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Ameron Inc. v. United States Army Corps of Engineers

filed: December 31, 1986.

AMERON, INC., APPELLEE AND UNITED STATES SENATE THOMAS P. O'NEILL, SPEAKER OF HOUSE OF REPRESENTATIVES AND BIPARTISAN LEADERSHIP GROUP, AND CHARLES A. BOWSHER, THE COMPTROLLER GENERAL OF THE UNITED STATES, INTERVENORS-APPELLEES
v.
UNITED STATES ARMY CORPS OF ENGINEERS; LT. COL. MICHAEL K. COLLMEYER, CONTRACTING OFFICER, UNITED STATES OF AMERICA; AND SPINIELLO CONSTRUCTION COMPANY, UNITED STATES OF AMERICAN, APPELLANT



On Appeal from the United States District Court for the District of New Jersey D.C. Civ. No. 85-1064.

Author: Becker

Before: Becker, Garth, Circuit Judges, and HUYETT,*fn* District Judge.

Opinion OF THE COURT

BECKER, Circuit Judge.

This appeal from a judgment of the district court for the District of New Jersey is before us on panel rehearing in the wake of the Supreme Court's decision in Bowsher v. Synar, 478 U.S. 714, 106 S. Ct. 3181, 92 L. Ed. 2d 583 (1986). There the Supreme Court struck down certain provisions of the Gramm-Rudman-Hollings Act as unconstitutional because they violated the doctrine of separation of powers by giving executive powers to an officer in the legislative branch, the Comptroller General of the United States.

Here we are concerned with the constitutionality of the Competition in Contracting Act, enacted as Title VII of the Deficit Reduction Act of 1984, Pub. L. No. 98-369, 98 Stat. 494, and codified at 31 U.S.C. §§ 3551-3556 (hereinafter "CICA" or "the Act"), CICA empowers the Comptroller General to issue recommendations to procuring agencies on protests brought by disappointed bidders for federal contracts. Plaintiff Ameron, Inc., invoked those provisions in the course of challenging a contract award by defendant Army Corps of Engineers (the Army). The Army contends that CICA violates the doctrine of separation of powers because, in aid of his power to recommend resolutions of bid protests, CICA authorizes the Comptroller General to alter the timetable under which the procuring agencies go through the procurement process. The district court disagreed and granted an injunction against the Army, enforcing the provisions of CICA that stay the procurement process. Ameron Inc. v. United States Army Corps of Engineers, 607 F. Supp. 962 (D.N.J. 1985). This panel modified the scope of the injunction for reasons unrelated to the merits of the constitutional question,*fn1 but otherwise affirmed the judgment of the district court. 787 F.2d 875 (3d Cir. 1986).

Synar established that the Comptroller General is a member of the Legislative branch for separation of powers purposes because Congress has the power to remove him by following a procedure less demanding than impeachment. See 106 S. Ct. at 3191. Given the Court's holding in Synar, the issue now before us is whether CICA authorizes the Comptroller General to perform functions that constitute "execution of the law in constitutional terms." Synar, 106 S. Ct. at 3192. For the reasons that follow we hold that it does not, and again, albeit on grounds different from those we relied upon when the case was first before us, we affirm the district court's conclusion that CICA is constitutional.

I. THE FACTS GIVING RISE TO THIS LITIGATION

The facts which gave rise to this case are set out in detail in the district court's opinion, 607 F. Supp. at 964-65, and in this panel's earlier opinion, 787 F.2d at 879-80. We review them briefly here for the convenience of the reader.

Plaintiff Ameron, Inc. submitted a bid in response to the Army's "Invitation for Bids" on a sewer repair and cleaning project to be completed at the U.S. Military Academy at West Point. Ameron's bid was the lowest submitted, but the Army did not award Ameron the contract because it believed Ameron's bid bond did not comply with the requirements set out in the "Invitation." Ameron believed that its bid was in compliance, and after the award was announced but before execution had begun, Ameron filed a bid protest with the Comptroller General.

