Constitutionality of GAO's bid protest function : hearings before a subcommittee of the Committee on Government Operations, House of Representatives, Ninety-ninth Congress, first session, February 28 and March 7, 1885 online

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CONSTITUTIONALITY OF GAO'S BID PROTEST
FUNCTION



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HEARINGS

BEFORE A

SUBCOMMITTEE OF THE

COMMITTEE ON

GOVERNMENT OPERATIONS

HOUSE OP REPRESENTATIVES

NINETY-NINTH CONGRESS

FIRST SESSION



FEBRUARY 28 AND MARCH 7, 1985



Printed for the use of the Committee on Government Operations






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CONSTITUTIONALITY OF GAO'S BID PROTEST
FUNCTION



HEARINGS

BEFORE A

SUBCOMMITTEE OF THE

COMMITTEE ON

GOVERNMENT OPERATIONS

HOUSE OF REPRESENTATIVES

NINETY-NINTH CONGRESS

FIRST SESSION



FEBRUARY 28 AND MARCH 7, 1985



Printed for the use of the Committee on Government Operations




U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 1985



COMMITTEE ON GOVERNMENT OPERATIONS
JACK BROOKS, Texas, Chairman



DON FUQUA, Florida
JOHN CONYERS, Jr., Michigan
CARDISS COLLINS, Illinois
GLENN ENGLISH, Oklahoma
HENRY A. WAXMAN, California
TED WEISS, New York
MIKE SYNAR, Oklahoma
STEPHEN L. NEAL, North Carolina
DOUG BARNARD, Jr., Georgia
BARNEY FRANK, Massachusetts
TOM LANTOS, California
ROBERT E. WISE, Jr., West Virginia
BARBARA BOXER, California
SANDER M. LEVIN, Michigan
MAJOR R. OWENS, New York
EDOLPHUS TOWNS, New York
JOHN M. SPRATT, Jr., South Carolina
JOE KOLTER, Pennsylvania
BEN ERDREICH, Alabama
GERALD D. KLECZKA, Wisconsin
ALBERT G. BUSTAMANTE, Texas
MATTHEW G. MARTINEZ, California



FRANK HORTON, New York
THOMAS N. KINDNESS, Ohio
ROBERT S. WALKER, Pennsylvania
WILLIAM F. CLINGER, Jr., Pennsylvania
ALFRED A. (AD McCANDLESS, California
LARRY E. CRAIG, Idaho
HOWARD C. NIELSON, Utah
JIM SAXTON, New Jersey
PATRICK L. SWINDALL, Georgia
THOMAS D. (TOM) DeLAY, Texas
DAVID S. MONSON, Utah
JOSEPH J. DioGUARDI, New York
JOHN G. ROWLAND, Connecticut
RICHARD K. ARMEY, Texas
JIM LIGHTFOOT, Iowa
JOHN R. MILLER, Washington



William M. Jones, General Counsel

John E. Moore, Staff Administrator

James E. Lewin, Chief Investigator

Stephen M. Daniels, Minority Staff Director and Counsel



Legislation and National Security Subcommittee



JACK BROOKS,
DON FUQUA, Florida
HENRY A. WAXMAN, California
STEPHEN L. NEAL, North Carolina
TOM LANTOS, California
JOHN CONYERS, Jr., Michigan



Texas, Chairman
FRANK HORTON, New York
JIM SAXTON, New Jersey
DAVID S. MONSON, Utah
JOSEPH J. DioGUARDI, New York



Richard C. Barnes, Staff Director



(II)



CONTENTS



Hearings held on: Page

February 28 1

March? 243

Statement of:

Biddle, A.G.W., president, Computer & Communications Industry Associa-
tion, accompanied by David S. Cohen, senior partner, Cohen & White,
and P. David Pappert, president, ViON Corp 229

Bowsher, Charles A., Comptroller General of the United States, accompa-
nied by Milton J. Socolar, Special Assistant to the Comptroller General,
and Harry R. Van Cleve, general counsel 4

