service contracting and rights of civil service personnel

Service Contracting and Rights of Civil Service PersonnelAuthor(s): Michael A. KatzSource: Public Contract Law Journal, Vol. 4, No. 1 (April 1971), pp. 1-24Published by: American Bar AssociationStable URL: http://www.jstor.org/stable/25753788 .

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Service Contracting and Rights of Civil Service Personnel

ARTICLES


By Michael A. Katz*

The subject of this article is the

right, if any exists, on the part of

employees in the Federal civil ser

vice1 and/or their representa tive organizations, to contest the

practices of the agencies or depart ments with which they are em

ployed with respect to contracting for services. Procurement regu

lations generally prohibit the ob

taining of "personal services,"

loosely defined as "the procuring of services by contract in such a manner that the contractor or his

employees are in effect employees of the Government."2 While the Civil Service Commission3 and the General Accounting Office4 have from time to time issued pro

nouncements upon the subject in which attempts have been made to

develop criteria of a workable na ture to be used in identifying such

illegal contracts, only recently has the issue been raised by adversely affected government employees, in a manner which threatens, through the invocation of the judicial pro cess, to have a profound effect on

the utilization of service con

tracting as a means of accom

plishing the business of the Gov ernment in the future.

This discussion will not incor

porate the question of what is and

what is not an illegal personal ser

vices contract, or what should be, but rather, will be devoted to a

consideration of the various means

by which this question has been

raised by aggrieved government

personnel. In particular, these in clude (1) actions under labor

management agreements between

employee unions and government

* LL.B., 1966, New York University. Presently Assistant United States Attorney, District of Columbia. At the time this article was written, the author was a staff officer in the Office of the Judge Advocate General of the Army.

1. The "civil service" consists of all appointive positions in the executive, judicial and

legislative branches of the Government, except for those in the armed forces. 5 U.S.C.

2101(1). 2. Armed Services Procurement Regulation (ASPR) ? 22- 102.1(a). 3. Opinion of the General Counsel, United States Civil Service Commission, Legality of

Selected Contracts, Goddard Space Flight Center, National Aeronautics and Space Adminis

tration, as later supplemented and revised, summarized in U.S. Civil Service Commission,

FPM Ltr. 300-8, Dec. 12, 1967 and FPM Ltr. 300-12, Aug. 20, 1968; Opinion of the

General Counsel, Civil Service Commission, Feb. 12, 1965 (employment of contract tech

nicians at Fuchu Air Base, Japan), H.R. Rep. No. 188, 89th Cong., 1st Sess., at 2 (1965). See

Kornreich and Schwartz, The New "Law" of Government Service Contracts, 28 Fed. B. J. 239

(1968). 4. Ms. Comp. Gen. B-133394, Nov. 1, 1967 (concurrence with Civil Service Commission

respecting the Goddard contracts); Ms. Comp. Gen. B-156219, June 1, 1965 (use by General Services Administration of contract clerical help prohibited); Ms. Comp. Gen.

B- 146824, Mar. 4, 1965 (concurrence with Civil Service Commission opinion respecting Fuchu Air Base case); 30 Comp. Gen. 495 (1950) (employment of certain outside consultants

improper).

1



Public Contract Law Journal_

agencies; (2) administrative pro ceedings incident to reduction in force actions; and (3) judicial pro ceedings in the Federal courts.

Background A brief consideration of several factors which have in recent times caused this matter to come to the

fore is useful to proper per spective.

Extent of Contracting for Support Services

The general policy of the Govern ment is one of reliance on private

industry and the free enterprise system for those products and ser

vices which can be obtained from that source.5 The operation by agencies of "commercial or in dustrial activities" is discouraged.6 The extent to which this policy is

implemented in the services area is illustrated by statistics presented in 1968 to the House Committee on

Government Operations to the effect that the Federal government receives annually from the private sector support services costing $8.5 billion, performed by over 250,000

contractor employees, as compared with $11.5 billion expended an

nually for the services of personnel appointed in the Civil Service.7

While the Bureau of the Budget has expressed the above-described

policy along with the caveat that it will not be used to "justify depar ture from (Civil Service) law(s) or

regulation(s). . . (or) for the pur pose of avoiding established salary or personnel limitations,"8 it is

questionable whether the limitation is being adhered to as faithfully as is the broad policy. Government

agencies purchase services of all sorts, and probably many situations exist which contravene those few

guidelines presently available re

specting unlawful personal services contracts.9

Increasing Unionization of the Federal Service In 1962, President John F.

Kennedy promulgated Executive Order 10988, in which for the first time there was established as official Federal policy the right of

government employees to organize and to engage in collective

bargaining.10 While the subjects to

5. Bureau of the Budget Circ. No. A-76, Aug. 30, 1967. Attempts to supplement Circular A-76 with special provisions respecting contracting for services were unsuccessful. See House Committee on Government Operations Hearings on Government Procurement and Con

tracting, Pt. 7, at 1875-77 (1969); see also, H.R. Rep. No. 1850, 90th Cong., 2d Sess. (1968). 6. Activities operated by government agencies which provide products or services also

obtainable from private sources. Bureau of the Budget Circ. A-76, supra note 5, 1-2. See DOD Dir. 4100.15, Commercial and Industrial Activities, Apr. 17, 1969.

