Court Condemns Reagan Inaction on Contract Law

In a harsh condemnation of the Reagan Administration’s refusal to implement provisions of a 1984 law designed to enhance competition in government contracting, a federal appeals court on Wednesday upheld both the law and a lower court decision that had accused the President of “judicial gamesmanship” in refusing to enforce it.

The U.S. 9th Circuit Court of Appeals joined an earlier appellate court decision in declaring the contracting provisions constitutional and went a step further in ruling that the Administration acted in bad faith by “willfully and deliberately” refusing to enforce a law adopted by Congress.

Unusual Ruling

In an unusual move, a three-member panel of the appeals court ruled that the government must pay attorney fees to Lear Siegler Inc., a contractor that went to court to seek enforcement of the 1984 Competition in Contracting Act after it lost out on a $5.1-million contract with the Navy to a firm controlled by the Israeli government.

The Administration’s argument that the President has the authority not to enforce laws that he believes are unconstitutional is “utterly at odds with the texture and plain language of the Constitution and with nearly two centuries of judicial precedent,” wrote Judge Betty B. Fletcher, an appointee of President Jimmy Carter who is regarded as one of the court’s more liberal members.

“Constitutional limitations upon the executive branch’s powers are not mere tools to advance the executive’s litigating objectives,” Fletcher wrote.

Joining in the decision, issued in San Francisco and Pasadena, were Judge Jerome Farris, another Carter appointee, and Justin L. Quackenbush, a Washington district court judge sitting temporarily on the appeals court.

The decision has little immediate practical effect because the Administration a little more than two years ago agreed to enforce all provisions of the law pending a final resolution in the courts. The U.S. Supreme Court agreed earlier this week to hear a Philadelphia case that raises almost identical issues.

But Brian Donovan, an Irvine lawyer who represented Lear Siegler, said it is likely that the Justice Department will seek to have this case joined with the Philadelphia case before the Supreme Court in order to air the “bad faith” issue.

“It’s certainly the first time they’ve ever refused to enforce provisions of a law and been sanctioned for it,” Donovan said.

“Who does the executive branch think they are? There is a Constitution, and the entity that decides what’s constitutional and what isn’t is the judicial branch, not the executive branch,” he said.

Law Passed in 1984

The 1984 law was passed by Congress in an attempt to stem the persistent use of “sole source” contract awards without competitive bidding. Reagan signed the law but said at the time that he “vigorously” objected to provisions that automatically stay the award of a contract when a competing bidder has challenged a bid, pending review and recommendations from the comptroller general.

The stay provisions were included to prevent what had been a persistent problem: though deficiencies in the bidding process were sometimes detected after a review, it was often too late to do anything about it when the contract had already been awarded to another bidder.

The Reagan Administration, echoing arguments raised earlier in challenges to the Gramm-Rudman budget law, claims the stay provisions are an unconstitutional attempt to delegate to the comptroller general, an officer of Congress, duties that are rightfully within the domain of the executive branch.

Almost immediately after passage of the law, the Administration ordered federal agencies not to enforce the stay provisions, arguing that the President has an obligation not to enforce laws that he believes to be unconstitutional.

The present court battle is one of a number of skirmishes mounted in recent years between the Administration and Congress over laws--ranging from Gramm-Rudman to the appointment of special prosecutors--that Reagan regards as an encroachment by the legislative branch into the domain of the executive.

Congress, which at one point had threatened to cut off funding to the Justice Department and various agencies over the contracting stay issue, intervened in the present case in seeking to have the law held constitutional.

“We were aware of certainly no case in which the executive branch had taken a law that applied generally to the people throughout the country and despite the fact the President had signed the law immediately announced that all agencies should disobey it,” said Morgan J. Frankel, assistant legal counsel for the Senate.

Indeed, the appeals court concluded that the Administration’s actions were “wholly unprecedented” and concluded that Lear Siegler was entitled to an estimated $28,000 in attorneys’ fees for having to go to court to compel the Administration to enforce the law.

Lear Siegler had lost out on a contract to supply fuel tanks on the Navy’s F/A 18 fighter attack aircraft when its $6.9-million bid came in substantially above the low $5.1-million bid submitted by a company controlled by the Israeli government, Israel Military Industries.

Lear Siegler believed it should have been awarded the contract under provisions of the federal “Buy American” program, under which it argued that IMI’s bid should have been upped by 50%. Lear Siegler sought to have the award of the contract to IMI stayed, pending the comptroller general’s review, and filed suit when the Navy refused.

As it happened, the comptroller general, U.S. District Judge David Kenyon in Los Angeles and, on Wednesday, the appeals court ruled against Lear Siegler on the awarding of the contract, but Donovan called the ruling “a moral victory” nonetheless.

Justice Department lawyers could not be reached for comment Wednesday.