Brooks, Hon. Jack, a Representative in Congress from the State of Texas,
and chairman, Legislation and National Security Subcommittee: Open-
ing statement 1

Coburn, George M., counsel, Sachs, Greenebaum & Tayler, Washington,
DC 183

Gressman, Eugene, professor of law, University of North Carolina Law
School 51

Hardman, William E., president and chief operating officer. National
Tooling & Machining Association, accompanied by Bruce N. Hahn,
chairman-elect. Small Business Legislative Council, and Paul J. Seid-
man, procurement counsel 206

Jensen, D. Lowell, Acting Deputy Attorney General of the United States,
accompanied by Ralph Tarr, Acting Assistant Attorney General, Office
of Legal Counsel, U.S. Department of Justice, Washington, DC 295

Levinson, Sanford, professor of law. University of Texas Law School 50

Ross, Steven R., general counsel, Office of the Clerk, U.S. House of
Representatives, accompanied by Charles Tiefer, deputy general coun-
sel 255

Stockman, David A., Director, Office of Management and Budget, accom-
panied by Joseph R. Wright, Jr., Deputy Director 245

Tushnet, Mark, professor of law, Georgetown University Law Center 50

Velvel, Lawrence L., attorney at law 340

Williams, Karen Hastie, chairman, legislative liaison committee, section

of public contract law, American Bar Association 91

Letters, statements, etc., submitted for the record by: -

Biddle, A.G.W., president, Computer & Communications Industry Associa-
tion: Prepared statement 230-236

Bowsher, Charles A., Comptroller General of the United States: Submis-
sions to Congressman Horton's additional questions 14-15

Coburn, George M., counsel, Sachs, Greenebaum & Tayler, Washington,
DC: Prepared statement 185-200

Gressman, Eugene, professor of law. University of North Carolina Law
School:

Prepared statement 46-49

Submissions to Chairman Brooks' additional questions 74-81

Submissions to Congressman Horton's additional questions 81-90

Hardman, William E., president and chief operating officer. National
Tooling & Machining Association: Prepared statement 209-225

Jensen, D. Lowell, Acting Deputy Attorney General of the United States:

Prepared statement 302-323

Submissions to Chairman Brooks' additional questions 326-328

Submissions to Congressman Horton's questions 333-338

(III)



IV

Page

Letters, statements, etc., submitted for the record by — Continued

Levinson, Sanford, professor of law, University of Texas Law School:

Prepared statement 29-45

Submissions to Chairman Brooks' additional questions 61-63

Submissions to Congressman Horton's questions 64-73

Ross, Steven R., general counsel, Office of the Clerk, U.S. House of

Representatives: Prepared statement 257-276

Stockman, David A., Director, Office of Management and Budget: Pre-
pared statement 247-250

Tiefer, Charles, deputy general counsel. Office of the Clerk, U.S. House of

Representatives: The Justice Department's asserted "precedents" 283-289

Tushnet, Mark, professor of law, Georgetown University Law Center:

Prepared statement 19-28

Submissions to Chairman Brooks' additional questions 54-55

Submissions to Congressman Horton's additional questions 56-60

Van Cleve, Harry R., general counsel, U.S. General Accounting Office:

Information concerning CICA protests 11

Williams, Karen Hastie, chairman, legislative liaison committee, section
of public contract law, American Bar Association:

Prepared statement 94-183

Submissions to Congressman Horton's questions 203-205

APPENDIXES

Appendix A. — Pertinent material submitted for the record 345

1. December 12, 1984, joint letter from Chairman Jack Brooks, Repre-

sentative Frank Horton, Senator William S. Cohen, and Senator
Carl Levin to members of the Defense Acquisition Regulatory Coun-
cil and the Civilian Agency Acquisition Council, with January 10,
1985, response 345

2. January 16, 1985, GAO letter report (B-208159.5) containing plans for

implementing bid protest provisions of the Competition in Contract-
ing Act and final Bid Protest Regulations (3 attachments) 356

