Authority of the General Services Board of Contract

Appeals to Order Reimbursement of the Permanent

Judgment Fund for Awards of Bid Protest Costs

T h e G en eral S erv ic e s B oard o f C o n tract A ppeals d o e s not have the a u th o rity to o rd e r th e 

D ep artm en t o f th e A rm y to reim burse the p erm an en t indefinite ju d g m e n t fu n d fo r a B o ard 

aw ard o f b id p ro te st co sts u n d er the C o m p e titio n in C o n tractin g A ct.

May 29, 1990

M e m o r a n d u m O p i n i o n f o r t h e G e n e r a l C o u n s e l

D e p a r t m e n t o f t h e A r m y

This memorandum responds to your office’s request for the opinion of 

this Office on the authority of the General Services Board of Contract Appeals (“GSBCA” or the “Board”) to order the Department of the Army 

(“Army”) to reimburse the permanent indefinite judgment fund, 31 U.S.C. § 

1304, for bid protest costs under the Competition in Contracting Act 

(“CICA”), Pub. L. No. 98-369, 98 Stat. 1175, 1182-84 (1984) (codified in 

relevant part at 40 U.S.C. § 759(f)(5)). See Letter to William P. Barr, Assistant Attorney General, Office of Legal Counsel, from Colonel William A. 

Aileo, Chief, Litigation Division, Office of the Judge Advocate General, 

United States Department of the Army (Jan. 30, 1990) (the “Army Letter”). 

We conclude that the Board does not have authority to order the Army to 

reimburse the judgment fund.

I. Background

Your inquiry was prompted by two GSBCA cases, Julie Research Laboratories, Inc., 1989-1 B.C.A (CCH)1 21,213 at 107,020 (Sept. 23, 1988), appeal

dismissed. United States v. Julie Research Laboratories, Inc., 881 F.2d 1067 

(Fed. Cir. 1989), and Bedford Computer Corp., 1990-1 B.C.A (CCH) f 22,377 

(Oct. 13, 1989). In both these cases, the Board awarded bid protest costs 

against the Army under section 2713 of CICA, 40 U.S.C. § 759(0(5).

The Army disputes the Board’s conclusion in the Julie Research Laboratories and Bedford Computer cases. It maintains that the Board has exceeded 

its authority under 40 U.S.C. § 759(f)(6)(C) by requiring it to reimburse the

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judgment fund. Moreover, components of the federal government other than 

the Army, including the Department of the Air Force, the National Transportation Safety Board, and the General Accounting Office, are interested in the 

resolution of the issue. See Army Letter at l .1

Section 759(f)(5)(C) provides that, when the Board makes a determination that a challenged agency action violates a statute or regulation or the 

conditions of any delegation of procurement authority issued pursuant to the 

section, the Board

may, in accordance with section 1304 of title 31, further declare an appropriate interested party to be entitled to the costs 

of—

(i) filing and pursuing the protest, including reason— 

able attorney’s fees, and

(ii) bid and proposal preparation.

Section 759(f)(5)(C) explicitly requires that the Board’s awards of bid 

protest costs be made “in accordance with” 31 U.S.C. § 1304, the Automatic 

Payment of Judgment Act. That act created the permanent judgment fund. 

Section 1304 thus appropriates necessary amounts to pay final judgments, 

awards, settlements, and interest and costs specified in the judgments when 

the following three conditions are satisfied:

(1) payment is not otherwise provided for;

(2) payment is certified by the Comptroller General; and

(3) the judgment, award, or settlement is payable . . . under a 

decision of a board of contract appeals.

Despite section 759(f)(5)(C)’s express reference to payments from the 

judgment fund, the Board in both Julie Research Laboratories and Bedford

Computer cases required the Army to reimburse the permanent judgment 

fund for the award, thus effectively requiring the Army to pay the costs from 

its procurement appropriation. In Julie Research Laboratories,2 the Board 

supported its decision to require the Army to reimburse the judgment fund 

as follows:

1 A recent R eport to Congress from the G eneral A ccounting O ffice has said that “there has been som e 

c o nfusion in m aking adm inistrative and policy decisions” as a result o f disagreem ents over the requirem ents o f the law, and has called fo r corrective legislation. G eneral A ccounting O ffice, ADP Bid Protests, R eport to the C hairm an, Subcom m ittee on Federal Services, Post O ffice, and Civil Service, C om ­

m ittee on G overnm ental Affairs, U .S . Senate, at 33 (M arch, 1990) (“GAO Report").

