*1 (Redmond a constant one worked on Satur- 1973).
day only during five times showing replacement
There is no that a efficiency.
would result in a loss of
testimony was uncontradicted that Saturday
work done on in overtime was work that
essentially any employ- unskilled doing.
ee would be capable replacement
To pay employees premium
wages impose would not a cost on the de-
fendant, for the regular employ- warehouse
ees already receiving premium wages
for their Saturday work.
There bargain- was no union or collective present any prob- contract which would shifting plaintiff’s
lem in schedule.
Therefore, agree we with the trial court’s
finding that defendant made no effort to needs, plaintiff’s religious
accommodate
failed to demonstrate that it would suffer
any undue hardship in accommodating the
plaintiff.17 reasons,
For the foregoing we affirm the
judgment of the trial court.
AFFIRMED.
ELI CO., LILLY & Plaintiff-Appellee,
v. STAATS,
Elmer B. Comptroller General States,
of the United and United
States, Defendants-Appellants.
No. 77-1280.
United States Court of Appeals,
Seventh Circuit.
Argued Nov.
Decided April 12, 1978.
Rehearing and Rehearing En Banc 30, 1978.
Denied June challenges traditionally 17. Defendant also low the constitution- and federal courts have held ality religion arguing arguments Title VII as it relates to that constitutional cannot be raised appeal. violative of the establishment clause. for the first time on Allen Beneficial v. However, Co., (7th defendant did not raise the issue be- Finance 531 F.2d Cir. *2 Leathers, Hollander, F. Harland
Morton Justice, Div., Wash- Dept, Civil Attys., McCarty, U. S. C., Dill ington, Virginia D. Ind., defendants-ap- Atty., Indianapolis, pellants. Jr., Ind., request pursuant This
Stephen Terry, Indianapolis, W. 10 U.S.C. for plaintiff-appellee. 254(c).1 and 41 2313(b) Accord- complaint, Gen- PELL, Circuit Before CUMMINGS statutory eral’s exceeded his au- CAMPBELL, Senior District Judges, and thority and covered confidential business Judge.* records whose disclosure would benefit *3 Therefore, plaintiff’s competitors. plaintiff CUMMINGS, Judge. Circuit sought declaratory a the judgment brought In this action under U.S.C. Comptroller request General’s exceeded his plaintiff sought and §§ legal permanent authority sought in- injunctive declaratory and relief with re- junction prohibiting him examining from to spect Comptroller the United Gen- States following the documents: eral’s to examine certain of its “(a) Lilly experienced records of According books and records. to the com- including materials, costs of direct direct plaint, plaintiff, a drug manufacturer of labor, overhead, pertinent products, was other cor- awarded a contract the costs, January porate Veterans Administration in six Depart- contracts with the Defense “(b) Lilly records supporting prices ment in phar- 1973. The contracts involved Government, charged to the products widely plain- maceutical sold to “(c) other in- containing records tiff’s commercial customers its standard formation for by use to However, catalog prices. product each sold review the reasonableness of the to the Government sold plain- below prices.” contract catalog tiff’s at “a price price lower Two months the filing after of the com- than the price given any person other or plaint, the district court permitted entity.” United to intervene. On the States follow- complaint also alleged that the con- ing day, filed an States answer tracts awarded to plaintiff response and counterclaim. The al- counterclaim to bids solicited by the United States. leged that each contracts contained Plaintiff was assertedly awarded following standard clauses: tracts because bids were the lowest sub- “(b) The agrees Contractor mitted to the Government. General the United States August In duly or any representa- his authorized wrote requesting that it make shall, tives the expiration until of 3 years available for examination the General Contract, payment after final under this Accounting (GAO) Office which he heads: or such specified lesser time in either books, “all documents, papers, and other Appendix M of the Armed Services Pro- records directly pertinent to the con- Regulation curement or the Pro- Federal tracts, include, but are not limited Regulations 1-20, curement ap- Part as (1) of experienced costs includ- propriate, right have access to and the materials, costs of direct labor, direct books, any directly examine pertinent overhead, and other pertinent corporate documents, papers, and records of the costs, (2) prices support charged involving Contractor transactions related Government, (3) such other infor- to this contract. mation as may necessary use “(c) review the The Contractor agrees reasonableness of the contract further prices adequacy and the protection include all his subcontracts hereinun- afforded the provision Government’s interests.” der the effect * Judge Campbell letter, Senior District William J. his also sitting by the Northern District of Illinois is to 31 §§ referred U.S.C. 53 and but does not designation. right” “base claim of rec- [his] to examine the 63a). (App. ords on those statutes Buy- precluded by “was pany’s offer agrees Comptrol-
subcontractor 10a-10c) and (41 §§ American Act” any States or ler General the United price was shall, plaintiff’s because “offered duly representatives [con- authorized on the and reasonable based expiration final fair years until the of 3 after sidered] Since the contract competition received.” the subcontract such payment under or initially the prices specified prices time in either were identical Appendix lesser were not actual- Lilly, prices M of the Armed Procurement offered Services fixed “not negotiated but were Regulation ly the Federal Procurement 1-20, ‘cost-plus’ formula.” type Regulations appropriate, Part based right have access to and the examine found contractual court district books, documents, pertinent any directly “in were not performances negotiations papers, and such subcontractor records of upon, directly related way dependent involving related to transactions the sub- *4 drugs pur- to, producing of the Lilly’s costs contract. The term ‘subcontract’ as used contracts, real- profits the the chased under (1) purchase in this clause excludes orders by which methodology or the by Lilly, ized $2,500 (2) exceeding and subcontracts catalog prices for stan- its Lilly establishes purchase public in for serv- utility orders also The court articles.” dard commercial ap- ices at rates established for uniform records for these request the found that to plicability general public.” the of by the Chairman in 1971 was initiated plaintiff’s The counterclaim asserted Monopolyof the Sen- on the Subcommittee to permit refusal the Business on Small Committee ate Select question examine the in to records contra- competi- the status of during hearings on 2313(b) vened 10 U.S.C. and 41 U.S.C. Plain- industry. pharmaceutical tion in the 254(c) and the contractual clauses. compa- pharmaceutical and five other tiff Therefore, sought the Government declara- I GAO’s phase in participated nies tory injunctive and relief in its favor. manufacturing processes study of their Subsequently, the United States filed a However, response marketing policies. judgment motion for on summary its coun- they were study, phase II of the GAO’s terclaim and the filed a for plaintiff motion Comptroller General unwilling the give summary judgment complaint on its and on prod- on individual cost and records pricing Finally, the Government’s counterclaim. under Government by the purchased ucts the filed a motion for the Consequently, contracts. specified judgment. summary foregoing sent the Comptroller General plaintiff 1974 to August written After con- hearing arguments oral drug companies the five other briefs, affidavits, sidering the an- pleadings, were letters I. These engaged phase in his depositions swers to on interrogatories con- of the GAO representatives sent after file, granted plaintiff’s