Opinion ID: 355306
Heading Depth: 1
Heading Rank: 1

Heading: The Comptroller General's Purpose

Text: 33 Plaintiff's argument that the Comptroller General's demand exceeds his authority because he is using his powers for an improper purpose is based on the principle of administrative law that power to investigate can be exercised only for the purpose for which the authority was granted (Br. 19). See 1 K. Davis, Administrative Law § 3.10. 2 Relying on the district court's conclusion that the Comptroller General in this case is using his authority for the purpose of conducting a research study of the economics of the entire pharmaceutical industry, plaintiff suggests that such a study is an improper purpose and therefore the demand violates Professor Davis' principle of administrative law. 34 Even assuming that the contractual powers of the GAO, which is a unique independent agency within the legislative branch of Government (see Cibinic & Lasken, The Comptroller General and Government Contracts, 38 Geo.Wash.L.Rev. 349, 349-350 (1970)), are subject to the same restraints as those on the subpoena powers of administrative agencies to which plaintiff refers, the Comptroller General's demand was not outside the purpose for which his investigatory authority was granted for two reasons. First, although the district court did find that one of the Comptroller General's purposes was to conduct a research study, it did not explicitly find that such a study was the only purpose of the information demand. Instead, it apparently recognized that one of the Comptroller General's purposes was to determine the costs of producing the items purchased in the contracts. See Finding of Fact 21, App. 137a. Given that the Comptroller General thus had more than one purpose in mind, another principle of administrative law becomes relevant. As the Ninth Circuit stated in Lynn v. Biderman, 536 F.2d 820, 826 (1976), certiorari denied, 429 U.S. 920, 97 S.Ct. 316, 50 L.Ed.2d 287, that principle is that it is not    a ground to deny enforcement of a subpoena that it is being employed for a wrongful purpose if there is also a legitimate purpose for the subpoena. See also Donaldson v. United States, 400 U.S. 517, 91 S.Ct. 534, 27 L.Ed.2d 580. Since (as we discuss in Part II infra ) the cost elements of the items purchased are a legitimate area of inquiry under 10 U.S.C. § 2313 and 41 U.S.C. § 254, the Comptroller General's investigation is motivated by at least one legitimate purpose and therefore is a proper investigation under principles of administrative law. 35 A second reason why the Comptroller General's investigation is not motivated by an improper purpose is that even if the only purpose of the investigation were to conduct the research study, that purpose may be proper given the spectrum of statutes outlining the duties of the Comptroller General. This statutory spectrum is best outlined by noting the provisions cited by the Comptroller General in making his demand. In his written request to plaintiff of August 26, 1974, the Comptroller General stated his review of procurement of drugs by agencies of the federal government was being made pursuant to 31 U.S.C. §§ 53 and 67 (as well as under 10 U.S.C. § 2313(b) and 41 U.S.C. § 254(c)). Although his Answer to plaintiff's Interrogatory 10 denied that 31 U.S.C. §§ 53 and 67 were the basis for his claim of right to have access to and examine plaintiff's books and records, the answer did not constitute an abandonment of reliance on those provisions as spelling out his duties, and therefore his legitimate purposes, as opposed to his specific powers to obtain information. Therefore, we look to those and other related provisions to see if they provide a legitimate purpose for the present survey. 31 U.S.C. § 53 provides: 36 Investigations and reports by Comptroller General 37 (a) The Comptroller General shall investigate, at the seat of government or elsewhere, all matters relating to the receipt, disbursement, and application of public funds, and shall make to the President when requested by him, and to Congress at the beginning of each regular session, a report in writing of the work of the General Accounting Office, containing recommendations concerning the legislation he may deem necessary to facilitate the prompt and accurate rendition and settlement of accounts and concerning such other matters relating to the receipt, disbursement, and application of public funds as he may think advisable. In such regular report, or in special reports at any time when Congress is in session, he shall make recommendations looking to greater economy or efficiency in public expenditures. 38 (b) He shall make such investigations and reports as shall be ordered by either House of Congress or by any committee of either House having jurisdiction over revenue, appropriations, or expenditures. The Comptroller General shall also, at the request of any such committee, direct assistants from his office to furnish the committee such aid and information as it may request. 39 (c) The Comptroller General shall specially report to Congress every expenditure or contract made by any department or establishment in any year in violation of law.(d) He shall submit to Congress reports upon the adequacy and effectiveness of the administrative examination of accounts and claims in the respective departments and establishments and upon the adequacy and effectiveness of departmental inspection of the offices and accounts of fiscal officers. 40 (e) He shall furnish such information relating to expenditures and accounting to the Office of Management and Budget as it may request from time to time. 41 This statute plainly authorizes the detailed scope of inquiry into underlying records that the Comptroller General is attempting here (see Cibinic & Lasken, supra, at 387), and it does so in connection with public reports. The more difficult question of whether the statute contemplates such an inquiry into the records of private contractors as well as government agencies can be answered in the affirmative by noting the significant amount of public funds spent in contracts with private firms (see id.; Fullilove v. Kreps, 443 F.Supp. 253, 258 (S.D.N.Y.1977) ($120 billion awarded annually)); and then recognizing that Section 53 deals with all matters relating to the receipt, disbursement, and application of public funds (emphasis added). 