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Parties Involved:
Techniarts Engineering
Appellee
United States of America
Appellant

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 9, 1994 Decided April 14, 1995

No. 93-5304

TECHNIARTS ENGINEERING,

APPELLEE

v.

UNITED STATES OF AMERICA,

APPELLANT

Appeal from the United States District Court

for the District of Columbia

(91cv00547)

Thomas M. Bondy, Attorney, Department of Justice, argued the cause for the appellant. On brief

were Frank W. Hunger, Assistant AttorneyGeneral, Eric H. Holder, Jr., United States Attorney, and

Anthony J. Steinmeyer, Attorney, United States Department ofJustice. R. Craig Lawrence, John D.

Bates and Susan A. Nellor entered appearances for the appellant.

Daniel M. Press argued the cause for the appellee.

Before WILLIAMS, HENDERSON and ROGERS, Circuit Judges.

Opinion for the court filed by Circuit Judge HENDERSON.

KARENLECRAFTHENDERSON, Circuit Judge: The United States Information Agency (USIA)

appeals from a summary judgment in favor of Techniarts Engineering (Techniarts), the former

producer of the USIA's "TV Marti" newscasts. The district court held that when the USIA began

producing TV Marti newscastsin-house, instead ofrenewing its contract withTechniarts, the agency

violated the EconomyAct, 31 U.S.C. § 1535(a), and the Office ofManagement andBudget'sCircular

A-76, 48 Fed. Reg. 37,110 (1983), (OMB Circular), which direct federal agencies to compare the

costs of commercial and agency production and to use the former unlessmore expensive. The district

court further held that the USIA violated Federal Acquisitions Regulations, 48 C.F.R. § 37.104(b),

(FAR 37.104) by entering into unauthorized private service contracts in the course of internalizing

newscast production. Because the USIA was authorized by statute both to move production in-house

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and to enter into the service contracts, we conclude the agencywas not bound by the cited provisions

and reverse the district court's decision.

In 1988Congress authorized the USIAto begin television broadcaststo Cuba, on a trialbasis,

and appropriated up to $7,500,000 for the tests. See Act of Oct. 1, 1988, Pub. L. No. 100-459, tit.

V, 102 Stat. 2186, 2221-22 (1988). In January 1990, after competitive bidding, the USIA contracted

withTechniartsto produce a half-hour dailynews programfor the trialbroadcasts. In February 1990,

before testing was complete, Congress enacted the TV Marti Act, formally instructing the Director

of the USIA to "establish within the Voice of America a Television Marti Service" to "be responsible

for all television broadcasts to Cuba authorized by this subchapter." 22 U.S.C. § 1465cc(a).

Although the Act appropriated $16,000,000 for TV Marti broadcasting in each of fiscal years 1990

and 1991, those funds could not "be obligated or expended unless the President determine[d] and

notifie[d] the appropriate committees of Congress that the test of television broadcasting to Cuba ...

has demonstrated television broadcasting to Cuba is feasible and will not cause objectionable

interference with the broadcasts of incumbent domestic licensees." Id. § 1465ee. On August 26,

1990, President Bush notified Congress that he had made the required determination. Presidential

Determination No. 90-35, 55 Fed. Reg. 38,659 (1990).

On October 3, 1990, the USIA published notice of its intent to negotiate a "follow-on"

contract with Techniarts for the period January 1, 1991 to June 30, 1991. After some negotiation,

however, the USIA extended the contract only until March 15, 1991, when the agency took

production in-house and began using its own facilities and personnel, as well as some private

contractors, to produce the newscasts.

