B-156711, NOV. 29, 1965

B-156711: Nov 29, 1965

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RICHLAND AND WILL ASSURE THAT COMPUTING AND DATA PROCESSING SERVICES ARE PROVIDED TO THE COMMISSION (CUSTOMER) CONTRACTORS AT SERVICE LEVELS CONSISTENT WITH AND ESSENTIAL TO THEIR PRESENT REQUIREMENTS AND FUTURE GROWTH AND DEVELOPMENT. THE SELECTED CONTRACTOR WILL BE EXPECTED TO EXERT MAXIMUM EFFORT IN ESTABLISHING WITH PRIVATE CAPITAL A REGIONAL COMPUTER CENTER IN RICHLAND FROM WHICH PRIVATE WORK CAN BE PERFORMED IN ADDITION TO THE COMMISSION WORK. THE COMMISSION WILL PERMIT THE SELECTED CONTRACTOR TO USE THE COMMISSION'S EXISTING FACILITIES AND EQUIPMENT IN THE PERFORMANCE OF PRIVATE WORK ON THE TERMS AND CONDITIONS OUTLINED ELSEWHERE IN THIS LETTER AND ITS ATTACHMENTS.'. INTERESTED ADP FIRMS WERE ADVISED THAT SELECTION OF THE SUCCESSFUL CONTRACTOR WOULD BE BASED ON ALL PERTINENT FACTORS INCLUDING: "/1) FIRM'S BACKGROUND AND EXPERIENCE IN ACTUALLY MANAGING AND ECONOMICALLY OPERATING COMPUTER AND DATA PROCESSING FACILITIES INVOLVING ORGANIZATIONS WITH A DIVERSITY OF SKILL AND CAPABILITIES. "/2) EVIDENCE OF SATISFACTORY LABOR RELATIONS AND SALARY AND WAGE ADMINISTRATION. "/3) DEGREE OF INTEREST AND EXPECTED SUPPORT OF FIRM'S TOP MANAGEMENT. "/4) EXPERIENCE AND QUALIFICATIONS OF PERSONNEL PRESENTLY EMPLOYED BY THE FIRM AND PROPOSED FOR ASSIGNMENT TO KEY MANAGEMENT AND TECHNICAL POSITIONS IN THE PROPOSED WORK. "/5) DEGREE OF INTEREST EVIDENCED BY PROPOSER IN PLANNING WAYS AND MEANS TO SECURE OUTSIDE PRIVATE WORK WHICH COULD BENEFICIALLY ASSIST IN DEVELOPMENT OF INDUSTRY IN THE RICHLAND COMMUNITY.

B-156711, NOV. 29, 1965

TO FOOD INDUSTRIES RESEARCH AND ENGINEERING:

WE REFER TO YOUR LETTER OF APRIL 29, 1965, AND SUBSEQUENT CORRESPONDENCE, PROTESTING AGAINST THE NEGOTIATION OF CONTRACT NO. AT/45-1/-1820 WITH THE COMPUTER SCIENCES CORPORATION FOR THE PERFORMANCE OF AUTOMATIC DATA PROCESSING (ADP) SERVICES AT THE ATOMIC ENERGY COMMISSION (AEC) FACILITY AT HANFORD, WASHINGTON.

ON SEPTEMBER 28, 1964, THE AEC ISSUED A REQUEST FOR PROPOSALS TO OBTAIN THE FOLLOWING OBJECTIVES IN CONTRACTING FOR MANAGEMENT-TYPE ADP SERVICES:

"A. TO OBTAIN A SINGLE COMPUTER CENTER IN THE RICHLAND AREA, RICHLAND AND WILL ASSURE THAT COMPUTING AND DATA PROCESSING SERVICES ARE PROVIDED TO THE COMMISSION (CUSTOMER) CONTRACTORS AT SERVICE LEVELS CONSISTENT WITH AND ESSENTIAL TO THEIR PRESENT REQUIREMENTS AND FUTURE GROWTH AND DEVELOPMENT; AND

"B. TO AUGMENT DIVERSIFICATION OF THE ECONOMY OF THE AREA. THE SELECTED CONTRACTOR WILL BE EXPECTED TO EXERT MAXIMUM EFFORT IN ESTABLISHING WITH PRIVATE CAPITAL A REGIONAL COMPUTER CENTER IN RICHLAND FROM WHICH PRIVATE WORK CAN BE PERFORMED IN ADDITION TO THE COMMISSION WORK. TO FURTHER ENCOURAGE THE DEVELOPMENT OF PRIVATE WORK, THE COMMISSION WILL PERMIT THE SELECTED CONTRACTOR TO USE THE COMMISSION'S EXISTING FACILITIES AND EQUIPMENT IN THE PERFORMANCE OF PRIVATE WORK ON THE TERMS AND CONDITIONS OUTLINED ELSEWHERE IN THIS LETTER AND ITS ATTACHMENTS.'

