
$67,980.03, to be submitted to the Congress under the MCA. 
Akal's claim was forwarded from GAO to our Office due to the 
transfer of the claims settlement and submission functions 
under Public Law Nos. 104-53 and 104-316.
    At our request, an administrative report was furnished to 
us by the Defense Finance & Accounting Service (DFAS), Defense 
Accounting Office-Indianapolis Center, St. Louis, Missouri 
(whose functions have since been transferred to Indianapolis). 
That report recommended submission of Akal's claim to the 
Congress.

                               Discussion

    As amended \2\, 10 U.S.C. Sec. 2465 provides that:
---------------------------------------------------------------------------
    \2\ The 1996 amendment is irrelevant to the issue, and a 1988 
amendment renumbered this statute to the current section from 10 U.S.C. 
Sec. 2693.

          ``(a) Except as provided in subsection (b), funds 
        appropriated to the Department of Defense may not be 
        obligated or expended for the purpose of entering into 
        a contract for the performance of firefighting or 
        security-guard functions at any military installation 
        or facility.'' [Emphasis added]
          ``(b) The prohibition in subsection (a) does not 
        apply--(1) to a contract to be carried out at a 
        location outside the United States (including its 
        commonwealths, territories,

        and possessions) at which members of the armed forces 
        would have to be used for the performance of a function 
        described in subsection (a) at the expense of unit 
        readiness; (2) to a contract to be carried out on a 
        Government-owned but privately operated installation; 
        or (3) to a contract (or the renewal of a contract) for 
        the performance of a function under contract on 
        September 24, 1983.''

    The emphasized language, which applies to the instant case, 
was added by Public Law No. 100-180 \3\ three years before the 
period at issue. Its relatively recent addition could explain 
why ARPERCEN, AVSCOM, and ACE personnel were unaware of the 
statute's prohibition on contracted security services. Also, 
there is some indication that these personnel may have believed 
that the Diehlman Building was not a military installation or 
facility. In any case, after some discussion, the Army's 
General Counsel decided that the Diehlman Building was a 
``military installation or facility'' subject to 10 U.S.C. 
Sec. 2465. None of the exceptions in 10 U.S.C. Sec. 2465(b) 
apply: the Diehlman Building is in the United States; the site 
is not owned by the Government; and Akal's first contract 
regarding the site was issued on January 26, 1991.
---------------------------------------------------------------------------
    \3\ Public Law 100-180, Div. A, Title XI, Sec. 1112(a), December 4, 
1987, 101 Stat. 1147.
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    Thus, Akal's claim cannot be considered on the basis of 
quantum meruit/quantum valebant because it does not meet the 
first requirement, that the procurement would have been valid 
had the proper procedures been followed. Graphic Creations. 
Inc., 72 Comp. Gen. 291 (1993). Therefore, Akal has asked that 
its claim be forwarded to the Congress for consideration under 
the MCA.
    The MCA \4\, now codified at 31 U.S.C. Sec. 3702(d), 
states:
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    \4\ Act of April 10, 1928, Ch. 334, 45 Stat. 413; formerly codified 
at 31 U.S.C. Sec. 236.

        ``The official responsible under subsection (a) for 
        settling the claim shall report to Congress on a claim 
        against the government that is timely presented under 
        this section that may not be adjusted by using an 
        existing appropriation, and that the official believes 
        Congress should consider for legal or equitable 
        reasons. The report shall include recommendations of 
---------------------------------------------------------------------------
        the official.''

    DOHA has not yet rendered any determinations or decisions 
concerning the MCA. However, there are a number of decisions 
issued by GAO that provide guidance. When the MCA was under the 
jurisdiction of GAO, only a few of the many claims presented 
for submission to the Congress under that statute were actually 
submitted. GAO had no ``ground rules'' for considering such 
claims; rather, each claim was to be considered on its own 
merits. B-137604, Feb. 13, 1959. Besides the statutory 
requirement of ``legal and equitable reasons,'' a claim had to 
be ``unusual or extraordinary'' to warrant submission. Marvin 
K. Eilts, 63 Comp.Gen. 93 (1983). In 53 Comp.Gen. 157 (1973), 
the Comptroller General stated:

        ``The remedy afforded by the Act [MCA] is limited to 
        extraordinary circumstances, and the cases reported by 
        the GAO to the Congress generally have involved 
        equitable circumstances of an unusual nature and which 
        are unlikely to constitute a recurring problem, since 
        to report to the Congress a particular case when 
        similar equities exist or are likely to arise with 
        respect to other claimants would constitute 
        preferential treatment over others in similar 
        circumstances.''