7. H.R. Rep. No. 1850, supra note 5, at 5. 8. Bureau of the Budget Circ. A-76, supra note 5, para. 4(a). 9. Notes 3 and 4, supra. 10. 3 C.F.R. 521 (1959-1963 Comp.), 5 U.S.C. 7301, at 300. Executive Order 10988 was

superseded in October 1969 by Executive Order 11491, 34 Fed. Reg. 17605 (1969). See Smith, Executive Orders 10988 and 11491, and Craft Recognition in the Federal Service, 48 Mil. L. Rev. 1-3(1970).

2



_Service Contracting and Rights of Civil Service Personnel

which the right of collective

bargaining extends are rather limited when compared to the extent of exercise of that right in the private sphere (the most noticeable exclusion being in the area of rates of pay, these being controlled by Congress),11 federal

employee unions may bargain with their employing agencies (referred to herein at times by the term,

"management") in the general area

of "personnel policies and practices and matters affecting working conditions."12

Although some government

employees have been represented by labor organizations for many years, the issuance of the Executive Order was a great impetus to their

subsequent growth in membership and power. In 1963, of a total of

2,365,000 Federal employees, 670,000, or 28%, were repre sented13 by labor unions, of whom

180,000 were other than postal workers. In 1969, the total number of Federal civil service employees had increased to 2,705,000; how

ever, unions now represented

a to

tal of 1,477,000, or 62%, 843,000

of whom were other than postal workers.14

The largest union representing government employees is the pow erful American Federation of Gov ernment Employees (AFGE), an

affiliate of the AFL-CIO, which has a total dues-paying membership of

304,300, and represents through the medium of exclusive bargain ing rights approximately 600,000 federal workers.15 Others include the National Association of Gov ernment Employees (NAGE), the National Federation of Federal

Employees (NFFE), and the vari ous postal unions, as well as tradi

tional craft unions which represent Federal workers who engage in

their trades, principally so-called

"wage board"16 employees. Increasing militance has been

noted recently in the activities of these unions, evidenced most dra

matically in the recent strikes in

volving postal employees and Fed

eral Aviation Administration air traffic controllers. At the AFGE's recent convention in Denver, a "no

strike" proviso was stricken from the union's constitution,17 and mili

11. See 5 U.S.C. 5301 **. 5*9. 12. Exec. Order 11491 ? 11(a). 13. These statistics refer to numbers of employees in bargaining units with respect to

which unions have exclusive bargaining rights. Those employees are not required to be, and

many of them are not, dues-paying union members.

14. "New Era for Federal Workers?Bigger Unions, Strike Threats," U.S. News Csf World

Report, Aug. 24, 1970, 62-64. 15. Id. 16. Employees, principally in the trades and crafts, whose wages are paid on an hourly

basis and are fixed in accordance with prevailing wage rates for the same trades in the

private sector. See 5 U.S.C. 5341. On the other hand, federal white-collar employees are

classified under the provisions of 5 U.S.C. 5101 et. seq., and paid at fixed salaries established

by Congress in the General Schedule ("GS"), at 5 U.S.C. 5332.

17. Striking against the Federal government is, of course, prohibited by law, 5 U.S.C.

7311(3).

3



Public Contract Law Journal

tant delegates mounted a serious, albeit unsuccessful, challenge to the reelection of John F. Griner as national President, a post held by him since 1962.18

Recent Reductions in Force

The immediate cause of employee attacks on agency contracting prac tices has been large scale reduction in force actions (known collo

quially, and sometimes referred to herein as, "RIFs") conducted in the recent past at various installations of the Department of Defense and of the National Aeronautics and

Space Administration. For several

years, NASA has had periodic RIFs in connection with reductions in certain phases of the space pro

gram; more recently, the Defense

Department has been required to

employ the procedure as a result of recent reductions in force levels associated with decreasing in volvement of United States military forces in the Vietnam conflict, as well as demands for general reduc tions in military spending and di version of funds intended therefor to domestic needs. Both agencies utilize large numbers of contractor service personnel, and conduct ex tensive "commercial and industrial activities" as defined by the Bureau of the Budget.

The above-described influences have combined to produce an in

creasing number and variety of at tacks on agency service contracting practices, as described below.

Actions Under Labor

Management Agreements Pursuant to Sections 11 and 12 of Executive Order 11491, the succes sor of Executive Order 10988,19

agencies and labor organizations which have been accorded ex

clusive recognition entitling them to bargain on behalf of all those

employed in the bargaining unit in question20 may negotiate agree

ments. Various subject areas con

sidered non-negotiable include matters with respect to the mission

of an agency; its budget; its organi zation, the numbers of employees; and the numbers, types and grades of

positions or employees assigned to an

organizational unit, work project or

tour of duty; the technology of per forming its work; or its internal secu

rity practices.21 In addition, there is expressly

reserved to the agency the right to, inter alia: ? relieve employees from duties be cause of lack of work or for other le gitimate reasons ? maintain the efficiency of the Gov ernment operations entrusted to them ? determine the methods, means and

personnel by which such operations are to be conducted22

18. See Big John's Dilemma: Restive Civil Servants Pressure Union Chief to Try Tougher Tactics, Wall Street Journal, Aug. 10, 1970.