1 In Julie Research Laboratories, the A rm y’s M issile C om m and had issued a solicitation for a m ultiye ar procurem ent o f autom atic data processing equipm ent (“A D PE” ). Julie R esearch L aboratories protested the solicitation and prevailed on a significant issue. It then applied for $25,754.88 in costs. The 

B oard aw arded it $20,986.13.

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Because this monetary award is inextricably connected with 

the true economic cost of the procurement, it is appropriate 

that the fund be reimbursed by the agency whose appropriations were used for the contract out of available funds or by 

obtaining additional appropriations for such purposes. Such 

reimbursement, is consistent with the purpose underlying 41 

U.S.C. § 612 (1982), see S. Rep. No. 1118, 95th Cong., 2d 

Sess. 33 (1978), and with our responsibility to “accord due 

weight to the policies of [the Brooks Act, [Pub. L. No. 89- 

306, 79 Stat. 1127 (1965)]] and the goals of economic and 

efficient procurement . . . .” 40 U.S.C. § 759(h)(5)(A) (Supp.

Ill 1985) (to be recodified at 40 U.S.C. § 759(f)(6)(C). . . . 

Accordingly, we revise the delegation of authority to require 

the agency to make the reim bursem ent. 40 U.S.C. § 

759(h)(5)(B) (Supp. Ill 1985).

Julie Research Labs., Inc. at 89-1 B.C.A 1 21,213 at 107,021. Administrative Judge Borwick dissented in part. He stated:

[A]bsent a statutory requirement for reimbursement of the 

judgment fund in the Brooks Act, requiring agencies to reimburse the judgment fund is not appropriate. The majority 

relies on that portion of the Brooks Act which empowers the 

Board to order any additional relief which it is authorized to 

provide under statute or regulation. 40 U.S.C. § 759(h)(6)(C)

(Supp. Ill 1985) (to be recodified at 40 U.S.C. § 759(f)(6)(C)).

I do not believe that our broad authority to grant relief applies 

to this matter of fiscal and accounting policy which is purely 

a matter of statutory direction. There are sound policy reasons for the result reached by the majority as the reimbursement. 

However, if Congress had wished to adopt that policy, it would 

have specifically done so, as it did in the CDA [Contract Disputes Act, 41 U.S.C. §§ 609-613, Pub. L. No. 95-563, 92 Stat.

2388 (1978)]. As Congress has not, I would not revise the 

DPA [delegation of procurement authority] to require such reimbursement.

Id.

The Army then appealed this judgment to the Federal Circuit, which dism issed the appeal on the ground that the dispute w as purely 

intragovemmental:

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[T]he government’s obligation to pay Julie has been determined and Julie has received everything it could recover by 

receiving a decision on the merits in its favor which has not 

been appealed. A decision by this court of this intra-government dispute “cannot affect the rights of [the] litigants," North

Carolina v. Rice, 404 U.S. [244,] at 246 [(1971)], and we 

must, therefore, conclude that the issue presented is not justiciable.

United States v. Julie Research Labs., Inc., 881 F.2d 1067, 1068 (Fed. Cir. 1989).

In Bedford Computer, the Board, citing Julie Research Laboratories, also 

ordered the Army to reimburse the judgment fund in the amount of its award 

of costs.3 Bedford Computer, 1990-1 B.C.A 1 22,377 at 112,434 (Oct. 13,

1989). Concurring separately in Bedford Computer, Administrative Judge 

Hendley agreed that the judgment fund should be reimbursed. He added 

that in future settlements of protest costs, the respondent agency should pay 

directly “in accordance with the Federal Acquisition Regulation (FAR).” Id.

Judge Hendley wrote:

So long as agency funds are available, to seek to have the 

payment made from the judgment fund and then reimburse 

that fund, is economically inane and constitutes a pointless 

exercise in unnecessary paper shuffling. That an agency should 

pay such costs directly, and not through the conduit of the 

judgment fund, is clearly directed by FAR 33.105(0 [48 C.F.R.

§ 33.105(0 (1988)] which states:

(0(1) The GSBCA may declare an appropriate 

interested party to be entitled to the cost of —

(1) Filing and pursuing the protest, including 

reasonable attorney’s fees; and

(ii) Bid and proposal preparation.

(2) Costs awarded under (0(1) above shall be 

paid promptly by the agency out of funds 

available to or for the use of [4] the 

acquisition of supplies or services.

