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AFL-CIO v. Kahn

United States Court of Appeals for the District of Columbia Circuit

Argued en banc June 13, 1979 ; June 22, 1979; As Amended September 14, 1979

No. 79-1564


 [*785]  Before WRIGHT,  [**2]  Chief Judge, and BAZELON, McGOWAN, TAMM, LEVENTHAL, ROBINSON, MacKINNON, ROBB, and WILKEY, Circuit Judges.

Opinion for the court, concurred in by Circuit Judges BAZELON, McGOWAN, TAMM, LEVENTHAL, and ROBINSON, filed by Chief Judge WRIGHT.

Concurring opinions filed by Circuit Judges BAZELON and TAMM.

Dissenting opinions filed by Circuit Judges MacKINNON and ROBB. Circuit Judge WILKEY joins in Circuit Judge ROBB's dissenting opinion.

WRIGHT, Chief Judge: This case presents the question whether Congress has authorized the President to deny Government contracts above $5 million to companies that fail or refuse to comply with the voluntary wage and price standards. We answer that question in the affirmative.

After presenting the facts of the case, we examine in Part II the authority granted to the President under the Federal Property and Administrative Services Act of 1949 (FPASA or Procurement Act). 1 In Part III we evaluate the contention of appellees, a group of labor unions, that the procurement compliance program is barred by the Council on Wage and Price Stability Act (COWPSA), 2 while in Part IV we review the claim that the program thwarts the national labor policy.  [**3]  


On November 1, 1978 President Carter signed ] Executive Order 12092 directing the Council on Wage and Price Stability (Council) to establish voluntary wage and price standards for noninflationary behavior for  [*786]  the entire economy. 3 ] For a business, the Order stated that non-inflationary price increases would be no more than 0.5 percent less than that company's recent rate of average price increase; for workers, noninflationary wage increases were defined as no more than a seven percent annual rise. The President ordered the Chairman of the Council to monitor compliance with these standards and to publish the names of noncomplying companies. ] The Executive Order also instructed the head of each Executive agency and Military Department to require that all contractors certify that they are in compliance with the wage and price standards. The Office of Federal Procurement Policy (OFPP) was charged with implementation of the procurement aspect of the program. ] The initial wage and price standards [**4]  announced by the Council on December 21, 1978 largely followed the outline of the President's November 1 Order, 4 with the added provision that a company may be excepted from compliance in order to "avoid situations [of] undue hardship or gross inequity." 5 

 [**5]  OFPP issued a policy letter on January 4, 1979, requiring that ] Government contracts worth more than $5 million and signed after February 15 must include certification that the contractor is in compliance with the wage and price standards. 6 The letter provides that ] if the Council finds that the standards have not been respected by any such contractor or first-tier subcontractor whose contract exceeds $5 million, the relevant agency head may terminate the contract and the company may be ruled ineligible for future Government business. 7 The policy letter established HN7] three grounds for waiving either termination or a finding of ineligibility: (1) if "the product or service is essential to National security or public safety," and there are no feasible alternative sources of supply; (2) if Government action would "threaten the contractor's or subcontractor's ability to survive"; and (3) if the contractor agrees both to comply with the wage and price standards and to make an "equitable" reduction of the contract price. 8 The procurement compliance program is expected to reach 65 to 70 percent of all Government procurement dollars, or about $50 billion worth. 9 

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618 F.2d 784 *; 1979 U.S. App. LEXIS 13761 **; 199 U.S. App. D.C. 300


Prior History:  [**1]  Appeal from the United States District Court for the District of Columbia (D.C. Civil Action No. 79-0802)


procurement, federal government, delegation, compliance, contractors, presidential, guidelines, controls, stabilization, negotiated, mandatory, directives, orders, terms, provisions, contracts, prescribe, Supplier, powers, policies, prices, executive order, regulations, purposes, price control, factors, bidder, authorizes, wages, bid

Governments, Federal Government, Executive Offices, Public Contracts Law, Costs & Prices, General Overview, Business & Corporate Law, Directors & Officers, Compensation, Domestic Security, Administrative Law, Separation of Powers, Executive Controls, Constitutional Law, The Presidency, Separation of Powers, Bids & Formation, Contract Provisions, Legislative Controls, Business & Corporate Compliance, Labor & Employment Law, Collective Bargaining & Labor Relations, Bargaining Subjects