3. January 31, 1985, letters from Judiciary Chairman Peter W. Rodino,

Jr. to the Speaker and the Attorney General expressing concern
over Justice Department decision, with February 22, 1985, response
from Larry L. Simms, Acting Assistant Attorney General, Office of
Legal Counsel, Department of Justice 428

4. December 17, 1984, 0MB Bulletin No. 85-8, "Procedures Governing

Implementation of Certain Unconstitutional Provisions of the Com-
petition in Contracting Act of 1984" 462

5. February 7, 1985, study by the Congressional Research Service, Li-

brary of Congress, entitled "State Constitutional Provisions Estab-
lishing Auditors or Controllers" 465

Appendix B. — Additional statements and letters for the record 486

1. Statement of Senator William S. Cohen and Senator Carl Levin 486

2. Statement of Computer and Business Equipment Manufacturers Asso-

ciation 494

3. Statement of Arthur S. Miller, professor emeritus of law, George

Washington University 497

Appendix C. — Materials relating to the Competition in Contracting Act 530

1. March 6, 1985. — Letter from Comptroller General Charles A. Bowsher

to Chairman Jack Brooks discussing the basis for the executive
branch's decision not to execute or defend certain provisions of the
Competition in Contracting Act 530

2. March 1, 1985.— "GAO Chief Assails Reagan's Stance on Bid Pro-

tests," Washington Post 533

3. February 27, 1985. — Letter from Judiciary Committee Chairman Peter

W. Rodino, Jr. to Chairman Jack Brooks transmitting the Attorney
General's response to the Judiciary Committee letter concerning bid
protest provisions 534

4. February 25, 1985. — Letter from Chairman Jack Brooks to Speaker of

the House Thomas P. O'Neill, Jr., requesting authorization of the
General Counsel to the Clerk of the House to intervene in pending
litigation 543

5. February 6, 1985. — Memorandum from the Congressional Research

Service to the Committee on Government Operations concerning
"The Executive's Duty to Enforce the Laws" 544



Page
Appendix C— Materials relating to the Competition in Contracting Act-
Continued

6. February 5, 1985.— Letter from Hon. Peter W. Rodino, Jr., chairman

of the House Committee on the Judiciary, to Chairman Jack Brooks
expressing that committee's concern over the determination of the
Department of Justice that Federal agencies not execute the bid
protest provisions of the Competition in Contracting Act and enclos-
ing copies of letters to the Attorney General and the Speaker of the
House 560

7. January 19, 1985.— Letter from Deputy Director Joseph R. Wright, Jr.,

Office of Management and Budget, to Chairman Brooks 565

8. January 15, 1985.— Federal Acquisition Circular 84-6 to all Federal

departments and agencies containing revisions to the Federal Acqui-
sition Regulation 567

9. January 8, 1985.— Letter from Chairman Jack Brooks to 0MB Direc-

tor David A. Stockman regarding constitutionality of Competition in
Contracting Act provisions 594

10. January 2, 1985.— Article by David Burnham entitled "Reagan Bat-

tling Sections of Law on Cost Cutting," New York Times 595

11. 1985.— Article by Paul C. Besozzi, "The New Bid Protest Statute: Is It

Constitutionally Suspect?" Public Contract Newsletter, Winter
1985 596

12. November 21, 1984.— Letter from Attorney General William French

Smith to Speaker of the House Thomas P. O'Neill containing deci-
sion that Federal agencies should not execute certain bid protest
provisions (identical letter sent to the President of the Senate; see
appendix C-15 for text of October 17, 1984, memorandum from the
Office of Legal Counsel that was included as an attachment to the
Attorney General's letter) 600

13. November 7, 1984.— GAO Letter Report (B-208159) regarding Justice

Department memorandum setting forth the Attorney General's
advice on implementation of bid protest provisions (See Appendix C-
15 for texts of October 17, 1985, letter and memorandum from the
Office of Legal Counsel that was included as an attachment to the
GAO report) 610

