842 F.2d 1102 (9th Cir. 1988), 86-6496, Lear Siegler, Inc. Energy Products Div. v. Lehman

Docket Nº:86-6496, 87-5698 and 87-5670.
Citation:842 F.2d 1102
Party Name:LEAR SIEGLER, INC., ENERGY PRODUCTS DIVISION, Plaintiff-Appellee/Cross Appellant, v. John LEHMAN, Secretary of the Navy, et al., Defendants-Appellants/Cross- Appellees. LEAR SIEGLER INC., Plaintiff-Appellee, and United States Senate; United States House of Representatives, Plaintiffs- Intervenors-Appellees, v. John LEHMAN, Secretary of the Navy; Wi
Case Date:March 23, 1988
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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842 F.2d 1102 (9th Cir. 1988)


Plaintiff-Appellee/Cross Appellant,


John LEHMAN, Secretary of the Navy, et al.,

Defendants-Appellants/Cross- Appellees.

LEAR SIEGLER INC., Plaintiff-Appellee,


United States Senate; United States House of

Representatives, Plaintiffs- Intervenors-Appellees,


John LEHMAN, Secretary of the Navy; William Stevenson,

Contracting Officer, Defendants-Appellees.

Nos. 86-6496, 87-5698 and 87-5670.

United States Court of Appeals, Ninth Circuit

March 23, 1988

Argued and Submitted Oct. 9, 1987.

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Peter B. Jones, Foster, Jones & Donovan, Irvine, Cal., for the plaintiff-appellee/cross appellant.

Harold J. Krent, U.S. Atty., Dept. of Justice, Washington, D.C., for defendants-appellants/cross appellees.

Morgan J. Frankel, Asst. Senate Legal Counsel, Washington, D.C., for plaintiffs-intervenors-appellees.

Appeal from the United States District Court for the Central District of California.

Before FLETCHER and FARRIS, Circuit Judges, and QUACKENBUSH, [*] District Judge.

FLETCHER, Circuit Judge:

This appeal arises out of the Executive Branch's constitutional challenge to legislation regulating procedures for the award of procurement contracts by federal agencies. The government defendants (the Navy) maintain that the Competition in Contracting Act of 1984 (CICA), Pub.L. No. 98-369, 98 Stat. 1199, 31 U.S.C. Secs. 3551-3556, is unconstitutional to the extent that it allows the Comptroller General to determine the length of stays or suspensions of government contract awards when contracts are protested. The challenged provisions, it is argued, give "executive" powers to an officer of the legislative branch, and are therefore unconstitutional. The district court granted summary judgment, upholding CICA's constitutionality, and awarded attorneys' fees against the Navy in favor of Lear Siegler, Inc., Energy Products Division (Lear Siegler), on the ground that the Navy's intentional refusal to adhere to the challenged provisions of CICA unjustifiably forced Lear Siegler to litigate the issue. The Navy appeals both issues.

Lear Siegler cross-appeals from the district court's grant of summary judgment to the Navy denying Lear Siegler's bid protest. According to Lear Siegler, the Navy failed to follow applicable procurement regulations in awarding the contract to Lear Siegler's competitor.

For the reasons set forth below, we affirm the judgment of the district court.


CICA was enacted as part of the Deficit Reduction Act of 1984 to stem the persistent and costly use of "sole-source" or non-competitive contract awards made by federal agencies, particularly in the defense area. The Act was meant to compel greater use of fair, competitive bidding procedures "by shining the light of publicity on the procurement process, and by creating mechanisms by which Congress can remain informed of the way current procurement legislation is (or is not) operating." Ameron v. U.S. Army Corps of Engineers, 809 F.2d 979, 984 (3rd Cir.1986) ("Ameron II ").

CICA establishes a system by which the General Accounting Office, or Comptroller General, can investigate protests lodged by frustrated bidders claiming agency failure to adhere to competitive procedures. The Comptroller General, upon receipt of a protest, notifies the agency concerned and investigates the matter, finally issuing a non-binding recommendation to the agency on the procurement decision. CICA sets forth detailed reporting requirements and deadlines that formalize an existing "bid protest" system with a few important modifications. The modification central to this dispute is that CICA imposes an automatic stay or suspension of any contract award or performance once a bid protest is timely lodged. An award may not be made, or

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performance resumed, "while the protest is pending." 31 U.S.C. Sec. 3553(c)(1) & (d)(1). The protest is pending for as long as it takes the Comptroller General to investigate and reach a decision. The Comptroller General may dismiss frivolous protests right away, but may take up to 90 working days, as needed; moreover, the Comptroller General may take more than 90 days, if circumstances require and written reasons are given. Sec. 3554. On the other hand, the procuring agency may override the stay at any time "upon a written finding that urgent and compelling circumstances which significantly affect the interests of the United States will not permit waiting for the decision of the Comptroller General." Sec. 3553(c)(2)(A).