Although CICA requires the executive to stay execution on challenged contracts until the Comptroller General's recommendation is issued, the Army proceeded with execution because it believed the stay provisions unconstitutional. Ameron filed suit in the United States District Court for the District of New Jersey, seeking, inter alia, an order that the Army obey CICA's stay provisions. The Army defended by asserting CICA's unconstitutionality.

The district court found that CICA was constitutional, and it accordingly held that Ameron was entitled to a preliminary injunction enforcing CICA's stay provisions. 607 F. Supp. at 974. The Army then appealed to this court, which affirmed. 787 F.2d at 891. A majority of the panel held in that opinion that the Comptroller General was not an agent of the legislative branch and therefore that it was permissible for Congress to delegate to the Comptroller the power to decide when CICA's stay would be lifted. See 787 F.2d at 885-87.*fn2

A motion for panel or in banc reconsideration was then filed by the Army. By that time certiorari had been granted in Bowsher v. Synar. The court deferred action on the motions pending the Supreme Court's decision in Synar.

The Supreme Court's decision in Synar was contrary to the reasoning of the panel majority in the first Ameron opinion: the Supreme Court held that for separation of powers purposes the Comptroller General must be regarded as an agent of the legislative branch, and therefore that the Comptroller may not exercise any power which Congress itself may not possess. We therefore granted panel rehearing, and received further briefs and oral argument. We now reconsider the Army's challenge to CICA in light of those developments.

II. CICA'S STRUCTURE AND OPERATION

As the federal procurement process is currently structured, Congress appropriates funds for a wide variety of purposes and delegates to executive branch officials the authority to make certain decisions regarding how those funds are to be spent. This discretion is exercised by procurement officers in each federal agency which makes purchases.

The discretion thus delegated is not completely unstructured. In two statutes, the Armed Services Procurement Act, See 10 U.S.C. §§ 2301-2324, and the Federal Property and Administrative Services Act, codified in Title 41 of the United States Code, Congress has established procedures which must be followed by procuring agencies, and standards the agencies must adhere to, when they decide what to purchase and on what terms. These procedures and standards are designed to ensure that the government satisfies its needs at prices as low as possible. See 41 U.S.C. § 401(2) (declaring that "it is the policy of the Congress to promote economy, efficiency and effectiveness in the procurement of property and services by the executive branch of the Federal Government by . . . (2) establishing policies, procedures, and practices which will provide the government with property and services of the requisite equality, within the time needed, at the lowest reasonable cost"); Part III of House Comm. on Government Operations, H. Rep. No. 97-71 Accompanying H.R. 3519 (subsequently passed as the Department of Defense Authorization Act of 1982. P.L. 97-86, 95 Stat. 1099) at 9, reprinted in 1981 United States Code Cong. & Admin. News 1801 at 1806 (procurement process relies on "competition as the predominant means of getting the most value from federal expenditures").

Among the most important of the policies implemented by these statutes and regulations is the principle that competitive bidding is the favored method of identifying least-cost suppliers. These statutes and regulations permit sole-source contracting (i.e. the letting of a government contract to a supplier picked by the Government without competitive bidding) under some circumstances. See 41 U.S.C. §§ 5, 253 (c)-(f); 10 U.S.C. § 2304(a)-(f). But for most procurements competitive bidding is required. 41 U.S.C. § 253(2); 10 U.S.C. § 2304(a).

Although competitive bidding is supposed to be the way most government purchases are made, Congress has found procuring officials extremely -- and increasingly -- reluctant to use competitive bidding as the method of choosing sellers. This reluctance to use competitive bidding has been accompanied by rapid growth in the budgets for procuring agencies. In Congressional discussions regarding CICA Representative Brooks, one of CICA's sponsors, observed that

while Federal procurement regulations require agencies to award contracts on a competitive basis, inventive procurement officials within the agencies have found numerous ways to circumvent or get around these requirements altogether . . . . As a result of not using full and open competition, the Government is spending billions of dollars each year in excessive prices for its goods and services.