14. October 29, 1984.— Article entitled "Portions of CICA Bid Protest Pro-

visions Deemed Unconstitutional by Justice Department," Federal
Contracts Report 612

15. October 17, 1984.— Letter from Acting Assistant Attorney General

Larry L. Simms, Office of Legal Counsel, to Allan W. Beres, Assist-
ant Administrator, Office of Acquisition Policy, General Services
Administration, transmitting copy of implementation memorandum
for distribution to the Civilian Agency Acquisition Council 614

16. October 2, 1984.— Memorandum from Steven R. Ross, General Counsel

to the Clerk of the House, to Chairman Jack Brooks regarding
constitutionality of the Competition in Contracting Act 635

17. August 8, 1984. — Memorandum from the American Law Division, Li-

brary of Congress, to the Oversight and Management Subcommittee,
Senate Committee on Governmental Affairs, regarding constitution-
ality of the Competition in Contracting Act provisions 646

18. August 1, 1984.— Memorandum from Morgan F. Frankel, Assistant

Counsel, Office of Senate Legal Counsel, to Senate Governmental
Affairs Committee, regarding "Constitutionality of Procurement
Statute" 661

19. August 1, 1984.— Joint letter from the House Committee on Govern-

ment Operations and Senate Committee on Governmental Affairs to
Comptroller General Charles A. Bowsher requesting the establish-
ment of an interdivisional task force to review implementation of
the Competition in Contracting Act 671

20. July 31, 1984.— Letter from Defense Acquisition Regulatory Council

and Civilian Agency Acquisition Council to Representative Frank
Horton regarding establishment of Ad Hoc Interagency Task Group. 673

21. July 19, 1984.— Article by Myron Struck, "President Resists Wider

GAO Role," Washington Post, p. A19 674

22. July 18, 1984.— Statement of the President on signing of Competition

in Contracting Act, "Deficit Reduction Act of 1984," Weekly Compi-
lation of Presidential Documents, vol. 20, No. 28, p. 1037 675



VI

Page

Appendix C. — Materials relating to the Competition in Contracting Act —
Continued

23. July 18, 1984.— Portion of Public Law 98-369, Deficit Reduction Act of

1984, containing the Competition in Contracting Act, with related
portion of June 23, 1984, conference report, Report 98-861, contain-
ing the statement of managers 676

24. July 16, 1984. — "Competition Bid Protest Provisions Enacted by Con-

gress Are 'Far-Reaching'," Federal Contracts Report, vol. 42, p. 81 725

25. May 8, 1984.— GAO Letter Report (B-208159) commenting on Justice

Department's letter of April 20, 1984, on H.R. 5184 727

26. April 30, 1984. — Letter from Acting Administrator Ray Kline, General

Services Administration, to Chairman Jack Brooks containing the
agency's views on H.R. 5184, the Competition in Contracting Act of
1984 732

27. April 20, 1984. — Letter from Assistant Attorney General Robert A.

McConnell, to Chairman Jack Brooks, setting forth the Justice De-
partment's views on H.R. 5184 736

28. April 6, 1981.— Letter from Attorney General William French Smith

to the Senate Judiciary Committee responding to the committee's
request that the Department reconsider its decision not to defend
the constitutionality of an act of Congress in the case of League of
Women Voters v. FCC 742

29. July 30, 1980. — Letter from Attorney General Benjamin R. Civiletti to

Senator Max Baucus (excerpted from hearings entitled "Department
of Justice Authorization and Oversight, 1981," March-May 1980,
Senate Committee on the Judiciary) 744

30. October 11, 1979. — Letter from Attorney General Benjamin R. Civiletti

to Speaker of the House Thomas P. O'Neill, Jr., informing the
House of Representatives that the Department will not defend the
constitutionality of a statute in the case of League of Women Voters
v.FCC. 756

