B-154204, SEP. 4, 1964

B-154204, SEP. 4, 1964

TO MR. A. A. KINSFATHER, CHIEF, FINANCE AND ACCOUNTING BRANCH, U.S. ARMY ENGINEER DISTRICT, WALLA WALLA:

YOUR LETTER OF APRIL 7, 1964, FORWARDED TO US BY THE ENGINEER COMPTROLLER ON MAY 8, 1964, REQUESTS OUR DECISION WHETHER A VOUCHER FOR $150 FOR CONSULTANT SERVICES PERFORMED UNDER A CONTRACT BY MR. ALPHONSE KEMMERICH ON MARCH 25 AND MARCH 26, 1964, MAY BE PAID.

YOU INFORM US THAT MR. KEMMERICH WAS FORMERLY EMPLOYED BY THE FISH AND WILDLIFE SERVICE AND IS CURRENTLY RECEIVING A CIVIL SERVICE RETIREMENT ANNUITY. WE HAVE BEEN INFORMALLY ADVISED BY THE CIVIL SERVICE COMMISSION THAT MR. KEMMERICH WAS NOT AUTOMATICALLY SEPARATED FOR AGE BUT VOLUNTARILY RETIRED. YOU FURTHER INFORM US THAT:

"* * * THIS OFFICE WAS IN NEED OF AN EXPERT IN THE FIELD OF FISH SPAWNING AND HATCHING TO ASSIST IN A STUDY OF THE EFFECTS OF THE JOHN DAY LOCK AND DAM ON THE FALL CHINOOK POPULATION SPAWNING IN THE RESERVOIR AREA. BECAUSE OF MR. KEMMERICH'S GREAT KNOWLEDGE AND EXPERIENCE, THE CONTRACT FOR CONSULTANT SERVICES WAS NEGOTIATED. NORMAL CIVIL SERVICE APPOINTIVE PROCESSES, INCLUDING OATH OF OFFICE, WERE NOT FOLLOWED. THE CONTRACT PROVIDES FOR THE CONTRACTOR TO SERVE IN AN ADVISORY CAPACITY IN CONNECTION WITH THE STUDY AND TO MAKE RECOMMENDATIONS CONCERNING THE EXTENT AND TYPE OF MITIGATION MEASURES CONSIDERED MOST FEASIBLE FOR CONSERVING CHINOOK SALMON THAT NOW SPAWN IN THE AREA TO BE INUNDATED BY THE JOHN DAY LOCK AND DAM. SERVICES INCLUDE SITE INSPECTION, CONFERENCES, AND REVIEW OF REPORTS AND RECOMMENDATIONS AS REQUESTED. REPORTS AND RECOMMENDATIONS PREPARED BY THE CONTRACTOR AND FURNISHED THE GOVERNMENT ARE THE PRODUCT OF THE CONTRACTOR'S INDEPENDENT JUDGMENT AND DECISION WITHOUT GOVERNMENT SUPERVISION.'

IT IS NOTED ON THE CONTRACT THAT IT WAS NEGOTIATED PURSUANT TO "SECTION 6, ACT OF 3 JULY 1930 * * * (33 U.S.C. 569A) AND THE SCHEDULE A OF 5 CODE OF FEDERAL REGULATIONS, SECTION 6.101/N) AND 10 U.S.C. 2304/A) (4).'

SECTION 6 OF THE ACT OF JULY 3, 1930, CH. 847, 46 STAT. 948, AS AMENDED, 33 U.S.C. 569A, PROVIDES:

"THE CHIEF OF ENGINEERS IS AUTHORIZED TO PROCURE THE TEMPORARY OR INTERMITTENT SERVICES OF EXPERTS OR CONSULTANTS OR ORGANIZATIONS THEREOF IN CONNECTION WITH CIVIL FUNCTIONS OF THE CORPS OF ENGINEERS WITHOUT REGARD TO THE CLASSIFICATION ACT AS AMENDED: PROVIDED, THAT INDIVIDUALS SO ENGAGED SHALL NOT BE PAID IN EXCESS OF $100 PER DAY FOR THEIR SERVICES.'

5 CFR 6.101/N) LISTS "POSITIONS REQUIRING THE TEMPORARY OR INTERMITTENT EMPLOYMENT OF PROFESSIONAL, SCIENTIFIC, OR TECHNICAL EXPERTS FOR CONSULTATION PURPOSES" AS AMONG THOSE WHICH ARE EXCEPTED FROM THE COMPETITIVE SERVICE AND CONSTITUTE SCHEDULE A. 10 U.S.C. 2304/A) PROVIDES IN PERTINENT PART THAT:

"/A)PURCHASES OF AND CONTRACTS FOR PROPERTY OR SERVICES COVERED BY THIS CHAPTER SHALL BE MADE BY FORMAL ADVERTISING. HOWEVER, THE HEAD OF AN AGENCY MAY NEGOTIATE SUCH A PURCHASE OR CONTRACT, IF---

