Mr. GANT. If a small business appellant is involved, by Board policy, the hearing will be held at the site of the small business. As a matter of policy, the Board will not remand cases, and thus avoids another delay. Despite this favorable picture which I have drawn for you, the rules of the Board and the Board itself have been tailormade for the particular Government agency, the AEC. As you know, the AEC is a hybrid agency. For its operation it was deemed best to have a hybrid board. The conclusion I have to draw, therefore, is that the AEC system is not exportable. This does not mean that some of its concepts are not worthy of adoption. The only other agency where I believe a similar system could work is NAŠA. III. CONCLUSION Hence, based on my studies in the contract appeals field, including my AEC experience, my membership on the staff of the Second Hoover Commission, my participation in the claims study of the Administrative Conference, and the study of material developed by this committee, I have come to the following conclusion: I do not advocate the establishment of one board for the entire Government. But I strongly recommend the drafting of a set of uniform rules with active participation of the talent which is available in the Government, and in the private bar. Concerning the jurisdiction of boards and the type of hearings, agencies should be able to take such uniform rules, en bloc, and incorporate them in their rules of boards of contract appeals. This will enable appellants to litigate in the same manner before all boards and obtain relief or denials from all boards on the same basis. Obviously, limitations of time on the part of the committee and on my part have prevented me from delving in depth on problems which may be of interest to your committee. However, I stand ready to answer questions, and I am happy that the Atomic Energy Commission has given me the opportunity to speak freely and fully to you. Senator MONTAYA. Thank you, Mr. Gantt, for a very fine statement. Now, what can you tell this committee concerning the propriety of review of the Board's decision by the courts, as to questions of law and fact or a trial de novo? Mr. GANTT. One of the greatest of the great five Presidents of the United States, namely, Harry Truman, once said of his position that there is a point where the buck must stop. This is my general approach, too. If you can provide on the agency basis for a fair trial of the case on the merits, there is no necessity, in my opinion, for a review either by the courts or by the Comptroller General. Now, I say this despite my experience in the Interior Department, where seven appeals went to the Comptroller General, and the Comptroller General upheld the decisions of the Interior Board in all seven cases. I do not want unduly to take credit from my predecessor, but I would say that about four of the decisions were before my tenancy started, and three afterward. Now, we are very careful in the rules of the Atomic Energy Board of Contract Appeals to point out that the decision is not final under the Anti-Wunderlich Act, and under the Bianchi rule. Any board which is capable and knows its onions can write a decision that is untouchable on the question of fact. My Board is fortunate in that the Commission has given it complete jurisdiction to decide questions of fact and law. However, this does not mean that the Board has finality on questions of law. Senator MONTAYA. What do you mean by that last statement, that there is no finality on questions of law? You perhaps mean that that is reviewable by the courts? Senator MONTOYA. That is elementary, isn't it? I was referring to questions of law and fact. Mr. GANTT. Yes. But, I don't think it is elementary, Senator Montoya, because of the difficulty in distinguishing between questions of fact and law. I always think of the little jingle from an operetta which goes like this: "Fact is fact and law is law, And never the twain shall meet; And which is which, and what is what, Senator MONTOYA. Well, you have some certain situations where certain facts may also be questions of law. Mr. GANTT. Mixed questions of fact and law, yes. Senator MONTOYA. Correct. Mr. GANTT. I would give the benefit of the doubt that the court can review them. Senator MONTOYA. Yes. Mr. GANTT. And the court does so. Senator MONTOYA. Now, do you feel that the limited power of subpena conferred by the United States Code, section 94, is adequate even if the Department of Justice lays down strict guidelines as to its use? Mr. GANTT. As I mentioned in my presentation, the Atomic Energy Commission Board of Contract Appeals is the only Board that has full power of subpena. In the 16 months in which I have been running the Board, we have not issued a subpena. It was requested in two cases by the Government, never by the appellant. To my knowledge, from a study of the past 10 years, in only one instance has a private appellant been unable to get documents. As far as I am concerned, subpena is not necessary; 5 U.S.C. 94 is sufficient even for those agencies which have no express power of subpena, and I believe that Mr. Jaffe, who will testify later, can tell you more about it, because the Department of Justice has insured that the procedures will be equally available to the Government and to the appellant. Senator MONTOYA. What do