3 In B edford Computer the Army c onceded that it had failed to com ply w ith certain procurem ent 

s tatu tes and reg u latio n s. T he Army and the protester d ecided to settle the protest. The B oard found 

th a t the p ro te sto r has prevailed on a sig n ifican t issue, and aw arded it $75,000 in protest costs.

‘ P erhaps should read: “or.”

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Although the FAR is couched in terms of payment of costs 

awarded by the Board in a case where those costs were contested, it would be sheer sophistry to contend that in those 

instances where the parties have settled their dispute, those 

same costs, reflected in their settlement, should not be paid 

from the agency’s funds as well.

Id. at 112,434-35.

II. Analysis

We conclude that a Board award of costs under CICA is payable out of 

the judgment fund, and that the Board does not have the authority to order 

an agency to reimburse the judgment fund for having paid such an award.3

1. The only substantive question concerning the availability of the judgment fund to pay bid protest costs in the Julie Research Laboratories and 

Bedford Computer cases is whether the first of section 1304(a)(l)’s three 

conditions is met,6 i.e., whether payment of a Board award is “otherwise 

provided for” from some other appropriation. As a general rule, “agency 

appropriations are not available to pay judgments. Exceptions are recognized only where the appropriations or special funds for the activities out of 

which the cause of action arose expressly include provisions for the payment 

of judgments, or where other express provisions of law include such authority.” GAO Principles at 12-3.

We are aware of no statutory authority — and none was cited in Julie

Research Laboratories or Bedford Computer — that would require the Army 

either to pay Board awards of bid protest costs out of its own appropriations, 

or to reimburse the judgment fund for having paid such awards. There is no 

provision in either 40 U.S.C. § 759 or in 31 U.S.C. § 1304 which requires a 

procuring agency to reimburse the judgment fund when bid protest costs are

’ This dispute betw een the A rm y and the Board, as the Federal C ircuit held, is purely a disagreem ent 

w ithin the G overnm ent and in no way affects the rights or rem edies o f parties (such as Julie R esearch 

L aboratories, Inc.) outside the executive branch. C onsequently, as the court held, the dispute was not 

justiciable under A rticle III. See United States v. Julie Research Labs., Inc., 881 F.2d at 1068. B ecause 

the dispute arises only betw een two com ponents of the executive branch, this O ffice has jurisdiction to 

resolve it. See § 1-401 o f Exec. O rder No. 12146, 3 C.F.R. 409,411 (1980), as am ended by E xec. O rder 

No. 12608, 3 C.F.R. 245 (1988) (A ttorney G eneral has authority to resolve interagency disputes). T he 

A ttorney G eneral has delegated to this O ffice his authority to provide legal opinions and advice to the 

President and heads of the Executive and m ilitary departm ents. See 28 U.S.C. § 5 1 0 (A ttorney G eneral’s 

authority to delegate); id. §§511-513 (duties o f A ttorney General); 28 C .F R . § 0.25 (m atters delegated 

to O LC ); see generally M em orandum for Helen S. Lessin, Director, Federal Legal C ouncil, from Leon 

U lm an, Deputy A ssistant Attorney G eneral, Office o f Legal C ounsel, Re- OLC Policies Regarding

Issuance and Release o f Opinions (Sept. 10, 1980).

‘ T he second statutory requirem ent — the necessity for certification by the C om ptroller G eneral — 

im poses no substantive constraints on access to the judgm ent fund: the C om ptroller G eneral’s certification follow s from satisfaction of the other two requirem ents and com pletion of the necessary paperw ork.

C ontinued

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awarded against it.7 We recognize that an award to a contractor by an agency 

board of contract appeals under the Contract Disputes Act (“CDA”), Pub. L. 

No. 95-563, 92 Stat. 2388 (1978) (codified at 41 U.S.C. §§ 609-613), when 

paid by the judgment fund, must thereafter be reimbursed by the procuring 

agency whose appropriations were used for the contract at issue. See 41 

U.S.C. § 612(c). But CDA is inapplicable here because the awards at issue 

were not made under CDA, but under CICA, a wholly distinct enactment.8 

Hence, we conclude, Congress intended that Board awards of these bid protest costs be paid out of the judgment fund, rather than being statutorily 

subject to reimbursement.9

2. The remaining question is whether the Board exceeded its authority in 

ordering the Army to reimburse the judgment fund for having paid the awards. 

We conclude that the Board has exceeded its authority.

In Julie Research Laboratories, the Board majority relied on 40 U.S.C. § 

759(f)(6)(C), which states:

[N]othing contained in this subsection shall affect the board’s 

power to order any additional relief which it is authorized to 

provide under any statute or regulation.

