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U.S.C. § 486(a) (1976)] as authority for his actions under E.O. 12092. Section 205(a) provides that the President "may prescribe such policies and directives, not inconsistent with the provisions of this Act, as he shall deem necessary to effectuate the provisions of said Act
In Section 2 [40 U.S.C. $ 471] Congress declared that FPASA was designed to foster “an economical and efficient system for procurement and supply". The Act also directs that the Administrator of General Services chart policy and procure supplies in a manner "advantageous to the Government in terms of economy, efficiency, or service, and with due regard to the program activities of the agencies concerned." Section 201(a) [40 U.S.C. § 481(a)]. Contracts are to be awarded to bidders whose terms "will be most advantageous to the Government, price and other factors considered." Section 303(b) [41 U.S.C. § 253(b)].
On March 13, 1979 the American Federation of Labor and Congress of Industrial Organizations (“AFL-CIO”) along with nine other labor organizations filed suit for declaratory and injunctive relief in federal district court against COWPS Chairman Alfred E. Kahn, COWPS Director Barry Bosworth, and the Administrator of OFPP, Lester A. Fetting (AFL-CIO v. Kahn, Civil Action No. 790802] (D.D.C.). The plaintiffs complained that E.O. 12092 and its implementing regulations constitute a mandatory system of wage and price controls unauthorized by any Act of Congress and repugnant to the express language of FPASA. They claimed that the defendants' actions are also violative of the Council on Wage and Price Stability Act ("COWPSA") which in pertinent part provides, “Nothing in this Act . . . authorizes the continuation, imposition or reimposition of any mandatory controls with respect to prices, rents, wages, salaries, corporate dividends, or any similar transfers [.]” Section 3(b) (12 U.S.C. § 1904 note (1976)].
On May 4, 1979 Senators John Heinz, Jake Garn and John Tower along with Representatives Jack F. Kemp, Clarence J. Brown, Dave Stockman, J. Danforth Quayle, G. William Whitehurst, Lyle Williams, Tennyson Guyer, Steven D. Symms, Bill Frenzel, John H. Rousselot, Ron Paul, Robert S. Walker, Clair W. Burgener, Edward J. Derwinski, Norman D. Shumway, Don Young, Gerald B. Solomon, William Thomas, Newton Gingrich, Lawrence Coughlin and Jim Jeffries field a motion for leave to file an amicus curiae memorandum on the issues of executive authority. They asserted that they “equally share plaintiffs' position that the mandatory control programs which the President has launched, employing the coercive force of Government procurement, is entirely unauthorized by statute.” The motion was granted on May 9, 1979.
In June 1979 Judge Barrington Parker granted summary judgment in favor of the plaintiffs. He stated that Congress never intended that FPASA be used to affect general price levels. The Court also interpreted the President's program as mandatory, not voluntary, and therefore in violation of COWPSA. Accordingly, enforcement of the President's program was enjoined. That injunction was stayed pending the outcome of an expedited appeal.
On June 22, 1979 the United States Court of Appeals for the District of Columbia Circuit, sitting en banc, reversed the decision of the District Court. In an opinion filed by Chief Judge Wright,
the Circuit Court found E.O. 12092 and its implementing regulations to be consistent with, and authorized by, FPASA:
[A] survey of the terms of the FPASA, its legislative history, and Executive practice since its enactment_suggests that the District Court misapprehended the President's statutory powers in this case. Any order based on Section 205(a) must accord with the values of "economy" and "efficiency.” Because there is a sufficiently close nexus between those criteria and the procurement compliance program established by Executive Order 12092, we find that program to be authorized by the FPASA.
The District Court was alarmed by the prospect of Government contracts being diverted from low bidders who are not in compliance with the wage and price standards to higher bidders.* The result, it might seem, could be an unwarranted drain on the public fisc. Yet it is important to consider the procurement compliance program in its real-world setting. Much Government procurement takes place through the processes of negotiation rather than formal advertisement and competitive bidding. Military procurement, which is the largest single component of Government purchasing, is conducted almost exclusively through negotiated arrangements.* In the context of a negotiated contract, the procurement program announced by Executive Order 12092 will likely have the direct and immediate effect of holding down the Government's procurement costs.
