Ameron, Inc. v. U.S. Army Corps of Engineers

• Decision Date: 04 April 1986
• Docket Number: Nos. 85-5226,85-5377,s. 85-5226
• Citation: 787 F.2d 875
• Parties: , 33 Cont.Cas.Fed. (CCH) 74,321 AMERON, INC. and United States Senate, Intervenor, Thomas P. O'Neill, Speaker of House of Representatives and Bipartisan Leadership Group, Intervenors, Appellees, v. U.S. ARMY CORPS OF ENGINEERS; Lt. Col. Michael K. Collmeyer, Contracting Officer, United States of America; and Spiniello Construction Company. Appeal of UNITED STATES of America.
• Court: U.S. Court of Appeals — Third Circuit

Page 875

787 F.2d 875

54 USLW 2515, 33 Cont.Cas.Fed. (CCH) 74,321

AMERON, INC.

and

United States Senate, Intervenor, Thomas P. O'Neill, Speaker of House of Representatives and Bipartisan Leadership Group, Intervenors, Appellees, v. U.S. ARMY CORPS OF ENGINEERS; Lt. Col. Michael K.

Collmeyer, Contracting Officer, United States of

America; and Spiniello Construction Company.

Appeal of UNITED STATES of America.

Nos. 85-5226, 85-5377.

United States Court of Appeals, Third Circuit.

Argued Oct. 29, 1985.

Decided March 27, 1986.

As Amended April 4, 1986.

Richard K. Willard, Asst. Atty. Gen. (argued), W. Hunt Dumont, U.S. Atty., Paul Blankenstein, U.S. Dept. of Justice, Appellate Staff, Civ. Div., Washington, D.C., for appellant U.S.

Edward G. D'Alessandro, D'Alessandro, Sussman, Jacovino & Mahoney, Florham Park, N.J., for appellant Spiniello Const. Co.

Michael Davidson, Senate Legal Counsel (argued), Ken U. Benjamin, Jr., Deputy Senate Legal Counsel, Morgan J. Frankel, Asst. Senate Legal Counsel, Washington, D.C., for appellee U.S. Senate.

Theodore I. Botter (argued), Meyner & Landis, Newark, N.J., for appellee Ameron, Inc.

Steven R. Ross, Gen. Counsel to the Clerk, Charles Tiefer, Deputy General Counsel to the Clerk (argued), Michael L. Murray, Assistant Counsel to the Clerk, U.S. House of Representatives, Washington, D.C., for intervenors-appellees Speaker and Bipartisan Leadership Group.

David S. Cohen, Sharon R. Gross, Cohen & White, Washington, D.C., for amicus curiae Computer & Communications Industry Assn.

Harry R. Van Cleve, Gen. Counsel, Seymour Efros, Associate Gen. Counsel, Robert P. Murphy, Atty. (argued), U.S. Gen. Accounting Office, Washington, D.C., for amicus curiae The Comptroller General of the U.S.

Before GARTH, and BECKER, Circuit Judges, and HUYETT, District judge. ^*

OPINION OF THE COURT

GARTH, Circuit Judge:

This appeal presents, in a rather prosaic setting, a problem of profound constitutional significance concerning the division of power among the three branches of our federal government. At issue is the constitutionality of the automatic stay provisions of the Competition in Contracting Act (CICA), Pub.L. No. 98-369, Subtitle D, 98 Stat. 1199-1201, codified at 31 U.S.C.A. Sec. 3553 et seq. (West Supp.1985). The United States Army Corps of Engineers and the other executive department defendants [hereinafter referred to collectively as the Army] appeal from a decision of the district court declaring the CICA stay provisions to be constitutional and ordering broad injunctive relief to plaintiff Ameron and the Congressional intervenors.

We now affirm the district court's holding that the Comptroller General, as head of the General Accounting Office, is an independent official with duties involving both the legislative and executive branches of the United States government. As such, he may constitutionally exercise the powers conferred upon him by CICA. We also conclude, however, that the injunction granted by the district court was broader than necessary to grant the full relief to which plaintiffs were entitled, and therefore modify the injunction as specified below.

I.

A.

Congress created the General Accounting Office (GAO) and the Office of the Comptroller General by the Budget and Accounting Act of 1921, Pub.L. No. 13, Sec. 301, 42 Stat. 20, 23. The 1921 Act was the culmination of Congressional efforts over many years to provide accountability for the federal government's finances. The original Comptroller of the Treasury was an executive officer within the Treasury Department. 1 Stat. 65-66 (1789). The Comptroller continued as an executive officer with executive functions under subsequent enactments. See, e.g., Act of March 3, 1817, 3 Stat. 366; Dockery Act of 1894, 28 Stat. 162, 205.