the district court of same Sen- the ferred with Chairman for summary judgment motion and denied ate Subcommittee. requested relief the defendants. We by all reverse. Government’s The court found negotia- plaintiff’s was not to audit purpose granting summary judgment plain- In con- of seven performance tions tiff, found in as part the district court was tracts in but as disclosed question, in question The seven contracts follows: interrogatories plaintiff’s response to one of fixed-price contracts.” “negotiated as follows: plaintiff, them Six of were awarded ex- requested purpose “The sole offeror, compari- of a the sole the basis on is records Lilly’s books and its amination of its standard son of offered per- instance, negotiations and Lilly’s not to audit the con- catalog prices. In each in this involved catalog price. than the formance of contracts price tract lower Rather, request- purpose seventh suit. Plaintiff was contract awarded contemplat- examination, presently ed acceptance only other com- because ed, by authority only permit nego- to review audits pricing contract suppliers, Lilly, performances particular tiations and including Government’s (cid:127) drug negotiation. tracts awarded after adequacy items to determine the court also that the protection concluded afforded the Govern- General was not authorized to examine by the negotiation techniques ment used these they documents because do not direct- Accomplish- the procuring agencies. ly to, pertain do not involve transac- objective upon ment is contingent seven relating tions these contracts. ability GAO’s access to the rec- gain addition, Comptrol- court held (1) ords needed to ascertain the nature of ler General’s demand was too broad because the activities for which the firms drug encompassed relating incurring costs, (2) are to ascertain and plaintiff methods which established verify extent to the costs catalog prices standard which were set the prices paid by these activities affect regard without to these and en- procured the Government for items under compassed records of costs which contracts, specified negotiated (3) assign does not allocate particular pricing to determine the bases firms’ Therefore, products Judge or contracts. and, products par- considerations Holder decided that the Gener- ticularly, the applicability of these consid- plaintiff’s al could examine contract erations to any procurement Federal files these seven contracts and other the products involved.” enable records which him deter- *5 purpose Another study Government’s mine: public was “to have a better understanding “(a) Lilly’s catalog prices standard and legislative understanding of the eco- products purchased speci- under the of nomics the industry.” contracts; fied court The plaintiff’s major found that “(b) prices products That cost in producing items of marketing purchased upon were based established pharmaceutical products (including those catalog or market of commercial Government) sold to quantities items sold in substantial costs, general “are administrative mar- general public; and costs, keting and research develop- “(c) That the prices received major ment costs. These items are not government under the contracts were or assigned phar- allocated to individual equal prices.” to or less than catalog products maceutical or sales un- contracts The contractual clauses in each contained Lilly’s accounting system gen- der and no of the contracts and set pages out at 906- erally accepted accounting ex- principle supra were pursuant to 10 U.S.C. making ists for such an allocation of 2313(b) 254(c), and 41 U.S.C. § § types specific those of indirect costs to respectively provide as follows: products specific or contracts.” “Examination of books and records of The finding court’s final was that the rec- contractor sought ords Comptroller General “(b) Except provided in subsection contain confidential business information (c), each negotiated contract under this which, and secrets of plaintiff pub- if made chapter provide Comptrol- shall that the lic, plaintiff would cause irrevocable com- ler General are representatives and his petitive injury. entitled, until of three expiration fact, Based his 25 findings of years after payment, final to examine judge district Comptrol- concluded that the books, documents, any papers, or records ler General’s statutory demand exceeded his the contractor, of or subcon- any of his authority and contractual pur- because his tractors, to, in- directly pertain pose towas conduct study a research on the volve the con- relating transactions economics of the pharmaceutical entire in- (10 tract or subcontract” U.S.C. dustry, whereas given 2313(b)). he was inspection § language 254(c), of 41
“Negotiated Requirements equivalent U.S.C. § contracts— “directly pertinent” be records, etc., records must books, Examination of contractors; involve related to limitation; and must “transactions time Together contract or subcontracts.” such “(c) negotiated All contracts without with the issue whether pursuant advertising authority were, as the requests district General’s this chapter, chapter tained in 11C found, improper pur- anby court motivated chapter chap- Title 10 of Title 11 Title 44 a clause to whether the information pose, question ter shall include language of these the effect fits within requested duly of his United States prime focus of this forms the two clauses representatives until the authorized shall appeal.
expiration pay- years three after final
ment have access to
right
Purpose
General’s
I.
books,
any directly pertinent
examine
argument
Comp
that the
Plaintiff’s
documents, papers, and records of the
his
troller
demand exceeds
au
General’s
contractor or
of his
subcontractors
powers
is
his
thority
using
because he
engaged in the
in-
performance
volving
princi
is based on the
improper purpose
transactions related to such con- an
(41
tracts
power
subcontracts”
law that
ple
administrative
254(c)).
for the
can
exercised
investigate
grant
authority was
purpose for which the
essentially
Both of the above statutes are
Davis,
(Br. 19).
ed
K.
Administrative
See 1
alike.
former applied
to the six De-
on the
Relying
district court’s
Law 3.10.2
Department contracts,
fense
and the latter
that the
conclusion
to the Veterans Administration contract.
pur
authority for the
using
case
It first should be noted that
the statutes
study of the
conducting
a research
pose
contracts,
are limited to
but
negotiated
in
pharmaceutical
economics of the entire
ne-
has admitted that these were
study
suggests that such
dustry, plaintiff
gotiated
Next,
(Br. 58).
stat-
*6
the
and therefore
improper purpose
is an
permit
utes
access
to the Comptroller
principle
Davis’
violates Professor
demand
General and his representatives, obviously
law.
of administrative
referring to
of
which
employees
the GAO
heads,
he
but do
prohibit
not
the
from
GAO
assuming that the contractual
Even
transmitting
gleaned
the
information
from
GAO,
inde
unique
is a
powers of the
records
appropriate
to
governmental
legislative
within the
pendent agency
right
sources. The
of
until
access exists
(see
Lask
Cibinic &
branch of Government
years
three
payment,
after final
not assert-
en,
General and Govern
as a stumbling
ed
present
block
the
case.
349,
Contracts,
Geo.Wash.L.Rev.
ment
38
Finally,
2313(b),
in the case
10
of U.S.C. §
to the same
(1970)),
subject
the
to be
349-350
are
“directly
examined must
to,
pertain
subpoena powers
relating
as
on the
involve transactions
restraints
those
or,
plain-
the contract or
to which
agencies
subcontract”
of administrative
investigatory
prompted
grant
precisely,
principle
Stated more
is
purpose
investigation
power,
purpose
“the
of
identified.
must be to
if a limited
can be
get
legitimate
offi-
information
fill a
need of the
our
that defendant
Because of
conclusion
Davis,
purposes
agency.”
investigation
1 K.
Administrative
Law
cial’s
fits within the
3.10;
Perkins,
Corp.
investigatory power,
prompted
grant
v.
see Endicott Johnson
of 509,
501,
339,
potential-
U.S.