On March 14, 1991, Techniarts filed this action in the district court challenging the USIA's

assumption of TV Marti production on the grounds that the agency had not first conducted cost

comparisons, asrequired by the Economy Act and by the OMB Circular, and that it had entered into

unauthorized private service contractsfor production work,some with former Techniarts employees

later hired by the USIA, in violation of FAR 37.104. On August 6, 1993, the district court ruled in

favor of Techniarts, on cross-motionsfor summary judgment, holding that the USIA had violated all

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1There is reason to doubt this assumption. In United States Dep't of Health & Human Servs.

v. FLRA, 844 F.2d 1087, 1094-96 (4th Cir. 1988), the Fourth Circuit, sitting en banc, concluded

that the OMB Circular "is not an "applicable law,' " as that term is used in 5 U.S.C. § 7106(a)(2),

and "confers no grievable, arbitrable, or justiciable rights on third parties under Title VII of the

Civil Service Reform Act of 1978." But see Diebold v. United States, 947 F.2d 787, 801 (6th

Cir. 1991) ("We are not called on to say whether the Circular, standing alone, would be sufficient

as a source of law, but it is clear that in the context of the whole regime of statutes and

regulations governing this dispute, the Circular functions as part of the law to apply."). In United

States Dep't of Treasury v. FLRA, 996 F.2d 1246, 1249-50 (D.C. Cir. 1993), this court

acknowledged the Fourth Circuit's view that the OMB Circular is "merely an internal executive

branch management directive" but found it unnecessary to reach the issue. 

2The Economy Act provides in part:

(a) The head of an agency or major organizational unit within an agency

may place an order with a major organizational unit within the same agency or

another agency for goods or services if

...

(4) the head of the agency decides ordered goods or services cannot be

provided by contract as conveniently or cheaply by a commercial

enterprise.

31 U.S.C. § 1535(a) (emphasis added). In addition, the Economy Act's implementing regulations

expressly incorporate the OMB Circular's requirements. See 48 C.F.R. § 17.503; id. subpt. 7.3. 

3The OMB Circular provides in part:

5. Policy. It is the policy of the United States Government to:

a. Achieve Economy and Enhance Productivity. Competition enhances

quality, economy, and productivity. Whenever commercial sector performance of

three provisions. It remanded the case to the USIA for cost comparisons in conformance with the

Economy Act and the OMB Circular and ordered the agency to cease in-house production and to

terminate personal service contracts then in effect. The USIA now appeals the court's judgment.

Assuming, without so deciding, that claims grounded in the OMB Circular are reviewable,1as the

district court held, we conclude that the USIA's actions were authorized by the TV Marti Act and

therefore not in violation of law.

We first consider the contention that the USIA's decision to move production in-house

without first comparing the costs of private and agency production violated the Economy Act2and

the OMB Circular.3 The USIA maintains that the specific provisions of the TV Marti Act preempted

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a Government operated commercial activity is permissible, in accordance with this

Circular and its Supplement, comparison of the cost of contracting and the cost of

in-house performance shall be performed to determine who will do the work.

b. Retain Governmental Functions In-House. Certain functions are

inherently Governmental in nature, being so intimately related to the public interest

as to mandate performance only by Federal employees. These functions are not in

competition with the commercial sector. Therefore, these functions shall be

performed by Government employees.

c. Rely on the Commercial Sector. The Federal Government shall rely on

commercially available sources to provide commercial products and services. In

accordance with the provisions of this Circular, the Government shall not start or

carry on any activity to provide a commercial product or service if the product or

service can be procured more economically from a commercial source.

48 Fed. Reg. 37,110, 37,114 (1983) (emphasis added). 

any duty the agency might otherwise have had under the Economy Act or the OMB Circular to

conduct cost comparisons or to continue to rely on commercial production. We agree.

The TV Marti Act provides: "To assure consistency of presentation and efficiency of

operationsin conducting the activities authorized under thissubchapter, the Television Marti Service

shall make maximum feasible utilization of Agency facilities and management support, including

Voice of America: Cuba Service, Voice of America, and the United States Information Agency

Television Service." 22 U.S.C. § 1465cc(b). In American Textile Mfrs. Inst., Inc. v. Donovan, 452

U.S. 490, 508 (1981), the United States Supreme Court observed that the plain meaning of "feasible"

is "capable of being done, executed, or effected" and therefore concluded that feasibility does not

depend on a comparison of costs and benefits. Consistent with that determination, this court has

found occupational safety standards to be feasible "if the cost of compliance does not threaten the

"competitive structure or posture' of the industry," without considering the relative costs of

alternative standards. National Cottonseed Prods. Ass'n v. Brock, 825 F.2d 482, 487 (D.C. Cir.