19. See note 10, supra. 20. Procedures by which unions may gain exclusive recognition are set out in ?? 7- 10,

Exec. Order 11491. 21. ? 11(b), Exec. Order 11491. 22. ? 12(b) (3-5), Exec. Order 11491. The texts of recently concluded labor-management

agreements are published from time to time in the (Government Employee Relations Report, issued weekly by the Bureau of National Affairs, Inc.

4




Labor-management agreements may provide for grievance proce dures, which may further provide for use of arbitration; however, ar

bitrators are not authorized to en

tertain challenges to, or proposed changes in, agency policies.23 Agreements which have been reached are subject to the approval of the head of the agency con

cerned or his designee; however, his approval may not be withheld if the agreement conforms to appli cable law and existing regulations and policies.24

The Executive Order provides for the adjudication by the Assis tant Secretary of Labor for La

bor-Management Relations, pur suant to procedures promulgated by him,25 of complaints brought by union or agency of "unfair labor

practices." These are specific prac tices denounced by the provisions of the Executive Order, and, from the union's standpoint, consist

largely of such matters as manage ment refusal to recognize or nego

tiate with the union,26 and agency attempts to discourage union mem

bership or interfere with any em

ployee rights granted by the Or der.27 On the other hand, disputes over interpretation, application and alleged violation of agree ments are resolved by means of the

grievance procedures and do not involve the Department of Labor. Of especial significance in the

context of the present discussion are provisions frequently found in

labor-management agreements on the subjects of contracting for ser vices and reductions in force. The clauses have, of course, been drafted with the above-described limitations on the role of the unions in these areas in mind, and as a consequence they are rather

vague and appear essentially prec atory in nature. They provide nu merous "outs" for management, contain little that would seem ca

pable of enforcement, and are

largely restatements of otherwise

existing law. By way of illustration,

23. ?? 13, 14, Exec. Order 11491. The grievance and arbitration procedures may be

designated as sole remedies, to the exclusion of agency and Civil Service Commission

grievance procedures otherwise applicable. Arbitration is generally advisory, and either

party may take exception to the arbitrator's decision to the Federal Labor Relations Council, established in the Executive Office of the President in accordance with ?4, Exec. Order 11491.

24. ? 15, Exec. Order 11491. 25. 29 C.F.R. 201 et. seq. (1970), 35 Fed. Reg. 2556 (Feb. 4, 1970). 26. ? 19, Exec. Order 11491. Of particular importance here is the prohibition expressed

in Sec. 19(a) (6) against refusal to "consult, confer or negotiate with a labor organization as

required by this Order" as this is usually all an agency must do when it decides to contract

for services or reduce its work force. In Local 1106, National Fed'n. of Federal Employees v.

Laird, 318 F.Supp. 153 (D.D.C., 1970), the plaintiff union claimed that the Army had

improperly failed to consult it before ordering the closing of the Army Pictorial Center in

Long Island City, New York. Although the court held it lacked subject matter jurisdiction {see note 31, infra, and accompanying text), it stated that the agency's obligation to consult did not extend to a decision to close an installation, citing the language contained in ? 11(b) of Exec. Order 11491 (note 21, supra ).

27. ? 19(a)(l, 2), Exec. Order 11491.

5




the following language appears in a representative agreement:28 CONTRACTING

a. The Union recognizes that the

Employer has the authority and re

sponsibility to determine the methods, means and personnel required to ac

complish the mission of the Employer. The Employer and the Union recog nize that contracting for services by the

Employer is subject to certain policies and regulations having government wide application.

b. The Employer will give the Union as much notice as possible in advance of contracting actions which

may adversely effect (sic) or displace career employees. The Employer fur

ther agrees to utilize service type con

tracts only in those cases where such

action is clearly indicated by applicable policies and regulations. In all cases

where contracting is utilized the Em

ployer will take all possible prudent ac tion to retain career employees.

REDUCTIONS IN FORCE a. The Employer agrees to notify

the Union in advance of reduc

tion-in-force actions at which time the

Union may make its views and recom

mendations known concerning the

implementation of such reduction in-force actions. After the reduc tion-in-force plan has been developed and prior to its implementation, the employer will discuss in detail with the President of the Union or his design ated representative the competitive lev

els to be affected. b. In the event of a reduction in

force, existing vacancies will be utilized to the maximum extent to place em

ployees in continuing positions who otherwise would be separated from the service. All reductions in force will be carried out in strict compliance with applicable laws and regulations.29

To date, not much use has been made of the grievance and arbi tration procedures with respect to

contracting-out practices. In a re

cent arbitration case, however, Lo cal Lodge No. 830, International Assn.

of Machinists and Naval Ordnance Station, Louisville, Ky.,30 an arbi trator considered a union's claim that management had failed to consult with it concerning the con

tracting of a study and repairs in cident thereto of an internal tele

phone system that had apparently ceased functioning for unknown reasons. The arbitrator found that

although the union's members nor

mally had the mission of making repairs to the system, the contract was used in this instance for the

purpose of obtaining outside ad vice from a disinterested person, faulty maintenance apparently be

ing one possibility as the cause of the breakdown. Since the con

tracting out clause required con

sultation with the union only in the event that it would result in dis

charge or furlough of civil service

personnel, its consultation provi sions were held not to be applicable to the situation at hand since no

28. Articles XXIII (Reductions in Force, etc.) and XLVII (Contracting), Agreement be tween United States Army Missile Command and Medical Department Activities (Redstone

Arsenal, Alabama) and Local 1858, American Federation of Government Employees, Octo ber, 1969.

