MOTION TO COMPEL COMPLIANCE
                 WITH SUBPOENA GRANTED: March 25, 1993
                                                       
 
 
                             GSBCA 12322-P
 
 
                           XEROX CORPORATION,
 
                                                Protester,
 
                                   v.
 
                      GOVERNMENT PRINTING OFFICE,
 
                                                Respondent.
 
        Frederick W. Claybrook, Jr., James J. Regan, Stephanie B. N.
   Renzi,  Devon Engel,  and John  E.  McCarthy, Jr.,  of Crowell  &
   Moring,  Washington, DC;  and Harry  C.  Orenstein and  Robert J.
   Patton of Xerox Corporation, McLean, VA, counsel for Protester.
 
        Roy E.  Potter and  Kerry L. Miller,  Office of  the General
   Counsel, Government Printing Office,  Washington, DC, counsel for
   Respondent.
 
   WILLIAMS, Board Judge.
 
        On  March 3,  1993,  Xerox  Corporation  (Xerox)  filed  the
   instant  protest claiming that the Government, acting through the
   Government Printing Office (GPO) and Department of Defense (DOD),
   induced  Xerox to invest millions  of dollars preparing a complex
   proposal  in  response   to  a  solicitation  that   was  issued,
   continued,  and  canceled  in violation  of  procurement  law and
   regulation.  GPO  as the entity  which canceled the  solicitation
   was designated the respondent by the Clerk's Office of the Board.
   Although DOD entities were invited  to participate in the protest
   as intervenors, none chose to do so.
 
        This  matter comes before the Board on Protester's Motion to
   Compel Compliance  with Subpoena  and the  Department of  Defense
   Inspector General's (IG's) Motion Opposing Protester's  Motion to
   Compel.  The  IG claims that certain documents  responsive to the
   subpoena  are  subject  to  the  deliberative  process privilege;
   protester claims that they are not.
 
        At issue  are four  categories of  documents:   (1) a Quick-
   Reaction  Draft  Report  Regarding  the  Air   Force  Information
   Publishing  Service (AFIPS)  Solicitation, issued  by  the IG  on
   November 27, 1992; (2)  portions of the IG audit  exit conference
   briefing materials  and notes;  (3) portions of  the Air  Force's
   mark-up  of  the  draft  audit  report;  and  (4) portions  of  a
   memorandum for the Secretary of Defense dated December 4, 1992.
 
        The Board ruled orally on the motion  on March 19, 1993, and
   concluded that even though portions  of the documents fell within
   the  deliberative  process  privilege,  the  privilege  was   not
   absolute and  was overcome in  this case by protester's  need for
   the documents to litigate its case.
 
                               Background
 
        On May 20, 1992,  the GPO issued  a solicitation for  AFIPS.
   The statement  of work  stated that  the  contract would  provide
   technical and  administrative information publishing  services to
   support a  wide range  of customers worldwide  in the  Air Force,
   Army, Navy, and other DOD agencies.
 
        Xerox claims that when GPO initially issued the solicitation
   the  Government  had  not   performed  the  required  acquisition
   planning, that duplicate services were available through  another
   contract,  the Joint  Computer  Aided  Acquisition and  Logistics
   Support (JCALS) contract which DOD awarded in December 1991, that
   although  the  Defense  Printing Service  (DPS)  was  the central
   printing  authority for  DOD, the  Government  acted without  its
   approval,  and that  the  Government  had  not  determined  which
   agency,  the Air  Force  or  DPS, would  manage  and control  the
   procurement.  Complaint   10.  Protester further alleged:
 
        20.  The government did  not have a definite  intent to
        award a contract under the Solicitation at the time  it
        issued  Amendment 2.  .  .  .  [U]pon  information  and
        belief:
 
        . . . .
 