INTERESTED ADP FIRMS WERE ADVISED THAT SELECTION OF THE SUCCESSFUL CONTRACTOR WOULD BE BASED ON ALL PERTINENT FACTORS INCLUDING:

"/1) FIRM'S BACKGROUND AND EXPERIENCE IN ACTUALLY MANAGING AND ECONOMICALLY OPERATING COMPUTER AND DATA PROCESSING FACILITIES INVOLVING ORGANIZATIONS WITH A DIVERSITY OF SKILL AND CAPABILITIES.

"/2) EVIDENCE OF SATISFACTORY LABOR RELATIONS AND SALARY AND WAGE ADMINISTRATION.

"/3) DEGREE OF INTEREST AND EXPECTED SUPPORT OF FIRM'S TOP MANAGEMENT.

"/4) EXPERIENCE AND QUALIFICATIONS OF PERSONNEL PRESENTLY EMPLOYED BY THE FIRM AND PROPOSED FOR ASSIGNMENT TO KEY MANAGEMENT AND TECHNICAL POSITIONS IN THE PROPOSED WORK.

"/5) DEGREE OF INTEREST EVIDENCED BY PROPOSER IN PLANNING WAYS AND MEANS TO SECURE OUTSIDE PRIVATE WORK WHICH COULD BENEFICIALLY ASSIST IN DEVELOPMENT OF INDUSTRY IN THE RICHLAND COMMUNITY, E.G. AMOUNT OF EFFORT AND THE SIZE OF THE MARKETING STAFF TO BE ENGAGED IN SOLICITING PRIVATE BUSINESS FOR THE RICHLAND COMMUNITY.'

SIX PROPOSALS WERE SUBMITTED AND, AFTER EVALUATION AND NEGOTIATION, IT WAS DETERMINED BY AEC THAT COMPUTER SCIENCES WAS THE BEST QUALIFIED FIRM TO MANAGE AND OPERATE THE ADP FACILITIES AT HANFORD. WE ARE ADVISED BY THE AEC THAT COMPUTER SCIENCES OFFERED TO ESTABLISH AT HANFORD A NORTHWEST COMPUTER SCIENCES CENTER. THIS WOULD INCLUDE THE INSTALLATION OF THE UNIVAC 1107 COMPUTER, IMMEDIATE INSTALLATION OF REMOTE DATA LINK EQUIPMENT IN THE LABORATORIES FOR TRANSMISSION OF OFF SITE LOAD TO THEIR EL SEGUNDO (LOS ANGELES) CENTER PENDING THE UNIVAC 1107 INSTALLATION, AND USING THE REMOTE DATA LINK DEVELOPMENT TO LINK ALL PRINCIPAL CITIES OF THE NORTHWEST TO RICHLAND AS A HUB AND REGIONAL NETWORK. COMPUTER SCIENCES COMMITTED ITS FINANCIAL RESOURCES TO THE INITIATION AND SUCCESSFUL CONTINUATION OF THE DIVERSIFICATION PROJECT; AND IT ALSO COMMITTED THE INVESTMENT OF ITS FIXED FEES RECEIVED BY AEC AS WELL AS ITS OWN CAPITAL FUNDS INTO THE EXPANSION OF THE CENTER. WE ARE FURTHER ADVISED THAT THE PROGRAMS WILL BE CARRIED OUT BY COMPUTER SCIENCES WITH ITS OWN CAPITAL AND EQUIPMENT, AND THAT PRESENT HANFORD PROGRAM DEMANDS FOR COMPUTER SERVICES EXCEEDS BY 20 TO 25 PERCENT THE CAPACITY OF ALL INSTALLED GOVERNMENT COMPUTER EQUIPMENT AND REQUIRES INSTALLATION OF ADDITIONAL COMPUTER CAPACITY WHICH COMPUTER SCIENCES IS OBLIGATED UNDER ITS CONTRACT TO INSTALL AT ITS OWN EXPENSE. THIS CONTRACT WITH COMPUTER SCIENCES IS A COST-TYPE MANAGEMENT CONTRACT UNDER WHICH COMPUTER SCIENCES WILL OPERATE GOVERNMENT-OWNED FACILITIES AND PROVIDE COMPUTER SERVICES TO AEC AND ITS OTHER MANAGEMENT CONTRACTORS AT RICHLAND IN CARRYING OUT AEC PROGRAMS. AS PROVIDED ON THE REQUEST FOR PROPOSALS, COMPUTER SCIENCES WAS REQUIRED, AS A CONDITION OF HAVING ITS PROPOSAL CONSIDERED, TO ACCEPT IN PRINCIPLE AEC'S STANDARD ALLOWABLE COST PROVISIONS AND TO AGREE TO THE PROPOSED FEE RANGE. AEC ADVISES THAT THE STANDARD ALLOWABLE COST PROVISION AND FEE RANGES WERE IN NO WAY ALTERED BECAUSE OF THE INCLUSION IN THE REQUEST FOR PROPOSALS OF A DIVERSIFICATION FACTOR.