tiff 10 denied that 53 Comptroller General’s de- U.S.C. and 67 §§ purpose right mand was not for which were “claim outside the basis for his authority granted investigatory examine” plaintiff’s have access to and First, although records, two reasons. the district books and answer did not court of the Comptroller did find that one stitute an abandonment reliance on those General’s purposes was conduct a re- duties, provisions as out his spelling search study, explicitly it did not find that legitimate purposes, therefore his as op- only purpose such a study was the posed specific powers to his obtain infor- Instead, apparent- information demand. Therefore, we mation. look to those and ly recognized that one of the other to see if provisions they pro- related General’s purposes was determine the legitimate present vide a for the purpose purchased costs of items producing the in survey. 21, Finding App. the contracts. of Fact See 31 provides: U.S.C. 53§ 137a. Given that the “Investigations reports by Comptrol- mind, thus had more purpose than one ler General another principle administrative law be- “(a) shall in- comes relevant. As the Ninth stat- Circuit vestigate, government at the seat Biderman, 820, in Lynn ed v. 536 F.2d 826 elsewhere, relating to the re- all matters denied, (1976), 920, certiorari U.S. disbursement, ceipt, application 287, principle S.Ct. 50 L.Ed.2d is * * * funds, public and shall make to the Presi- that “it is ground to deny him, dent when and to requested Con- subpoena enforcement of a that it is being gress regular at the of each beginning employed purpose for a if wrongful there is session, writing of the work of report a legitimate also for the purpose subpoena.” Office, Accounting the General contain- States, also See Donaldson v. United concerning leg- recommendations U.S. S.Ct. L.Ed.2d 580. islation he may necessary deem to facili- (as infra) Since we discuss in Part II tate the prompt and accurate rendition cost purchased elements of the items are a and settlement accounts and concern- legitimate area of under 10 inquiry ing such relating other matters 2313 and 41 the Comptroller U.S.C. § disbursement, receipt, application General’s investigation is motivated public may least funds think advisable. one as he legitimate purpose and therefore a proper In such regular under or in re- investigation principles report, special ports administrative at Congress law. time when is in session, he shall make recommendations A why second reason Comp looking greater economy or efficiency *7 troller General’s investigation is not moti public in expenditures. vated by an improper purpose is that even “(b) investigations He shall make such the only if purpose of the investigation and reports as shall be ordered either were to conduct study, the research by any House of or Congress committee purpose may proper given spectrum be having jurisdiction of either House over of statutes outlining duties of the revenue, expenditures. appropriations, Comptroller General. This statutory spec also, The shall at Comptroller General trum is best by noting outlined the provi committee, direct as- of such sions cited Comptroller General in office to sistants from his furnish the making his demand. In his written request committee such aid and information as it 26, 1974, to of August the Comp may request. troller General stated his review procure of ment of drugs “(c) of by agencies Comptroller spe- The General shall federal government being pursuant cially made report Congress every expendi- to 31 U.S.C. 53 (as and 67 well as by any department §§ under 10 ture or contract made 2313(b) U.S.C. 41 254(c)). and any year in violation establishment in Although plaintiff’s his Answer Interrog- of law.
911 upon relied also 31 U.S.C. § re- Since Congress submit “(d) He shall letter, requesting General’s Comptroller and effective- adequacy upon the ports governmental agencies, duties of deals with of examination of the administrative ness However, to this case. germane it is not de- respective claims accounts and support further 65 lend 60 and U.S.C. §§ upon and establishments and partments request because General’s Comptroller depart- of and effectiveness adequacy investigatory re- outline broad they also and the offices of inspection mental 60 directs the Thus Section sponsibilities. officers. of fiscal accounts expendi- to make an General such information He shall furnish “(e) federal executive analysis ture of each accounting and relating expenditures opinion in his “will enable which agency Budget Management and of to the Office determine whether Congress to [as here] time.” time to from may request as economically and have been public funds the detailed authorizes plainly This statute expended” administered efficiently underlying into inquiry scope following 65 contains the whereas Section attempting policy as to declaration Congressional 387), Lasken, supra, (see & here Cibinic auditing: accounting with public so in connection it does policy declaration of “Congressional question more difficult The reports. in en- policy Congress It is an contemplates such the statute whether chapter that— acting this contrac private records of into the inquiry “(a) accounting of the Government can be agencies government as well as tors full disclosure of the results provide by noting the in the affirmative answered financial operations, adequate financial spent in public amount of funds significant management needed in the information id.; (see Fulli firms private with and the formulation operations (S.D.N. F.Supp. Kreps, v. love effective Budget, execution of annually)); awarded Y.1977) ($120 billion funds, income, expenditures, over control 53 deals recognizing and then Section assets. property, and other relating receipt, to the “all with matters, “(b) given Full consideration be disbursement, application public leg- of both responsibilities needs and added).3 Thus it is our (emphasis funds” the es- and executive branches islative when it though view that even reporting accounting tablishment of Congress gave the enacted Section requirements. systems and powers of significant accounting “(c) The maintenance respect govern with investigation of financial producing and the systems records,4 language left him with mental operations respect to the reports with responsibility to oversee general central fa- including agencies, executive whole, as a spending Government’s and disclos- together bringing cilities for pri disbursements necessarily included the fi- the results of ing information Congress The fact contractors. vate Government operations nancial exec- (when dealings whole, responsibility waited until the 1950’s may contractors private over or concern utive branch. Government, increased) give
have for the “(d) auditing *8 of investigatory power into specific Comptroller General General the conducted agent not vitiate the con as an contracts does private the United States the determining at the terms of the at all times be directed Congress clusion that related accounting and to which Comptroller the General extent gave legislation purposes the fulfill reporting financial expendi all to oversee responsibility the have transactions financial specified, tures. Lasken, supra, U.S.C. § 4. See 31 at 387. see Cibinic & 3. But 912 in accordance with statutes
been consummated indicate this request was au- laws, legal require- or other regulations thorized. While this interpretation of the ments,'and give financial the adequate Comptroller internal statutes would Gener- exercised, al operations supervisory broad responsibilities, over the control legislative history of afford basis for the settle- those statutes does an effective reflect at one on the powers ment of of least limitation accounts accountable officers. implement responsibil- available to those “(e) placed effecting be on Emphasis against making ities: a restriction records resulting in orderly improvements simpli- the provi- disclosed under access-to-records accounting, fied and more effective fi- public allowing sions in a fashion identifica- reporting, budgeting, nancial audit- tion companies. of individual Disclosure of ing requirements procedures and on companies information individual about in a the elimination of those involve manner that would aid competitors appar- or which serve duplication pur- do not ently was contemplated by sponsors not the pose costs in- commensurate of 97 Cong.Rec. Sections 2313 254. See volved. limitation, 13197. With that applicabili- “(f) Comptroller General ty of which the General has States, Secretary Trea- recognized infra), (see Part we IIC sury, and the Director of the Office of request clude that properly his moti- Management Budget conduct a con- Accord, vated. Hewlett-Packard Company improvement tinuous program States, v. United 385 (9th F.2d accounting reporting and financial 1967), denied, Cir. certiorari 390 U.S. Government.” 1292; Co., S.Ct. 19 L.Ed.2d Merck & Although might possible be to argue Staats, Inc. v. Civil No. Action 74-1447 general descriptions responsi- such (D.D.C. 12, 1977) Aug. (slip op. help bilities do proper purpose not define a under a specific (see supra), statute note II. The Comptroller General’s Powers is not argument persuasive when as That the General was acting specific here the statute was enacted for legitimate accord with a purpose would the purpose implementing general justify not alone be sufficient his responsibilities that had been outlined in in the absence of a statute or contract au- the earlier legislation. That access-to- thorizing the actions he took requesting records provisions in Sections 2313 and 254 the information. Plaintiff’s' second line of to help implement enacted Congress’ offense is that the inspection sought was listing of responsibilities Sections the statutory authorized or contrac- and 65 is clear from the statement before (quoted tual language pages 908-909 the House Congressman Hardy, sponsor supra). and 906-907 clauses gave Those of the legislation, major one “right reasons for legislation give was “to books, examine any pertinent documents, the proper tools to do papers and Contractor involv- job Congress has instructed him to ing transactions related to this contract.” 13198; do.” 97 Cong.Rec. see also id. at His letter that language tracked but added 13200; Hearings Comptroller General include, “which (1) but are not limited Reports Congress on Audits Defense experienced records of including Contracts Before Subcommittee of the materials, labor, costs of direct direct Committee Operations, on Government 89th overhead, pertinent other corporate Cong., (1965) (statement 1st Sess. costs, (2) support prices charged Rorback). Herbert Government, (3) such other infor-
Thus
if
study
even
a research
had
may
necessary
mation as
for use to
been the Comptroller
pur
General’s sole
review the reasonableness of the contract
pose,
the statutory
outlining
scheme
protection
and the
adequacy
*9
powers and
legislative history
the
of those
afforded the Government’s interests.”