        b.   on  July  17,  1992, the  Air  Force  Audit Agency
        issued  a  memorandum to  the  DoD  Assistant Inspector
        General for Audit stating that 'the AFIPS/902-S program
        is  being transferred to  the Defense Printing Service'
        and  outlining five  areas  of  concern  that  the  DoD
        Inspector  General  should investigate,  including  the
        possible  overlap  between the  902-S  Solicitation and
        JCALS and  the fact  that the  procurement should  have
        been designated as a 'major system acquisition' but had
        not been and  failed to receive required oversight as a
        result.   Additionally, the  memorandum suggested  that
        adequate acquisition  planning had not  been performed,
        stating:
 
             The  program manager  could not  provide  [the Air
             Force Audit  Agency]  with a  statement  of  need,
             program management directive,  cost versus benefit
             analysis,  functional economic  analysis, or  test
             and evaluation  master plan.  Without  these plans
             and analyses, the  AFIPS/902-S program may  have a
             very high risk of failure.
 
        c.   the government  was  aware, or  should  have  been
        aware, that  it had not performed  adequate acquisition
        planning  and  had  not  met  major  system acquisition
        requirements;
 
        d.   the government knew,  or should  have known,  that
        the 902-S Solicitation would be or had been transferred
        from the Air Force to DPS; and
 
        e.   the government  knew, or should  have known,  that
        all elements of programs that duplicated any portion of
        JCALS would be eliminated.
 
   Complaint   20.
 
   Draft  Quick-Reaction  Report  on  the  AFIPS  902-S  Procurement
   Program
 
        The  IG issued  a  draft  Quick-Reaction  Report,  or  audit
   report,  on November 27,  1992.   The  audit was  in response  to
   requests from the Air Force Audit  Agency and Congressman Charlie
   Rose,  Chairman, Joint  Committee  on  Printing.    The  requests
   expressed  concerns regarding  acquisition planning,  management,
   and oversight of the AFIPS program.  Draft Quick-Reaction Report,
   Executive  Summary; Letter  from  DOD IG  Counsel  to the  Board,
   Attachment B  (Mar. 18,  1993).   The  audit objectives  were  to
   determine the  need for the  procurement and to determine  if DOD
   requirements and regulations were followed.  Id.  Consistent with
   DOD  regulation,  the  draft  was  provided  to  appropriate  DOD
   managers for their review and comments which the IG will consider
   in preparing its final report.  Affidavit of Robert J. Lieberman,
   Assistant Inspector  General for Auditing  (Lieberman Affidavit),
     10.  A quick-reaction format  is used when imminent events make
   it  impractical  to  use  a standard  draft  audit  report  which
   normally takes several  months to issue.   Id.  In this  case the
   draft  report was  issued  in  a  quick-reaction  format  because
   proposals  for  the  902-S   procurement  were  due  to  GPO   on
   January 29, 1993.  Id.
 
        The  Assistant Inspector General  for Audits has  raised the
   deliberative  process privilege with  regard to portions  of this
   document claiming in pertinent part:
 
        As  with all draft  reports issued by  this office, the
        draft  audit  report  regarding  AFIPS  was  issued  to
        management  in order to obtain comments and a statement
 
        of corrective  action to  be taken.   The IG,  DoD uses
        this procedure because  it wants and needs  to consider
        management's comments  in preparing  the final  report.
        The draft  audit report may  be revised as a  result of
        the comments  received and  further reviews  within the
        Office of the Inspector General.  The draft report is a
        direct  part of  the deliberative  process  in that  it
        contains the auditors'  preliminary recommendations and
        opinions  on the  issues under  consideration.   As  an
        indication of  the preliminary nature of  the findings,
        conclusions, and recommendations contained therein, the
        draft audit report is signed by one of  my subordinates
        (in  the instant  case  by  the  Director  of  Contract
        Management).   After management  comments are  received
        and  considered,  the  audit  recommendations  may   be
        revised.   The final audit report, containing the final
        recommendations of the OIG, DoD,  is signed by me or my
        deputy.
 
