Diebold v. United States

WELLFORD, Senior Circuit Judge,

dissenting:

Because I am convinced that Judge Charles M. Allen was correct in his memorandum opinion in this case on agency discretion, I would affirm the dismissal of this action. It was brought by two employees of “Logistics, Food Service Division, Fort Knox, Kentucky,” to set aside a decision of the government • agency at Fort Knox to contract food services to a private successful bidder. I dissent from the majority view for a number of reasons.

The substance of the district court’s opinion is set out in the last paragraph:

While the Sixth Circuit has not ruled on this issue, we note the complete unanimity of opinion among the courts that have had occasion to address the question. We are particularly persuaded by the careful statutory and regulatory analysis in Local 2855 [v. United States, 602 F.2d 574 (3d Cir.1979)]. We conclude that the contracting-out decision requires the exercise of considerable expertise, and there are no precise standards for assessing the varying circumstances involved in such decisions.

I. STANDING

While I find no error in the district court’s conclusions that the agency decision involved was committed to its discretion and therefore not appealable, I would first address the standing question. Another court has addressed this question and has come to the conclusion that employees, such as the two plaintiffs here, are not disappointed bidders and have no standing to contest the final agency decision in this type of situation.

Nothing in the legislative history of the 1921 [Budget and Accounting] Act suggests that Congress contemplated the protection of employment of federal employees. Indeed, Representative Good’s presentation of the 1921 Act to the 67th *812 Congress suggests a congressional purpose inconsistent with those interests. That is, the Act would require that some federal employees be terminated under the new budgeting process.

National Federation of Federal Employees v. Cheney, 883 F.2d 1038, 1046 (D.C.Cir. 1989), cert. denied, — U.S. —, 110 S.Ct. 3214 , 110 L.Ed.2d 662 (1990).

I find the following language from Cheney to be a correct statement of the law on the standing of plaintiffs:

In the present case, the legislative history of the Budget and Accounting Act of 1921, as amended, leads us to conclude that Congress did not contemplate in-house federal employees and federal employee labor unions as plaintiffs. Congress carefully crafted a two-pronged checks and balances budgeting process to coordinate the United States budgeting process, eliminate duplication of services, and promote efficiency. Congress knew that some federal employees would be adversely affected and, instead of giving these employees some recourse, intentionally removed the director of the Bureau of Budget from as much external pressure as possible so that he could make the “hard” decision to reduce the employee force where necessary. At most, federal employees’ interests are marginally related to this centralized annual budgeting process balanced between the Executive and Legislative branches.

Cheney, 883 F.2d at 1048 . 1

In Cheney , however, the court based its decision on agency discretion rather than on standing. In the course of its decision, the D.C. Circuit noted that plaintiffs have no more claim to standing to challenge the agency action here than did the taxpayer, citizen in United States v. Richardson, 418 U.S. 166 , 94 S.Ct. 2940 , 41 L.Ed.2d 678 (1974), or the reservist plaintiffs in Schlesinger v. Reservists Committee, 418 U.S. 208 , 94 S.Ct. 2925 , 41 L.Ed.2d 706 (1974), who sought unsuccessfully to challenge CIA action and Vietnam War conduct. Those cases found no generalized standing to object to the government actions opposed by the plaintiffs. The D.C. Circuit analyzed Clarke v. Securities Indus. Ass’n, 479 U.S. 388 , 107 S.Ct. 750 , 93 L.Ed.2d 757 (1987) (a case mentioned by the majority for consideration of standing on remand), as not suggesting that an “assumed unavailability of other plaintiffs is any more relevant to the intent of Congress” in granting or withholding citizen standing to challenge a government agency action. Cheney, 883 F.2d at 1052 , quoting Clarke, 479 U.S. at 399 , 107 S.Ct. at 757 , (“[T]he essential inquiry is whether Congress ‘intended for [a particular] class [of plaintiffs] to be relied upon to challenge agency disregard of the law’.”).

