Opinion ID: 355306
Heading Depth: 2
Heading Rank: 2

Heading: The Legislative History of the Statutes

Text: 60 Despite its brevity, the legislative history of Sections 2313 and 254 lends support to the Comptroller General's contention that an inquiry into whether costs are excessive was intended by the drafters of those bills. The sponsor of the legislation, Congressman Hardy, made this added purpose apparent when he explained that under its new authority the GAO would find (whether) the rates (prices) were excessive and that in addition to deterring improprieties the new authority also would deter wastefulness in the negotiation of contracts. 97 Cong.Rec. 13198. Consistent with this purpose, Congressman Hardy recognized the GAO's authority to look behind the rate (price) which had been established. Id. 7 Although no emphasis need be placed upon it, it is instructive to note that the GAO's consistent interpretation of the access-to-records clauses, entitled to weight as the administrative interpretation of the statute (see J. McBride & T. Touhey, Government Contracts § 2.20) and as an interpretation voiced before Congress and not changed by it (cf. Kay v. Federal Communications Commission, 143 U.S.App.D.C. 223, 443 F.2d 638, 646 (1970)), has been that Congress intended the GAO to examine the books and records of the contractor to make certain that the Government was getting a fair deal out of negotiated contracts. 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. 147 (1965) (statement of Robert Keller); see id. at 44 (statement of Comptroller General Joseph Campbell); 115 Cong.Rec. 25801; J. McBride & T. Touhey, supra, § 7.140(1) (citing unpublished Comptroller General opinions). 61 Plaintiff's objections to this interpretation of the legislative history fall into two groups. The first group of objections disputes that Congress intended an inquiry into wastefulness by noting gaps in the legislation that allegedly are inconsistent with such an intent and later legislation from which the opposite intent could be inferred. Thus plaintiff argues that had Congress' concern been with wastefulness and not just fraud, it would have extended the scope of the legislation to advertised contracts as well. However, it is not illogical to assume that Congress simply felt the problem of waste was more acute in negotiated contracts (see generally Cibinic & Lasken, supra, at 387-388); in any event plaintiff's argument proves too much because it would still have some application even if as plaintiff contends Congress was only concerned with fraud. Similarly, plaintiff's argument that Congress could not have intended to inquire into wastefulness in contracts such as the one here in which the drugs were supplied to the Government at a fixed price at or below the wholesale market price (Br. 35) ignores the fact that the information sought by the Government may show that the prices it paid were nevertheless much too high. It should be noted that this same situation was present in Hewlett-Packard and not found determinative. See 385 F.2d at 1014. 62 Although plaintiff relies on subsequent history to restrict the Comptroller General's power, it is improper to resort to such materials when, as here, the relevant statutory provisions taken together plainly support the Government. Haynes v. United States, 390 U.S. 85, 87 n. 4, 88 S.Ct. 722, 19 L.Ed.2d 923; Wisconsin Cheeseman, Inc. v. United States, 388 F.2d 420, 423 (7th Cir. 1968). In any event, the failure to pass S. 2268 (94th Cong., 1st Sess.) giving the Comptroller General access to records in connection with profit studies, which plaintiff uses to argue that Congress disapproves of such power, could easily mean that Congress ultimately considered he already had sufficient inspection powers to justify requests such as the one at issue here. Cf. Red Lion Broadcasting Co. v. Federal Communications Commission, 395 U.S. 367, 382 n. 11, 89 S.Ct. 1794, 23 L.Ed.2d 371. 63 Finally, plaintiff argues that the access-to-records authority must be construed in harmony with other federal procurement laws (Br. 47), specifically the Truth-in-Negotiation Act (10 U.S.C. § 2306) and the Renegotiation Act (50 U.S.C. App. § 1216). Apparently the argument is that because the other federal procurement laws specifically exempt contracts such as the one here on the ground that they are based on established catalog prices, therefore the access-to-records clauses must be read similarly. However, even assuming that other expressions of Congress at different times have any relevance in interpreting legislation (see Benevento v. United States, 461 F.2d 1316, 1322, 198 Ct.Cl. 772 (1972), certiorari denied, 409 U.S. 1038, 93 S.Ct. 516, 34 L.Ed.2d 486), such relevance is not persuasive when as here the legislation clearly has no exemption provision. In fact, it can be argued that the proper inference to be drawn, if any, is that since Congress in the Renegotiation Act demonstrated its ability to draft a specific exemption provision, its failure to do so in the access-to-records legislation indicates that no such exemption was intended. See United States v. Columbia River-Longview Bridge Co., 99 F.2d 287, 289 (9th Cir. 1938). Although as plaintiff submits there may be some anomaly in requiring disclosure here when disclosure might not be required under other procurement statutes, it would be even more anomalous to deny this disclosure to the Government in this case, in which it has contracted for disclosure, when it is likely that the Government could compel the same disclosures from plaintiff in discovery proceedings even in litigation in which plaintiff is not a participant. See United States v. International Business Machines, 66 F.R.D. 186 (S.D.N.Y.1974). 64 Beyond these attempts to infer legislative intent, plaintiff's second type of objection seeks to prove legislative intent by relying on the discussion of the access-to-records legislation in the Congress and focusing specifically on Congressman Hoffman's insertion of the word directly into the legislation. However, plaintiff can point to no language in the legislative history to indicate that the word directly is to be given a meaning different from its normal interpretation discussed supra. In offering the amendment, Congressman Hoffman said only that his purpose was to limit the snooping that may be carried on under this bill which we do not have the votes to defeat. 