the
the Comptroller
was derived from
that
General
language
This
could examine
Hewlett-Packard, supra.
relating
in
to “the cost of
approved
produc-
ing the items” furnished under the con-
interpreted this
few courts that have
tracts, the
scope of
order in that case
conclu-
differing
reached
have
language
and,
importantly,
more
the reasoning of the
gave
below
Judge
opinion
Holder’s
sions.
reviewing court do not seem to be signifi-
read-
its narrowest
statutory language
cantly different from the Comptroller Gen-
in-
to obtain
allowing
Government
ing,
eral’s
here.
position
Plaintiff’s observation
catalog
only
Lilly’s
to determine
formation
that the Hewlett-Packard order did not ex-
items, to determine
purchased
for the
prices
pressly include reference to costs not as-
purchase price
whether
Government’s
signed by the firm to individual products
of items
catalog prices
was based on the
general
and similar
cost and pricing infor-
quantities
general
sold in substantial
mation is not persuasive both because the
prices
whether the
public, and
determine
costs,
order
type
included overhead
of cost
equal
to or
the Government
paid by
that is
always assignable
not
to individual
142a).
(App.
A
catalog prices
less than the
products, and because the rationale of the
interpretation
less restrictive
somewhat
opinion,
emphasized
Ninth Circuit’s
which
v.
Laboratories
was offered
Bristol
appropriateness
inquiry
pro-
into the
(S.D.N.Y.1977). In
Staats, 428
F.Supp.
whole,
as a
process
curement
was not limit-
case,
the same set
grew
out of
that
specific
ed to disclosure of the
costs request-
as
General
inquiries by
by
par-
ed
case,
court
limited
the district
ticular case.
to information
manufacturing
to offer:
agreed
Bristol had
Meaning
A.
Statutes
materi-
(including
packaging
raw and
benefits,
als,
quality
applied
pharmaceutical
con-
At least as
to the
fringe
labor and
think
manufacturing
industry,
reading
over-
we
that the broad
supervision);
trol
administration,
pro-
reading
of Hewlett-Packard
most
(including plant
head
warehousing,
plain meaning
utilities and consistent with the
planning,
duction
language
legislative
and with the
expenses;
delivery statutory
security); royalty
interpreting
statutory
Bris-
lan-
apparently accepted
history.
costs. The court
develop-
as the
General con-
argument
guage,
tol’s
that research
tends,
ment,
imagine anything
and distri-
“it is hard to
more
marketing
promotion,
than the
directly
should
related to a contract
cost
bution and administration costs
it or
by
remote to
the items covered
they
producing
be disclosed because
are “too
makeup
price”
into the
gener-
going
the most
matters
the contracts and have
Accord,
Hewlett-Packard
relation,
charged.”
Br.
(Reply
al
if
to the
any,
States, supra, at 1016.
Company
v. United
court’s
Id.
1389-1390. The Bristol
“directly pertinent”
by Judge That such costs can be
accepted
clusions recently were
Staats,
though they are not all
Civil
to the contract even
Co.,
Inc. v.
Bryant Merck &
12,
to the contract or
1977).5 assigned by
company
Aug.
(D.D.C.
Action No. 74-1447
at least as
product
explained,
can be
Merck court
Although plaintiff and the
pharmaceutical
applied
we view
to contracts
sought
narrowly,
both
read
that the manufac-
companies, by the fact
in Hewlett-
opinion
the Ninth Circuit’s
States,
individual
costs of
turing
and distribution
Company
Packard
v. United
estimat-
denied,
have been
(1967),
pharmaceutical products
F.2d 1013
certiorari
U.S.
per9
cent of the
tak-
ed to
as little as
19 L.Ed.2d
constitute
88 S.Ct.
Rucker, Public
prices.
While it
sale
See
products’
view.
considerably broader
Pricing
Policy
order af-
Considerations
is true
the district court’s
States, 4
Prescription Drugs in
in Hewlett-
firmed
Ninth Circuit
(1974). Al-
Int. J. Health
declaring
Packard went
than
Services
no further
being appealed.
and Merck are
Bristol
both
5. We have been advised
the Government
*10
not offer this Court
plaintiff
While
did
argue
to
possible
be
though might
it
interpret-
research
manner of
any precise
that costs such as
alternate
industries
other
impact
have such a small
development
“directly pertinent,” its ar-
phrase
“directly pertinent” to the
they are not
pertinent”
that
gument
“directly
seems to limit
price,
research and other
contract and
negoti-
were
inquiry
to an
into what issues
attributable to one
immediately
not
costs
contracting (see,
g.,
e.
ated at the time of
large portion
a
of the
product form such
48-49).
interpretation apparently
Br.
This
product that their
pharmaceutical
costs of a
that
if the
assumption
is based on the
inescap-
seems
import to such a contract
negotiate
not
about an is-
Government did
able.
sue,
perti-
it not to be
thereby
it
considered
rea-
plaintiff’s argument
interpretation might
an
be
response
In
nent. Such
give
would not
full
were that
including
statutory
these items
sonable if the
standard
implied by
perti-
effect
the limits on disclosure
“directly
must be
the information
“directly,”
without dis-
the use of
word
the standard is
negotiation,
nent” to the
but
is a difficult con-
puting that “directness”
to the contract
“directly pertinent”
define,6it
be
that costs
cept to
should
noted
suppose
plaintiff offers no reason
development
as research and
at the
such
negotiate about
there would be a reason to
logical,
to have a
causal and
appear
least
significant
a
might
item that
have
each
consequential relationship
portion
to a
performance.
effect on the seller’s cost
price
products purchased by
of the
fact,
method of
plaintiff’s proposed
Further, contrary
plain-
Government.
what was
defining pertinence by analyzing
contention,
are not “re-
tiff’s
such costs
inter-
would not serve even its
negotiated
mote” within the established definitions of
a
long
ests in the
run because such standard
portion
that term in
to at least a
relation
encourage the
adopted
simply
once
would
price
price
because their inclusion in the
protract
negotiations
Government to
product
is not unforeseeable once
which it
raising any conceivable issue about
incurred,
costs are
nor is their
on a
impact
might
later
want information and
part
price significantly
altered
make an issue
allow
Government to
any intervening
generally
cause.