    Over the years, GAO repeatedly emphasized that preferential 
treatment of one claimant from many similarly situated 
claimants (actual or potential) should not be afforded under 
the MCA. Control Data Corporation, B-201284, Apr. 21, 1981.
    The well-established rule is that the Government is not 
bound or made liable by the erroneous advice or actions of its 
officers, employees, and agents, even if given or made in the 
course of their official duties. DOHA Claims Case No. 97012101 
(February 6, 1997). The record is mixed as to how that rule was 
applied to requested MCA submissions. In B-168300, December 4, 
1969, the Comptroller General denied a request in the case of 
supplies and services advanced by a cooperative to an 
unsuccessful farmer based on assurances made by a Farmers Home 
Administration employee without authority to make such 
assurances. But in B-136117, June 6, 1958, GAO acted favorably 
in the case of a timber company for losses it sustained due to 
an erroneous Bureau of Land Management computation of 
merchantable timber in its contracted area. The Comptroller 
General noted that the error was the largest such mistake in 
the history of the agency, that the contractor diligently 
performed the work, and that the Government received a benefit 
from that work. In Campanella Construction Co., Inc., B-
194135(1), Nov. 19, 1979, GAO submitted a claim for a 
contracted upgrade of a wastewater treatment plant that, 
unknown to the Army and the contractor, had already been deeded 
over to the local school board from the Federal Government.
    The record is also mixed as to submitting claims based on 
work done under contract for the Government in violation of a 
statutory provision. In B-147086, Sept. 20, 1961, the request 
was denied in the case of a construction contract for an amount 
in excess of the statutory limit. However, submission was 
approved in the cases of newspaper advertisements procured 
without proper authorization in The Florida Times-Union and The 
Jacksonville Journal, B-208306, Aug. 18, 1982, and in The 
Virginian-Pilot and The Ledger-Star, B-205094(1), Nov. 24, 
1981. In both cases, the Comptroller General noted that the 
Government received a benefit, that the newspapers acted in 
good faith, and that the amounts were reasonable.
    The instant case may be considered extraordinary in that it 
involved the expeditious procurement of additional security 
services at a possible terrorist target during a national 
emergency. Both ARPERCEN and DFAS agree that the Government 
received a benefit from Akal's work, enhanced security during a 
national emergency in which there were official warnings of 
possible terrorist attacks on Federal buildings, including a 
specific warning from the FBI; that Akal acted in good faith; 
and that the amounts claimed by Akal are reasonable. Similar 
circumstances existed in B-136117, B-205094(1), and B-208306, 
supra. The work at issue was instigated by Government employees 
or officials who were unaware of the statutory prohibition 
against it, as in B-194135(1), B-205094(1), and B-208306, 
supra. Thus, a strong case based on equity can be made. The 
persons and offices responsible for this pro-

curement have since been made aware of the prohibitions 
effected by 10 U.S.C. Sec. 2465; no similar cases seem to have 
been received by our Office; and nine years have now elapsed 
since the prohibition against contracted security guard 
services was enacted. Thus, a recurrence of this type of claim 
does not seem likely, frequent, or numerous.

                               Conclusion

    We recommend to the General Counsel that the claim of Akal 
Security, Inc., for payment for security guard services 
provided to the Army Reserve Personnel Center, be submitted to 
the United States Congress for consideration under the 
Meritorious Claims Act, 31 U.S.C. Sec. 3702(d), with a 
favorable recommendation.

          Michael D. Hipple, Chairman, Claims Appeals Board
         Christine M. Kopocis, Member, Claims Appeals Board
             Jean E. Smallin, Member, Claims Appeals Board.
                              ----------                              

                                 A BILL

To relieve, under the Meritorious Claims Act, Akal Security, 
    Inc. of New Mexico of responsibility to repay the Army for 
    security guard services provided the Army Personnel Center 
    in St. Louis, Missouri.

    Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled,

SECTION 1. RELIEF OF LIABILITY FOR REPAYMENT.

    Notwithstanding the provisions of section 2465 of title 10, 
United States Code, or any other provision of law, Akal 
Security, Inc. of Santa Cruz, New Mexico, is relieved of all 
liability to repay $57,771.29 to the United States for security 
guard services performed but not authorized in 1991 at the Army 
Reserve Personnel Center in St. Louis, Missouri.

SEC. 2. PAYMENT FOR SERVICES PERFORMED BUT NOT PAID.

    The Secretary of the Treasury is authorized and directed to 
pay, out of any money in the Treasury not otherwise 
appropriated, $10,208.74 to Akal Security, Inc. of Santa Cruz, 
New Mexico, provided such Akal Security, Inc. agrees that the 
relief of liability in section 1 and such payment are in full 
satisfaction of its claim against the United States for 
security guard services provided by Akal Security, Inc. to the 
Army Reserve Personnel Center in 1991.

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