PART H

SELECTED ISSUES OF LIABILITY: GOVERNMENT PROPERTY AND CATASTROPHIC ACCIDENTS

Chapter 3

Catastrophic Accidents

4. Enact legislation to assure prompt and adequate compensation for victims of catastrophic accidents occurring in connection with Government programs.

5. Enact legislation to provide Government indemnification, above the limit of available insurance, of contractors for liability for damage arising from a catastrophic accident occurring in connection with a Government program.

PART I

PATENTS, TECHNICAL DATA, AND COPYRIGHTS

Chapter 2

Patents

1. [Legislative action preferred.] Implement the revised Presidential Statement of Government Patent Policy promptly and uniformly.

2. Enact legislation to make clear the authority of all agencies to issue exclusive licenses under patents held by them.

4. Amend 28 U.S.C. § 1498 to make authorization and consent automatic in all cases except where an agency expressly withholds its authorization and consent as to a specific patent.

6. Authorize all agencies to settle patent infringement claims out of available appropriations prior to the filing of suit.

7. Grant all agencies express statutory authority to acquire patents, applications for patents, and licenses or other interests thereunder.

8. Give the United States District Courts concurrent jurisdiction with the Court of

Claims for suits brought pursuant to 28 U.S.C. § 1498 subject to the jurisdictional amount under the Tucker Act.

Chapter 3

Technical Data

9. Amend or repeal statutes limiting agency flexibility concerning rights in technical data.

11. Authorize agencies to acquire information and data.

13. Establish a remedy for the misuse of information supplied to the Government in confidence.

Chapter 4 Copyrights

14. Amend or repeal statutes limiting agency flexibility in dealing with the publication of works developed under Government contracts.

15. Enact legislation giving all agencies authority to acquire private copyrights or interests therein.

[Drafts of legislation to carry out recommendations calling for legislative action in Part I are set forth at Appendixes A and B to Part I.]

PART J

OTHER STATUTORY CONSIDERATIONS Chapter 2

Codification-A Consolidated Procurement Title in the United States Code

1. Establish a program for developing the technical and formal changes needed to organize and consolidate the procurement statutes to the extent appropriate in Title 41, Public Contracts, of the United States Code.

Chapter 4

Statutes of Limited Application

2. Extend the Truth in Negotiations Act to all Government procurement agencies and de

velop coordinated regulations for interpretation and application of its provisions.

3. Extend the Renegotiation Act for periods of five years.

4. Extend the Renegotiation Act to contracts of all Government agencies.

5. Raise the jurisdictional amount under the Renegotiation Act from one million to two million dollars for sales to the Government; and from twenty-five thousand to fifty thousand dollars for brokers' fees.

5. Expand and clarify the criteria used by the Renegotiation Board.

APPENDIX A

INTRODUCTION

Like all Federal activities, Government procurement operates in a framework of law which derives from the Constitution, statutes, Executive orders, regulations, court decisions, and administrative rulings. However, in one respect, Government procurement is unique. A major part of the applicable law stems from the general law or common law of contracts. Thus, as its title signifies, Government contract law is a special blend of Government law and contract law.

The importance of this composite of law is threefold. First, it determines the authority of the contracting officer to enter into and administer a contract on behalf of the Government. He can bind the Government only within the scope of authority assigned to the United States by the Constitution under our Federal system,1 and delegated to him by statutes and regulations. Second, the law determines the validity of the contract in other respects and also defines the rights, obligations, and relations of the parties. Finally, the law provides remedies for enforcement and redress of contract rights.

2

This discussion traces the path of the law from its sources in the common law and the Constitution through the statutes to its working place in the regulations. Its purpose is informational-to provide general background on the legal structure, forces, and constraints which shape and animate, and sometimes hobble, the Government procurement process.

1 United States v. Tingey, 39 U.S. (5 Pet.) 112 (1831).

2 The Floyd Acceptances, 74 U.S. 666 (1868); Federal Crop Insurance Corp. v. Merrill, 332 U.S. 380 (1947).

THE CONSTITUTIONAL FRAMEWORK OF GOVERNMENT CONTRACTING

The authority of the Government to engage in procurement is not grounded in any specific provision of the Constitution, but is inherent in its sovereignty. The United States as "a body politic, may, within the sphere of the constitutional powers confided to it, and through the instrumentality of the proper departments to which those powers are confided, enter into contracts not prohibited by law, and appropriate to the just exercise of those powers." "There is power to contract in every case where it is necessary to the execution of a public duty."

4

Though the Constitution contains no provisions specifically addressed to procurement, a number of provisions are particularly significant. Section 3 of Article IV of the Constitution provides that Congress shall have the power to make all rules and regulations concerning property of the United States. Section 9 of Article I prohibits the withdrawal of moneys from the Treasury except in consequence of appropriations made by law. This section, however does not prohibit legislation authorizing the creation of contractual obligations. Thus, if a statute authorizes the making of a contract, it is legal notwithstanding the absence of an appropriation; payment, however, must await an appropriation.®

Although relatively rare, constitutional questions sometimes arise in connection with

United States v. Tingey, 39 U.S. (5 Pet.) 114 (1831).