31. January 15, 1979. — Portion of S. 5 (96th Congress), Federal Acquisition

Reform Act, pertaining to bid protest function 758

32. July 13, 1978.— Portion of S. 1264 (95th Congress), as reported by Mr.

Chiles and referred to the Committee on Armed Services, pertaining

to bid protest function 766

33. July 22, 1977. — Letter from Roy S. Mitchell, American Bar Associa-

tion, to Chairman Lawton M. Chiles, Senate Subcommittee on Fed-
eral Spending Practices and Open Government, setting forth the
opinion of the public contract law section on S. 1264, the Federal
Acquisition Act of 1977 774

34. December 1972. — Excerpt from the Report of the Commission on Gov-

ernment Procurement, vol. 4 784

Appendix D. — Court Cases on the Constitutionality of GAO's bid protest
function 801



CONSTITUTIONALITY OF GAO'S BID PROTEST

FUNCTION



THURSDAY, FEBRUARY 28, 1985

House of Representatives,
Legislation and National Security Subcommittee

OF THE Committee on Government Operations,

Washington, DC.
The subcommittee met, pursuant to notice, at 10:05 a.m., in room
2154, Rayburn House Office Building, Hon. Jack Brooks (chairman
of the subcommittee) presiding.

Present: Representatives Jack Brooks, Frank Horton, and David
S. Monson.

Subcommittee staff present: Richard C. Barnes, staff director;
Mary Alice Oliver, clerk; full committee staff: William M. Jones,
general counsel; John E. Moore, staff administrator; James E.
Lewin, chief investigator; James E. Rife, Charles C. Wheeler, R. Mi-
chael Long, and Robert S. Richard, professional staff members;
Ralph Doty, and Judge Williams, staff members; Stephen M. Dan-
iels, minority staff director and counsel; Douglas D. Mitchell and
John Parisi, minority professional staff, Committee on Government
Operations.

OPENING STATEMENT OF CHAIRMAN BROOKS

Mr. Brooks. The subcommittee will come to order.

Today we will begin our hearings on the constitutionality of
GAO's bid protest function.

Last year, after much work by this committee and others. Con-
gress enacted the Competition in Contracting Act, Public Law 98-
369. This statute is widely regarded as the first major piece of pro-
curement reform legislation passed by the Congress in over 40
years.

The Competition Act requires Federal agencies to open up their
bidding process to all qualified firms wishing to compete for the
Government's business. It also establishes, for the first time in stat-
ute, a forum in which contractors can appeal to the General Ac-
counting Office when they have been unlawfully denied the oppor-
tunity to compete.

During our deliberations on this legislation, we received consider-
able opposition to these reforms, reasonable though they are, from
executive branch agencies. Apparently, high level officials, both
within the Defense Department and some of the civilian agencies,
thought it was their right to regularly award sweetheart contracts
to their favored sole-source suppliers. In passing this act. Congress



firmly rejected this notion, and, in my view, the American taxpay-
er will be the ultimate winner.

Clearly, the statutory requirements mandating the use of full
and open competition will significantly lower the prices the Gov-
ernment pays for everything from claw hammers to nuclear sub-
marines. Unfortunately, because of the actions taken by the execu-
tive, it may be a while before these savings can be achieved.

The President, on signing the competition bill into law, declared
certain key provisions dealing with GAO's bid protest function to
be unconstitutional. And that has no standing in court whatsoever.
Subsequently, the Justice Department and 0MB directed executive
agencies not to comply with these provisions. Mr. Stockman even
went so far as to order Federal officials to willfully violate the law.

It has always been my impression that there are the legislative,
the executive, and the judicial branches of Government; and it was
the judicial branch that declared laws, actions to be unconstitution-
al, not the executive. Now, if we are going to change that, we ought
to abolish the Supreme Court and move it down to the White
House, and then the President could say a law is constitutional or
not. But do we want to try all of our cases down there?

In my opinion, these actions are unprecedented in the history of
our Government. The Competition in Contracting Act was duly en-
acted by Congress and signed into law by President Reagan in ac-
cordance with constitutional requirements. It is the law of the
land. Absent a judicial determination on the provisions in question,
it is the responsibility of Government officials to comply with the
statute in its entirety.