"/4) THE PURCHASE OR CONTRACT IS FOR PERSONAL OR PROFESSIONAL SERVICES;

THE VOUCHER SUBMITTED BY YOU DOES NOT CONFORM WITH ARTICLE 4C OF THE CONTRACT WHICH STIPULATES THAT:

"C. IT IS UNDERSTOOD AND AGREED THAT A SUM EQUAL TO ANY RETIREMENT PAY FROM THE GOVERNMENT TO WHICH THE CONTRACTOR MAY BECOME ENTITLED ON ANY DAY ON WHICH HE MAY BE EMPLOYED UNDER THIS CONTRACT SHALL BE DEDUCTED FROM ANY COMPENSATION DUE THE CONTRACTOR UNDER THE PROVISION OF THIS CLAUSE.'

YOU EXPLAIN THAT, BY LETTER DATED JANUARY 29, 1964, YOUR OFFICE:

"* * * REQUESTED THE DIVISION ENGINEER, U.S. ARMY ENGINEER DIVISION, NORTH PACIFIC, PORTLAND, OREGON, FURNISH A DETERMINATION AS TO THE PROPRIETY OF DELETING ARTICLE 4C FROM THE CONTRACT WITH MR. KEMMERICH AND SUBMITTED A FINDINGS OF FACT TO SUPPORT A PROPOSED MODIFICATION TO THE CONTRACT, IF SUCH MODIFICATION WAS TO BE REQUIRED. BY FIRST INDORSEMENT DATED 24 FEBRUARY 1964, THE DIVISION ENGINEER RULED THAT A MODIFICATION TO THE CONTRACT TO REMOVE THE CLAUSE WAS NOT NECESSARY AND THAT THE FINDINGS OF FACT WOULD SUPPORT PAYMENT WITHOUT THE ANNUITY DEDUCTION AS PROVIDED IN THE CONTRACT. * * *"

SPECIFICALLY, YOU ASK THE FOLLOWING QUESTIONS:

"1. IS THE ATTACHED VOUCHER PROPERLY PAYABLE?

"2. IF THE VOUCHER IS PROPERLY PAYABLE, WOULD IT BE IN ORDER TO REFUND TO THE CONTRACTOR THE ANNUITY DEDUCTIONS PREVIOUSLY WITHHELD FROM PAYMENTS UNDER THIS CONTRACT?

"3. IF YOUR ANSWER TO QUESTION 1 IS NEGATIVE, WOULD THE VOUCHER HAVE QUALIFIED FOR PAYMENT IF ARTICLE 4C HAD BEEN OMITTED OR DELETED FROM THE CONTRACT?

"4. IF YOUR ANSWERS TO QUESTIONS 1 AND 3 ARE BOTH NEGATIVE, MAY I ASSUME THAT ANNUITY PAYMENTS MUST BE DEDUCTED FROM COMPENSATION DUE EXPERTS AND CONSULTANTS ENGAGED IN CORPS OF ENGINEERS CIVIL WORKS ACTIVITIES UNDER AUTHORITY OF 33 U.S.C. 569A?

SECTION 13 (B) OF THE CIVIL SERVICE RETIREMENT ACT, APPROVED MAY 29, 1930, CH. 349, AS RENUMBERED JULY 31, 1956, CH. 804, SECTION 401, 70 STAT. 757, AS AMENDED, 5 U.S.C. 2263 (B), PROVIDES THAT WHEN AN ANNUITANT, WITH EXCEPTIONS NOT HERE RELEVANT, BECOMES AGAIN "EMPLOYED," A SUM EQUAL TO THE ANNUITY ALLOCABLE TO THE PERIOD OF HIS ACTUAL EMPLOYMENT SHALL BE DEDUCTED FROM HIS SALARY. SECTION 13 (B) APPLIES ONLY WHEN AN ANNUITANT BECOMES AN EMPLOYEE OF THE FEDERAL GOVERNMENT; IT DOES NOT APPLY IF HIS STATUS IS THAT OF AN INDEPENDENT CONTRACTOR.

A PROVISION SIMILAR TO THAT CONTAINED IN SECTION 13 (B) OF THE CIVIL SERVICE RETIREMENT ACT IS CONTAINED IN 33 U.S.C. 554A AS FOLLOWS:

"THE PROVISIONS OF SECTION 715A OF TITLE 5 SHALL NOT BE SO CONSTRUED AS TO PREVENT THE EMPLOYMENT BY THE CHIEF OF ENGINEERS UNDER AGREEMENT AS AUTHORIZED BY SECTIONS 569A, 584A, AND 607A OF THIS TITLE, OF ANY RETIRED CIVILIAN EMPLOYEE WHOSE EXPERT ASSISTANCE MAY BE NEEDED IN CONNECTION WITH THE PROSECUTION OF RIVER AND HARBOR OR FLOOD CONTROL WORKS: PROVIDED, THAT DURING THE PERIOD OF SUCH EMPLOYMENT A SUM EQUAL TO THE RETIRED PAY OF THE EMPLOYEE SHALL BE DEDUCTED FROM THE COMPENSATION AGREED UPON.'