29. A further provision in paragraph (c) of the Article provides that career employees who are separated in a reduction in force will be given preference in the event of future

hiring by the agency. 30. Bureau of National Affairs, Government Employee Relations Report No. 355, June 29,

1970._

6




such action was contemplated. The union also made the somewhat un usual contention that the con

tracting action amounted to a

breach of a provision in the agree ment said to place upon manage ment the "obligation" to "maintain the efficiency of the Government

operations entrusted to (it)," the

theory being that the contracting of the study was inefficient as the work could have been performed by union personnel at a lower cost to the government. In actuality, the union was attempting to invoke the

"management's rights" provisions of the agreement which vested in

management the exclusive right to

maintain the efficiency of the oper ations. The arbitrator held that the

language of the clause clearly es

tablished the exclusive authority of the agency to maintain efficiency, and that neither he nor the union had any authority or standing to

challenge the agency's judgment. Thus far, no attacks on agency

contracting for services utilizing these procedures has proved suc

cessful.

The courts as a rule have exhib ited reluctance to enter the area of federal labor-management rela

tions, and have generally declined invitations to enforce the provi sions of the Executive Orders relat

ing thereto. In Manhattan-Bronx

Postal Union v. Gronouski,31 the

plaintiff union sought an in

junction requiring the Postmaster General to recognize it as the ex clusive representative of employees of the New York Post Office in ac

cordance with the terms of Execu tive Order 10988. The requested relief was denied on the ground that the action was barred by the doctrine of sovereign immunity. The District of Columbia Circuit in so holding stated that the Execu tive Order was merely a formula tion of broad policy for the guid ance of federal employing agencies, that it could have been withdrawn at any time for any or no reason, and that

. . . the President did not undertake to create any role for the judiciary in the implementation of this policy. . . if

appellants disagreed with the Post master General's decision as to this as pect of personnel policy and believed it to be contrary to the President's wishes, it is obvious to whom their complaint should have been directed. It was not

to the judicial branch. Congress has

given the District Court many impor tant functions to perform, but they do not include policing the faithful execu tion of Presidential policies by Presi dential appointees.32

An exception to this rule was

carved out by the same court in National Assn. of Government Employ ees v. White.33 It appeared from the

facts that the defendant Adminis

31. 350 F.2d 451 (D.C. Cir. 1965), cert, denied, sub. nom. Manhattan-Bronx Postal Union v.

O'Brien, 382 U.S. 978 (1966). See also, National Assn. of Internal Revenue Employees v.

Dillon, 356 F.2d 811 (D.C. Cir. 1966); National Fed'n. of Federal Employees v. Laird, supra, note 26; Lodges 1647 and 1904, AFGE v. McNamara, 291 F.Supp. 286 (M.D. Pa. 1968); Canal Zone Cent. Labor Union v. Fleming, 246 F.Supp. 998 (D. Canal Zone 1965), rev'd on

other grounds sub nom. Leber v. Canal Zone Cent. Labor Union, 383 F.2d 110 (5th Cir. 1967). 32. Manhattan-Bronx Postal Union v. Gronouski, supra note 31 at 456-457.

33. 418 F.2d 1126 (D.C. Cir. 1969).

7




trator of the Environmental Sci ences Services Administration had

cancelled the plaintiff union's ex

clusive recognition rights following an incident in which its members had picketed and distributed liter ature in front of the entrance to

the New York office of the Weath er Bureau. The District Court had dismissed the action on the basis of the rule laid down in the Manhat tan-Bronx case. In view of the union's claim of alleged denial of constitutional rights to free speech and assembly, the District of Co

lumbia Circuit reversed the case

and ordered a hearing on the mer

its. In so doing, the court said: Somewhat intertwined with the basic

considerations which underlie the sov

ereign immunity doctrine is the doc

trine of non-justiciability. Courts have

refrained from the exercise of judicial power in situations where that might

overly infringe on the prerogatives of another branch of government. . .

We recognize that the federal govern ment employee's right to organize is set

forth in Executive Order 10988, and that implementation of this directive is

essentially a matter of executive deter

mination. But even where a privilege that has been extended is capable of unilateral revocation, the adminis

tration of that privilege cannot be ex ercised in a manner which clashes with basic constitutional safeguards. Judicial relief is available even when the priv ilege is not rooted in a statute.34

It appears that efforts to attack

contracting out decisions through the means available under the Fed

eral labor relations scheme have been unsuccessful and will prob ably remain so. Under the terms of

agreements as presently written,

management owes labor nothing except a vague duty of consultation as far as contracting out is con

cerned, and it is unlikely that the

agencies would abide the use of

any stronger language in such

agreements in the future. The gen eral "hands-off" attitude of the

judiciary also makes it improbable that union attempts to limit the use

of support services contracts

through collective bargaining and

grievance and arbitration proceed ings will meet with much success.