For two independent reasons, this provision does not, in our opinion, authorize the Board to require a procuring agency to reimburse the judgment fund 

for the payment of protest cost awards.

First, an order requiring the agency to reimburse the judgment fund would 

provide relief at all — still less “additional relief’ — to the bid protester, 

since the protester’s award has already been paid in full by the judgment 

fund. From the protester’s point of view, it makes no difference whether the 

agency’s procurement appropriation reimburses the judgment fund after the 

award is paid: the amount o f the award is exactly the same. Thus, requiring 

that the amount of the award be taken from agency procurement appropriations

‘ (....continued)

See Availability o f the Judgment Fund fo r the Payment o f Judgments or Settlements in Suits Brought

Against the Commodity Credit Corporation Under the Federal Tort Claims Act, 13 Op. O.L.C . 362, 363- 

64 & n .l (1989); accord General A ccounting O ffice, Principles o f Federal Appropriations Law, at 12-2 

(1982) (“GAO Principles"). The third requirem ent — that the aw ard or settlem ent be payable “under a 

decision o f a board o f contract appeals" — is manifestly satisfied by awards issued by the Board.

’ S ection 1304(c) refers to a situation in w hich the judgm ent fund is available to pay a judgm ent or 

com prom ise settlem ent but must thereafter be reim bursed. The section is irrelevant here: it only c o n ­

cerns cases in w hich the judgm ent o r settlem ent “arises out o f an express or im plied contract” m ade by 

the A rm y and A ir F orce Exchange Service, the N avy Exchanges, the M arine C orps Exchanges, the 

C oast G uard E xchanges, or the Exchange C ouncils o f the N ational A eronautics and Space A dm inistration. See Pub. L. No. 91-350, 84 Stat. 449 (1970) (codified at 31 U.S.C. § 1304(c)).

‘ C IC A , w hich gives the Board authority over A D PE protests, w as not an am endm ent to C D A but to the 

B rooks A ct, Pub. L. No. 89-306, 79 S tat. 1127 (1965) (codified at 40 U.S.C. § 7 59(0). H ence the reim ­

b ursem ent requirem ent o f section 612 o f CDA does not apply to Board aw ards under the B rooks Act.

’ T his O ffice reached a sim ilar conclusion in Payment o f Attorney Fee Awards Against the United States

Under 28 U.S.C. § 2412(b), 7 Op. O .L .C . 180 (1983)(judgm ent fund available by statute to pay fee 

aw ards). A ccord 63 C om p. Gen. 260, 263-64 & n.3 (1984) (citing R ose M em o).

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and transferred to the permanent judgment fund is purely a matter of accounting and fiscal policy, not a question of the scope of relief.10 Hence, 40 

U.S.C. § 759(f)(6)(C) cannot provide authority for the Board to order the 

Army to reimburse the judgment fund for the cost of the award.

Second, subsection 759(f)(6)(C) is not, as the Julie Research Laboratories majority mistakenly implied, itself an affirmative grant of authority to 

the Board. The subsection merely states that nothing in it shall affect the 

Board’s power to order “additional relief’ which the Board is otherwise

empowered to provide. Thus, even on the assumption (which we have rejected) that requiring the procuring agency to reimburse the judgment fund 

could constitute “additional relief,” the Board would still need to be “authorized to provide” such relief under some “statute or regulation” other than 

40 U.S.C. § 759(f)(6)(C) itself.

No other statute provides the needed authority. In Julie Research Laboratories, 1989-1 B.C.A. f 21,213 at 107,021 (Sept. 23, 1988), the Board 

majority stated only that ordering reimbursement was “consistent with the 

purpose underlying 41 U.S.C. § 612” and with the Board’s responsibility 

under 40 U.S.C. § 759(f)(5)(A) to “accord due weight to the policies of [the 

Brooks Act] and the goals of economic and efficient procurement.” However, neither 41 U.S.C. § 612 nor 40 U.S.C. § 759(f)(5)(A) authorizes the 

Board to order reimbursement of the judgment fund."

We recognize that, in Bedford Computer, the concurring opinion cited a 

regulatory source of authority. See id., 1990-1 B.C.A. U 22,377 at 112,435 

(Hendley, A.J., concurring separately). The cited regulation, FAR 33.105(f)(2), 

48 C.F.R. § 33.105(0(2) (1988), states that protest costs awarded by the 

Board “shall be paid promptly by the agency out of funds available to or for 

the use of the acquisition of supplies or services.”

