the contractor under a contract and the other deals with unsoli

cited proposals.

As attorneys for both the government and private industry, we find that claims by the government against a contractor under a completed contract are growing in number. With the passage of Public Law 87-653, "Truth-in-Pricing", and Public Law 93-379, the "Cost Accounting Standards" Act, the government can reach back into a completed contract eight years after completion of deliveries and file a claim against the contractor at either the Armed Services Board of Contract Appeals or some similar administrative tribunal. Although all contracts contain an audit clause which limits the government's right to audit to three years after date of final payment, the audit report setting forth the grounds for a claim might languish for three or four years before a contracting officer issues a final decision which can be appealed to an agency board such as the Armed Services Board of Contract Appeals. A contractor's ability to submit a claim against the government under a contract provision is forever closed once the contractor accepts final payment or, under a cost reimbursement type contract, once a contractor waives his right to such claims against the government. We recommend that a four year statute of limitation be included in the legislation. This four year period would commence at the date of final payment and would end four years later. This approach would permit the government the normal three years after date of payment for audit and an additional year to prepare and make its claim against the contractor. A statute of limitations such as

the one we propose would permit a contractor to reduct the volume of records he must retain and would, of course, thereby eliminate considerable costs of record retention. In addition, the government would be forced to bring its claim against a contractor when the evidence is both available and reasonably fresh in the minds of the parties.

Senate Bill 1264 contains no provision which deals with unsolicited proposals. The Commission on Government Procurement stated in recommendation #7 that the government should eliminate restraints which discourage the generation and acceptance of innovative ideas through unsolicited proposals. We believe that any acquisition statute should include a statement which urges the preparation of unsolicited proposals and a reward to those contractors whose proposals are sufficiently unique to justify acceptance by the government. We recommend that the reward should ordinarily be the award of a contract for the initial procurement or for the initial research and development. This or an equivalent reward should be to the source who prepared the unsolicited proposal. On the other hand a unique unsolicited proposal which is not in the public domain should be returned by the government to the offeror when it is not used. The government should be forbidden from taking a unique idea and utilizing it to solicit private industry in general. The Commission on Government Procurement concluded that unsolicited proposals were the primary source through which the government obtains creative ideas from private industry for satisfying the national needs. Without the incentive of a potential single source award, contractors would be discouraged

from investing their capital and time in preparing unsolicited proposals.

Finally, as members of the bar, we must speak to Title VII, protests. We strongly support Title VII as it is currently drafted since it provides the availability of an effective remedy as the most practicable means of redressing erroneous or arbitrary agency actions as they affect the elements of the acquisition process involving selection of sources and award of contracts. We recommend, as did the Commission on Government Procurement, that the protest remedy should be continued to be adjudicated administratively by the Comptroller General. He and his staff have 50 years of experience in adjudicating bid protests. Furthermore, his office has a disinterestedness in

the outcome and an absence of bias towards the procurement decision under challenge. It is unlikely that the contracting agencies could ever obtain the public confidence if the decisions on bid protests were to be handled within the agencies. There would always be a fear expressed by the old saw of a "fox guarding the hen house".

Senator Chiles, when introducing S.1264, indicated a "widespread" dissatisfaction with the GAO's handling and implementation of protests.

We believe that this dissatisfaction has been engendered by an absence of clear legislative authority for the Comptroller General to perform this needed corrective role. The scope of the Comptroller General's authority was questioned in 1971 by a prior Attorney General of the United States and again recently on March 17, 1977 by Attorney General Bell. Given

these challenges of legal authority of the Comptroller General to bind the contracting agency by his bid protest decision, it is remarkable that the process has worked as well as it has.

According to the Comptroller General's statistics from the decisions during the period July 1975 through June 1976, of 472 protests decided after the award of a contract to another party, the GAO recommended cancellation or termination of the award in only 13 cases. The statistics further indicate a substantially higher percentage of protests being decided in favor of the contractor when those protests are decided before award. Much of this apparent unfairness to contractors with meritorious protests, we believe, will be cured by the enactment of Title VII. Under the authority of Title VII, the Comptroller General will be able to compel timely responses by contracting agencies to non-frivolous protests and to prevent contract awards from being made except only in those rare cases when an agency head personally finds in writing "that the interest of the United States will not permit awaiting the decision of the Comptroller General."

Under Title VII, the informal procedure will permit the expeditious handling of the protest. However, for good cause shown and when there are material issues of fact that the production of records or the taking of testimony before the GAO may resolve, Title VII permits this more formal procedure and even allows for subpoenas where appropriate. Nevertheless, because

there is no guarantee of the opportunity for a trial-type hearing before the GAO, we recommend that the decisions of the Comptroller

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General be made binding only on the contracting agency thereby permitting other interested parties the right to a de novo review in a federal court. The language as written in Section 703(b) makes the decision by the Comptroller General binding on all parties. This language should be changed to make the decision of the Comptroller General binding only on the contracting agency. We do not understand it to be congressional intent to preclude judicial review at the request of a bidder or contractor. We strongly believe that nothing in the bill or its history should indicate that it is the intent of Congress to preclude such judicial review.

This brings us to the constitutional questions raised by Attorney General Bell and others about the powers of Congress to vest in the Comptroller General the authority conferred by Title VII to declare that solicitations, proposed awards and awards do not comport with law or regulation, to declare that a contract so awarded shall be terminated for the convenience of the government, and to declare the entitlement of an appropriate party to bid and proposal preparation costs, and to make such declarations binding at least on the contracting agencies involved.

We have considered these questions, and by letter to Senator Chiles as Chairman of this Subcommittee we shall express the opinion that Title VII is entirely within the legislative power of Congress to enact. We reach this conclusion primarily for the reason that in deciding bid protests, as in settling public accounts under Sections 304 and 305 of the Budget and Accounting