Administrative Actions Incident to Reduction in Force In view of the fact that most of the current disputes between govern ment agencies and their employees over contracting out practices have been engendered by the announce

ment and carrying out of reduction in force actions, some consid

eration of reduction in force proce dures and the effect thereof on in dividual civil service employees is

considered appropriate.35 As a general proposition, the

power to remove a civilian officer or employee from his position or

job in the Federal government is incident to the power of appoint

ment.36 It is well settled that in the

34. Id. sit 1130. 35. On March 6, 1970, the Department of Defense announced that as a part of a general

military budget curtailment, 340 installations would be closed or curtailed by June 29, 1970. The attendant reductions in force amid union allegations of unlawful contracting practices, has resulted in the filing of several suits.

36. Keim v. United States, 177 U.S. 290 (1900). _

8




absence of legislation, government employment can be revoked or ter minated summarily.37 In the ab sence of the statutory provisions to be discussed herein, it would be

possible to discharge civil service

employees for lack of work on a more or less random basis, since the government does not contract with its employees to retain them if their services are not required.38

The "retention preference" pro visions of the civil service laws, now contained in title 5, chapter 35, United States Code, and which

prescribe generally the manner in which employees will be separated in a reduction in force, were enacted into law as Section 12 of the Veterans' Preference Act of 1944.39 The operative portion thereof prescribes as follows:40

The Civil Service Commission shall prescribe regulations for the release of

competing employees in a reduction in force which give due effect to ?

(1) tenure of employment; (2) military preference, subject to

section 3501(a) (3) of this title;41 (3) length of service; and (4) efficiency or performance rat

ings.

The regulations of the Civil Ser

vice Commission,42 as amplified and explained in the Federal Per sonnel Manual,43 implement the above-referenced statute by pro mulgating certain procedures to be followed in accomplishing a reduc tion in force, and by providing for

appeals by employees respecting certain matters associated there

with. Many of the agencies have also issued regulations of their own

which frequently afford greater rights to their employees than the minimum requirements of the Cavil Service Commission.44

In general, a reduction in force occurs, and the retention prefer ence requirements come into play, when an agency, by reason of lack of work or funds, or reorganiza tion, releases an employee from his

"competitive level"45 by separation, demotion, or by reassignment re

quiring displacement.46 At the risk of over-generaliza

tion, the following is a greatly sim

plified explanation of how a reduc tion in force is accomplished.

When funding limitations or other factors require an agency to curtail

its activities, it will initiate a reduc

tion in force by determining that

37. Cafeteria and Restaurant Workers, etc. v. McElrov, 367 U.S. 886, 896 (1961); Vitarelli v. Seaton, 359 U.S. 535 (1959); Medoff v. Freeman, 362 F.2d 472 (1st Cir. 1966).

38. Stilling v. United States, 41 Ct. Cl. 61 (1906); Brown v. United States. 39 Ct. Cl. 255

(1904). 39. 58 Stat. 387 (1944), 5 U.S.C. 3501 el seq. 40. 5 U.S.C. 3502(a). 41. The cited provision places certain restrictions on the eligibility for military preference

in reductions in force of retired military members. 42. 5C.F.R. 351 et. seq. 43. U.S. Civil Service Commission, Federal Personnel Manual, Chapter 351 (hereinafter

cited as "FPM"). 44. E.g., Dept. of the Army, Civilian Personnel Regulations (CPR) R3 (April 1962). See

para. 2-2, FPM Ch. 351. 45. Infra, note 49 and accompanying text. 46. Para. 2- 1(a), FPM Ch. 351. See 5 C.F.R.

351.201(a)._

9



Public Contract Law Journal _

certain jobs or positions will be abolished.47 A competitive area is

established on the basis of orga nization and/or geography. This outlines the boundaries for em

ployee competition for jobs, and limits the "ripple effect" associated

with a reduction in force.48 Com

petitive levels are also established, and initially, employees compete for jobs only in their own level, which consists of jobs so similar in

important respects that an employ ee can shift from one to another without significant retraining and without unduly interrupting the

agency's work program.49 While

management encourages those em

ployees eligible to do so to retire or transfer to other agencies,50 reten

tion registers are prepared for each competitive level, in which all

employees therein are ranked in accordance with the statutory pref erences.51 If positions are abol

ished within a competitive level, the employees released therefrom will be those with the lowest stand

ing on the retention register.52 All

Group III employees53 so released are then separated, thus con

cluding the "first round com

petition." Group I and II employ ees who are released from their

competitive levels will then partici pate in the "second round com

petition," in which they will have the right to secure a position in a

different competitive level if there exists therein an employee of lower retention standing than their own

whom they can displace or

"bump," and if they possess the

requisite qualifications for such po sition.54

Thus, the net effect of all this is that an employee may lose his job in a reduction in force if either his

position is abolished by the agency, or if he is "bumped" therefrom by

47. The decisions as to whether a reduction is necessary, which and how many jobs are to

be abolished, and when the reduction is to take place are made by the affected agency and are generally not reviewable by the Civil Service Commission, Para. 2-7(a), FPM Ch. 351, or

by the courts, Adams v. Humphrey, 232 F.2d 40 (D.C. Cir. 1955); Adams v. United States, 137 Ct. Cl. 52 (1956).

48. Para. 4-2, FPM Ch. 351. See Fass v. Gray, 197 F.2d 587 (D.C. Cir. 1952); Bashein v.

United States, 279 F.2d 255 (Ct. Cl. 1960). See also 5 C.F.R. 351.402.

