Page images
PDF
EPUB

1320

NORTH CAROLINA LAW REVIEW

[Vol. 51

door. Therefore, it is not necessary for us to determine what de-
cisions he might make or what finality they might have in cases
not brought before us.110

The Court, following its own precedents, sent the case back to the
Commissioner for review under Wunderlich Act standards.

The Supreme Court reversed in 1972 in an opinion by Justice Douglas. The purpose of the disputes clause is, the Court said, "to provide a quick and efficient administrative remedy and to avoid 'vexatious and expensive and, to the contractor oftentimes, ruinous litigation." This case was almost ten years old, the court noted, and that almost per se provided an example of "vexatious litigation."141

A citizen has the right to expect fair dealing from his government . . . and this entails in the present context treating the government as a unit rather than as an amalgam of separate entities. [T]he A.E.C. spoke for the United States and its decision, absent fraud or bad faith, should be honored.1+2

[ocr errors]

The result in the particular case was not entirely unexpected. Indeed even the GAO had admitted that its review authority was indirect and limited to causing the AEC to withold payment.143 The Government's only real argument was the theory that both partiesnot just the claimant-should be held to have a right of appeal. The Court, however, dismissed the idea, saying, "Normally . . . the duty of the Department of Justice is to implement [an agency] decision and not to repudiate it."144

More damaging to the GAO than the result, which after all was basically consistent with Kihlberg, may be the court's gratuitous dicta. First it spoke of GAO and Justice Department review as "additional

140. Id.

141. 406 U.S. at 8, quoting Kihlberg v. United States, 97 U.S. 398, 401 (1878). Kihlberg is discussed at text accompanying note 66 supra. It, of course, did not involve a disputes clause.

On the matter of the timely decision, see Sun Shipbuilding & Dry Dock Co. v. United States, 461 F.2d 1352 (Ct. Cl. 1972). There the Maritime Administration had had a claim before it for four years, and the contractor finally filed suit before the Board decision alleging the delay constituted a breach of contract over which the Court of Claims had jurisdiction. The court agreed that in some circumstances delay could be a breach but found four years was not too long in this case.

142. 406 U.S. at 10.

143. Brief for United States at 44. The Government was represented in the Supreme Court by the Justice Department, specifically by Mr. Irving Jaffe of the Civil Division, who has been at odds with the GAO's view of its jurisdiction. See notes 59 & 79 supra. In order to get the GAO position before the Court, the GAO prepared a ten-page appendix to the Government's brief.

144. 406 U.S. at 13.

61-502 O 75-22

1973]

GENERAL ACCOUNTING OFFICE

1321

bureaucratic oversight,"145 hardly boding well for any alleged power of disallowance. Then, in a footnote the Court discussed the specific statutory power given the GAO to inspect contractor records looking for kickbacks and said: "If the Comptroller General has the broad, roving investigatory powers that are asserted, specific statutory grants of authority such as this provision relating to kickbacks would be superfluous."*146

Justice Blackmun, speaking for four Justices, added insult to injury in a statement directly undercutting any pretentions as to the power to disallow:

[T]he Government, by its position here, would grant itself the
right to challenge its own executive determination whenever the
General Accounting Office, by interposition, thinks this should be
done. This, for me, does not make good sense and, in the ab-
sence of clear congressional authorization, I doubt that it would
make good law,147

Justice Brennan wrote a lengthy dissent, convincingly showing the role the GAO had played, or tried to play, since 1921. He argued that at the time the Wunderlich Act was passed, a right of appeal existed in the Government, albeit not an appeal to the GAO.148 Only two other Justices were persuaded, however, and the GAO has gotten out of the disputes business, at least for now.149

145. Id. at 14.

146. Id. at 10 n.8.

147. Id. at 20.

148. Id. at 23-90. The opinion was joined by Justices White and Marshall. The Wunderlich Act says simply that the board's decision shall not be "final ca a question of law," 41 U.S.C. § 322 (1970), or where its findings are "fraudulen: or capricious or arbitrary or so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence." 41 U.S.C. § 321 (1970). It has been argued that a decision not satisfying those standards is wholly void, and that the invalidity thus may be asserted by anyone, including the GAO. The problem with such reasoning is that the disputes clause is more precise and says a board decision is "final" until reversed "by a court of competent jurisdiction." See note 102 supra. This more specific language could and should be said to estop the Government from denying finality. Further, S & E Contractors could easily have been decided on this more narrow basis and thus could have answered Mr. Justice Brennan's elaborate discussion of legislative intent.