THE COMPUTER SCIENCES' CONTRACT, IN ACCORDANCE WITH THE REQUEST FOR PROPOSALS, RECOGNIZES THAT SPACE IN A GOVERNMENT BUILDING WOULD BE MADE AVAILABLE, ALONG WITH GOVERNMENT-OWNED EQUIPMENT AND FACILITIES, FOR THE PERFORMANCE OF PRIVATE ADP SERVICES. THE USE OF SUCH SPACE, FACILITIES AND EQUIPMENT IS COVERED BY AN AEC USE PERMIT ARRANGEMENT WHEREUNDER A USE CHARGE WILL BE PAID.

YOU QUESTION THE AUTHORITY OF AEC TO ENTER INTO SUCH A CONTRACT AND AFTER PROTESTING TO OUR OFFICE YOU FILED AN ACTION IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF WASHINGTON, SOUTHERN DIVISION, FRUIT INDUSTRIES RESEARCH FOUNDATION, A CORPORATION D/B/A) FOOD INDUSTRIES RESEARCH AND ENGINEERING; ET AL. V. A.E.C., UNITED STATES OF AMERICA, ET AL., CIVIL NO. 2089. BY ORDER DATED OCTOBER 15, 1965, THE COURT DENIED YOUR MOTION FOR PRELIMINARY INJUNCTION AND DISMISSED THE ACTION ON THE FOLLOWING GROUNDS:

"THE PLAINTIFFS, FRUIT INDUSTRIES RESEARCH FOUNDATION, AND OTHERS IN THE COMPUTER FIELD NOW ATTACK THE AWARD OF THE CONTRACT TO COMPUTER SCIENCES CORPORATION. THEY ALLEGE THAT THE ATOMIC ENERGY ACTS ARE UNCONSTITUTIONAL, THAT THE AWARD TO COMPUTER SCIENCES WAS ARBITRARY AND CAPRICIOUS, THAT THE ATOMIC ENERGY ACT GIVES NO AUTHORITY FOR THE COMMISSION TO MAKE ANY SUCH CONTRACT, AND THAT THEY WILL BE DEPRIVED OF THEIR PROPERTY WITHOUT DUE PROCESS OF LAW.

"BY WAY OF RELIEF, THEY PRAY FOR AN INJUNCTION AGAINST THE CARRYING OUT OF THE CONTRACT.

"THE PRIMARY CONCERN OF THE PLAINTIFFS IS THE CONTRACTEE'S RIGHT TO USE THE OFFICE SPACE AND THE COMPUTER MACHINERY OF THE GOVERNMENT FOR THE CARRYING ON OF PRIVATE BUSINESS. THE CONTRACT GIVES THEM THIS RIGHT, AND COMPUTER SCIENCES IN TURN MUST PAY THE GOVERNMENT A CHARGE FOR THE USAGE.

