Opinion ID: 368290
Heading Depth: 2
Heading Rank: 2

Heading: Plaintiffs' Challenge to the Army's Cost Analysis Studies

Text: 17 The foregoing considerations lead to the conclusion that Congress never intended that the plaintiffs be afforded a judicial forum to contest the studies and evaluations that formed the basis for the Army's decision, inasmuch as that managerial decision and the studies and evaluations upon which it rested involved questions of judgment requiring close analysis and nice choices. 16 18 This conclusion is confirmed by an examination of the statutory scheme. Congress invested the head of every executive and military department with general authority to prescribe regulations for the government of his department, the conduct of its employees, the distribution and performance of its business, and the custody, use, and preservation of its records, papers, and property. 17 The head of a department is permitted by statute to delegate to subordinate officials the authority vested in him . . . by law to take final action on matters pertaining to the employment, direction, and general administration of personnel under his agency . . . . 18 Furthermore, Congress instructed that (u)nder regulations prescribed and administered by the Director of the Bureau of the Budget (now the OMB), each agency shall review systematically the operations of each of its activities, functions, or organization units, on a continuing basis, for the purpose of determining the degree of efficiency and economy in the operation of the agency's activities, functions, or organization units . . . . 19 19 Applying the approach most recently employed by the Supreme Court in Southern Ry. Co. v. Seaboard Allied Milling Corp., --- U.S. ----, 99 S.Ct. 2388, 60 L.Ed.2d 1017 (U.S., 1979), we observe that the statute is, for the most part, written in the language of permission and discretion. 20 Also, 20 (t)he statute is silent on what factors should guide (a department's management-related decisions); not only is (t)he extent of this inquiry . . . not . . . marked . . . with certainty, cf. United States v. Louisiana, supra, 290 U.S. (70), at 77, (54 S.Ct. 28, at 32, 18 L.Ed. 181) but on the face of the statute there is simply no law to apply in determining if (a) decision is correct. Cf. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410, 91 S.Ct. 814, 820, 28 L.Ed.2d 136. Similar circumstances have been emphasized in cases in which we have inferred nonreviewability. See Barlow v. Collins, 397 U.S. 159, 166 (, 90 S.Ct. 832, 25 L.Ed.2d 192); Schilling v. Rogers, 363 U.S. 666, 674 (, 80 S.Ct. 1288, 1294, 4 L.Ed.2d 1478.) 21 21 OMB Circular A-76, Department of Defense Directive 4100.15, and Army Regulation 235-5 likewise fail to provide meaningful criteria against which a court may analyze the Army's decision. In fact, the OMB Circular explicitly recognizes that (n)o specific standard or guideline is prescribed for deciding whether savings are sufficient to justify continuation of an existing Government commercial activity and each activity should be evaluated on the basis of the applicable circumstances. 22 And although Army Regulation 235-5 identifies factors that must be considered in the decisionmaking process and specifies cost elements that must be included, it speaks only in general terms. As to the ultimate decision whether to continue a government activity, it announces that no precise standard is prescribed in view of the varying circumstances. 23 22 Perhaps most significant is the fact that the scales are weighted heavily against continuation of in-house operations by the Army. An in-house operation is deemed an exception to the general policy of relying on the private enterprise system, and must be fully justified and supported by specific data demonstrating that a compelling reason exists for the exception. 24 In addition, Army Regulation 235-5 sets as a guide in assessing a confidence factor for the cost analysis that the cost of in-house operation ordinarily should be at least 10 percent less than the cost of obtaining the product or service from commercial sources. 25 Moreover, the Army is implicitly permitted to consider nonquantifiable and non-cost-related factors in deciding against continued in-house performance of a function, 26 thereby making possible the Army's reliance, in this case, on such benefits as greater flexibility in adjusting to workload fluctuations and the ability to reallocate manpower authorizations to support combat forces. 27 23 Thus the statutory and regulatory provisions do not provide rules or specifications that would permit a court to adjudicate plaintiffs' disagreements with the formulas, factors, and cost projections relied upon by the Army. 28 The absence of fixed standards reflects an understanding that the type of decision made by the Army here is necessarily a matter of judgment and managerial discretion, and is by and large an inappropriate subject for judicial review. Accordingly, we hold that the substance of the Army's decisionmaking process, undertaken pursuant to these directives, is committed to agency discretion by law. 29