49. Para. 4-3, FPM Ch. 351; 5 C.F.R. 351.403. 50. Under recently promulgated liberalized discontinued service annuity rules, early

retirement is available at a reduced pension. 51. Subchapter 5, FPM Ch. 351. Competing employees, i.e., those with satisfactory per

formance ratings, are divided into three groups, viz: Group I, Career employees not serving probationary periods; Group II, Probationary and career-conditional employees; Group III,

temporary and term employees. Each group is subdivided into two sub-groups, A (veterans) and B (nonveterans). Employees are then ranked within each subgroup based on length of service. Thus, the four factors to which effect must be given by the terms of 5 U.S.C. 3502(a) come into play. The relative retention standing is determined by the descending order of retention standing from the highest group (I) to the lowest (III), from subgroup A in each

group to subgroup B, and from the earliest service date to the latest in each subgroup. 5 C.F.R. 351,404, 351.501-506.

52. Para. 6- 1, FPM Ch. 351; 5 C.F.R. 351.602. 53. See note 51 supra. 54. Para. 7-1, FPM Ch. 351; 5 C.F.R. 351.701-703.

10




another employee with greater se

niority; and that he may be ad

versely affected thereby either by being separated or reassigned to

another position resulting in a re

duction in grade and consequent loss of earnings.55

An employee who believes that a

reduction in force action taken

against him was improper in one or more respects may appeal to the head of the agency, if authorized

by the agency's regulations,56 or he

may appeal to the Civil Service Commission.57 These appeals are

generally limited to such matters as

failure to give sufficient notice as

required, failure to discharge lower-ranking employees, improp er tenure grouping or designation of competitive area or competitive level, violation of veterans' prefer ence rights, and so forth.58

In the recent past, a number of

attempts have been made to appeal reduction in force actions on the

ground that the functions formerly performed by the appellant were

contracted to private firms by means of unlawful contracts for

personal services, or that so long as

there exists any contract for per sonal services in an agency, the le

gality of which is open to question, no civil servant should be down

graded or separated. Usually, the Commission's own pronounce ments on the subject59 are invoked in aid of such contentions.

The Commission, however,

speaking through its Board of Ap peals and Review, has taken the

position that it will not entertain such complaints. It has reasoned that even if a contract were held to

have been entered into in violation of the federal personnel laws, the

employees of the contractor would not be considered "competing em

ployees" with civil service employ ees within the meaning of the Re tention Preference Act. Therefore, it is said, the legality of service con

tracts is a matter irrelevant to, and not appropriate for decision in

connection with, a reduction in force appeal.60 There has been fur ther ascribed to the Board the fol

lowing statement:

A decision to carry out some of its functions by using other than federal civilian employees is a matter solely within the administrative discretion of the agency and the propriety of such decision is not subject to review or modification by the Civil Service Com mission in the adjudication of the re duction-in-force appeal of any federal civilian employees affected thereby.61

Obviously, the major portion of

this holding is at variance with the

55. Efforts are made to ameliorate the effects of reduction in force actions, and include

counselling programs, reemployment priority rights, and, in some cases, retained pay. 56. E.g., ? 7, CPR R3, supra note 44.

57. Subchapter 9, FPM Ch. 351; 5 C.F.R. 351.901.

58. Appendix D, FPM Ch. 351; Para. 7- 1(b), CPR R3, supra note 44.

59. See note 3 supra. 60. Lodge 1858, American Federation of Govt. Employees v. Paine, 436 F.2d 882 (D.C.

Cir. 1970). 61. Id. at 897, n. 99.

11




views of the Commission as ex

pressed in the opinions of the Gen eral Counsel referred to earlier; and while the Commission has no

compunctions about requiring agencies to reinstate individual em

ployees, it is probably hesitant about ordering a return to a status

quo involving hundreds, or thou sands of employees.

Judicial review in civil service cases is limited. The courts will not overturn agency action unless it is found to be procedurally defective, or arbitrary or capricious, or if there exists clear and compelling evidence that the agency had an

ulterior motive or undisclosed rea son for its action.62 In accordance

with the general requirement that

available administrative remedies must first be exhausted, the courts will normally not hear civil service cases until they have been finally decided by the Civil Service Com mission.63 However, the exhaustion

requirement has in some cases

been excused where plaintiffs are

able to show "a clear violation of some incontestable right under a

federal statute."64

In a similar fashion, the courts will rarely intercede in a reduction in force action by issuance of a pre liminary injunction as usually the

requirements therefor65 are found to be lacking.66

Litigation The remainder of this discussion

62. Eberlein v. United States, 257 U.S. 82 (1921); Brown v. Zuckert, 349 F.2d 461 (7th Cir. 1965), cert, denied, 382 U.S. 998 (1966); Sudduth v. Macy, 341 F.2d 413 (D.C. Cir. 1964); Seebach v. Cullen, 338 F.2d 663 (9th Cir. 1964), cert, denied, 380 U.S. 972 (1965); Angrisani v. United States, 172 Ct. Cl. 439 (1965); Smith v. United States, 151 Ct. Cl. 205 (1960). In

Reynolds v. Lovett, 201 F.2d 181 (D.C. Cir. 1951), cert, denied, 345 U.S. 926, a reduction in force was invalidated where it appeared that rather than adhering to the requirements of the retention preference laws, the Naval shipyard in question had retained those employees who, in the opinion of the management, were best qualified. Judge Clark concurred, stating that the majority failed to condemn the agency's disregard of the will of the Congress in

strong enough terms. In his view, the conduct of the defendants constituted "a greater menace to our institutions than the threat of the atomic bomb." 201 F.2d at 182.