"THIS DECISION TO ALLOW THE CONTRACTEE TO USE GOVERNMENT EQUIPMENT FOR PRIVATE WORK WAS MADE AFTER A FINDING THAT ENCOURAGEMENT TO PRIVATE INDUSTRY WAS NECESSARY FOR THE ECONOMIC BENEFIT OF THE AREA. RECENT PLANS TO REDUCE THE NUMBER OF PRODUCTION FACILITIES AT HANFORD MAY STRIKE HARD AT THE LOCAL ECONOMY, SINCE IT IS VERY LARGELY DEPENDENT UPON THE HANFORD FACILITY. TO PREVENT THIS, THE GOVERNMENT IS USING WHAT MEANS IT CAN TO ENCOURAGE PRIVATE INVESTMENT IN THE LOCAL AREA. BY AGREEMENT, COMPUTER SCIENCES IS REQUIRED TO INVEST ALL OF THE FEES FROM THE CONTRACT, PLUS $200,000.00 OF ITS OWN FUNDS, FOR THE EXPANSION OF THE COMPUTER CENTER. THIS PROGRAM OF DIVERSIFICATION AND ENCOURAGEMENT OF PRIVATE INVESTMENT HAS THE SUPPORT OF BOTH THE CONGRESSIONAL AND LEGISLATIVE BRANCHES OF THE GOVERNMENT. SEE THE PRESIDENT'S LETTER OF APRIL 17, 1965, TO THE ATOMIC ENERGY COMMISSION, AND JOINT COMMITTEE REPORT OF APPROPRIATIONS CHAIRMAN, ATOMIC ENERGY COMMISSION, AND JOINT COMMITTEE REPORT OF APPROPRIATIONS AUTHORIZATION FOR FISCAL YEAR 1965. WHEN THE CONGRESS HAS DECIDED UPON A POLICY WHICH IT BELIEVES WILL CONTRIBUTE TO THE WELFARE OF THE PEOPLE, THAT POLICY IS NOT TO BE LIGHTLY TAMPERED WITH.

"CONSIDERING FIRST PLAINTIFFS' BROAD CLAIM OF UNCONSTITUTIONALITY, COUNSEL AGREES WITH THE GENERAL DOCTRINE THAT FEDERAL STATUTES SHOULD BE CONSTRUED SO AS TO AVOID DOUBTS AS TO CONSTITUTIONALITY. HOWEVER, IF I FOLLOW HIS LINE OF ARGUMENT CORRECTLY, PLAINTIFFS ALLEGE THAT A CONSTRUCTION AUTHORIZING THIS USE OF GOVERNMENT PROPERTY WOULD BE UNCONSTITUTIONAL. THEY CONTEND IT WOULD BE UNCONSTITUTIONAL BECAUSE THE GOVERNMENT HAS ONLY LIMITED POWERS UNDER THE CONSTITUTION, AND THE CONSTITUTION DOES NOT AUTHORIZE THE GOVERNMENT TO CARRY ON A PRIVATE BUSINESS.

"PLAUSIBLE AS THIS CONTENTION MAY OR MAY NOT BE, WE ARE OBLIGATED TO CONSIDER, FIRST, THE POSTURE OF THE CASE FROM A NONCONSTITUTIONAL STANDPOINT.

"WHAT THE PLAINTIFFS CLAIM IS THAT THEIR BUSINESS, MEANING THEIR PROSPECTIVE CUSTOMERS, WILL BE LOST TO COMPUTER SCIENCES BECAUSE OF THE ADVANTAGES GRANTED THEM UNDER THIS CONTRACT; THAT IS, GRANTED TO THE SUCCESSFUL BIDDER, OR COMPUTER SCIENCES. THEY ALLEGE THE AWARD OF THE CONTRACT AS BEING ILLEGAL; THAT IS, BEYOND THE POWER OF THE COMMISSION TO CONCLUDE.

"IN ORDER FOR THE PLAINTIFFS TO HAVE STANDING IN THIS PROCEEDING, THEY MUST FIRST SHOW INJURY TO A LEGALLY-PROTECTED RIGHT.

"THE INITIAL ISSUE THEREFORE, IS: DOES AN ALLEGEDLY UNLAWFUL AGENCY ACT, WHICH RESULTS ONLY IN COMPETITIVE INJURY, GIVE THE INJURED PERSON STANDING TO BRING AN INJUNCTIVE SUIT SUCH AS THIS?

"I THINK THE QUESTION HAS BEEN SETTLED BY A SERIES OF SUPREME COURT CASES WHICH ARE APPLICABLE TO THE SITUATION AT BAR. AS I READ THEM, THE CASES OF TENNESSEE ELECTRIC POWER COMPANY VERSUS TENNESSEE VALLEY AUTHORITY, 306 U.S. 118 (1939); ALABAMA POWER COMPANY VERSUS ICKES, 302 U.S. 464 (1938); KANSAS CITY POWER AND LIGHT VERSUS MCKAY, 225 FED. 2D 294 (1955); CERTIORARI, DENIED, 350 U.S. 884; AND TEXAS STATE AFL-CIO VERSUS KENNEDY 330 FED. 2D 217 (D.C. CIR. 1964), ALL HOLD THAT ,FREEDOM FROM COMPETITION," WHETHER THE COMPETITION BE GOVERNMENT INITIATED OR GOVERNMENT-SPONSORED, IS NOT A LEGALLY-PROTECTED RIGHT.

