Martin Becker, Case No. VFA-0666, September 7, 2001

Case No. VFA-0666

September 7, 2001

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

APPEAL

Name of Appellant:Martin Becker

Date of Filing:April 16, 2001

Case Number: VFA-0666

Martin Becker appeals from a determination of the Savannah River Operations Office (SROO) of the Department of Energy (DOE). The determination was issued in response to his request for documents, which he filed pursuant to the Freedom of Information Act (FOIA), 5 U.S.C. § 552, and the DOE implementing regulations, 10 C.F.R. Part 1004. For the reasons set forth below, we will remand Becker's request for further processing.

Background

Becker filed a FOIA request with SROO on September 22, 2000. In his request, he sought "a copy of any leases (including renewals and/or extensions) by Westinghouse Savannah River Company [WSRC] (including any subsidiaries or affiliates thereof) at Centennial Corporate Center in Aiken [South Carolina] since 1/1/96." We will refer to the record requested by Becker as "the lease."

SROO has denied Becker's request three times. Each denial has been appealed by Becker. Following each of the first two appeals by Becker, we remanded the request for further processing. Martin Becker, 28 DOE ¶ 80,133 (2000) (Becker I); Martin Becker, 28 DOE ¶ 80,153 (2001) (Becker II).

In our two earlier decisions, we made the following findings. WSRC is the management and operating (M&O) contractor at the DOE's Savannah River Site. Westinghouse Safety Management Solutions (WSMS) is a subcontractor to WSRC, and is the tenant holding the lease. The relationship between WSMS, WSRC, and the DOE was explained by a DOE contracting official as follows:

WSMS ... provide[s] support to WSRC ... via a contractual document referred to as an "Interworks Requisition." WSMS' services are paid for by WSRC on a cost- reimbursement basis. The costs paid to WSMS by WSRC are then charged by WSRC to DOE.

Neither the DOE nor WSRC has a copy of the lease. Becker I, 28 DOE at 80,576-77; Becker II, 28 DOE at 80,622-23. WSMS, however, has at least one copy of the lease. Becker II, 28 DOE at 80,624.

We also found that the lease was not an agency record for the purposes of the FOIA, because it was neither created by the DOE, nor in the possession of the DOE at the time of the request. Becker I, 28 DOE at 80,576. We stated, however, that the lease may still be subject to mandatory disclosure under a provision of the DOE regulations, the Contractor Records regulation, 10 C.F.R. § 1004.3(e)(1). The Contractor Records regulation states:

When a contract with the DOE provides that any records acquired or generated by the contractor in its performance of the contract shall be the property of the Government, the DOE will make available to the public such records that are in the possession of the Government or the contractor, unless the records are exempt from public disclosure under 5 U.S.C. § 552(b) [i.e., the FOIA].

Thus, the Contractor Records regulation provides for the disclosure of certain records that are not subject to disclosure under the FOIA itself. See Sangre de Cristo Animal Protection, Inc. v. Department of Energy, No. 96-1059, slip op. at 3-6 (D.N.M. Mar. 10, 1998) (holding that records that the DOE neither possessed nor controlled and that were created by an agency contractor, although not agency records, are accessible under the Contractor Records regulation). Because we have previously determined that the lease is not subject to the FOIA, our discussion below is concerned solely with the applicability of the Contractor Records regulation to any copy of the lease in the possession of WSMS.

Analysis

To determine whether the lease is subject to disclosure under the Contractor Records regulation, we must consider three distinct criteria. First, we will consider whether the contract by which WSMS performs services for WSRC, and ultimately for the DOE, contains a provision whereby the Contractor Records regulation is applicable to WSMS. Next, we will consider whether the lease is a type of document that is deemed the property of the government by operation of the applicable contract. Finally, we will consider whether the lease was acquired or generated by WSMS in the performance of a relevant contract. As discussed below, we conclude that the lease meets all of these criteria.

1. Does the contract provide that records the contractor acquires or generates are the property of the government?

In Becker I, we examined certain provisions of WSRC's contract with the DOE dealing with whether the lease is the property of the government. We found in Becker II that the Contractor Records regulation is applicable to WSMS, though WSMS does not contract directly with the DOE. As we found in Becker II, the DOE acquisition regulations provide for the insertion of certain clauses regarding the government's ownership of contractor records into all M&O contracts. In addition, the regulations require that these clauses "pass down" to - i.e., be integrated into - certain subcontracts between the M&O contractor and other parties. We noted in Becker II that WSMS acknowledges that some of its subcontracts meet the threshold for the pass down of these clauses. Becker II, 28 DOE at 80,622. We conclude that WSMS has at least one contract that includes the requisite provision.