W.
See
introducing it in the
pertinent simply by
Prosser,
(4th
1971).
Law of Torts
ed.
negotiations.
a minimal share
If such costs constituted
analysis, plaintiff’s suggested
In the final
contract, might
it
price
the total
ne-
interpretation
examining
what was
argue
that these costs are “di-
difficult
gotiated rests on its conclusion
Sec-
of the con-
rectly pertinent”
price
designed
tions 2313 and 254
whole,
not
tract as a
but that issue does
negotiation
“improprieties
uncover
presented on these facts. Thus
seem to be
(Br. 43, quoting 97
Government contracts”
whole,
in relation to the contract as
these
However,
our view of
Cong.Rec.
legal
fit within the common and
legislative history,
in the fol-
outlined
understandings
“directly pertinent.”
section,
was
lowing
controlling
fraud
that,
asserts,
fact
The mere
the only purpose
legislation
does not or even could not allocate costs
legislators
that another concern of the
development
such as research and
to an
latter
pricing.
excessive
Given
individual contract does not undercut the
meaning of
purpose and our view of the
proposition
directly per-
that those costs are
“directly pertinent,”
tinent
an
the access-to-records
merely
individual contract but
so that an
they
directly pertinent
interpreted
indicates that
are
to clauses should be
more than
if
one individual contract.
item is
to contract
“directly pertinent”
See,
Prosser,
Torts,
merce);
Byse,
g.,
Administrative
e. W.
Law
263-267
W. Gellhorn & C.
Comments,
(4th
1971)
(6th
(discussing
Law
201-211
ed.
ed.
direct cause in tort
Cases and
Gunther,
law);
1964)
injury
(discussing
as limit on
G.
Cases and Materials on Con-
direct
Law,
(8th
1970) (dis-
standing).
stitutional
626-628
ed.
cussing
direct burdens
on interstate
com-
*11
significant
input
it is a
in
objections
the cost of the
Plaintiff’s
interpreta-
this
product purchased in the contract.
tion of
legislative history
fall into two
groups.
group
The first
objections
dis-
B. The Legislative History of the Stat-
putes that Congress intended an inquiry
utes
into
by noting gaps
wastefulness
in the
Despite
brevity,
legislative
legislation that allegedly are inconsistent
history of Sections 2313 and 254
sup
lends
with such an
legislation
intent and later
to the
port
Comptroller General’s conten
from which the opposite intent could be
inquiry
tion that an
into whether costs are
inferred.
plaintiff argues
Thus
that had
excessive was
intended
the drafters of
Congress’ concern been with wastefulness
those bills. The sponsor
legislation,
just fraud,
and not
it would have extended
Congressman Hardy, made
pur
this added
the scope
legislation
to advertised
pose apparent when he explained that un
However,
contracts as well.
illogi-
it is not
der its new authority the GAO would “find
cal to assume that Congress simply felt the
the rates [prices] were excessive”
[whether]
problem of waste was
negoti-
more acute in
and that in addition to deterring improprie
(see
ated
generally
ties the
Cibinic &
new authority also would deter
Lasken,
negotiation
“wastefulness
supra,
387-388);
of con
in any event
tracts.”
97 Cong.Rec. 13198. Consistent
plaintiff’s argument proves too much be-
purpose,
Congressman Hardy rec
cause it would still have
application
some
ognized the GAO’s authority “to look be
even if as plaintiff contends Congress was
hind the
[price]
rate
which had been estab
only concerned with fraud.
Similarly,
Although
lished.” Id.7
emphasis
no
need
plaintiff’s argument
Congress
could
it,
placed upon
it is instructive to note
not have
to inquire
intended
into wasteful-
the GAO’s
interpretation
consistent
ness in contracts such as the one here in
clauses,
access-to-records
entitled to
drugs
supplied
which the
weight as the administrative interpretation
Government “at a fixed price at or below
(see
statute
J. McBride & T. Touhey,
(Br. 35)
the wholesale
price”
ignores
market
2.20)
Government Contracts
and as an
sought by
the fact that the information
interpretation voiced before Congress and
may
Government
show that
it
changed by
(cf.
Kay
v. Federal Com
paid
high.
were nevertheless much too
It
Commission,
munications
U.S.App.D.C.
143
should be noted that
this same situation
638,
443 F.2d
(1970)),
646
has been that
“Congress
present
was
in Hewlett-Packard and not
intended the GAO to examine
the books and records of the contractor to
found determinative.
C. from data obtained release statutory wording from the Apart Congress or to an Member of individual offers history, plaintiff legislative and its outside GAO. any person agency limiting aimed at arguments three further intends that the “5. I know that GAO General’s re striking from request for data obtained only First, argues that the ac quest. plaintiff which would be honored GAO must be construed cess-to-records clauses request submitted be an official written conflicting with narrowly Lilly’s to avoid or a Congress by either House of Amend under the Fourth right privacy House, or Joint Chairman of a Senate assuming that the consent ment. But even over the having jurisdiction Committee when the contract given by study and subject proposed matter of the ineffective be signed could be deemed by and extent authorized then by the required cause the consent was in- know that GAO by law. I directed (but v. Bis Government see United States will not be tends that such well, 311, 316, 92 S.Ct. U.S. *13 Lilly notified has first honored until GAO 87), the administrative law cases L.Ed.2d has been that a and this Court by plaintiff itself indicate that upon relied made. are plaintiff’s rights Fourth Amendment knowledge and my the best of “6. To are, here, as “rea protected requests if the agreed or belief, never honored GAO has investigation to an within sonably related” confidential any request to honor jurisdiction requesting agency. pertinent data pricing and related Airlines, Civil Aeronautics Board v. United drug prod- firms or specified individual 394, (7th 1976); 401-402 542 F.2d Cir. see ucts.” Equal Employment Opportunity Commis below, sub- the Government In the court University Mexico-Albuquer sion v. of New it summa- granting proposed order mitted (10th 504 F.2d que, Cir. the infor- that but ry judgment providing privacy argument Related to this is a “shall be plaintiff from mation obtained argument plaintiff second that suf- would provided not be and shall in confidence held competitive fer injury upon disclosure of Comp- made available or otherwise However, requested information. in agency or any person troller General support of the motion of the United States ex- Accounting Office outside the General judgment, the first affidavit summary subpar- subsequent provided” in two cept as supplied by the GAO states that “GAO does subparagraphs first of those The agraphs. identify drug not intend to firms individual plaintiff’s receiving after that provided in specific products any report issued such data could make comments the GAO Congress” and that no “information that way such a “in to outsiders available pertaining other than that to a contractor’s Lilly identification or indirect any direct would in a re- government appear business * * * reasonably possible.” not is port issued GAO or otherwise be made after sev- that provided subparagraph next public.” pro- second GAO affidavit plaintiff days’ en notice vides in part follows: obtained information submit General could “3. I that [Gregory know GAO Ahart] to an official response from any report using intends that made data Congress either House request of written obtained from will made so that Lilly be or Joint Congressional Committee Lilly products identification of or its is over the sub- jurisdiction having Committee will reasonably possible not pharmaceutical ject matter of the GAO’s period of time be- afforded reasonable authorized the extent industry study “to to examine report fore release of such Therefore, ap- it is by law.” and directed upon and comment it. properly is the Government parent for confiden- need cognizant plaintiff’s I know that intends to use “4. GAO judicial tiality. including resort its best efforts
Focusing on the contractual nature of the Reversed and pro- remanded for further clauses, plaintiff lastly re- access-to-records ceedings consistent herewith. Merck language
lies on
in Bristol and
interpretation
provi-
contractual
PELL, Circuit Judge, dissenting.