63. Hills v. Eisenhart, 256 F.2d 609 (9th Cir. 1958), cert, denied, 358 U.S. 832; Burns v.

McCrary, 229 F.2d 286 (2d Cir. 1956); Fitzpatrick v. Snyder, 220 F.2d 522 (1st Cir. 1955), cert, denied, 349 U.S. 946; Green v. Baughman, 214 F.2d 878 (D.C. Cir. 1954); Ramsey v. United States, 151 Ct. Cl. 224 (1960).

64. Fitzpatrick v. Snyder, supra note 63, at 525; Group v. Finletter, 108 F.Supp. 327

(D.D.C. 1952); Reelber v. Rossell, 91 F.Supp. 108 (S.D.N.Y. 1950). So, too, where it is plain that the administrative remedy in question is illusory and attempts to exhaust the same

would be futile. City Bank Farmers Tr. Co. v. Schnader, 291 U.S. 24, 34 (1934). See American Fed. of Govt. Employees v. Paine, supra note 60, at 896.

65. Showing of likelihood of success on the merits; irreparable injury to plaintiff if stay not granted; no substantial harm to other parties if stay granted; no substantial harm to the

public interest. Virginia Petroleum Jobbers Assn. v. Federal Power Commn, 259 F.2d 921, 925 (D.C. Cir. 1958). See also, Yakus v. United States, 321 U.S. 414 (1944); Scripps-Howard Radio v. Federal Communications Commn., 316 U.S. 4 (1942); Virginia Ry. Co. v. System Federation, 300 U.S. 515 (1937); Belcher v. Birmingham Tr. Natl. Bank, 395 F.2d 685 (5th Cir. 1968); Baggett Trans. Co. v. Hughes Trans., Inc., 393 F.2d 710 (8th Cir. 1968); Covington v. Schwartz, 341 F.2d 537 (9th Cir. 1965); Eastern Air Lines v. Civil Aeronautics Bd., 261 F.2d 830 (2d Cir. 1968).

66. The probability of success on the merits is generally assessed in terms of the require

12




will be devoted to a consideration of the recent decision of the United States Court of Appeals for the District of Columbia in Lodge 1858, American Federation of Govern ment Employees v. Paine01 in which the issues with which we are here concerned first came to the atten

tion of the judiciary by means of an

attempt by the plaintiff civil ser vice employees of the National Aeronautics and Space Adminis tration's George C. Marshall Space

Flight Center, at Redstone Arsenal,

Huntsville, Alabama, and their

duly recognized union to enjoin a

reduction in force action con

templated for that installation. In 1967, NASA made the deter

mination to reduce the workforce at Marshall, effective on January 13, 1968. As originally con

templated, the reduction in force would result in the separation of

approximately 560 permanent, full-time civil service employees, and the reduction in grade of ap

proximately 300 others. The six in dividual plaintiffs, together with

approximately 240 other personnel adversely affected, filed appeals with the Civil Service Commission.

At the same time, officials of NASA

and of the Civil Service Commis sion initiated attempts to reduce

the impact of the reduction. The

thrust of the plaintiffs* attacks on

the action was, of course, that it

represented a violation of their job retention rights owing to the fact that they were to be separated while persons not in the employ of the CGovernment were to continue to labor at Marshall pursuant to

provisions of what were deemed unlawful contracts for personal services with private firms.

In January of 1968, plaintiffs Hied suit in the District Court for the District of Columbia, and re

quested a preliminary injunction blocking the reduction in force. On January 15th, Judge Molt/off

gratited the injunction, in order to

sUiy the reduction in force and

thereby preserve the status quo while NASA and the Civil Service Commission went about the busi ness of "harmonizing NASA's op erational needs and service con

tract policies at the Marshall Space Flight Center, with the legal re

quirements and Commission pol icies under the civil service laws,"68 it having been represented to the court that "in accord with estal> lished NASA policy, no civil service

employee (would be) separated or

reduced in grade and pay in the

reduction in force actions while

non-Government (contractor) per

sonnel performing the same func

men! for exhaustion. See cases cited in notes 63 and 64, supra. It is doubtful that irreparable harm can Ik* shown since the Civil Service Commission can order restoration of the status quo. Para. 9-2(c ), PPM Ch. 351, and hac k pay may be awarded under the provisions of 5 U.S.C

5596. Substantial harm to the defendant (and, presumably, the public: interest) could result

from a requirement to retain the plaintiffs and pay them wages not requited to be* paid otherwise, and the concomitant disruption and chaos occasioned thereby.

67. 436 F.2d 882 (D.C. Car. 1970). 68. Ordei granting preliminary injunction, p. 1.

13




tion continue to work on site at the Center under service contracts cur

rently in effect with private con tractors. "69 In the meantime,

plaintiffs were ordered to pursue their administrative remedies with the Civil Service Commission. The

injunction was vacated on March

12, 1968, following the conclusion of an agreement between NASA and the Civil Service Commission,

pursuant to which all but 166 of the previously issued reduction in force notices were cancelled.70 On

April 9, Judge Holtzoff granted NASA's motion to dismiss, and in so doing, stated:

This is a most extraordinary suit.