2. Does the contract provide that the lease is exempt from government ownership?

In Becker II, we noted that Section H.27 of the contract between WSRC and the DOE incorporates the Access to and Ownership of Records clause (the "Ownership of Records clause").(1) Becker II, 28 DOE at 80,622. The Ownership of Records clause states that "except as provided in paragraph b of this clause, all records acquired or generated by the contractor in its performance of this contract shall be the property of the Government...." We noted that the relevant exception to the general policy of government ownership of records is found in paragraph b(3) of the Ownership of Records clause, which exempts "non-accounting records relating to any procurement action by the Contractor" from government ownership. WSMS contends that the lease is a non-accounting procurement record, and thus exempt from government ownership under paragraph b(3).

The term "non-accounting procurement record" is not explicitly defined in either the contract or the DOE regulations. We find, however, that a provision of the DOE acquisition regulations addresses the issue of accounting records. The Accounts, Records, and Inspection regulation, 10 C.F.R. § 970.5232-3, provides that "except as agreed upon by the Government and the contractor, all financial and cost reports, books of account and supporting documents, system files, data bases, and other data evidencing costs allowable ... shall be property of the Government." The lease is clearly a form of "data evidencing costs allowable." As such, it serves an accounting purpose, and therefore cannot be considered a "non-accounting" procurement record. We conclude that the lease is an accounting record within the meaning of the Ownership of Records clause, and is therefore the property of the DOE.

3. Was the lease acquired or generated in the performance of a contract?

The next issue in determining whether the lease is subject to the Contractor Records regulation is whether WSMS acquired or generated the lease in the performance of its subcontract with WSRC. We find that it did.

WSMS was incorporated as a subsidiary of WSRC in January 1997. It entered into its first contract to provide services to WSRC on October 1, 1997. It acquired its lease for space in the Centennial Corporate Center on November 27, 1997.(2) A DOE contracting officer stated that "WSMS's services are paid for by WSRC on a cost-reimbursement basis. The costs paid to WSMS by WSRC are then charged by WSRC to DOE. I would assume that WSMS recovers the lease costs of its facilities by including those costs in its overhead rates charged to all customers, including WSRC."(3) In addition, WSMS has acknowledged that "the cost of [the lease] is indirectly part of the costs of the services WSMS provides for all of its customers, government and commercial, one of which is WSRC."(4)

Thus, WSMS pays rent on the lease while performing its contract with WSRC, and receives reimbursement for at least part of the rent under the terms of that contract. Finally, as stated above, WSRC then charges the costs that it pays to WSMS to DOE, under the terms of its contract with the agency. Acquiring a lease for office space and contemporaneously entering into a service contract that provides for reimbursement of the rent for that space is a sufficient factual basis for us to conclude that the lease in question was acquired or generated by the contractor in the performance of the contract.

Conclusion

We have found that the lease, which is partially paid for by DOE funds, was acquired or generated by WSMS in its performance of a contract, and is the property of the government. We therefore find that the lease is subject to mandatory disclosure to the public under the DOE's Contractor Records regulation. The lease or any portion thereof may be withheld, however, if it would be exempt from disclosure under the Freedom of Information Act. See 10 C.F.R. § 1004.3(e)(1)

We shall therefore remand this matter to SROO. On remand, SROO must review the lease, segregate and release all non-exempt portions of it, and issue a new determination that justifies any withholding.

It Is Therefore Ordered That:

(1) The Freedom of Information Act Appeal filed by Martin Becker, Case No. VFA-0666 is hereby granted in part as specified in Paragraph (2) below and denied in all other respects.

(2) This matter is hereby remanded to the Savannah River Operations Office to issue a new determination in accordance with the instructions set forth in the above Decision and Order.

(3) This is a final Order of the Department of Energy from which any aggrieved party may seek judicial review pursuant to the provisions of 5 U.S.C. § 552(a)(4)(B). Judicial review may be sought in the district where the requester resides or has a principal place of business or in which the agency records are situated or in the District of Columbia.

George B. Breznay

Director

Office of Hearings and Appeal

Date: September 7, 2001

(1) The Ownership of Records clause, which is found in the DOE regulations at 48 C.F.R. 970.5204.3, is required in all DOE M&O contracts.

(2) E-mails from Matt Alan, WSMS counsel, to OHA, February 15, 2001 and February 28, 2001. Alan also stated that WSMS had been allowed to occupy the rental space on October 1, 1997.

(3) E-mail from Thomas Reynolds, SROO, to OHA, February 27, 2001.

(4) E-mail from Matt Alan, WSMS, to OHA, February 9, 2001.