sion turns
understanding
on the intent and
do,
Viewing
majority opinion
as I
parties
that “it is
involved and
incon-
unwarranted,
this case as an
and unfortu-
ceivable” that a
firm
contracting
nate,
Big
concept
have
extension of the
Brother
understood the clause in the manner
interprets
privacy
Government now
it.
in the industrial
legitimate
into
g., Merck,
e.
supra,
op.
field,
See
mem.
at 5.
might
I
dissent. While I
respectfully
Even assuming
Lilly’s understanding
phraseol-
have
minor differences of
adopted
would be
we
with
controlling,
disagree
dispositive opinion
there in a
ogy here and
Bristol and Merck
language,
least as
Holder in his
by Judge
from that used
case,
applied to this
since the contracts at
Judgment,
those differ-
Summary
detailed
signed
issue were
after the landmark Hew-
minimal,
analysis
ences are so
and his
lett-Packard
decision and
knew that
legal
appear
conclusions
to me to be so
position
Government’s
similar
correct,
eminently
adopt
judg-
I would
adopted there
chargeable
or at least is
judgment
ment as the
of this court. Be-
that knowledge.
Engi-
See Stencel Aero
Summary Judgment
cause Judge Holder’s
neering Corp.
States,
v. United
431 U.S.
reported,
although
substantial
674 n.
97 S.Ct.
Buy-American Act, and also because the government contracting officer determined ing to examine those The records. price the offered was fair and reasona- (“the government”) States of America in- ble competition based on the received. tervened and filed Counterclaim for a declaratory judgment permanent in- product prices in each of the seven junction, asking the Court to declare that prices contracts were identical to the initial- the Comptroller right General has the to ly offered Lilly actually and were not enjoin examine the of Lilly, Lilly negotiated. prices each contract from preventing General were fixed and were not based on any type records, from examining and to direct of formula. “cost-plus” Lilly to make the records available for ex- to submit cost or required Lilly was not amination. contracting agencies pri- to the pricing data 6. The Veterans (“VA”) Administration contracts, or to the award of and the Defense Supply Agency (“DSA”) of prices in all product because the the Defense Department awarded certain adequate were based either contracts negotiated fixed-price contracts "phar- catalog on established competition or price maceutical products to Lilly. The contract items sold or market of commercial numbers, award, dates of contract prices general pub- quantities in substantial and dates of payment final on the contracts lic, exemption provisions within are as follows: Truth-In-Negotiation Act U.S.C. [10 and, VA con- 2306(f)] in the case of the tract, provisions of the simi- exemption regulation procurement lar federal [41 addition, l-3.807-3(a), (b)]. C.F.R. § exempt each of the contracts is from the Renegotiation (50 App. Act §§ et were for seq.) because the contracts articles.” 50 U.S.C. “standard commercial App. 1216(e)(1).
8. Neither negotiations per- nor the formance of the seven by Lilly 7. The contracts were awarded to Lilly government were in any way dependent as a result of Lilly’s submitting a proposal upon, or directly Lilly’s related costs of to the agency involved in response to the producing drugs purchased under agency’s solicitation of a proposal from Lil- contracts, the profits by Lilly, realized ly. With respect contracts, to six of the the methodology by establishes offeror, was the sole and the contract- catalog prices for standard commercial ing agency awarded the contract to Lilly on articles. the basis of a comparison of Lilly’s offered *16 prices to Lilly’s catalog prices standard 9. Each of the contracts contains an ac- the drugs being purchased. case, In each cess-to-records clause which provides in per- the contract price was lower than Lilly’s part: tinent standard wholesale commercial catalog “The agrees Contractor that the Comp- prices. The government, therefore, in ev- troller General of the United or States ery purchase from Lilly acquired Lilly prod- of any duly his representatives authorized ucts at prices lower going than the commer- shall, until expiration years of three cial market price for those products. after final payment under this contract * * *, With respect to the seventh have right contract access to and the examine (DSA120-74-C-1640), any books, offers directly pertinent were sub- documents, mitted by companies two papers, and the award and records of the was made to Lilly because Contractor acceptance involving of the transactions related other company’s precluded offer was this by the contract.”