        Even if a  final audit  report is  issued, the  auditor
        opinions   and   assessments   contained   in   auditor
        workpapers  and the draft  report would continue  to be
        privileged due to their  predecisional and deliberative
        character.   Such information must be withheld in order
        that  the audit process  and the  quality of  the final
        audit   report   not   be  harmed.      Disclosure   of
        predecisional deliberative  information, such  as draft
        audit report and auditor workpapers, to the extent that
        they  do  not  contain   purely  factual  portions   or
        compilations  of a purely  factual nature would  have a
        chilling effect on  the ability of auditors  to provide
        candid observations and recommendations  to each other,
        to their supervisors, and finally, to management during
        the audit process.
 
   Lieberman Affidavit,    15, 16.
 
        He  further stated  that distribution  of  IG draft  reports
   outside the Department of Defense is not authorized.  Id.   18.
 
   Auditors' Memoranda of Exit Conferences
 
        In  late   November  1992,   the  auditors  conducted   exit
   conferences with  DOD managers  at the end  of their  field work.
   Lieberman Affidavit,   20.  During the exit conferences, auditors
   discussed their preliminary findings and conclusions with the DOD
   managers.   Id.  The  IG provided  redacted versions of  the exit
   memoranda   which  synopsized  the  discussion  during  the  exit
   interview.   Letter from DOD  IG Counsel to the  Board, Exhibit C
   (Mar. 18, 1993).  All of the exit memoranda predated the issuance
   of  the  draft  report  on November 27,  1992.    Id.;  Lieberman
   Affidavit,   24. 
   Air Force Comments to Draft Quick-Reaction Report
 
 
        The  IG produced  in full  the Air  Force's comments  on the
   draft  audit  report.    The  comments  were  in the  form  of  a
   memorandum for the  IG dated December 18,  1992, from the  Deputy
   Assistant  Secretary.  However,  the IG claimed  the deliberative
   process privilege for  the "Air Force Mark-Up Copy"  of the draft
   audit  report.     This   document  included   the  Air   Force's
   corrections,  comments,  and  suggested  changes  to  the  report
   including the Air Force's rationale.
 
   Memorandum  for Secretary of Defense from Inspector General dated
   December 4, 1992
 
        The  IG claimed  the deliberative  process  privilege for  a
   portion    of   this    two-page   memorandum    which   included
   recommendations and conclusions of the audit.
 
                               Discussion
 
        As we  recognized in  U.S. West  Information Systems,  Inc.,
   GSBCA 9103-P,   87-3  BCA    20,204,  to  support  its  claim  of
   deliberative  process privilege, an  agency must  establish that:
   (1) the materials  were part of  a deliberative process  by which
   policies or decisions  were formulated and (2) the  materials are
   predecisional or advisory or recommendatory in nature, expressing
   an  opinion  on  a  legal  or  policy  manual  or  otherwise  are
   reflective of  a deliberative  process.   Id. at  102,345 (citing
   Mobile  Oil Corp.  v. Department  of  Energy, 102  F.R.D. 1,  5-6
   (N.D.N.Y. 1983)).   The privilege  is to  be narrowly  construed.
   U.S. West,  87-3 BCA  at 102,345-46 (citing  J. R. Norton  Co. v.
   Arizmendi, 108 F.R.D. 647,648 (S.D.  Cal. 1985)).  To qualify for
   protection,  a  document  "must  directly  recommend  courses  or
   prescribe  options for  a  specific  agency  decision  or  policy
   change."   Walsky Construction Co.  v. United States, 20  Cl. Ct.
   317, 321 (1990).
 