The Cheney court also considered the Office of Federal Procurement Policy Act Amendments of 1979 (OFPPAA):

Since the legislative history of the OF-PPAA endorses the Executive branch policy of reliance on the private sector and the Circular finds authority in the OFPPAA, it is difficult to conclude anything but that the interests of federal employees are inconsistent with the purposes of OFPPAA. As previously discussed, appellants’ real interest in this case is the protection of the federal jobs of its members, not efficiency in governmental operations.... But again in the assertion of that interest of efficiency, they have no greater claim to standing than any taxpayers_ Their real interest of job protection flies in the face of a policy that federal departments and agencies, through OMB Circular A-76, should rely on the private sector. Thus appellants’ interests are inconsistent with the purposes of the OFPPAA and not within the zone of interest of that *813 Act. Cf Clarke, 479 U.S. at 399 , 107 S.Ct. at 757 .

Cheney, 883 F.2d at 1049-50 . It also considered the National Defense Authorization Act of 1987 and had this to say, concluding plaintiffs had no standing on that basis:

From our review of the legislative history, the phrase “realistic and fair” was added to the Authorization Act to protect the private government contractor in the contracting out process against undue built-in “bias” favoring in-house performance of services. In fact, the phrase was added at the behest of government contractors in protest against the ten percent conversion differential.

The interests of the in-house federal employees are therefore “antithetical” to the interests of the private contractors because “federal employees present an ‘either-or’ situation in relation to private” contractors. American Federation of Government Employees, Local 1668 v. Dunn, 561 F.2d 1310, 1313 (9th Cir.1977) (federal employees lack standing to contest a contracting out of an Air Force food service facility). Thus appellants’ interest is inconsistent with the purpose of the [sic] section 1223(b) which provides for contracting out where that is the most cost-efficient alternative. It follows that appellants’ interests are not within the zone of interests of the Authorization Act of 1987.

Cheney, 883 F.2d at 1050, 1051 .

I share the concern expressed by another court about costly delays and discouragement of bidders if federal employees might be allowed to come in after the administrative “contracting out” process resulting in a successful bid to attempt to set the entire process aside through grievance procedures or otherwise. See Department of Health & Human Services v. FLRA, 844 F.2d 1087 (4th Cir.1988) (en banc).

Another case similar to the one at issue, American Fed’n of Gov’t Emp. v. Stetson, 640 F.2d 642 (5th Cir.1981), involved custodial workers at Randolph Air Force Base, Texas, and the contracting out of custodial services. Stetson held that the displaced employees and their union had no standing to contest the contract owned by the government agency:

Not only are the rights of the federal employees outside “the zone of interest,” the interests of the federal employees are antithetical to those of the private employees. It was on behalf of the latter that the Service Contract Act was passed. We are in full accord with the conclusions of our colleagues of the Ninth Circuit in a case which is factually and legally identical to that before us. Am. Fed. of Government Emp., Local 1668 v. Dunn, 561 F.2d 1310 (9th Cir. 1977).

Stetson, 640 F.2d at 646 . The Dunn decision, approved by Stetson , involved mess attendants at an Alaska Air Force Base displaced by a similar contracting out of mess hall services to a private contractor. Dunn held that the mess hall attendants had no standing to contest the contracting out award.

Still another case found, in an action brought by the same union involved in Stetson and Dunn , that plaintiff Army civil service employees at the Huntsville, Alabama Missile Command had no standing to challenge agency action in cutting back employment as the consequence of an award to private contractors. See American Fed’n of Gov’t Emp. v. Hoffmann, 427 F.Supp. 1048 (N.D.Ala.1976). The challenge in Hoffmann was based upon OMB Circular A-76, DOD 4100.33 and 4100.15 contentions, the basis of the majority’s discussion concerning agency discretion in the instant case.

Hoffmann concluded:

Defendants contend that plaintiffs have not demonstrated the requisite standing to maintain this action. To show standing plaintiffs must first allege and be able to prove that the challenged action has caused them injury in fact, economic or otherwise. Secondly, they must be able to show that the interest they seek to protect is arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question. Barlow v. Col- *814 tins, 397 U.S. 159 , 90 S.Ct. 832 , 25 L.Ed.2d 192 (1970); Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150 , 90 S.Ct. 827 , 25 L.Ed.2d 184 (1970). The court must conclude that they have satisfied neither of these tests.

