American Federation of Labor and Congress of Indus. Organizations v. Kahn
| Citation | 618 F.2d 784 |
| Decision Date | 02 July 1979 |
| Docket Number | No. 79-1564,79-1564 |
| Parties | 24 Wage & Hour Cas. (BN 162, 199 U.S.App.D.C. 300, 26 Cont.Cas.Fed. (CCH) 83,361 AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS et al. v. Alfred E. KAHN, Chairman, Council on Wage and Price Stability, et al., Appellants. |
| Court | United States Courts of Appeals. United States Court of Appeals (District of Columbia) |
Appeal from the United States District Court for the District of Columbia (D.C. Civil Action No. 79-0802).
Benjamin R. Civiletti, Deputy Atty. Gen., Washington, D. C., of the bar of the Supreme Court of Md., pro hac vice, by special leave of court, with whom Barbara Allen Babcock, Asst. Atty. Gen., Earl J. Silbert, U. S. Atty., Robert E. Kopp and Burton D. Fretz, Attys., Dept. of Justice, Sally Katzen, Gen. Counsel, Council on Wage and Price Stability, Washington, D. C., and Thomas F. Williamson, Gen. Counsel, Office of Management and Budget, Washington, D. C., were on the brief, for appellants.
Laurence Gold, Washington, D. C., with whom J. Albert Woll, Jerry D. Anker, Winn Newman, Woody Peterson, Thomas X. Dunn, Plato E. Papps, Elliot Bredhoff, Isaac N. Groner, and George Kaufmann, Washington, D. C., were on the brief, for appellees American Federation of Labor and Congress of Industrial Organizations et al.
Laurence Silberman, Washington, D. C., a member of the bar of the Supreme Court of Hawaii, pro hac vice, by special leave of court, for amicus curiae U. S. Senators and Representatives.
Before WRIGHT, Chief Judge, and BAZELON, McGOWAN, TAMM, LEVENTHAL, ROBINSON, MacKINNON, ROBB and WILKEY, Circuit Judges.
Opinion for the court, concurred in by Circuit Judges, BAZELON, McGOWAN, TAMM, LEVENTHAL, and SPOTTSWOOD W. ROBINSON, III, filed by Chief Judge, J. SKELLY WRIGHT.
This case presents the question whether Congress has authorized the President to deny Government contracts above $5 million to companies that fail or refuse to comply with the voluntary wage and price standards. We answer that question in the affirmative.
After presenting the facts of the case, we examine in Part II the authority granted to the President under the Federal Property and Administrative Services Act of 1949 (FPASA or Procurement Act). 1 In Part III we evaluate the contention of appellees, a group of labor unions, that the procurement compliance program is barred by the Council on Wage and Price Stability Act (COWPSA), 2 while in Part IV we review the claim that the program thwarts the national labor policy.
On November 1, 1978 President Carter signed Executive Order 12092 directing the Council on Wage and Price Stability (Council) to establish voluntary wage and price standards for noninflationary behavior for the entire economy. 3 For a business, the Order stated that noninflationary price increases would be no more than 0.5 percent less than that company's recent rate of average price increase; for workers, noninflationary wage increases were defined as no more than a seven percent annual rise. The President ordered the Chairman of the Council to monitor compliance with these standards and to publish the names of noncomplying companies. The Executive Order also instructed the head of each Executive agency and Military Department to require that all contractors certify that they are in compliance with the wage and price standards. The Office of Federal Procurement Policy (OFPP) was charged with implementation of the procurement aspect of the program. The initial wage and price standards announced by the Council on December 21, 1978 largely followed the outline of the President's November 1 Order, 4 with the added provision that a company may be excepted from compliance in order to "avoid situations o(f) undue hardship or gross inequity." 5
OFPP issued a policy letter on January 4, 1979, requiring that Government contracts worth more than $5 million and signed after February 15 must include certification that the contractor is in compliance with the wage and price standards. 6 The letter provides that if the Council finds that the standards have not been respected by any such contractor or first-tier subcontractor whose contract exceeds $5 million, the relevant agency head may terminate the contract and the company may be ruled ineligible for future Government business. 7 The policy letter established three grounds for waiving either termination or a finding of ineligibility: (1) if "the product or service is essential to National security or public safety," and there are no feasible alternative sources of supply; (2) if Government action would "threaten the contractor's or subcontractor's ability to survive"; and (3) if the contractor agrees both to comply with the wage and price standards and to make an "equitable" reduction of the contract price. 8 The procurement compliance program is expected to reach 65 to 70 percent of all Government procurement dollars, or about $50 billion worth. 9