130 Cong. Rec. H1785 (daily ed. March 20, 1984) (statement of Rep. Brooks). See also House Comm. on Gov't Operations, Report on the Competition in Contracting Act of 1984, H.R. Rep. No. 1157, 98 Cong., 2d Sess. 11-17 (1984); 129 Cong. Rec. S16005-9 (daily ed. November 11, 1983) (statements of Senators Cohen, Roth, Percy and Levin); Senate Comm. on Gov't Affairs, Report on the Competition in Contracting Act of 1983, S. Rep. No. 50, 98th Cong., 1st Sess. 3 (1983); Management of the Department of Defense, Part 6, Purchasing of Spare Parts and Support Equipment : Hearings Before the Senate Comm. on Gov't Affairs, 98th Cong., 1st Sess. 1-21 (1983).

After considering the issue in a variety of contexts (especially defense), and after three different bills were introduced to remedy this problem.*fn3 Congress enacted statutes which used several different tools to compel executive obedience to the Congressional will. First, and perhaps most familiarly to administrative lawyers, Congress established tribunals called boards of contract appeals, which are charged with hearing disappointed bidders' complaints that executive branch officials did not comply with the procurement laws. See 41 U.S.C. §§ 601-613. The decisions issued by the boards are binding on procuring agencies. See 41 U.S.C. § 607(d) (authorizing boards "to grant any relief that would be available to a litigant asserting a contract claim in the United States Claims Courts").

Congress also sought to compel greater use of competitive bidding 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. These two goals the legislature has pursued by requiring publicity, and creating offices with the incentive to produce it, in a variety of contexts. Written justifications, approvals and public notices are required when non-competitive procurements are believed necessary. 41 U.S.C. § 253(f); 10 U.S.C. §§ 2304(c)(7)(b), 2310(b). An advocate for competition is established in each agency, responsible for publicizing and challenging barriers to full and open competition. 41 U.S.C. § 418; 10 U.S.C. § 2318. And annual reports to Congress are required describing plans for increasing competition. 41 U.S.C. § 407. Department of Defense advocates for competition must annually inform Congress of their accomplishments during the preceding year. 10 U.S.C. § 2318(c).

Finally, the bid protest resolution process created by CICA is also intended to inform Congress of the operation of existing procurement laws, and to use the pressure of publicity to enforce compliance with those laws. CICA's bid protest procedures enable disappointed bidders to compel the executive to explain some of its procurement decisions to the Comptroller General. Although that official, in turn, is not authorized to alter the executive decisions in any way, he is empowered to recommend action to the procuring agency. If his recommendation is not accepted the Comptroller General must inform Congress about the entire episode in "a report describing each instance in which a Federal agency did not fully implement the Comptroller General's recommendations." 31 U.S.C. § 3554(e)(2).

To ensure that the force of publicity is brought to bear effectively on challenged procurement decisions, and that if that does not work Congress is fully informed about the incident, CICA contains a variety of provisions regarding the timing of procurements challenged by bid protests. The net effect of these provisions is to suspend the procurement process until the Comptroller General has issued his recommendation.

A less formal version of the CICA's bid protest procedure had been followed for many years prior to passage of the Act. See Wheelabrator Corp. v. Chafee, 147 U.S. App. D.C. 238, 455 F.2d 1306, 1313-16 (D.C. Cir. 1971). Before CICA, however, when the Comptroller General decided what relief a protesting bidder should receive, he also took into account the cost to the procuring agency of providing the recommended relief. The cost of awarding a contract to a protesting bidder is of course much higher once the contract has already been awarded to another supplier, and work begun on it. Because procuring agencies were often reluctant to adopt the Comptroller General's recommendation, they frequently responded to the filing of a bid protest, or other form of Congressional concern over how certain resources were being purchased, by rushing to award a contract and begin its execution. This prevented the Comptroller General from even recommending relief that would undo what the procuring agency had done or wanted to do.*fn4 This problem is exemplified by the facts in Aero Corp. v. Department of the Navy, 540 F. Supp. 180 (D.D.C. 1982). See especially id. at 215.

CICA is in part a response to this problem. The House Report on CICA explained that, under existing law,

GAO has no power to stop a contract award or contract performance while a protest is pending. As a result, agencies usually proceed with their contracts, knowing that they will preclude any possibility of relief simply by delaying the protest process.