Hoffmann, 427 F.Supp. at 1082 . The district court in Hoffmann discussed fully its conclusion that plaintiffs lacked standing under the Administrative Procedure Act (APA), the basis for the majority analysis in this case involving Fort Knox:

As to the zone of interests element of the current standing test, plaintiffs have asserted that their interests are protected by the provisions of OMB Circular A-76, DOD Directives 4100.33 and 4100.15, AR 235-5 and the ASPR. These regulations and directives constitute managerial and policy tools to aid in the procurement of supplies and services for the Federal Government and military services. They are not intended to provide benefits to plaintiffs. See Kuhl v. Hampton, [ 451 F.2d 340 (8th Cir.1971)]. Rather they have been promulgated to promote the efficient functioning of the military establishment and the economy of the service. See Independent Meat Packers v. Butz, [ 526 F.2d 228 (8th Cir. 1975), cert. denied, 424 U.S. 966 , 96 S.Ct. 1461 , 47 L.Ed.2d 733 (1976) ]; Allgood v. Kenan, [ 470 F.2d 1071 (9th Cir.1972)]; Silverthome v. Laird, [ 460 F.2d 1175 (5th Cir.1972) ]; Cortright v. Resor, 447 F.2d 245, 251 (2d Cir.1971), certiorari denied, 405 U.S. 965 , 92 S.Ct. 1172 , 31 L.Ed.2d 240 (1972).

Such regulations do not constitute a relevant statute for plaintiffs, within the meaning of the APA. See Pullman Incorporated v. Volpe, 337 F.Supp. 432, 440 (E.D.Pa.1971). Further, these regulations and directives provide no implied private right of action to the plaintiffs to enforce their provisions. See Cort v. Ash, 422 U.S. 66 , 95 S.Ct. 2080 , 45 L.Ed.2d 26 (1975); Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 , 95 S.Ct. 1733 , 44 L.Ed.2d 263 (1975); Acevedo v. Nassau County, 500 F.2d 1078, 1082-84 (2d Cir.1974); Farkas v. Texas Instrument Corporation, 375 F.2d 629, 633 (5th Cir.1967), cert. denied, 389 U.S. 977 , 88 S.Ct. 480 , 19 L.Ed.2d 471 (1967).

Hoffmann, 427 F.Supp. at 1083 . See also Local 2855, AFG v. United States, 602 F.2d 574 (3d Cir.1979); Nat’l Maritime Union v. Commander, Military Sealift Command, 632 F.Supp. 409 (D.D.C.1986), aff'd, 824 F.2d 1228 (1987). The Comptroller General has reached the same conclusion as the courts above that under OMB Circular A-76 there is no private right of action, no standing, for federal employees to contest a decision to contract out work on services. See In the Matter of U.S.D.C. for Dist. of Col., 58 Comp.Gen. 452 (1979); Comptroller Gen.Resp. B-223558 (Sept. 2, 1986) (unpublished) (“unions and employees do not fall under the statutory definition of ‘interested parties’ ”). The only benefit plaintiffs can claim as taxpayers, rather than as employees seeking to protect their jobs, is the benefit unsuccessfully sought by plaintiffs in Schlesinger v. Reservists, 418 U.S. 208 , 94 S.Ct. 2925 , 41 L.Ed.2d 706 (1974), and this was foreclosed by the Supreme Court.

I would conclude that plaintiffs have no standing to disrupt and interfere with the congressionally intended equitable and expeditious process of private contract bidding and the exercise of agency discretion on the most efficient and economic manner of operating mess halls at Fort Knox. Under the Administrative Procedure Act, 5 U.S.C. § 702 , I would hold that plaintiffs have suffered no “legal wrong,” no “injury in fact” as a consequence of the agency action. Warth v. Seldin, 422 U.S. 490, 508 , 95 S.Ct. 2197, 2210 , 45 L.Ed.2d 343 (1975). Neither have they been adversely affected by the agency action within the meaning of a relevant statute. See Cheney, 883 F.2d at 1043 . I would further find that plaintiffs do not come within the “zone of interests” as set out in Clarke v. Securities Indus. Ass’n, 479 U.S. 388 , 107 S.Ct. 750 , 93 L.Ed.2d 757 (1987). See also Block v. Community Nutrition Inst., 467 U.S. 340 , 104 S.Ct. 2450 , 81 L.Ed.2d 270 (1984); Valley Forge Christian College v. Americans *815 United, 454 U.S. 464 , 102 S.Ct. 752 , 70 L.Ed.2d 700 (1982).