When they were created to replace the Comptroller of Treasury, the GAO and the Comptroller General were initially empowered to report to Congress and assist Congress in the budget process. 1921 Act, Secs. 304-312, 42 Stat. 23-26. Even in 1921, however, the Comptroller General, even though created in part to assist Congress, was assigned duties that were not traditionally "legislative": auditing and settling public accounts, countersigning treasury warrants, prescribing "the forms of keeping and rendering all public accounts"--these and other executive duties were given to the GAO and the Comptroller General by the 1921 Act, which also abolished the Comptroller of the Treasury. Secs. 301, 304, 310. The parties do not dispute that the Comptroller General continues to perform significant duties that are both "legislative" and "non-legislative," i.e., executive, in nature.

As an adjunct of its account-settling role, the Comptroller General over the years began to hear protests from disappointed bidders on government contracts. See Wheelabrator Corp. v. Chafee, 455 F.2d 1306, 1313 (D.C.Cir.1971). This role was formalized by the Competition in Contracting Act (CICA) in 1984. 31 U.S.C.A. Secs. 3551-3556 (West Supp.1985). CICA was enacted to remedy a major loophole in the long-standing GAO review procedure: by the time the GAO reviewed most bid protests, the protests had become moot because either the contract had been let or the contractor was engaged in performing under the contract. While GAO regulations provided for a stay of either the granting or performance of In relevant part, CICA permits a potential or actual bidder who disputes the terms or awarding of a government contract to challenge the procurement or the award of the contract by filing a protest with the Comptroller General. Upon receiving the protest, the Comptroller General must "within one working day" notify the agency involved, which must then make a report on the challenged contract. 31 U.S.C. Sec. 3553(b)(1).

the contract in some circumstances, see Merriam v. Kunzig, 476 F.2d 1233, 1236 & n. 1 (3d Cir.1973), this stay was easily overridden by the contracting agency involved. The result was that most procurements became faits accomplis before they could be reviewed. This situation was identified by Congress as a contributing factor to the crisis of waste in federal procurement. In particular, Congress recognized as a problem that of $168 billion in government contracts awarded in fiscal year 1983, only about one-third, $54 billion, was awarded on a competitive basis. Competition in Contracting Act of 1984: H.R.Rep. No. 1157, 98th Cong., 2d Sess. 12 (1984). In enacting CICA, Congress attempted to provide effective review of bid challenges, and in the process to encourage competition in contracting. See Opinion of District Court, 607 F.Supp. 962, 973-74 (D.N.J.1985).

The filing of a protest freezes, or stays, the awarding of the contract or any action under it until either the Comptroller General makes a decision on the protest or the agency head certifies in writing that "urgent and compelling circumstances which significantly affect interests of the United States" require that the contract be awarded, 31 U.S.C. Sec. 3553(c)(2), or that "the best interests of the United States" require that performance proceed under a contract already awarded by the agency. 31 U.S.C. Sec. 3553(d)(2).

The Act requires the Comptroller General to issue a final decision on the protest within 90 working days unless he determines in writing that the circumstances of the protest require more time. 31 U.S.C. Sec. 3554(a)(1). The Comptroller General may also exercise an "express option" to expedite review of certain cases within 45 calendar days, 31 U.S.C. Sec. 3554(a)(2), and may dismiss patently frivolous or meritless claims on a summary basis. 31 U.S.C. Sec. 3554(a)(3).

The power of the Comptroller General in rendering his decision is limited to a recommendation that the agency, inter alia, terminate or rebid the contract, issue a new solicitation, refrain from exercising options under a contract, or award a different contract consistent with law. 31 U.S.C. Sec. 3554(b)(1). The only affirmative power provided to the Comptroller General is to award a prevailing protester its bid and proposal preparation costs, as well as its costs and attorneys' fees in filing and pursuing the bid protest. 31 U.S.C. Sec. 3554(c)(1).

President Reagan signed CICA into law as part of the omnibus Deficit Reduction Act of 1984, but he declared the automatic stay provision unconstitutional upon the advice of the Attorney General and ordered the executive department not to observe it. Accordingly, the Office of Management and Budget issued instructions to executive agencies to proceed with the procurement process "as though no such [stay] provisions were contained in the act." OMB Bulletin No. 85-8 at 2 (Dec. 17, 1984).

B.

The mundane facts underlying the present controversy belie the compelling nature of the constitutional question before us. In late 1984, Ameron submitted a bid on a proposed contract to clean and repair sewer lines at West Point, New York. The Army's "Invitation for Bids" required an interested party to submit along with its bid a bond guaranteeing 20 percent of the bid amount. When the sealed bids were opened, Ameron was the apparent low bidder with an offer of $1,033,000, about $200,000 less than the next lowest bidder, defendant Spiniello Construction Company. However, Ameron's bid was rejected because the dollar amount of the bond had been altered without any indication that the On March 1, 1985, within ten days of the awarding of the contract, Ameron filed a protest with the Comptroller General, claiming that the Army had wrongfully rejected its bid. Three days later, Ameron filed suit in federal district court claiming that the Army had arbitrarily rejected its bid and seeking a preliminary injunction to restrain the Army and the victorious bidder from proceeding with the contract pending the outcome of Ameron's protest to the Comptroller General. Ameron also sought a temporary restraining order enjoining performance of the contract.

...