"SINCE THE PLAINTIFFS DO NOT CONTEND INJURY TO A LEGALLY-PROTECTED INTEREST, OTHER THAN ECONOMIC COMPETITION, THE SUIT MUST BE DISMISSED FOR LACK OF STANDING TO SUE.

"EVEN IF THE SUIT WERE NOT DISMISSED, HOWEVER, I COULD NOT, ON THE STRENGTH OF THE SHOWING MADE HERE, GRANT A TEMPORARY INJUNCTION. IN HIS SWORN AFFIDAVIT, MR. WAGGONER, THE ASSISTANT MANAGER FOR ADMINISTRATION, RICHLAND OPERATIONS OFFICE, U.S. ATOMIC ENERGY COMMISSION, STATES THAT THE PRESENT HANFORD PROGRAM DEMANDS FOR COMPUTER SERVICES IS TWENTY TO TWENTY- FIVE PERCENT IN EXCESS OF THE GOVERNMENT COMPUTER CAPACITY. IF THIS IS CORRECT, COMPUTER SCIENCES WILL BE UNABLE TO USE THE GOVERNMENT COMPUTERS FOR ANY PRIVATE WORK, BECAUSE NO UNUSED COMPUTER TIME IS AVAILABLE.

"ON THIS STATE OF FACTS, AND ASSUMING ARGUENDO THE PLAINTIFFS HAD STANDING TO SUE, THERE IS NO ,IMMEDIATE" DANGER OF COMPETITIVE HARM TO THE PLAINTIFFS, AT LEAST NO HARM FROM PRIVATE USE OF GOVERNMENT COMPUTERS. SINCE A SHOWING OF AN IMMEDIATE THREAT OF IRREPARABLE INJURY IS ONE OF THE ESSENTIALS FOR INJUNCTIVE RELIEF, I COULD NOT GRANT THE INJUNCTION ON THE SHOWING MADE HERE.

"WHILE IT IS TRUE THAT MR. EARL CARLSEN, PRESIDENT OF THE PLAINTIFF FRUIT INDUSTRIES RESEARCH AND ENGINEERING,"DENIES" IN HIS AFFIDAVIT THAT THE GOVERNMENT COMPUTERS ARE PRESENTLY BEING USED AT CAPACITY, HIS "DENIAL" IS BASED UPON BELIEF. MR. WAGGONER'S AFFIDAVIT IS ON THE OTHER HAND A SWORN STATEMENT OF THE FACT BASED UPON PERSONAL KNOWLEDGE.

"WEIGHING THE TWO AFFIDAVITS LEAVES THE PLAINTIFFS WANTING IN THEIR BURDEN OF PROOF IN SHOWING IMMEDIATE INJURY.'

THE COURT THUS DISMISSED YOUR ACTION FOR LACK OF A LEGALLY PROTECTED INTEREST. FURTHERMORE, WE ARE OF THE OPINION THE QUESTIONED CONTRACT IS IN CONSONANCE WITH THE PROVISIONS AND OBJECTIVE OF 42 U.S.C. 2349. THAT SECTION, WHICH SPECIFICALLY DEALS WITH THE HANFORD ATOMIC PROJECT, AUTHORIZES THE AEC "TO LEASE LAND, AND TO SELL, LEASE, INCLUDING LEASES WITH OPTIONS TO PURCHASE, AND OTHERWISE DISPOSE OF IMPROVEMENTS THEREON, AND SUCH EQUIPMENT AND OTHER PERSONAL PROPERTY AS IS DETERMINED TO BE DIRECTLY RELATED THERETO * * * UPON A DETERMINATION BY THE COMMISSION THAT SUCH DISPOSITION WILL SERVE TO PREVENT OR REDUCE THE ADVERSE ECONOMIC IMPACT OF ACTUAL OR ANTICIPATED REDUCTIONS IN COMMISSION PROGRAMS IN THAT AREA * * *.' AND IT MAY BE MENTIONED THAT THE CONTENTION ADVANCED, THAT THE "USE PERMIT" GRANTED THE CONTRACTOR IS NOT A SALE OR LEASE OR DISPOSITION OF PROPERTY WITHIN THE MEANING OF THE SECTION, INVOLVES A DUBIOUS DISTINCTION, ONE WHICH AT BEST LOSES SIGHT OF THE STATED LEGISLATIVE PURPOSE THAT SUCH DISPOSITION WOULD SERVE TO PREVENT OR REDUCE THE ADVERSE ECONOMIC IMPACT OF ACTUAL OR ANTICIPATED REDUCTIONS IN COMMISSION PROGRAMS IN THE HANFORD PROJECT AREA.