11. General of in the clause was included DSA appeared That United States before the Subcom- of 10 provisions Monopoly mittee on pursuant Senate Select Committee on Small Business in 1971. Dur- 2313(b) provides: which U.S.C. § hearings, those which were concerned in subsection provided as “(b) Except competition phar- with the status of in the this under (c), negotiated each contract industry, drugs maceutical the costs of pro- Comptrol- shall chapter provide government cured were discussed at are representatives his ler length. Upon learning of the existence entitled, of three expiration until negotiated access-to-records clause in examine payment, after final years contracts, the Chairman the Subcommit- or records books, documents, papers, any tee stated to the General: contractor, of his subcon- or “I realize it to, may be a very and in- tractors, pertain complicated directly matter, but it would seem to me relating the con- that all volve transactions companies ought to be served notice that or subcontract.” tract the GAO is going to utilize this statute. pursu- contract in the VA included and was I think that we ought to take a look at 254(c) provisions of U.S.C. § ant to the some of those costs.” Hearings on Com- provides: which petitive Probiems in the Drug Industry, negotiated without All contracts “(c) supra, at 8020. (Emphasis added.) authority con- advertising pursuant Following hearings, 12. those series of clause to include a Act shall tained between members conversations held the effect officials. the Chairman’s staff GAO duly or of the United States conversations, in the These reflected as until the shall representatives authorized partici- temporary correspondence pay- years after final three expiration of pants, reveal most the character of clearly right and the have access to ment pharmaceutical government’s interest books, pertinent any directly examine industry profit cost records. Cost and data documents, papers, drugs to be about individual was obtained his subcontractors any of contractor That drug companies. and about individual and in-' performance engaged publicly re- information would then to such con- related volving transactions Specifically, leased. a subcommittee staff * *” * or subcontracts. tracts preference expressed that “rather than selling pharmaceutical has been attempt costs records under obtain such products agencies of the United States at arrangement preclude an that would re- govern- least since World War II. The porting manufacturing firm name very small ment’s business constitutes items,” drug it was identifying individual prod- part Lilly’s pharmaceutical sales of preferable press obtaining “to such rec- ucts, percent. approximately two so any strings ords without attached pharmaceuti- government purchases Lilly prod- high profits publicized by could be (1) cals two on an as- basically ways: April recently uct As and firm”. basis commercial needed at or below way it was stated that (2) by solicita- catalog prices, wholesale objec- could GAO serve Subcommittee’s specific tion given quantities for bids on specif- publicize gather “will be to tives products. government purchases When the prod- individual ic and cost data for price Ad- solicitations the Veterans through competi- particularly those for ucts — *17 Department, the Defense ministration or mark-ups are price limited and tion is government to are further prices the the the high”. The staff told GAO Chairman’s catalog from wholesale reduced commercial cost records with- it “should obtain the getting the the infor- prices, resulting government in attached so that any strings out anyone used needed.” Sub- Lilly at lower than mation could be products wanting for purpose avowed else. committee’s turing processes, accounting and systems, and the areas marketing policies, to select data has contin- cost company and industry in to be studied in Phase II. Phase I depth know- admits to the and GAO ued to date was to include visits the facilities the the in Subcommittee’s change ing of no cooperating pharmaceutical companies. sought. use of the data intended 13. The ac- proceeded GAO thus to seek 16. and five other pharmaceutical because, drug cess to records in companies’ companies volunteered to participate in demands, light of the “it Subcommittee’s I Phase with understanding the that access viewpoint appears long-range from a Office to detailed cost pertaining specif- records is no there viable alternative than to ic products granted. would not be During press companies the access to their cost October, 1973, GAO officials visited and in- data.” The believed that gained GAO if it spected Lilly’s operations facilities and records, access to the cost it “would obtain Indianapolis and consulted length with a cost data some sort on drug individual number of Lilly officials. The GAO also high items with unusually profit history made similar visits the five other cooper- public could be used to direct attention pharmaceutical ating companies. to an individual item an drug individual 21, 1974, On 17. March met with GAO Although manufacturer.” GAO representatives six cooperating com- sidered alternative studies which would not panies to present discuss its preliminary result in the identification of costs indi- April 17, I findings. Phase On or about drugs vidual drug companies, individual report GAO issued the Phase I disadvantage stated one those form proposal written and a for Phase II. alternatives “Congressional was that com- specific Detailed and comments on GAO mittees concerned unit costs would not report were submitted PMA behalf of on be satisfied.” As as July, late cooperating companies, separate six again GAO considered one such alternative comments were also submitted indi- using third-party to do the examination of companies, vidual cooperating including Lil- records, but there was “considerable ly- concern toas whether such an arrangement acceptable,” be to members of the General, following The Comptroller 18. Senate Committee. receipt upon of the critical comments proposal, his Phase II decided to abandon
14. In order satisfy interest companies’ plan obtaining drug Subcommittee and at same time make voluntary August, on a an records basis. In economic study pharmaceutical 1974, the Comptroller General sent demand industry, initially sought GAO access drug letters to who had companies the six drug companies’ cost voluntary records on a Phase I cooperate during volunteered to basis. In late approached the GAO asking pricing their cost and access to the Pharmaceutical Manufacturers Associa- products purchased individual tion (“PMA”) requested its member specified let- under The demand contracts. firms to participate study phar- in a ters were released after the GAO con- industry, production maceutical process, its ferred with the Chairman and Committee efficiency, costs profits. This initial Moreover, after the approval. obtained proposal was rejected because it was not sent, contin- letters were the GAO has had feasible and confidentiality because the correspondence with the ued Chairman companies’ the drug pro- data would not report attempt status of order tected. The objec- GAO then modified its gain drug access to cost companies’ June, tives by proposed a revised records. study to be two phases. conducted in 15. The Comptroller Phase I of that General’s demand study the GAO August 26,1974, letter to general nature, pecu- intended learn the dated claims authority problems pharmaceutical liarities and under the access-to-records clause negotiated in the seven contracts described industry, focusing specifically on manufac- *18 required information to be disclosed at letter be- hereof. The 6-9 paragraphs contracting. government time of The also gins: required concedes that was not Lilly to sub- any pricing mit cost or data at the time know, the increas- because of you
“As Specifi- these contracts were entered into. procure- in the Federal involvement contracts, cally respect the General DSA pharmaceuticals, ment of review underway pricing required a cost and data were not has Accounting Office by agencies drugs agency of because had that the procurement of the determined Government, including the price contract for one such was of the Federal contract pro- pharmaceuticals and drugs upon adequate price competition based and pricing This negotiated contracts. prices remaining cured under the contract of the several conducted at being is examination such contracts were based on established and Lilly Eli including drug companies, catalog prices or market of commercial * * *. Company quantities items sold substantial to the attempt- general public. respect With to the VA we “For time have been some contract, pricing cost data were not we consider gain access to records ing to In required purchasing agency review. because the had conduct such a necessary to with determined that the contract price we met regard, in June 1973 catalog on the Pharmaceutical based established or market representatives drug prices six of commercial items sold in substan- Association Manufacturers quantities general public. tial to the comprehensive review firms to initiate voluntary basis using provided data concedes Further, government 21. How- firms. representative industry by nego- Lilly’s to audit purpose is not that its ever, provid- firms have not industry performance tiations necessary to us to the records ed access It was asked in this suit. involved re- statutory out our carry satisfactorily as fol- Interrogatory 12 responded Lilly’s sponsibilities.” lows: records to be examined are de- No. 12 Interrogatory “Plaintiff’s scribed as: “ * * * requested “Is the of the purpose sole books, documents, pa- all Lilly’s examination of books and pers, directly and other records pertinent perform- Lilly’snegotiations audit contracts, include, but are ance of the in this contracts involved not (1) limited to experienced records of If the negative, suit? answer is in the materials, including costs of direct all the for which the re- purposes state labor, overhead, direct perti- and other sought? is quested examination costs, (2) nent corporate support prices Government, (3) Interrogatory No. charged to “Answer such other may information as be neces- ex- purpose requested “The sole sary for to review use the reasonableness is and records Lilly’s books amination adequacy contract and the per- negotiations Lilly’s to audit of the protection afforded Govern- in this involved the contracts formance ” * * * ment’s interests. Rather, request- purpose suit. examination, contemplat- presently ed government that there concedes by the ed, pricing is no is review contract reason to believe any- did Lilly, including suppliers, thing illegal, Government’s improper fraudulent adequacy drug items to determine negotiation or of the seven performance Govern- protection afforded contracts involved in this govern- suit. The used techniques by negotiation ment ment concedes that there is no reason to Accomplish- agencies. procuring believe government was induced Lil- upon contingent objective of this ly to ment any enter into contract here involved rec- access to the gain ability agree or to term GAO’s such the nature (1) ascertain ords needed to tract as a Lilly’s result of failure to disclose *19 924 genuine
2. There is no
or
issue
substan-
tial
to
controversy as
the existence
drug
the activities for which the
firms
costs, (2)
are
to
incurring
ascertain and
facts.
aforesaid material
verify the extent
to which the costs of
3.