1987) (quoting Industrial Union Dep't v. Hodgson, 499 F.2d 467, 478 (D.C. Cir. 1974)); see also

American Iron & Steel Inst. v. OSHA, 939 F.2d 975, 980 (D.C. Cir. 1991) ("A standard is

economically feasible if the costs it imposes do not "threaten massive dislocation to, or imperil the

existence of, the industry.' ") (quoting United Steelworkers of Am. v. OSHA, 647 F.2d 1189, 1265

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4Occupational safety standards must be both technologically and economically feasible. 

National Cottonseed Prods., 825 F.2d at 487. Because Techniarts objects only to the costs of

in-house production, we address only its economic feasibility. 

5That the statute requires "maximum" feasible use of agency resources accentuates the USIA's

duty to produce in-house if at all feasible. 

6

In fact, the drafters of the two general provisions have affirmatively expressed the intent that

specific statutes control. See Act of Feb. 14, 1984, Pub. L. No. 98-216, § 5(a), 98 Stat. 3, 7

(1984) ("Laws enacted after March 31, 1983, that are inconsistent with [the Economy Act]

supersede [the Economy Act] to the extent of the inconsistency."); 48 Fed. Reg. at 37,114 ("The

[OMB] Circular and its Supplement shall not ... [b]e applicable when contrary to law, Executive

Orders, or any treaty or international agreement...."). 

(D.C. Cir. 1980)).4 Similarly here, the USIA's in-house newscast production must be deemed feasible

so long as it does not seriously jeopardize the TV Marti program (or perhaps inflict grave injury on

some other program), whether or not commercial production might be cheaper. Thus, to the extent

that the EconomyAct and the OMBCircularrequire use of commercialresources when cheaper, they

are at odds with the TV Marti Act's mandate to "make maximum feasible utilization" of USIA

resources and, aslaws of general application, must give way to that specific mandate.5See Crawford

Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 445 (1987) ("As always, "[w]here there is no clear

intention otherwise, a specific statute will not be controlled or nullified by a general one, regardless

of the priority of enactment.' ") (quoting Radzanower v. Touche Ross & Co., 426 U.S. 148, 153

(1976)). Because there is no evidence of contrary congressional intent here,6 we conclude that

neither the Economy Act nor the OMB Circular required the USIA to compare the costs of agency

and commercial production before selecting the former.

We also reject the argument that the USIA violated FAR 37.104(b), which provides:

"Agencies shall not award personalservices contracts unless specifically authorized by statute (e.g.,

5 U.S.C. 3109) to do so." The USIA was, and is, expressly authorized by statute to enter into

temporary personalservice contracts lasting no longer than one year. Section 3109, the very statute

cited in the regulation, permits an agency "[w]hen authorized by an appropriation or other statute"

to "procure by contract the temporary (not in excess of 1 year) or intermittent services of experts or

consultants or an organization thereof, including stenographic reporting services." 5 U.S.C. §

3109(b). Congress has expressly authorized the USIA "[i]n carrying out" the provisions governing

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TV MARTI to "procure services of experts and consultants in accordance with section 3109." 22

U.S.C. § 1474(17). Techniarts does not contend that the challenged contracts were not temporary

but only that "they were used to circumvent the normal civil service processesexactly the reason

for the prohibition on such contracts." Appellee's Brief at 36-37. We find this argument

unpersuasive. All the USIA did was to enter interim contracts, pursuant to its statutory authority,

for services necessary in "carrying out" one of the TV Marti Act's provisions, namely the mandate

in 22 U.S.C. § 1465cc(b) to "make maximumfeasible utilization ofAgency facilities and management

support." The agency was under no duty, statutory or otherwise, to make Techniarts the beneficiary

of those contracts.

For the preceding reasons, we reverse the judgment of the district court and direct that

judgment be entered in favor of the USIA.

So ordered.

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