WE BELIEVE THE ABOVE PROVISO TO 33 U.S.C. 544A HAS BEEN SUPERSEDED BY SECTION 13 (B) OF THE CIVIL SERVICE RETIREMENT ACT SO FAR AS CONCERNS THE ENGAGING OF SERVICES RESULTING IN AN EMPLOYER-EMPLOYEE RELATIONSHIP. MOREOVER, WE DO NOT VIEW SUCH PROVISO AS BEING APPLICABLE WHERE THE RELATIONSHIP IS THAT OF AN INDEPENDENT CONTRACTOR.

ALTHOUGH ONE OF THE AUTHORITIES LISTED FOR THE CONTRACT WOULD INDICATE AN INTENT TO ENGAGE MR. KEMMERICH AS AN EMPLOYEE IN AN EXCEPTED POSITION, THE RECORD SHOWS THAT MR. KEMMERICH QUESTIONED THE NECESSITY OF ANNUITY DEDUCTIONS PRIOR TO EXECUTION OF THE CONTRACT APPARENTLY ON THE BASIS THAT HE WOULD SERVE IN AN INDEPENDENT CONTRACTOR STATUS RATHER THAN AS AN EMPLOYEE OF THE UNITED STATES. THE RECORD ALSO SHOWS THAT, SINCE THE INFORMATION NEEDED TO MAKE A DECISION WHETHER IT WAS NECESSARY GO MAKE ANNUITY DEDUCTIONS WAS NOT AVAILABLE AT THAT TIME AND AS MR. KEMMERICH'S SERVICES WERE URGENTLY NEEDED, IT WAS MUTUALLY AGREED THAT THE CLAUSE WOULD BE DELETED IF THE FACTS SO WARRANTED. THEREFORE, IT IS NECESSARY TO DETERMINE THE TYPE OF RELATIONSHIP CREATED WITHOUT REFERENCE TO THE AUTHORITIES LISTED ON THE CONTRACT. WE NOTE THAT A FINDING OF FACT HAS BEEN MADE BY THE DIVISION ENGINEER THAT MR. KEMMERICH IS AN INDEPENDENT CONTRACTOR, AND NOT AN EMPLOYEE.

AMONG THE FACTORS TO BE CONSIDERED IN DETERMINING WHETHER AN INDEPENDENT CONTRACTOR OR EMPLOYER-EMPLOYEE RELATIONSHIP IS CREATED BY A CONTRACT AND ITS PERFORMANCE, IS THE METHOD OF PAYMENT. PAYMENT BASED ON TIME ACTUALLY WORKED MAY BE INDICATIVE OF AN EMPLOYER EMPLOYEE RELATIONSHIP. THE DEGREE OF SUPERVISION GIVEN, AND THE FURNISHING OR NONFURNISHING OF EQUIPMENT, SUPPLIES, AND OFFICE SPACE TO THE INDIVIDUAL ARE OTHER FACTORS RELEVANT IN DETERMINING THE TYPE OF RELATIONSHIP. SEE B-153172, APRIL 9, 1964, COPY ENCLOSED. WHILE MR. KEMMERICH IS PAID FOR TIME ACTUALLY WORKED, HE EVIDENTLY WAS NOT FURNISHED ANY OF THE ITEMS JUST MENTIONED. YOU HAVE STATED THAT HE WORKS INDEPENDENTLY WITHOUT SUPERVISION. IN VIEW THEREOF, AND OF YOUR DESCRIPTION OF THE TYPE OF SERVICES DESIRED FROM MR. KEMMERICH AND THE CIRCUMSTANCES UNDER WHICH THEY ARE RENDERED, WE AGREE WITH HIS STATUS IS THAT OF AN INDEPENDENT CONTRACTOR. THEREFORE, BEING NO EMPLOYER EMPLOYEE RELATIONSHIP, IT IS CLEAR THAT NEITHER SECTION 13 (B) OF THE CIVIL SERVICE RETIREMENT ACT NOR THE PROVISO TO 33 U.S.C. 544A WOULD BE APPLICABLE IN HIS CASE.

BY REASON OF THE FOREGOING AND BECAUSE OF THE AGREEMENT TO MODIFY THE CONTRACT TO DELETE ARTICLE 4C THEREOF IS SUCH ARTICLE WAS NOT OTHERWISE REQUIRED, THE VOUCHER, WHICH IS RETURNED HEREWITH, MAY BE PAID, IF OTHERWISE CORRECT. IN ANSWER TO QUESTION 2, REFUND OF PRIOR DEDUCTIONS IS PROPER IN VIEW OF THE AGREEMENT CONCERNING THE DELETION OF THE ANNUITY DEDUCTION CLAUSE. IN VIEW OF THE ANSWER TO QUESTION 1 QUESTION 3 AND 4 REQUIRE NO ANSWER.