Competition in Contracting Act of 1984, H.R. Rep. No. 1157, 98th Cong., 2d Sess. 24 (1984). Congress responded to this practice by providing that, barring exigent circumstances, once a bid protest has been filed, a contract cannot be executed until the protest has been resolved. This rule is implemented by § 3553 subsections (c) and (d), and by § 3554(a), of title 31, United States Code. These provisions are set out in the margin.*fn5 Finally, CICA also authorizes the Comptroller General to order the procuring agency to reimburse bid protesters for the costs they incurred in preparing their bids and/or their bid protests. See 31 U.S.C. § 3554(c).

These provisions do not compel procuring agencies to obey the recommendation of the Comptroller General. Instead, the effect of these provisions is to compel procurement officials to make purchase decisions in light of what the Comptroller General recommends the government do in that case. The Comptroller General's interpretation of the procurement laws has come to be highly respected. See Sea-Land Service, Inc. v. Brown, 600 F.2d 429, 434 (3d Cir. 1979); Wheelabrator Corp. v. Chafee, 455 F.2d at 1313. His recommendations are therefore a persuasive mechanism through which Congress and disappointed bidders can speak to the executive about the way the laws are being executed. The stay provisions at issue in this case compel the executive to listen.

The other effect of the stay provisions, when they operate in tandem with CICA's reporting requirements, is to inform Congress, and thereby the public, of the extent to which the procurement laws are being followed. CICA commands the Comptroller General to decide what relief would be necessary given that the challenged procurement has not yet been made; such remedies can be identified only if the procurement is suspended until the Comptroller General's decision has been issued. CICA also commands the Comptroller General to inform Congress of "each instance in which a Federal agency did not fully implement the Comptroller General's recommendations." 31 U.S.C. § 3554(e)(2). This reporting function provides Congress with the information it wants, including the measures which would have been necessary to make the challenged procurement conform with applicable laws, only if the recommendations made by the Comptroller General are based on how things stood before the procurement had been executed. Given the apparent willingness of procuring agencies to frustrate Congressional inquiry by rushing to complete challenged procurement projects, CICA reflects Congress's decision that the pre-execution facts can be the basis for the Comptroller General's recommendation only if the procurement process is suspended until his recommendation is issued.

III. ARE THE DISPUTES REGARDING CICA'S STAY EXTENSION AND FEE PROVISIONS RIPE FOR CONSIDERATION BY THE COURT?

A Introduction

At the outset we address one issue on which the parties have divided only implicitly. The U.S. Senate, as Intervenor-Appellee, suggests that this Court need only decide the constitutionality of the automatic stay provision, under which the procurement process is automatically suspended for ninety days upon the filing of a bid protest. Because the Comptroller General decided Ameron's bid protest within the ninety days provided by the statute, and did not extend beyond that period the time during which the procurement process was suspended, the Senate argues that we need not decide whether the Comptroller General may constitutionally wield the stay-extending power. The Comptroller General also did not exercise his power, under 31 U.S.C. § 3554(c), to order the procuring agency to reimburse Ameron for either the cost of preparing its bid protest or the cost of preparing the underlying bid, but there is also some uncertainty among the parties as to whether or not the reimbursement provision is now before the Court. We analyze the ripeness argument regarding the stay provision and the fee provision separately.

B. Ripeness of the Dispute Regarding the Stay Provisions

A fair reading of the Army's contentions about the constitutional infirmity of CICA requires that we reject the Senate's argument as to the ripeness of the controversy regarding the stay extension provisions. The Army points out that the power to extend the stay affects the operation of the procurement process even when that power is not exercised, because the Comptroller General's ability to threaten an extension of the stay -- and his ability to promise that he will decide the protest quickly, or dismiss it as frivolous, and thereby cut the stay short -- give the Comptroller General influence over the procurement process which the doctrine of separation of powers forbids him to have so long as he is a member of the legislative branch.