        Having conducted  an in-camera  review of  the documents  at
   issue,   the  Board  concludes  that  portions  of  the  disputed
   documents  come within the  deliberative process privilege.   The
   draft audit report is predecisional; it preceded the cancellation
   decision at issue here, and no final audit report had been issued
   as     of     the     Board's     oral     rulings     on     the
   motions.[foot #] 1      The  opinions   and   recommendations  of
   the  auditors in  the draft  audit report  would come  within the
   privilege, as would portions of  the exit conference memoranda of
   the auditors  which reflect their opinions,  recommendations, and
   conclusions.
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 1   The final  report  has  since  been  issued  on
   March 22, 1993.  Of course, to  the extent any of the preliminary
   recommendations were  adopted in  the  final report  they are  no
   longer privileged.  U.S. West, 87-3 BCA at 102,346.
                       _________
 
                   ----------- FOOTNOTE ENDS -----------
 
 
 
        We  note, however, that these documents also contain factual
   information, including  the  auditors' findings  which would  not
   come within  the parameters  of the privilege.   E.g.,  U.S. West
   87-3 BCA at  102,346 ("The findings give the  respondent's candid
   views on past irregularities, and are not deliberative.").  Also,
   the  memoranda at  times simply  recount statements  made to  the
   auditors  by  the  managers,  or  background  events,  which  are
   factual.   Similarly, the characterization of the AFIPS contract,
   as  well as  the  description  of  which  agency  components  had
   oversight over the procurement are factual.
 
        We  find that  the  Air Force  mark-up comments  are largely
   incorporated into the  Air Force comments which  were voluntarily
   produced and, therefore, that the  deliberative process privilege
   was  waived  as to  those  materials.    Washington Post  Co.  v.
   Department of the Air Force, 617 F. Supp. 602, 605 (D.D.C. 1985).
   Finally, the memorandum  to the Secretary of Defense  from the IG
   simply  reiterates the  conclusions  and recommendations  of  the
   auditors which we already have found to be within the privilege.
 
        Despite our conclusion  that certain of the  above documents
   are  privileged, the privilege is not absolute, and is overridden
   here.   In Centel  Federal Systems, Inc.,  GSBCA 12011-P, et al.,
   1992 BPD   296  (Oct. 1, 1992), we recognized  that the privilege
   may  be  overridden  when  necessary  to  promote  the  paramount
   interest  of  the  Government  in  having  justice  done  between
   litigants or  to shed light on alleged Government misfeasances or
   in other circumstances  where the public's interest  in effective
   Government would be  furthered by disclosure.   The Board  listed
   five  factors to  be  considered in  making  such an  assessment:
   (1) the  relevance of the evidence; (2) the availability of other
   evidence;  (3) the seriousness of  the litigation and  the issues
   involved; (4) the  role of the Government in  the litigation; and
   (5) the possibility of future timidity by Government employees.
 
        In  this case protester seeks to remedy alleged illegalities
   in  the conduct of  the AFIPS procurement.   The  audit report is
   directly  relevant  to the  protester's claim  that the  laws and
   regulations  were violated in  the AFIPS procurement.   Moreover,
   protester has alleged  that the report itself was  relied upon by
   the Government in  taking the cancellation  action.  While  other
   evidence may be available, this  draft audit report may, in fact,
   be an operative event in the procurement decisions at issue here.
   The exit interviews and Air  Force mark-up comments on the report
   deal with the viability  of the AFIPS procurement and  compliance
   with regulation.  They, too,  are directly relevant to the issues
   of protest.   GPO is a party  to the litigation, and  DOD actions
   are at issue; DOD should not be permitted  to shield its relevant
   actions from Board review by claiming the privilege.  Finally, we
   see little possibility of future timidity by Government employees
   because  the protective order  will strictly limit  disclosure of
   these documents to  counsel of record in this case  who have been
   granted access to  protected material.  Thus, there  should be no
   risk of  a chilling  effect on  Government employees  cooperating
   with  DOD IG  in the  future, or  on  the auditors  themselves in
   voicing candid recommendations.
 
 
                                Decision
 
        Protester's motion  to compel  compliance  with subpoena  is
   GRANTED.  The Department of Defense's motion opposing protester's
   motion to compel compliance with subpoena is DENIED.
 
                                      _____________________________
                                      MARY ELLEN COSTER WILLIAMS
                                      Board Judge