97 Cong.Rec. 13377. Significantly, Congressman Hardy did not oppose the amendment and it was passed without opposition. Of course snooping was left undefined 8 and the extent to which it was to be limited was not explained. In our view the present request cannot be deemed snooping because, like the information requested in Hewlett-Packard, these costs directly pertain to, and involve transactions related to, those contracts (385 F.2d at 1015) and are therefore appropriate subjects for inspection. Thus at the very least the legislative history of Congressman Hoffman's amendment provides no basis to depart from the meaning of directly pertinent derived from an interpretation of that phrase and from an analysis of the legislative history of the legislation as a whole.C. Remaining Issues 65 Apart from the statutory wording and its legislative history, plaintiff offers three further arguments aimed at limiting or striking the Comptroller General's request. First, plaintiff argues that the access-to-records clauses must be construed narrowly to avoid conflicting with Lilly's right to privacy under the Fourth Amendment. But even assuming that the consent given by the plaintiff when the contract was signed could be deemed ineffective because the consent was required by the Government (but see United States v. Biswell,406 U.S. 311, 316, 92 S.Ct. 1593, 32 L.Ed.2d 87), the administrative law cases relied upon by plaintiff itself indicate that plaintiff's Fourth Amendment rights are protected if the requests are, as here, reasonably related to an investigation within the jurisdiction of the requesting agency. Civil Aeronautics Board v. United Airlines, 542 F.2d 394, 401-402 (7th Cir. 1976); see Equal Employment Opportunity Commission v. University of New Mexico-Albuquerque, 504 F.2d 1296, 1303 (10th Cir. 1974). 66 Related to this privacy argument is a second argument that plaintiff would suffer competitive injury upon disclosure of the requested information. However, in support of the motion of the United States for summary judgment, the first affidavit supplied by the GAO states that GAO does not intend to identify individual drug firms or specific products in any report issued to the Congress and that no information other than that pertaining to a contractor's government business would appear in a report issued by GAO or otherwise be made public. The second GAO affidavit provides in part as follows: 67 3. I (Gregory Ahart) know that GAO intends that any report made using data obtained from Lilly will be made so that identification of Lilly or its products is not reasonably possible and Lilly will be afforded a reasonable period of time before release of such report to examine and comment upon it. 68 4. I know that GAO intends to use its best efforts including resort to judicial remedies, if appropriate, to prevent the release of any data obtained from Lilly to an individual Member of Congress or to any person or agency outside GAO. 69 5. I know that GAO intends that the only request for data obtained from Lilly which would be honored by GAO would be an official written request submitted by either House of the Congress or a Chairman of a House, Senate or Joint Committee having jurisdiction over the subject matter of the proposed study and then only to the extent authorized by and directed by law. I know that GAO intends that such a request will not be honored until GAO has first notified Lilly and this Court that a request has been made. 70 6. To the best of my knowledge and belief, GAO has never honored or agreed to honor any request for confidential costs and related pricing data pertinent to specified individual drug firms or products. 71 In the court below, the Government submitted a proposed order granting it summary judgment but providing that the information obtained from plaintiff shall be held in confidence and shall not be provided or otherwise made available by the Comptroller General to any person or agency outside the General Accounting Office except as provided in two subsequent subparagraphs. The first of those subparagraphs provided that after receiving plaintiff's comments the GAO could make such data available to outsiders in such a way that any direct or indirect identification of Lilly    is not reasonably possible. The next subparagraph provided that after seven days' notice to plaintiff the Comptroller General could submit information obtained from plaintiff in response to an official written request of either House of Congress or any Congressional Committee or Joint Committee having jurisdiction over the subject matter of the GAO's pharmaceutical industry study to the extent authorized and directed by law. Therefore, it is apparent that the Government is properly cognizant of plaintiff's need for confidentiality. 72 Focusing on the contractual nature of the access-to-records clauses, plaintiff lastly relies on language in Bristol and Merck that the interpretation of any contractual provision turns on the intent and understanding of the parties involved and that it is inconceivable that a contracting firm would have understood the clause in the manner in which the Government now interprets it. See e. g., Merck, supra, mem. op. at 5. Even assuming that Lilly's understanding would be controlling, we disagree with the Bristol and Merck language, at least as applied to this case, since the contracts at issue were signed after the landmark Hewlett-Packard decision and Lilly knew that the Government's similar position was adopted there or at least is chargeable with that knowledge. See Stencel Aero Engineering Corp. v. United States, 431 U.S. 666, 674 n. 8, 97 S.Ct. 2054, 52 L.Ed.2d 665. 73 The Government's counterclaim sets forth the following demand for access to and examination of: 74     any books, documents, papers, or records of plaintiff Lilly that relate to and involve transactions relating to pricing and experienced costs including costs of direct materials, labor, overhead and other corporate costs, support for prices charged to the Government and such other necessary information which would permit his (the Comptroller General's) representatives to review the reasonableness of the contract prices provided for in the aforesaid contracts. 75 The plaintiff describes this as a request for records such as involved in Hewlett-Packard (Br. 53). The Government's brief reiterates that it seeks only the relief requested in its counterclaim (Br. 41). Therefore, the district court need not grant access to any additional documents, and no information need be produced relating to classes of costs that have no more than a de minimis impact on the price of a product purchased by the Government. In granting summary judgment for defendants on remand, the district court is directed to include the confidentiality subparagraphs contained in defendants' proposed order previously submitted below. 76 Reversed and remanded for further proceedings consistent herewith. 77