you think of the idea of having the tenure of full-time Board members limited to a term of 5 to 10 years? Mr. GANTT. As far as my own tenure is concerned Senator MONTOYA. Except the Chairman, of course. I want an impartial and not a prejudiced answer. Mr. GANTT. I had said, about the JAG members of the Armed Services Board of Contract Appeals, that I believe one of the advantages is to get new blood in. It is a real problem which I have encountered, that if a man gets old-and I am in that category now, myself—that you should step out when you reach about 65. Five years ago, I prob ably would have said, "You should step out when you reach 60." Some procedure must be invented to eliminate the incompetent, the superannuated, the sick. This sounds very cruel. But this is a very important function and just as there are efforts underway to limit the age of judges of the U.S. Courts of Appeals, I believe, to 65, I believe the same should be the limit as to Board membership. But, as I said, I hope it does not apply to myself. Senator MONTOYA. Now, should there be some specific followup procedure by the Board or the agency head to insure that the Board decisions are implemented with reasonable promptness? Mr. GANTT. Yes; there are some agencies where you have a reasonable followup. For instance, my study of the AEC BCA shows that our decisions are carried to payment fairly promptly. Senator MONTOYA. Thank you very much for your contribution. Mr. GANTT. Thank you for your courtesy, Senator, and I hope to see you again. Senator MONTOYA. I am going to have to go and cast another vote for democracy, and I will be right back. (Short recess.) Senator MONTOYA. Mr. Irving Jaffe, welcome before the committee, sir. STATEMENT OF IRVING JAFFE, CHIEF, COURT OF CLAIMS SECTION, CIVIL DIVISION, DEPARTMENT OF JUSTICE, WASHINGTON, D.C. Mr. JAFFE. Mr. Chairman, I am Chief of the Court of Claims Section of the Civil Division, Department of Justice. I am here in response to your invitation to testify. I am informed that the purpose of these hearings is to obtain information on the operation and effectiveness of boards of contract appeals established in various agencies to adjudicate contract disputes. Attorneys in the Department of Justice do not, ordinarily, participate in proceedings before agency boards of contract appeals. We do analyze and, where appropriate, defend in the courts the decisions of the boards and the records made before them when suit is instituted challenging those proceedings. It is from this vantage point that the Justice Department observes the operation and effectiveness of the boards of contract appeals. Contract disputes between the Government and its contractors are, by agreement, delegated for resolution to a representative of the Government, one of the parties to the contract. This is not a new concept nor is it unknown to private contracts. Almost a hundred years ago, the Supreme Court upheld the validity of a clause in a Government contract making final the decision of a designated Government official on disputed questions of fact arising under that contract. Today, virtually all Government procurement contracts contain a standard "disputes" clause under which a designated Government employee is empowered to decide all disputed questions of fact arising under the contract, and his decision is final unless appealed to the head of the agency or his designee within a specified time; if appealed, the agency decision is final. The purpose of the "disputes" clause is twopronged. First, it requires that performance under the contract be continued in accordance with the direction of the Government pending resolution of the dispute; and, second, it provides a fair, inexpensive and expeditious means for settling differences between the parties. The disputes clause, however, has not been free from problems, both judicial and administrative, concerning its scope. In 1950, the Supreme Court held that finality attached to a decision of the head of an agency (or its board of contract appeals) on questions of law as well as fact where an "all disputes" clause was used, i.e., a clause not limited to disputes concerning questions of fact. A year later, the Supreme Court ruled that the finality of a decision of a department head could only be overturned if fraud has been alleged, proved and found. As a direct result of these two decisions, Congress enacted the so-called Wunderlich Act (Act of May 11, 1954; 41 U.S.C. 321322). By this enactment, Congress provided that the decision of the head of an agency or his duly authorized representative under a Govenrment contract shall be final unless it is fraudulent or arbitrary or capricious, or so grossly erroneous as necessarily to imply bad faith, or is not supported by substantial evidence. That statute also probibits the inclusion in a Government contract of a provision making final the decision of any Government official or board on a question of law. These statutory standards of finality were not applied by the different courts in the same way. U.S. district courts generally determined whether an administrative decision was entitled to finality solely on the basis of a review of the record made before the agency. The Court of Claims on the other hand, before whom the greatest number and momentarily larger contract suits were brought, applied