Moreover, to the extent that compliance with the wage and price standards is widespread, a corresponding reduction (or more gentle increase) in Government expenses should take place.* There is every reason to anticipate general compliance throughout the economy. Executive officials have cited initial indications that most large companies will comply with the standards,* and the inflation problem is too serious for businessmen and workers not to understand the importance of compliance. In addition, by setting standards for both wages and prices Executive Order 12092 attempts to eliminate the need for either business or labor to seek price and wage increases. Finally, if the voluntary restraint program is effective in slowing inflation in the economy as a whole, the Government will face lower costs in the future than it would have otherwise.* Such a strategy of seeking the greatest advantage to the Government, both short and long-term, is entirely consistent with the congressional policies behind the FPASA.*
We do not deny that under Executive Order 12092 there may be occasional instances where lowest bidder will not be awarded a contract. Nevertheless, we find no basis for rejecting the President's conclusion that any higher costs incurred in those transactions will be more than offset by the advantages gained in negotiated contracts and in those cases where the lowest bidder is in compliance with the voluntary standards and his bid is lower than it would
have been in the absence of standards.* Consequently, we conclude that Executive Order 12092 is in accord with the "economy and efficiency" touchstone of the FPASA. By acting to restrain procurement costs across the entire Government, the President was within his Section 205(a) powers.
We wish to emphasize the importance to our ruling today of the nexus between the wage and price standards and sikely savings to the Government. As is clear from the terms and history of the statute and from experience with its implementation, our decision today does not write a blank check for the President to fill in at his will.* The procurement power must be exercised consistently with the structure and purposes of the statute that delegates
that power.* [Slip Opinion at 17-19] (*Footnotes omitted)
Next the court addressed the lower court's finding that the program is mandatory and therefore barred by COWPSĂ:
We disagree with the District Court's conclusion. Although every denial of a benefit may be viewed in some sense as a sanction, we do not find in the procurement compliance program those elements of coercion and enforceable legal duty that are commonly understood to be part of any legally mandatory requirement.* The situation in this case seems analogous to those federal programs that offer funds to state and local governments on certain conditions. The Supreme Court has upheld such conditional grants, observing on one occasion through Justice Cardozo that "to hold that motive or temptation is equivalent to coercion is to plunge the law in endless difficulties.'
Further, any alleged mandatory character of the procurement program is belied by the principle that no one has a right to a Government contract. As the Supreme Court ruled in Perkins v. Lukens Steel Co., "[T]he Government enjoys the unrestricted power ** to determine those with whom it will deal, and to fix the terms and conditions upon which it will make needed purchases. Those wishing to do business with the Government must meet the Government's terms; others need not.
The question presented by this case, however, is not whether in some abstract sense President Carter's program is mandatory or voluntary, but whether it is barred by Section 3(b) of COWPSA. In our view, that provision refers to the sort of mandatory economic controls imposed during World War II, the Korean War, and the early 1970s. The statute covers “prices, rents, wages, salaries, [and] corporate dividends,"* a likely reference to a similar list in Section 203(a) of the Economic Stabilization Act Amendments of 1971 which established legally enforceable wage and price controls.* Because COWPSA was enacted just a few months after the Economic Stabilization Act expired, it is reasonable to conclude that the language of Section 3(b) looks back to the provisions of the earlier Act.
In addition, the standards in Executive Order 12092, which
Perhaps more important, Section 3(b) is irrelevant to the
3(b) may not also grant him that authority.* [Slip opinion at 20-22.] (*Footnotes omitted)
In separate concurring opinions Judge Bazelon and Judge Tamm emphasized that their decision to uphold the procurement compliance program was predicated on the close nexus between the purpose of the program and the goal of FPASA.
