Can Congress direct who wins a contract?

A corporate official asked the following question: Agencies frequently base their requests for appropriations to Congress on particular contractors' products and services. Often committee reports, which accompany the appropriations, also identify specific companies. Can an agency rely on these reports as authorization to direct a contract award to the company identified in the appropriations acts' language and report? Are normal competition rules waived in these circumstances?

Typically, when Congress appropriates funds for agency operations, it does not identify in the appropriations act the specific contractors that it wants to perform required work. Indeed, appropriations acts rarely identify the specific amounts an agency should spend on each project. Instead, Congress generally appropriates a lump sum for each type of expenditure, based on cost estimates the agency provides.

Although Congress may rely on the agency's information, according to the General Accounting Office's Principles of Federal Appropriations Law [2d ed. 1991, Volume I at 4-9 to 4-10 (citations omitted)], "the inclusion of an item in departmental budget estimates for an expenditure which is otherwise prohibited by law, and the subsequent appropriation of funds without specific reference to the item, do not constitute authority for the proposed expenditure or make the appropriation available for that purpose. Burying an item prohibited by law in budget justifications and then claiming that Congress must have intended to include that item because it was there in black and white in the budget materials and [because] Congress did not object is not enough. An appropriation would be available for an otherwise prohibited item only if it makes specific reference to the item. Congress can, in effect, 'waive' a statutory prohibition, but it must do so explicitly."

A similar rule applies to statements in committee reports. GAO said, "When Congress enacts a lump-sum appropriation accompanied by committee reports detailing how it wants funds to be allocated, the agency has no legal obligation to follow such report statements, even if expressed as 'directives,' unless they can be related to the statutory language itself" [Letter to Congressman Ottinger, B-207697 (Oct. 4, 1982)].

Somewhat more pointedly, in the SeaBeam Instruments Inc. decision (B-247853.2, July 20, 1992, 92-2 CPD 30), GAO stated the issue in the following way: "When Congress appropriates funds in lump-sum amounts without statutorily restricting what can be done with those funds, a clear inference arises that it does not intend to impose legally binding restrictions on their use; language in committee reports and other legislative history indicating how funds should or are expected to be spent do not impose any legal requirements on federal agencies."

Thus, when appropriations are to be used for contracting, all applicable procurement laws must be met in the use of those appropriations, unless specifically provided in the appropriations act.

In Washington Council of Agencies (B-209598, June 1, 1983, 83-1 CPD 588), the District of Columbia used statements in the legislative history of its annual appropriations act as supporting the acquisition of third-party custody services from a particular company, Bonabond. However, GAO disagreed with the district, finding that "the references to Bonabond [were] buried in the district's budget request, and its testimony at the congressional hearings constitute merely a request to the Congress for an appropriation and do not evidence a congressional intent to authorize an exception to the procurement statutes."

Because the appropriations act did not direct the district to contract with Bonabond, the district was required to use normal competitive procedures in selecting a contractor. GAO noted that "there is a distinction to be made between utilizing legislative history for the purpose of illuminating the intent underlying language used in a statute and resorting to that history for the purpose of writing into law that which is not there."

For most federal government agencies, the Competition in Contracting Act of 1984 and the Federal Acquisition Regulation are the primary laws with which an agency must comply in the acquisition of goods and services. These and similar laws cannot be repealed based only on statements in an agency's request for appropriations or on the committee reports.

As summarized by GAO in Principles of Federal Appropriations Law [(2d ed. 1991), Volume I at 2-56 to 2-57], "If Congress wants to use an appropriation act as the vehicle for suspending, modifying or repealing a provision of existing law, it must do so advisedly, speaking directly and explicitly to the issue."

Peckinpaugh is a member of the law firm of Winston & Strawn, Washington, D.C.


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