At least in the First Amendment context, it has been held that if the power to threaten to act in a given way influences the exercise of constitutional rights, then the existence of that power can be judicially reviewed as soon as the power is created. The courts need not wait until the threat is made good. See United States Civil Service Comm'n v. National Ass'n of Letter Carriers, 413 U.S. 548, 551-554, 37 L. Ed. 2d 796, 93 S. Ct. 2880 (1973) (adjudicating challenge to constitutionality of the Hatch Act, which authorized prosecution of government employees who engaged in certain political activities); compare that case with United Public Workers v. Mitchell, 330 U.S. 75, 91 L. Ed. 754, 67 S. Ct. 556 (1947), in which the Court declined to adjudicate a similar challenge on ripeness grounds.

The doctrine of separation of powers gives each branch of the government constitutional rights. These rights are of tremendous importance, as they insure that our government functions properly. They thereby serve as bulwarks to the freedom which the doctrine of separation of powers is intended to preserve. We accordingly believe that the approach to ripeness adopted in the First Amendment context should also be used in disputes about the applicability of the doctrine of separation of powers. We note that the Supreme Court has adopted a uniquely flexible approach to ripeness in the separation of powers context, which also supports the ripeness result we reach here. See Buckley v. Valeo, 424 U.S. 1, 113-118, 46 L. Ed. 2d 659, 96 S. Ct. 612 (1976).

We note as well that the Army's argument on ripeness is quite similar to the argument in Synar regarding the present effect of Congress's statutory power to remove the Comptroller General. On the merits, the defenders of Gramm-Rudman-Hollings argued that Congress's power to remove the Comptroller General did not affect the way the Comptroller General carried out his budget cutting duties because the removal power had never been exercised in the sixty-five years since it was created. The Supreme Court rejected that argument, however, holding that the removal power was relevant even though it had never been exercised. Repeating the explanation given by the district court in Synar, the Supreme Court held that "it is the Comptroller General's presumed desire to avoid removal by pleasing Congress, which creates the here-and-now subservience to another branch that raises separation of powers problems." Bowsher v. Synar, 106 S. Ct. at 3189 n.5, quoting Synar v. United States, 626 F. Supp. 1374, 1392 (D.D.C. 1986).

Similarly, the Army argues in this case that procurement officers will feel obliged to conduct the procurement process differently after CICA, in an effort to minimize conflict with the Comptroller General, so that the Comptroller General does not have the chance to exercise his stay-extending power. In essence the Army is arguing that the procuring agency's "desire to avoid [conflict] by pleasing" the Comptroller-General "creates the here-and-now subservience to another branch that raises separation of powers problems."

It is certainly conceivable that the stay provisions create "here-and-now" subservience, as the Army argues. If the Army is right then CICA gives the Comptroller General some power over the procurement process even when he does not exercise the stay-extension authority: the Army is concerned with the Comptroller General's ability to threaten to exercise this power just as it is with his actual use of it. We must therefore decide whether the power to threaten conflicts with the doctrine of separation of powers, for if it does then the Constitution is violated even when the threat is not made good.

C. Ripeness of the Fee Provision Issue

In this case the Comptroller General has declined to order Ameron's reimbursement for either its bid proposal or bid protest preparation costs, and Ameron has not included a claim for such reimbursement in its complaint. In addition, and unlike the stay extension provisions which are at issue here even though they have not been exercised, no argument is made that the Comptroller General's ability to threaten a procuring agency with a reimbursement order will enable the Comptroller General to influence executive action even when that power is not actually exercised. We therefore believe that the parties' disagreement regarding the constitutionality of the fee provision is not ripe for judicial review.*fn6

IV. THE THE MERITS

The Army makes three different challenges to CICA's delegation of power to the Comptroller General. It is essential at the outset to separate those arguments, and to point out what the Army does not contend.

The Army does not argue that the Comptroller General may not investigate procurement decisions, or that he may not make recommendations on the basis of his investigation. The Army also concedes that Congress could have passed a law automatically staying the procurement process for a fixed period, commencing with the filing of a bid protest, to allow the Comptroller General to conduct an investigation. Transcript of Oral Argument at 18-19. Instead, the Army's attack focuses entirely on the Comptroller General's authority to shorten the stay if the protester's claim is frivolous or the investigation complete, and to lengthen the stay if more time is necessary to complete the investigation. About this particular power the Army makes several claims.