149. Indeed the GAO might argue that its authority to collaterally attack a Board decision is not directly affected by S & E Contractors. That is, it might argue it could set off the "illegal" award on a later contract, see, e.g., United States v. Cohen, 389 F.2d 689 (5th Cir. 1967), or direct the Justice Department to sue to recover the "illegal" payment. The message of S & E Contractors seems loud and clear, however, that once a contractor gets an award, it is his and no "bureaucratic" review can take it from him. The Court of Claims has so held. In Dynalectron Corp. v. United States, 18 CCH CONT. CAS. F. ¶ 81,757 (Ct. Cl. 1972), the board had ruled partly for the contractor and partly for the government. Each appealed from part of the deci sion. The court held the contractor's objections could be heard but the government's

1322

NORTH CAROLINA LAW REVIEW

What Should the GAO Role Be in the Disputes Process?

[Vol. 51

If a board of contract appeals proceeding is in effect a request that the head of the agency informally look over what his contracting officer decided, then S&E Contractors is right: the board decision should be looked at as a mere offer which the claimant may choose to accept or reject. The claimant should be able to "appeal," i.e., get a binding judgment, but the agency should not be able to impeach its own offer. A fortiori, as S & E Contractors held, the GAO should be able to criticize agency settlements but not stop payments.

If, on the other hand, a board appeal is seen as the first step in an adversary judicial procedure, it makes little sense to say one litigant is bound by it but not the other. This latter view seemed to have been taken in Bianchi, and S & E Contractors notwithstanding, it seems more to comport with reality.

Boards of contract appeals today are a mixed lot of varying independence and quality, but the idea of the board acting as alter ego of the head of the agency is ludicrous-at least as regards the major boards. Suggestions have been made to move more nearly to a few full-time independent boards which behave and are treated as independent bodies.151 The suggestions have regularly been opposed by

could not. The GAO has heard the message of S&E Contractors and has quietly retreated from its practice of review. Comp. Gen. Dec. No. B-174899 at 5 (June 1, 1972) (unpublished): "[T]his Office will no longer review Board of Contract Appeals decisions absent a showing of fraud or bad faith. Indeed in 52 Comp. GEN. 63 (1972), it even withdrew its objection to payment under a Board award it had "reversed" before S & E Contractors.

150. Justice Blackmun, joined by Chief Justice Burger and Justices Stewart and Powell, uncritically accepted a proposition that illustrates the problem exactly. He wrote, "The result would be a strange one if, as even the GAO here concedes, a con. tracting officer's decision favorable to a contractor possesses finality. while a decision at the higher level of the agency itself does not." 406 U.S. at 20-21. That result is not at all strange if one sees the contracting officer's decision as an "offer," the acceptance of which constitutes an accord and satisfaction, while the Board's decision is analogous to that of a trial court which may be appealed by either side. Put another way, it is presumably not "strange" that the Government may seek certiorari from a decision of the Court of Claims. To find appeal from a Board decision "strange" is to assume away the question: Is the Board more like a court or more like an informal superior of the contracting officer? The Commissies en Goverment Procurement, by a vote of seven to five, has now proposed reversing S & E Contractors by legislation to give both sides the right of appeal. 4 PROC. COMM's 25-27. This recommendation has been incorporated as § 9(e) of H.R. 9062, 93d Cong., 1st Sess. (1973).

151. E.g., Frana, Are There Too Many Boards of Contract Appeals?, 17 CATH. U.L. REV. 44 (1967). The boards are now purely creatures of contract and administrative regulation. In order to confirm their jurisdiction and trial-type character, legislation would be desirable.

"In fairness, it should be said that there is a strong current of thought that boards

1973]

GENERAL ACCOUNTING OFFICE

1323

the small agencies, who believe that separate boards better understand the problems of specific agencies. Consolidation, or at least common rules of procedure,152 seem essential, however, to have a fair, responsive system.

What would be the GAO's role in such a system? Congress could use S & E Contractors as a catalyst for legislation, as it did with B'underlich, and could grant the GAO the power of review. It should not do so, however. First, the GAO is not equipped to act as an appellate court. Of course, in this kind of proceeding, especially after Bianchi, fact-finding is no problem. But GAO review is wholly in camera, by members of the general counsel's office unknown to the parties. Further, the GAO is an agency with a definite policy-making role. Try as it may to be fair, the GAO is simply not a court. 153

In its efforts to give dignity and finality to Board decisions, the Court in S&E Contractors, and indeed in Bianchi, was certainly correct. The Air Force General Counsel put it well when he said:

[A]t some time, litigation of a dispute must come to an end. The
longer cases drag on, the more both sides lose. Litigation costs,
uncertainty, impairment of credit and countless other factors make
defeat more difficult and victory less real. It is only natural for
a losing lawyer-Government or private-to believe that justice

of contract appeals should either be dissolved altogether and claimants left to a judicial remedy, or that claimants have the alternatives of a judicial remedy. Congressman Celler has so proposed. H.R. 14726, 92d Cong., 2d Sess. (1972). The position is persuasively advocated in Spector, Public Contract Claims Procedures-A Perspective. 30 FED. B.J. 1, 11 (1971). Mr. Spector is a Commissioner of the Cour of Claims and a former Chairman of the Armed Services Board of Contract Appeals. The aliemative direct judicial remedy was also advocated by the Commission on Government Procurement. 4 PROC. COMM'N 23-25. This recommendation is 7 of H.R. 9062, 93d Cong., 1st Sess. (1973); cf. Comment, 73 YALE L.J., supra note 126, at 1450-57, which proposes creation of an entirely new court to hear such cases.

152. A proposed set of common rules was prepared by Professor Whelan's seminar at Georgetown University and published as PROPOSED UNIFORM RULES OF PROCEDURE FOR GOVERNMENT AGENCY BOARDS OF CONTRACT APPEALS (1967). "Model Rules for Boards of Contract Appeals," based on the Armed Services Board of Contract Appeals rules, were proposed by a Federal Bar Association Committee, in 1948 and “Proposed Uniform Contract Appeals Rules" were developed by an ABA committee in 1972. See Burch, supra note 104 at 122-23; FED. CONT. REP. No. 443, Aug. 21, 1972, at E-l.

153. This lack of procedural due process in GAO review has bothered commentators. Doolittle, Review of Boards of Contract Appeals Decisions, 39 PA. B.A.Q. 516 (1968); Kostos, Review of Boards of Contract Appeals Decisions, 39 PA. B.A.Q. 521. 523-24 (1968). Others, however, suggest that procedural due process was not a central issue in passage of the Wunderlich Act. Schultz, Wunderlich Revisited: New Limits on Judicial Review of Administrative Determination of Government Contract Disputes. 29 LAW & CONTEMP. PROB. 115, 118 (1964); Comment, 18 CATH. U.L. REV., supra note 45, at 549. The fact that Congress did not make it a basis for decision says nothing, however, about the appropriateness for so considering it.

1324

NORTH CAROLINA LAW REVIEW

1

[Vol. 51 would be done if he had but one more chance to appeal. Yet looking at the issue objectively, a system for resolving differences becomes less just, not more, when basically fair, impartial decisions are subject to repeated reviews. Even assuming that each additional review would catch a few more 'mistakes,' in most situations the long run benefits would be less than the long run costs. However well intentioned, then, we believe the GAO's participation in the disputes process would probably not be in the long-run interest either of the Government or of the contractors.154

This is the philosophy that should govern the entire disputes procedure. Congress never dreamed of boards of contract appeals in 1817 when it gave claims authority to the forerunner of the GAO. Present authority should reflect current realities and current needs. To the maximum extent possible the Government and contractor should be permitted and encouraged to settle all issues at the lowest possible level -that of the contracting officer. The more levels of appeal there are, the less will be the incentive of either side to negotiate hard and compromise differences. The GAO should, of course, be permitted and encouraged to investigate and criticize any specific settlements. What should be avoided is the GAO's random intervention in cases, either to penalize contractors or to charge disbursing officers for improper settlements.

If, on the other hand, Congress were to change the law and grant the Government a right of appeal, one recent change and an additional one proposed here should reduce the problems feared by the majority in S&E Contractors. First, it is ironic that just shortly before the Supreme Court decided S & E Contractors, much of the rationale for it was undercut by the long overdue administrative decision to pay six percent interest on claims against the Government from the time they. are filed to the time resolved.155 Thus any delay is now at least partly at the Government's expense, not the contractor's.

Another much needed change would be to simplify the Court of Claims rules so as to accelerate Wunderlich Act appeals. At present, one cannot just file a notice of appeal, then brief and argue his case. The court requires a complaint and answer, followed by a motion for summary judgment.156 That is fine for an ordinary civil suit in the

154. Doolittle, supra note 153, at 518.

155. ASPR 7-104.82, 37 Fed. Reg. 21,499 (1972): FRP 1-1.322, 37 Fed. Reg. 15,152 (1970). The agencies got advance approval of the Comptroller General before agreeing to this practice. 51 COMP. GEN. 251 (1971). This clause applies only to future contracts, of course, and was not used in the contract in S & E Contractors.

156. The rules of the Court of Claims are found in 28 US.C. (1970). See gener

« PreviousContinue »