26,
General’s August
these activities
the prices paid
affect
by
1974, demand for access
Lilly’s
the Government
procured
for items
under
exceeds his
authority under
access-to-
specified
contracts,
negotiated
(3)
and
records clause
in
contracts and under
to determine the bases of
pricing
firms’
statutes,
2313(b)
10 U.S.C.
and 41
§
and,
products
for
par-
considerations
254(c),
U.S.C.
because the
ticularly,
applicability
of these consid-
using
authority
General is
pur
for a
procurement
erations to
Federal
pose which
the contract
neither
clauses nor
products
involved.”
designed
serve,
statutes were
name
The government
22.
also admits that
ly, for the
purpose
conducting a research
one
“is
purpose
study
to have better
study on the economics of the entire phar
public understanding
legislative
and
under-
industry.
maceutical
Any administrative
standing of the
of the industry.”
economics
authority
investigate may be exercised
23.
Lilly
comply
has refused
with the
a purpose
for
authority
which the
Comptroller General’s demand lettér of Au-
granted.
is
Burlington Northern,
Inc. v.
26,1974,
gust
the ground
Comp-
on
that the
Comm’n,
Interstate Commerce
149 U.S.App.
troller General’s demand
his
exceeds
au-
176,
(1972),
D.C.
462
280
F.2d
cert. denied
thority
under
access-to-records clause
891,
409
93
U.S.
34
S.Ct.
L.Ed.2d 148
statutes,
and
(a)
for two
the re-
reasons:
(1972); Chattanooga Pharmaceutical Ass’n
quest
being made for an improper pur-
v.
Justice,
Dep’t
United States
358 F.2d
pose;
(b)
and
requested
the records
do not
(6th
864
1966);
Cir.
Shasta Minerals &
directly
pertain
and involve transactions
Chemical Co.
Exchange
v.
&
relating to,
Securities
the seven particular contracts
Comm’n, 328
(10th
1964);
285
involved
this suit.
F.2d
Cir.
Lines,
Montship
Ltd. v. Federal Maritime
Among
major
items
cost in-
Board,
U.S.App.D.C.
111
25. The
cannot
records of
which the
be used for
purpose.
such a broad
General seeks
examine
tain
Co.,
confidential
States
Refining
business information and
v. Humble Oil &
secrets,
Lilly would,
if such information
(5th
1974), vacated,
F.2d 953
Cir.
421 U.S.
public,
were made
irreparable
suffer
com- (1975),
S.Ct.
L.Ed.2d
petitive
$10,000.00.
injury
excess
remand,
(5th
II. Moreover, construing the Comptroller Conclusions of Law General’s authority limited access ne- under gotiated permit access an jurisdiction 1. The Court has over the investigation of an entire subject-matter personal industry of this action and jurisdiction raise parties. questions over serious constitutional be- costs, costs, marketing
administrative costs, research development which Lilly require Amendment’s cause of Fourth not assign particular does or allocate to de agency’s an administrative ment *20 contracts, and are products or which in- be relevant corporate records mand for a particular prod- curred without relation to Seattle, U.S. of 387 City See v. purpose. Therefore, Comptroller uct or contract. the 1737, (1967). 943 541, 18 L.Ed.2d 87 S.Ct. encompasses pricing General’s demand au General’s Therefore, Comptroller the not directly perti- cost records which are limit narrowly to construed must be thority to, nent and do not involve transactions which the purpose to the of access right to, relating particular the products pur- audit namely, right granted, the the contracts particular chased under in- contracts. particular negotiated in this suit. volved Co., Refining supra; & v. Humble Oil States Airlines, Board v. United Aeronautics Civil Lilly judgment 5. is entitled to a as a (N.D.Ill.1975). Inc., F.Supp. Complaint matter of law on its and on the August government’s 4. The General’s Counterclaim. Comptroller Lilly’s access to records 1974, demand for 6. is entitled to a Lilly permanent in- the access- also his under authority exceeds junction enjoining Comptroller General, because the and statutes to-records clause agents, servants, his employees and attor- re- records described categories neys, persons and all in active concert or to, involve pertain quest directly do them, participation with from examining or to, con- relating particular transactions attempting to the records of Lilly examine each involved in this suit. Since tracts General’s de- Comptroller described in the contract fixed-price the contracts was August mand letter of basis of com- solely on the Lilly awarded IT comparison ORDERED, IS bids or a AD- petitive received THEREFORE cata- JUDGED and DECREED THAT: Lilly’s offered with its standard price ex- each contract was log and since price, judgment of (1) summary The motion for Act Truth-In-Negotiation empt from the defendant-intervenor, the United States Act, Renegotiation negotia- neither be, hereby is, America, the same performance nor terms tions denied. way or dependent upon, were in tracts judgment of summary motion for (2) The to, Lilly’s produc- costs of directly related be, Company, Eli plaintiff, Lilly tion, Lilly methodology by which profits is, in all re- granted the same hereby its including standard prices, establishes spects. Therefore, relating catalog prices. records August (3) do General’s types to those of information not direct- to, Lilly’s .to records relat- demand examine ly pertain and involve transactions authority legal under U.S.C. exceeds his particular types negotiated 254(c) and the 2313(b) and § U.S.C. § contracts in this suit. involved in the seven con- access-to-records clauses addition, rec- pricing even if cost suit. Under tracts involved types ords were deemed relevant to these has authority, contracts, negotiated Gen- files contract on the right Lilly’s to examine still eral’s demand in this case exceeds other records which contracts and specified authority because the demand too broad. would enable relating Lilly’s request for records determine: encompass relating records pricing catalog prices for (a) Lilly’s standard establishes its the methods purchased speci- under products prices. catalog Those catalog standard contracts; fied however, necessarily with- prices, set (b) prices products pur- That in- regard particular out upon based established cata- Likewise, chased were in this the Comptrol- volved suit. prices log or market commercial items en- ler for cost records General’s quantities gen- substantial sold in compasses relating non-alloeated public; and costs, eral including general and non-allocable (c) That received by the
government under the contracts were
equal to or less than the catalog prices.
The Comptroller right General has no
examine records under 10 U.S.C. 2313(b) 254(c) and 41 under
the access-to-records clauses now before the
Court, including particular Lilly cost rec- records,
ords and pricing except those rec-
ords referred to above.
(4) The Comptroller General, his agents,
servants, employees attorneys, and all
persons in active concert or participation them, are permanently enjoined from
examining or attempting to examine
records, except those specified above, under
10 U.S.C. 2313(b) and 41 254(c) U.S.C. §
and under the access-to-records clauses now
before the Court.
(5) The Counterclaim of the defendant-
intervenor, the America, United States of be, and the is, same hereby dismissed.
(6) Costs be against assessed the defend-
ant and defendant-intervenor. NORTH WESTERN
CHICAGO AND COMPANY, Esca- TRANSPORTATION Superior Railroad Com-
naba and Lake Company,
pany Railroad and Soo Line
Petitioners, v.
UNITED STATES America and Commission,
Interstate Commerce
Respondents, Lindberg Sons, Inc.,
A. Intervening &
Respondent.
No. 77-1245. Appeals, States Court of
Seventh Circuit.
Argued Nov. 1977. April
Decided