On March 31, 1979 plaintiff labor unions challenged the program in District Court as interfering with the exercise of the right to bargain collectively and as beyond the power of the President to initiate. The District Court granted the unions' motion for summary judgment on the latter ground on May 31, 1979, and enjoined the procurement compliance program. 10 That injunction was stayed pending the outcome of this expedited appeal. 11
We note at the outset our disagreement with the contention that this case presents the same issue decided by the Supreme Court in Youngstown Sheet & Tube Co. v. Sawyer. 12 In Youngstown President Truman argued that he could constitutionally seize and operate the steel mills, which had been closed by a labor dispute, under his "inherent powers" to deal with national emergencies and wartime situations. In arguing for the validity of Executive Order 12092, however, the Government relies entirely upon authority said to be delegated by statute, and makes no appeal to constitutional powers of the Executive that have not been confirmed by legislation. Thus, although both cases involve challenges to Executive actions, they raise sharply different legal questions. 13 Although the separation of powers between Congress and the President was the dominant issue in Youngstown, here we primarily face a difficult problem of statutory interpretation. Appellees' challenge to the Executive Order is directed at the procurement aspect of the Order, not at the Council's authority under COWPSA to promulgate voluntary standards. 14 Thus the central issue in this case is whether the FPASA indeed grants to the President the powers he has asserted.
The FPASA was a response to the recommendation of the Hoover Commission in 1949 that the Government's method of doing business be streamlined and modernized. 15 The statute was designed to centralize Government property management and to introduce into the public procurement process the same flexibility that characterizes such transactions in the private sec tor. 16 These goals can be found in the terms "economy" and "efficiency" which appear in the statute and dominate the sparse record of the congressional deliberations.
The most important provision of the Act for this case, Section 205(a), provides that the President "may prescribe such policies and directives, not inconsistent with the provisions of this Act, as he shall deem necessary to effectuate the provisions of said Act * * *." 17 Because this language is open-ended, it is important to examine its genesis. The initial Hoover Commission study of procurement recommended that a General Services Agency oversee Government acquisitions, and that the Agency be placed within the Executive Office of the President to bolster its authority and to ensure central direction of the bureaucracy. 18 Congress, however, was reluctant to saddle the relatively small Executive Office with such a vast administrative burden, so it set up the General Services Administration as an independent agency. 19 But in response to the Hoover Commission's concern that the strength of the presidency support the new agency, Congress added Section 205(a) to guarantee that "Presidential policies and directives shall govern not merely guide " the agencies under the FPASA. 20 We believe that by emphasizing the leadership role of the President in setting Government-wide procurement policy on matters common to all agencies, Congress intended that the President play a direct and active part in supervising the Government's management functions.
To define the President's powers under Section 205(a), some content must be injected into the general phrases "not inconsistent with" the FPASA and "to effectuate the provisions" of the Act. The congressional declaration of policy for the FPASA sets forth the goal of an "economical and efficient system for * * * procurement and supply." 21 Section 201 directs that the Administrator of General Services chart policy and procure supplies in a manner "advantageous to the Government in terms of economy, efficiency, or service, and with due regard to the program activities of the agencies concerned." 22 This language recognizes that the Government generally must have some flexibility to seek the greatest advantage in various situations. "Economy" and "efficiency" are not narrow terms; they encompass those factors like price, quality, suitability, and availability of goods or services that are involved in all acquisition decisions. Similar concerns can be seen in the specific direction to contracting officers in Section 303(b) that contracts should be awarded to...
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