United States v. Maurice, 26 F. Cas. 1211 (No. 15, 747) (C.C.D. Va. 1823).

Reeside v. Walker, 52 U.S. (11 How.) 271 (1850).

Mitchell v. United States, 18 Ct. Cl. 281, rev'd 109 U.S. 146 (1883).

Government procurement. For example, in Gonzales v. Freeman, a debarred contractor argued that his debarment violated the due process requirements of the Constitution. The court held that due process was required by statute and therefore never reached the question whether the Constitution specifically required this. In another case, it was held that the original Renegotiation Act was not an unconstitutional delegation of powers. More recently, it was held that the current minority enterprise program under section 8(a) of the Small Business Act violates the Fifth Amendment.9

8

Occasionally, the constitutional doctrine of the separation of powers has generated controversy. One confrontation centered on executive reluctance to carry out a congressional authorization for the development of the RS70 supersonic bomber.10 The question arose whether Congress could require, not merely authorize, the President to act. The constitutional issue remained unresolved since agreement was reached to reconsider the project. A similar issue was raised in connection with 10 U.S.C. § 2662(a) which originally required the military departments to "come into an agreement with the Committees on Armed Services" before entering into certain real property transactions. As the result of constitutional and policy questions raised by President Eisenhower, this section was amended to provide merely for advance notification to the congressional committees.11 Recently President Nixon, in signing into law Pub. L. 92-313, directed GSA not to comply with two provisions requiring congressional approval of construction prospectuses because the provisions were unconstitutional.12

In a 1971 confrontation, the Attorney General suggested that the authority given the Comptroller General under 31 U.S.C. §§ 41, 67 (a), and 71 to audit accounts of disbursing officers and settle claims against the Government and, as an incident thereof, handle bid

7334 F.2d 570 (D.C. Cir. 1964).

8 Lichter v. United States, 334 U.S. 742 (1948).

Ray Baille Trash Hauling, Inc., v. Kleppe (D.C. Fla., Oct. 29, 1971). But see Kleen-Rite Janitorial Services v. Laird (D.C. Mass., Sept. 21, 1971).

10 See Davis, Congressional Power to Require Defense Expenditures, 33 Ford. L. Rev. 39 (1964).

11 See Harris, Congressional Control of Administration, 219-225 (1964).

12 See 437 FCR, Federal Contracts Report, C-1.

protests and review Board of Contract Appeals decisions, is constitutionally questionable because as an agency of Congress, he cannot be delegated executive functions.13

14

The constitutional doctrine of dual sovereignty has also had an impact on Government procurement, particularly with respect to the extent to which Government contracts or contractors are subject to State taxation and regulation. This doctrine, stemming from McCulloch v. Maryland, recognizes that the States and the Federal Government are separate and distinct sovereigns, each with its own sphere of authority, and neither may constitutionally interfere with the other. At one time, the Supreme Court was more prone to bar State action under this doctrine, but the modern trend is one of judicial restraint. In the field of taxation, a distinction has evolved between the so-called "incidence" and "burden" of a tax. Thus where a State tax is levied expressly against the Government, its property, or a Government contract, it will still be held unconstitutional.15 On the other hand, where it falls directly on the person of the contractor, it will generally be held constitutional even though the burden is passed on to the Government,16 as under a cost-reimbursement contract," unless Congress has expressly given the contractor immunity from State taxation 18 or the State tax discriminates against Government contractors.19

In the regulatory field, State actions which directly apply to the Government, or conflict with its established policy under statute or regulation, have been held unconstitutional. For example, the Secretary of the Interior was under no obligation to submit his plans and specifications for the construction of a dam on the Colorado River to the State engineer for

13 See letter, Attorney General to Comptroller General, June 14, 1971 (GAO File B-158766); Cibinic and Lasken, The Comptroller General and Government Contracts, 38 Geo. Wash. L. Rev. 349, 375-384, 393-5.

14 17 U.S. (4 Wheat.) 316 (1819).

15 See United States v. County of Allegheny, 322 U.S. 174 (1944) : Clallam County v. United States, 263 U.S. 341 (1923); KernLimerick, Inc. v. Scurlock, 374 U.S. 110 (1954).

16 Esso Standard Oil Co. v. Evans, 345 U.S. 495 (1953); United States v. City of Detroit, 355 U.S. 484 (1958); United States v. Town of Muskegon, 355 U.S. 484 (1958); United States v. Boyd, 378 U.S. 39 (1949).

17 Alabama v. King and Boozer, 314 U.S. 1 (1941).

18 See Carson v. Roane-Anderson Co., 342 U.S. 232 (1952).

19 Phillips Chemical Co. v. Dumas Independent School District, 361 U.S. 376 (1960); Moses Lake Homes, Inc. v. Grant County, 365 U.S. 744 (1961).