Judge MacKinnon wrote a 51 page dissent in which he attacked the program as being not only unauthorized by FPASA but also counterproductive to the Act's purpose. He also claimed that for all practical purposes the guidelines constitute the mandatory controls condemned by Congress in Section 3(b) of COWPSA. In another dissenting opinion Judges Robb and Wilkey focused on what they considered to be the mandatory, and therefore COWPSA-barred, characteristics of the program.
In July 1979 the plaintiffs petition for writ of certiorari was denied by the U.S. Supreme Court. [No. 78-1922]
Status.—The case is closed. United States v. Eilberg
Civil Action No. 79-1623 (E.D. Pa.)
In October, 1978, then-Representative Joshua Eilberg of Pennsylvania was indicted under a federal conflict of interest statute. In February, 1979, Mr. Eilberg pled guilty to the charge and was fined $10,000 and placed on probation for five years. (See page 45 of this Report for a discussion of the case.)
As a follow-up to that criminal prosecution, the Government filed a civil action against Mr. Eilberg on May 7, 1979. The Government's complaint contained three counts. The first count alleged that from June 1975 through 1976, the defendant, while a member of Congress, was also a member of the law firms known as "Eilberg, Corson, Getson and Abramson" and "Corson, Getson and Abramson". The Government said that these firms represented Hahnemann Medical College and Hospital of Philadelphia (hereinafter “Hahnemann”) in its attempt to obtain a $14.5 million grant from the Community Services Administration, an executive branch agency. As a result of this representation Congressman Eilberg received legal fees in the approximate amount of $35,172, which constituted his distributive share of the entire legal fee paid by Hahnemann. By representing Hahnemann, said the Government, Congressman Eilberg placed himself in a conflict of interest and breached his fiduciary duty to the United States in violation of 18 U.S.C. $ 203. This statute, which is the same statute Mr. Eilberg was convicted under in the earlier criminal action, makes it a crime for any member of Congress, except as provided by law, to receive compensation for services rendered in any proceeding, before a federal agency or department, in which the United States has a substantial interest.
Count II repeated the allegations of Count I and further charged that the defendant violated his agency relationship with the Government, breached his implied contract of employment, and was unjustly enriched, again in violation of 18 U.S.C. § 203.
Count III alleged that during the period from May, 1973 through January, 1978 Congressman Eilberg used, and permitted his family and friends to use, his official telephone credit card to charge personal calls to the House of Representatives. Allegedly, the defendant, for each of 57 consecutive months, falsely and knowingly certified to the Clerk of the House that all calls charged to his official credit card and billed to the House by the phone company were made in the course of his congressional duties, when in reality they were not. Such acts were said to constitute violations of 31 Ú.S.C. $ 231 (False Claims Act) which provides, in pertinent part, Any person
* who shall make * or present
* * knowingly such claim to be false * or who, for the purpose of obtaining * the payment or approval of such claim, makes [or] uses
any false bill, [or] voucher knowing the same to contain any fraudulent statement or entry, shall forfeit and pay to the United States the sum of $2,000, and in addition, double the amount of damages which the United States may have
sustained * Under Count III the Government requested that the court order Mr. Eilberg to pay $2,000 for each of the 57 alleged violations of the False Claims Act, plus double the Government's damages. Under Counts I and II the U.S. asked the court to deem the defendant's $35,172.00 legal fee as being held in constructive trust with the U.S. as the beneficiary.
In June, 1979, Mr. Eilberg filed a motion to dismiss the complaint. As to Counts I and II the defendant argued that the conflict of interest statute does not grant the Government a civil cause of action against him because a civil remedy should only be implied from a criminal statute when criminal liability is inadequate to ensure the full effectiveness of the statute. In the present case, said Mr. Eilberg, his Hahnemann legal fees were given to him by his law firm. Thus, since the only possible loss suffered was to his law partners, not the Government, the statute was given full effect