In the record, an uncontested affidavit by the successful private bidder, Colbar, Inc., states that it “anticipates the hiring of all of the approximately 280 food service employees that are presently employed,” and that, specifically it would offer “employment to the two named plaintiffs in this suit.” (Emphasis added). To the extent that plaintiffs claim standing as mess hall workers (and seek to represent a class of all such employees), the 'uncontested facts would seem to indicate little or no adverse economic effect because no loss of plaintiffs’ employment is threatened by converting the mess hall operation to a private contractor.

In the face of the substantial authority cited, plaintiffs have cited no authority purporting to give them standing in this type of situation. The majority decision suggests no authority that specifically sets out that plaintiffs in the position of Diebold and Plumblee have standing to pursue this challenge to the agency action taken. I would affirm the district court’s result based on lack of standing.

II. AGENCY DISCRETION

The majority’s decision that the decision in controversy was not “committed to agency discretion by law” is first based upon its assumption, which I believe to be unsupported, that “[t]he law to apply in the disappointed bidder cases is precisely the same set of laws and regulations as in disappointed in-house employee cases like this one.” The majority in this respect simply ignores the Cheney holding to the contrary (a case “on all fours”).

Neither appellants nor their members bid on a contract and, thus, have never placed themselves in the special relationship by which the government can bind them to the bid. Moreover, with no bid on a solicitation, it is impossible for them to be within the zone of active consideration. Thus, we hold that appellants do not have disappointed bidder standing to contest the contracting out decision made by Fort Sill. As we stated in National Maritime [Union v. Commander, Military Sealift Command], regarding an assertion of disappointed bidder standing by a union representing employees of an unsuccessful bidder, “the right is [the contractor’s], not [the union’s].” 824 F.2d [1228,] 1238 [ (D.C.Cir.1987) ].

Cheney, 883 F.2d at 1053-54 . See also Control Data Corp. v. Baldridge, 655 F.2d 283 , 293 (D.C.1981) (disappointed bidder status unavailable to persons who “cannot claim the special relationship found ... to exist between a bidder and the government”); National Maritime Union, 824 F.2d 1228, 1237-38 (D.C.Cir.1987).

Heckler v. Chaney, 470 U.S. 821 , 105 S.Ct. 1649 , 84 L.Ed.2d 714 (1985), cited by the majority for the proposition that unre-viewability of actions “committed to agency discretion” is a narrow exception under APA, also states that when “Congress has not affirmatively precluded review, review is not to be had if the statute is drawn so that a court would have no meaningful standard against which to judge the agency’s exercise of discretion.” Id. at 830 , 105 S.Ct. at 1655 . Heckler held that “individual decisions of the Food and Drug Administration not to take enforcement action ... are presumptively not reviewable under the Administrative Procedure Act.” Id. at 838 , 105 S.Ct. at 1659 . (Brennan, J., concurring.) Heckler simply constitutes one example of agency discretion not subject to judicial review, and the majority later concedes it is not “on point.”

Since I conclude, together with the case authority cited, that plaintiffs are not in the same posture as disappointed bidders, the whole postulate of the majority must fail. Disappointed bidder cases are simply not applicable to this situation. 2 Even if the disappointed bidder status were a prop *816 er analogy, our circuit has indicated doubt about the rights of unsuccessful bidders under an agency procurement action to obtain injunctive relief such as that sought by plaintiffs here. See Cincinnati Electronics v. Kleppe, 509 F.2d 1080 (6th Cir.1975).

At oral argument in this case, moreover, plaintiffs’ counsel conceded that cost calculations made by the agency are not reviewable, and that methods of calculation chosen by the agency are within the agency’s discretion. The majority cites no case law authority in support of its position that this review of agency action involves a dispute that requires an accounting and that “[cjourts have long dealt with [such] disputes.” The majority adds that “there is no Supreme Court case on point to guide our decision.” Administratively, plaintiffs’ appeal of the award decision was denied on the basis “that the costs at issue were not within the scope of the commercial activity comparison.” The Army in this case, after a GAO study, reaffirmed its position on the costs question.

The existence of broad discretionary power in an agency often suggests that the challenged decision is the product of political, military, economic, or managerial choices that are not really susceptible to judicial review. Indeed, given the separation of powers between the judiciary and the other branches of government, it would appear unseemly in such circumstances for a court to substitute its judgment for that of an executive or agency official.