We understand,12 however, that this Federal Acquisition Regulation was 

not intended to mandate that Board awards of bid protest costs under the 

Brooks Act be paid from agency procurement appropriations rather than

>0It appears that the decision o f the Board m ajority in Julie Research Laboratories relied on an understanding o f sound accounting policy. It stated that “[b]ecause this m onetary aw ard is inextricably 

connected w ith the true econom ic cost o f the procurem ent, it is appropriate that the [judgm ent] fund be 

reim bursed by the agency whose appropriations w ere used for the contract out o f available funds o r by 

obtaining additional appropriations for such purposes.” Id., 1989-1 B.C.A. 1 21,213 at 107,021. H ow ­

ever, as the dissent correctly pointed out, “our broad authority to grant relief [does not] appl[y] to this 

m atter o f fiscal and accounting policy w hich is purely a m atter o f statutory direction " Id.

" As explained above, 41 U.S C. § 612 provides that a m onetary aw ard to a contractor by an agency 

board o f contract appeals in a CDA case must be reim bursed to the judgm ent fund. N o com parable 

provision exists for Brooks Act cases. Rather, 40 U.S.C. § 759(f)(5)(C ) m erely states th at the B oard 

m ay hold a bid protestor to be entitled to protest costs to be paid “in accordance w ith section 1304,” the 

judgm ent fund statute.

Section 759(f)(5)(A ) instructs the B oard to take account of the policy o f the B rooks A ct and o f the 

goals o f econom ic and efficient procurem ent when “m aking a decision on the merits o f protests brought 

under this section” (em phasis added). That language does not authorize the Board to decide, after

m aking its decision on the merits, w hether paym ent for an aw ard o f protest costs is to com e from the 

ju d g m en t fund or from agency appropriations.

Per telephone conversation with Mr. Jack M iller, Deputy A ssociate G eneral Counsel, G SA .

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from the judgment fund.13 (Apparently, the draftsmen of the regulation overlooked the fact that protests costs in CICA cases, unlike CDA cases, were to 

be paid out of the judgment fund.) If the regulation were read to require 

agencies to pay such costs without any recourse to the judgment fund, we 

would find it invalid. The plain language of both the judgment fund statute, 

31 U.S.C. § 1304, and of the Brooks Act provision that refers to it, 40 

U.S.C. § 759(f)(5)(C), compels the conclusion that Board awards of bid 

protest cases are payable only out of the judgment fund, not out of the 

agency’s appropriation.14 Insofar as a regulation conflicts with the express 

provisions of a statute, the regulation is without effect. See, e.g., Dole v. 

United States Steelworkers o f Am., 494 U.S. 26, 42 & n.10 (1990); Board of

Governors o f the Fed. Reserve Sys. v. Dimension Fin. Corp., 474 U.S. 361, 

368 (1986); Arizona Grocery Co. v. Atchison T. & S.F. Ry. Co., 284 U.S. 370, 

387 (1932); 3 Op. O.L.C. 457, 459 (1979).

Accordingly, we conclude that the Board is not validly authorized by 

statute or by regulations to order reimbursement.

III. Conclusion

The General Services Board of Contract Appeals lacks the authority 

to order the reimbursement of the judgment fund from a procuring agency’s 

appropriation where the judgment fund has paid a Board award of bid protest costs against the agency in a case decided under 40 U.S.C. § 759.

JOHN O. McGINNIS 

Deputy Assistant Attorney General

Office o f Legal Counsel

'’ F urther, none o f the three statutes — 40 U .S.C. § 486(c); 10 U .S.C . ch. 137; 42 U.S.C. § 2453(c) — 

cited as authorities fo r the FAR regulation, see 50 Fed. R eg. 2270 (1985), expressly authorizes the G eneral S ervices A dm inistration to m andate, notw ithstanding 40 U .S.C . § 759(f)(5)(C ), that paym ent of 

G S B C A bid protest c o st awards in B rooks A ct cases be m ade directly from agency appropriations instead 

o f from the ju d g m e n t fund. Nor does a n y of those statutes allow the Board to o rder the judgm ent fund to 

be reim bursed from agency appropriations for having paid such aw ards.

14 T h e G A O expressly agrees with th e conclusion, observing that “while C IC A requires that G SBCA 

paym ents be m ade from the Judgm ent Fund, the Federal A cquisition R egulation provides that these 

paym ents m ust be m ade from the a g en cy ’s funds available for the acquisition o f supplies or services. 

The Federal Acquisition Regulation is inconsistent with CICA in this regard." GAO Report at 62 

(em phasis added).

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