the standards of the Wunderlich Act only after a de novo trial before it. It was on review of this "whole" record, that is, the record made before the court as well as the record made before the agency, that the Court of Claims decided whether the agency decision was arbitrary or capricious or unsupported by substantial evidence. This conflict in approach among the Federal courts ultimately reached the Supreme Court in United States v. Carlo Bianchi & Co., Inc., 373 U.S. 709 (1963). In this case the Supreme Court held that apart from fraud, the determination of the finality to be attached to an agency decision arising under a disputes clause must rest solely on consideration of the record before the agency and that no de novo proceedings may be held. As the court pointed out, the standards of arbitrariness, capriciousness, or substantial evidentiary support of an agency decision can only be tested on the basis of the evidence before the agency. Two Justices dissented in the Bianchi case, in part, upon the supposition that proceedings before the agencies or their boards of contract appeals were subnormal administrative proceedings. The majority of the court, however, stated that where an administrative record was inadequate or defective, the reviewing court could stay its proceedings to enable the agency to complete or rectify the record so that it could be subjected to judicial scrutiny. Should the agency fail to do so, the court had available the sanction of entering a judgment in favor of the contractor. The Bianchi case emphasized the importance to the Government and contractors alike of making and preserving a complete administrative record in contract disputes cases. It is equally clear that the courts expected the parties to present all their evidence administratively, with no holding back of important or probative evidence for a second trial. And, of course, the record itself must reflect the fairness of the proceeding and show that the contractor was apprised of the evidence against him and had ample opportunity to rebut it as well as present his own. Although some agencies, notably the Armed Services Board of Contract Appeals, have for years provided by their rules of procedure and by their conduct full, fair, and complete administrative hearings, other less active boards have, since the Bianchi decision, noticeably improved their procedures, the composition of their boards and the conduct of hearings before them. This improvement is continuing. The Bianchi decision has done much to alert contractors and Government procurement agencies to the importance of disputes procedures provided in Government contracts. The decision, however, has not resolved the critical question of the scope of the disputes clause insofar as defining the types of contract disputes the clause embraces. The Court of Claims apparently believes that the dispute clause is confined in its application to the adjudication of those disputes only with respect to which other clauses of the contract specifically authorize the granting of relief in the form of either an extension of time or monetary recompense. In the court's words, the disputes clause applies to disputes "arising under" the contract, but not to disputes concerning a violation of the contract or those which merely "relate to" the contract. As a consequence, there now exists what some writers have referred to as the "fragmentation" of the remedies in the resolution of disputes under Government contracts, that is, some must be heard administratively, others judicially. Under the view of the Court of Claims, it is possible for some facts to be decided administratively and for finality to attach to them for one purpose, but those same facts, when relating to another aspect of a contract disput, will be tried de novo by the court with a different result. It is hoped, however, that the question concerning the scope of the disputes clause, both its inclusiveness and its exclusiveness, may soon be resolved judicially. As indicated before, procedures before the various boards of contract appeals have improved and contractors do have full and fair consideration of their disputes. This is attested by the undeniable fact that a very small percentage of disputes are appealed from the contracting officer to the boards of contract appeals and fewer than 5 percent of the contractors seek redress in the courts after disposition of their claims by the boards of contract appeals. Neverthless, in petitions filed in the courts, contractors sometimes complain that important witnesses not subject to their control or to the control of the Government have not been available because of the lack of subpena power in most boards. The statutory provision now available to subpena a witness at the request of a head of a department or bureau (5 U.S.C. 94) is admittedly cumbersome and unwieldy. It is not the custom of most boards of contract appeals to specifically state their findings of fact in deciding disputes before them. Many of the facts found, of course, can be gleaned from the board decision. However, in recent months in those cases in which the Court of Claims has been confining itself to a review of the administrative record, the trial commissioners of the court and the court itself have alluded to the absence of or the difficulty in ascertaining |