In addition, we note that courts have been especially inclined to regard as un-reviewable those aspects of agency decisions that involve a considerable degree of expertise or experience, or that are based upon economic projections and cost analyses, at least when the agency has broad leeway to devise the formula to be applied in any particular situation and when there are no discernible guidelines against which the agency decision may be measured.

Local 2855, AFGE v. United States, 602 F.2d 574 , 579 (3d Cir.1979). Furthermore, the majority dismisses even more explicit language in Local 2855:

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.”

This conclusion is confirmed by an examination of the statutory scheme.

602 F.2d at 580-81 (footnote omitted).

The last case (before Cheney) to consider this issue of agency discretion in the military procurement or contracting out context suggests clearly why neither plaintiffs, nor the majority, have been able to cite a case supporting the majority rationale:

All of the courts which have considered the issue have held that conversion decisions made by the Department of Defense officials under Circular A-76 are committed to agency discretion and are not subject to judicial review. Local 2855, AFGE v. United States, 602 F.2d 574 (3d Cir.1979); American Federation of Government Employees v. Stetson, C.A. No. 77-2146 (D.D.C. July 2[4] 1979); American Federation of Government Employees v. Hoffmann, 427 F.Supp. 1048, 1082-84 (N.D.Ala.1976); and AFGE, Local 1688 v. Dunn, No. A-75-156 (D.Alaska Sept. 30, 1975), aff'd on other grounds, 561 F.2d 1310 (9th Cir. 1977).

American Fed’n of Gov’t Emp. v. Brown, 680 F.2d 722 , 726 (11th Cir.1982), cert. denied, 459 U.S. 1104 , 103 S.Ct. 728 , 74 L.Ed.2d 952 (1983) (emphasis added).

For the reasons heretofore indicated, I do not consider the disappointed bidder cases relevant or material. Plaintiffs are simply not disappointed bidders and do not occupy a comparable status. No case cited by the majority indicates that disappointed federal civilian employees seeking to challenge a contract award occupy the same position as disappointed bidders. BK Instrument, Inc. v. United States, 715 F.2d *817 713 (2d Cir.1983), which is of particular interest to the majority, is a Small Business Act disappointed bidder case. Compare Cincinnati Electronics, 509 F.2d 1080 , noted as adhering generally to Perkins v. Lukens Steel Co., 310 U.S. 113 , 60 S.Ct. 869 , 84 L.Ed. 1108 (1940). 3 At most BK Instrument holds that in the Second Circuit a frustrated SBA plaintiff, who is unsuccessful in an Army procurement, may be able to attain some measure of relief. This holding under APA has no bearing on our case, in my view, for the reasons stated. BK Instrument cites none of the federal employee cases mentioned holding that plaintiffs in such situations have no standing to seek judicial review of agency discretionary decisions.

Based on the authority cited, and on my conclusion that plaintiffs cannot claim the status of a disappointed bidder nor that of a statutory interested party in contracting out procedures, I would affirm the district court’s opinion that the decision in question was unreviewable by this court because it was “committed to agency discretion.” Because plaintiffs also have no standing, I would affirm dismissal of their complaint.

. Strangely, in remanding for standing consideration, the majority makes no mention of Cheney , except a brief footnote reference, which is directly on point. Instead, the majority refers to several other cases dealing with temporary status employees. Plaintiffs' brief concedes a stipulation that "the facts of this case were four square with the Cheney decision." If plaintiffs are merely temporary employees, they have less claim to standing than did the employees in Cheney .

. This court in Cincinnati Electronics Corp. v. Kleppe, 509 F.2d 1080 (6th Cir.1975), noted in an unsuccessful bidder case, relying on APA for review, that absent a "congressionally created exception, the general rule of Perkins v. Lukens Steel [, 310 U.S. 113 , 60 S.Ct. 869 , 84 L.Ed. 1108 (1940) ] [is] that a disappointed bidder has no legally enforceable right against the government’s award of a procurement contract-” Id. at 1086.

. The majority concedes that Lukens Steel “continues to provide valuable guidance concerning the primary purpose of the procurement laws.” At footnote 9, it concedes that "it suggests a general reluctance for courts to be involved in reviewing procurement matters."