Nobody asked these officials or even care what they think about
the law's constitutionality. The President is the determining factor
in that — not the 0MB nor the Justice Department. If they don't
like it, if they think it is wrong, they can sue in court. They can
pick their venue and take their case to court, and prove whatever
they can before the courts of this country.

I don't decide whether the law is constitutional or not. I think
that it is, but I don't make that decision. The courts will make that
decision. Until they do, as long as it was signed into law and duly
passed by Congress, it is the law of this country. We don't individ-
ually decide whether we think a law is constitutional or not. If you
don't like to pay your taxes, say it is unconstitutional like those
that don't pay them; and let's see if they don't haul you off and put
you in the clink.

I will just say that the President has chosen to do otherwise, and
as a result, he has failed to exercise his constitutional duty to take
care that the laws be faithfully executed.

The 0MB Director and the Attorney General were requested to
testify today. David Stockman has refused to appear. The Justice
Department was initially uncooperative. Under normal circum-
stances, I would move today to force the appearance of the Director
before the subcommittee. But, in part, due to Mr. Stockman's
recent illness, I have rescheduled both OMB and the Department's
testimony for March 7.

I would hope that Mr. Stockman is well enough to appear at that
time, and will take this time to reconsider his position.

We can now proceed with the hearing.



Mr. Horton, do you have an opening statement?

Mr. Horton. Yes, Mr. Chairman.

Thank you, Mr. Chairman.

I commend you on moving quickly to hold hearings on the seri-
ous issues that have been raised since passage last year of the Com-
petition in Contracting Act. And I would agree with you: I think
that this is a very serious constitutional question, a very serious
matter that results from the action taken by the executive branch
with regard to the declaration that certain provisions of this act
were not constitutional, and to the subsequent steps directly order-
ing agencies not to comply.

It is regrettable, of course, that the executive branch's reserva-
tions about constitutionality have clouded the prospects for imple-
menting the bid protest provisions, which lie at the heart of the re-
forms enacted in CICA. It is regrettable, further, that the executive
has taken objection to the bid protest provisions through a proce-
dure which assaults our own sense of constitutionality.

Obviously, I would rather not have to raise these concerns, but in
view of the sequence of events you have outlined, it is incumbent
upon us to do so.

It is a pleasure to welcome our distinguished witnesses today.
Some of them gave valuable testimony last March, on the need for
improving competitive practices in Government procurement, and
on the need for fair and equitable relief to contractors who are un-
fairly denied the benefits of competition. One of my questions to
our witnesses then was, "Would authorizing and expanding the
General Accounting Office's bid protest system make agencies
adhere more fully to principles of good procurement?" And the
clear answer was, uniformly, "yes."

I am convinced that the approach we took in CICA is not only
the most constructive in practice but also constitutionally sound.
Even if I were not convinced about the correctness of our action,
though, I would be greatly concerned about a philosophy that exec-
utive branch officials can determine which laws to carry out, and
which they can ignore. The way I've always read the Constitution,
the executive must carry out each and every law except those that
the judiciary finds unconstitutional.

I hope the testimony we receive today will be helpful in getting
the executive branch to reconsider its decision on these matters,
and to implement the bid protest law.

And I might add that I think the bid protest mechanism that we
provided in that legislation last year is very important, and a very
important key to assuring competition. If the Comptroller General
does not have the role that we gave him in that legislation, we
might just as well throw the whole thing out, because it is mean-
ingless.

So, I think it is very important that we have this testimony. And
I would agree with the chairman: I hope that the Attorney General
and the Director of the Office of Management and Budget will see
fit to appear before us next week so that we can have their views
on this very important question.

Thank you, Mr. Chairman.

Mr. Brooks. Thank you, Mr. Horton.



I will now put into the record the statement of Senator William
S. Cohen, a very able Republican from Maine, who previously
served in the House of Representatives; and Senator Carl Levin,
the distinguished Democratic Senator from the State of Michigan.

I will put their statement in the record at this point, and I would
just like to observe that they very clearly supported the legislation.