First, the Army argues that CICA is unconstitutional because of the very fact that the Comptroller General, an agent of the Congress, does the things that CICA orders be done. The Army contends that CICA's delegation of the power to extend or shorten the stay of the procurement process authorizes the Comptroller General to execute CICA. Totally apart from any effect the Comptroller General's actions may have on the procurement process, the Army argues that the provisions of CICA themselves are "laws" and that the Comptroller General's implementation of those provisions is the Comptroller General's "execution of the law" in violation of the doctrine of separation of powers.

Second, the Army argues that CICA impermissibly gives the Comptroller General control over the procurement process, again authorizing the Comptroller General to execute the law. Third, the Army contends that even if these first two arguments are not correct, CICA still gives the Comptroller General excessive influence over the procurement process and thereby authorizes excessive legislative interference in a domain the Constitution assigns to the executive.

In essence, these arguments break down into the contentions that the Comptroller General's authority to extend or shorten the stay usurps executive power per se, on the one hand, and on the other hand that it authorizes the Comptroller General to interfere impermissibly in the executive's performance of its responsibilities. See Immigration and Naturalization Service v. Chadha, 462 U.S. 919, 963, 103 S. Ct. 2764, 77 L. Ed. 2d 317 (1983) (Powell, J., concurring) (citations omitted) (noting that "functionally the doctrine [of separation of powers] may be violated in two ways. One branch may interfere impermissibly with the other's performance of its constitutionally assigned functions. Alternatively, the doctrine may be violated when one branch assumes a function that more properly is entrusted to another.") These two attacks on CICA could be understood to differ from one another only in the degree of usurpation they allege by one branch of another's functions. But applicable precedent has distinguished these two kinds of separation of powers problems. We therefore find it useful to analyze the two contentions separately. We begin with the second of the arguments described by Justice Powell, namely the contention that Congress has usurped a power that properly belongs to the executive. We then discuss the extent to which CICA authorizes congressional interference in executive action.

A. May the Comptroller General Constitutionally Implement CICA?

The Army attacks CICA by arguing that the Act authorizes the Comptroller General to engage in "execution of the law in constitutional terms." Synar, 106 S. Ct. at 3192. The Army begins this attack by summoning language from Synar which it asserts defines executive action:

Interpreting a law enacted by Congress to implement the legislative mandate is the very essence of "execution" of the law. Under § 251, the Comptroller General must exercise judgment concerning facts that affect the application of the Act. He must also interpret the provisions of the Act to determine precisely what budgetary calculations are required. Decisions of that kind are typically made by officers charged with executing a statute.

Id. Upon this language the Army bases its contention that the Comptroller General impermissibly executes CICA:

Under CICA, the Comptroller General has been empowered to determine whether a particular protest is "frivolous," whether it "state[s] a valid basis for protest," or whether "the specific circumstances of the protest" require staying performance of the government's contract for longer than the statutory period. 31 U.S.C. 3554(a)(1)-(a)(3). Because in discharging those responsibilities the Comptroller General "interprets the provisions of the Act" and "must exercise judgment concerning facts that affect the application of the Act" (Bowsher, [106 S. Ct. at 3192]) he is executing the law. Therefore, just as the Comptroller General may not discharge the responsibilities vested in him by the Gramm-Rudman-Hollings Act, he cannot exercise the authority drawn in question here, for while his responsibilities may be less extensive here than in Bowsher, they are nonetheless executive in nature.

Supplemental Memorandum of the United States Army Corps of Engineers, filed July 29, 1986, at 5-6.

The Army is correct insofar as it presses Synar's holding that an essential part of execution of the law is the interpretation of that law. Certainly the executive cannot execute the law's command until he decides what that command is, and absent a determination by the courts the executive must find the law's command himself. It is for this reasons, and to this extent, that "the President's duty to the law often puts upon him the duty to interpret it for ...


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