The stay provisions were designed to preserve the status quo until the Comptroller General issued his recommendation, in order to ensure that the recommendation would be considered. Under prior practice, procuring agencies had tended to exploit loopholes in earlier stay regulations; they would rush into contract awards and get performance underway so that, by the time the Comptroller General's recommendation came out, it would be too late and too costly to change contract awards, if such was the recommendation. House Comm. on Government Operations, The President's Suspension of the Competition in Contracting Act is Unconstitutional, H.R.Rep. No. 138, 99th Cong., 1st Sess. 4-5 (1985) (hereinafter cited as "House Report "). The Navy argues that the stay provisions are unconstitutional to the extent that the length of the stay is determined, in effect, by the Comptroller General's discretion in taking the time he needs to issue his report.

When President Reagan signed CICA into law, he objected to the stay provisions as an unconstitutional attempt to delegate to the Comptroller General, an officer of Congress, duties that may only be performed by executive officials. At the Attorney General's direction, the Office of Management and Budget issued a directive requiring agencies to disregard the stay provisions of CICA. House Report, at 5-7. In connection with the Ameron case, the Attorney General stated on April 18, 1985 that the executive branch would not comply with a district court order upholding CICA, nor even possibly a court of appeals decision. Ameron v. U.S. Army Corps of Engineers, 787 F.2d 875, 889-90 ("Ameron I "), modified, 809 F.2d 979 (3d Cir.1986).

It was against this background that the instant case arose. Lear Siegler placed a sealed bid with the Navy in response to a bid solicitation for a contract to provide fuel tanks for the Navy F/A-18 aircraft. When the bids were opened publicly on November 15, 1984, the two lowest bidders were Lear Siegler ($6,910,479), and Israel Military Industries (IMI) ($5,125,788). In January 1985, in response to a request by the Israeli government, the Navy exercised its discretion to "waive" a penalty factor provision of the Buy American Act, 41 U.S.C. Sec. 10a, which required foreign contractor bids to be calculated with a 50% upward adjustment. Believing the waiver to be improper, Lear Siegler filed a bid protest with the GAO on February 14, 1985. This protest should have automatically stayed a contract award under CICA. Nevertheless, pursuant to the Reagan Administration's announced position, the Navy disregarded CICA's stay provisions and awarded the contract to IMI on February 19, 1985.

Immediately thereafter, Lear Siegler filed this action in district court seeking 1) declaratory and injunctive relief to compel the Navy's compliance with CICA, and 2) a court ruling on the merits of its bid protest. The U.S. Senate filed a complaint as intervenor, on March 5, 1985, for declaratory and injunctive relief upholding the validity of the CICA stay provisions. The Comptroller General and the House of Representatives subsequently joined as intervenors. None of the intervenors took, or now take, any position as to the merits of Lear Siegler's bid protest. The GAO issued a decision rejecting the bid protest on April 8, 1985.

On November 21, 1985, the district court granted the Senate's motion for summary judgment, upholding the constitutionality of CICA. However, the court's rationale

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was in part undercut by the Supreme Court's subsequent holding in Bowsher v. Synar, 478 U.S. 714, 106 S.Ct. 3181, 92 L.Ed.2d 583 (1986), that the Comptroller General is an agent of the legislative branch. The district court reconsidered the issue and again upheld the challenged provisions, on the ground that the Comptroller General's CICA functions were not "executive" under Bowsher. The court also rejected Lear Siegler's bid protest on the merits, but granted attorneys' fees to Lear Siegler for its success on the constitutional issue.


  1. Analytical Framework

    We examine the separation-of-powers issue in light of the principles set forth in INS v. Chadha, 462 U.S. 919, 103 S.Ct. 2764, 77 L.Ed.2d 317 (1983), and Bowsher v. Synar, 478 U.S. 714, 106 S.Ct. 3181, 92 L.Ed.2d 583 (1986). According to the Navy, Chadha and Bowsher compel the conclusion that Congress may not "vest one of its officers or component parts with the power to affect the rights of those outside the legislative branch," and, thus, the Comptroller General cannot discharge the "executive" tasks assigned by CICA.

    In Bowsher v. Synar, the Supreme Court struck down certain provisions of the Gramm-Rudman-Hollings Act as violating separation of powers. Ruling that the Comptroller General was an officer of the legislative branch, 106 S.Ct. at 3191, the Court held that it was unconstitutional for Congress to grant the Comptroller General certain budget-cutting powers which the Court found to be "executive" in nature. According to the Court, Congress cannot "execute the laws" or delegate to an officer under its control the power to execute the laws. Id. at 3188. The Court went on to define the "essence of 'execution' of the law" as interpreting and...

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