3 Thus it is our view that even though in 1921 when it enacted Section 53 Congress gave the Comptroller General significant powers of investigation only with respect to governmental records, 4 its language left him with a general responsibility to oversee the Government's spending as a whole, which necessarily included disbursements to private contractors. The fact that Congress waited until the 1950's (when dealings with or concern over private contractors may have increased) to give the Comptroller General specific investigatory power into private contracts does not vitiate the conclusion that at all times the terms of the legislation gave the Comptroller General the responsibility to oversee all expenditures. 42 Since 31 U.S.C. § 67, also relied upon in the Comptroller General's requesting letter, deals with duties of governmental agencies, it is not germane to this case. However, 31 U.S.C. §§ 60 and 65 lend further support to the Comptroller General's request because they also outline broad investigatory responsibilities. Thus Section 60 directs the Comptroller General to make an expenditure analysis of each federal executive agency which in his opinion will enable Congress to determine whether (as here) public funds have been economically and efficiently administered and expended whereas Section 65 contains the following Congressional declaration of policy as to accounting and auditing: 43 Congressional declaration of policy 44 It is the policy of the Congress in enacting this chapter that 45 (a) The accounting of the Government provide full disclosure of the results of financial operations, adequate financial information needed in the management of operations and the formulation and execution of the Budget, and effective control over income, expenditures, funds, property, and other assets. 46 (b) Full consideration be given to the needs and responsibilities of both the legislative and executive branches in the establishment of accounting and reporting systems and requirements. 47 (c) The maintenance of accounting systems and the producing of financial reports with respect to the operations of executive agencies, including central facilities for bringing together and disclosing information on the results of the financial operations of the Government as a whole, be the responsibility of the executive branch. 48 (d) The auditing for the Government, conducted by the Comptroller General of the United States as an agent of the Congress be directed at determining the extent to which accounting and related financial reporting fulfill the purposes specified, financial transactions have been consummated in accordance with laws, regulations or other legal requirements, and adequate internal financial control over operations is exercised, and afford an effective basis for the settlement of accounts of accountable officers. 49 (e) Emphasis be placed on effecting orderly improvements resulting in simplified and more effective accounting, financial reporting, budgeting, and auditing requirements and procedures and on the elimination of those which involve duplication or which do not serve a purpose commensurate with the costs involved. 50 (f) The Comptroller General of the United States, the Secretary of the Treasury, and the Director of the Office of Management and Budget conduct a continuous program for the improvement of accounting and financial reporting in the Government. 51 Although it might be possible to argue that such general descriptions of responsibilities do not help define a proper purpose under a specific statute (see note 2 supra ), that argument is not persuasive when as here the specific statute was enacted for the purpose of implementing the general responsibilities that had been outlined in the earlier legislation. That the access-to-records provisions in Sections 2313 and 254 were enacted to help implement Congress' listing of responsibilities in Sections 53, 60 and 65 is clear from the statement before the House of Congressman Hardy, sponsor of the legislation, that one of the major reasons for the legislation was to give the Comptroller General the proper tools to do the job the Congress has instructed him to do. 97 Cong.Rec. 13198; see also id. at 13200; Hearings on Comptroller General Reports to Congress on Audits of Defense Contracts Before a Subcommittee of the Committee on Government Operations, 89th Cong., 1st Sess. 146 (1965) (statement of Herbert Rorback). 52 Thus even if a research study had been the Comptroller General's sole purpose, the statutory scheme outlining his powers and the legislative history of those statutes indicate that this request was authorized. While this interpretation of the statutes would give the Comptroller General broad supervisory responsibilities, the legislative history of those statutes does reflect at least one limitation on the powers available to implement those responsibilities: a restriction against making records disclosed under the access-to-records provisions public in a fashion allowing identification of individual companies. Disclosure of information about individual companies in a manner that would aid competitors apparently was not contemplated by the sponsors of Sections 2313 and 254. See 97 Cong.Rec. 13197. With that limitation, the applicability of which the Comptroller General has recognized (see Part IIC infra ), we conclude that his request was properly motivated. Accord, Hewlett-Packard Company v. United States, 385 F.2d 1013, 1016 (9th Cir. 1967), certiorari denied, 390 U.S. 988, 88 S.Ct. 1184, 19 L.Ed.2d 1292; Merck & Co., Inc. v. Staats, Civil Action No. 74-1447 (D.D.C. Aug. 12, 1977) (slip op. 4).