To ask the courts to enjoin a Govern

ment agency from discharging employ ees or demoting them and thus in

terfering with the internal day-to-day administration of Governmental func

tions, would be a very unusual action

for the courts to take. To be sure, if

any of the dismissals or demotions are

in violation of the Civil Service Act, the individual employees against whom ad verse action has been taken have an

administrative remedy provided by law within the Civil Service Commission, and after it is exhausted they may bring individual actions for relief. The relief that may be granted, however, is

of a very limited character. The courts

may not and do not interfere with the internal administration of Government

departments.71

Judge Holtzoff went on to state

flatly that "the Court may not en

join a Government agency from

discharging any of its employ ees,"72 and took pains to point out

that the only reason he had grant ed the injunction earlier was to aid the investigation being conducted

by the Civil Service Commission, which, said Judge Holtzoff, "is

charged by law and by the Presi dent with the duty of enforcing personnel policies."73

On April 21, 1970, the District

of Columbia Circuit reversed, and

ordered the case remanded to the District Court for trial on the mer

its. In so doing, Judge Robinson noted the difficulties inherent in a

resolution of the exhaustion issue,

in view of the reluctance of the Civil Service Commission to enter

tain the issues raised by the

plaintiffs, but found it unnecessary to resolve the question in view of the fact that at least some of the

plaintiffs had by the time of the

decision received adverse decisions on their appeals before the Com

mission's Board of Appeals and

Review, its forum of last resort.74

Instead, the case was decided solely on the issue of plaintiffs' "in dividual or organizational standing to question NASA's deployment of

69. Court's Findings of Fact and Conclusions of Law in Support of Preliminary In

junction, p.2. 70. The injunction by its terms provided for vacation upon the happening of this event.

Of the 166 employees still affected, 56 were separated, and the remainder were reduced in

grade. 71. Lodge 1858, American Federation of Government Employees v. Webb, 283 F.Supp.

155, 156 (D.D.C. 1968). 72. Id. 73. Id. 74. Lodge 1858, American Federation of Government Employees v. Paine, supra note 67,

at 895-898.

14




contractor personnel,"75 a matter not addressed by Judge Holtzoff, in view of his disposition of the case on other grounds.

The defendants sought to deny the standing of plaintiffs to contest the use of the disputed contracts on the traditional78 argument that

they were unable to demonstrate a

"legally safeguarded right" to pro tection from the competition for

employment threatened thereby. In a tentative effort to approach the case on this basis, the court considered briefly two possible sources of such a right, the civil service statutes, especially the re

tention preference provisions,77 and the collective bargaining agreement between NASA and the

plaintiff union, but concluded that neither was a source from which "such a right in (plaintiffs) fa vor clearly and unquestionably springs,"78 and that a final determi nation in that regard could only be made after consideration on the merits.

The court then proceeded to an

analysis of the standing question in accordance with the reasoning ap

plied by the Supreme Court79 and in its own recent cases80 which cast

aside the "legally protected right" criterion in favor of a new, liber alized approach. In arriving at its

holding that the plaintiffs pos sessed the requisite standing to sue, the court found that (1) plaintiffs had been "aggrieved in fact" by NASA's contracting practices; (2)

they appeared to be within a "zone of interests" intended by Congress to receive legal protection; and (3) there was no showing of Congres sional intent to insulate the process of decision making in the area of

service contracting from judicial

scrutiny.

Judge Robinson had little

difficulty in finding the plaintiffs to

have suffered some degree of ag

grievement in fact, the first, and in the view of some,81 the only, pre

requisite to standing to sue.82 In

75. Id. at 887. 76. I.e., that standing is lacking "unless the right invaded is a legal right?one of property,

one arising out of contract, one protected against tortious invasion, or one founded on a

statute which confers a privilege." Tennessee Elect. Power Co. v. Tennessee Valley Auth.,

306 U.S. 118, 137 (1939);seealsoPerkins v. Lukens Steel Co., 310 U.S. 113 (1940); Alabama

Power Co. v. Ickes, 302 U.S. 464 (1938). 77. 5 U.S.C. 3502(a), supra note 40.

78. Lodge 1858, American Federation of Government Employees v. Paine, supra note 67. at 889.

79. Association of Data Processing Serv. Organizations v. Camp. 397 U.S. 150 (1970); Barlow v. Collins, 397 U.S. 159 (1970); Flast v. Cohen, 392 U.S. 88 (1968); Hardin v.

Kentucky Utilities Co., 390 U.S. 1 (1968); Abbott Laboratories v. Gardner, 387 U.S. 136

(1967); Baker v. Carr, 369 U.S. 186 (1962). 80. Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859 (D.C. Cir. 1970); Curran v. Laird,

420 F.2d 122 (D.C. Cir. 1969). 81. Dissenting opinion of Mr. Justice Brennan in Barlow v. Collins, supra note 79, at 167;

dissenting opinion of Judge Wright in Curran v. Laird, supra note 80, at 137.

82. This is founded on the requirement of a case or controversy of Article III of the

Constitution, and represents an effort to insure that "the dispute sought to be adjudicated

15



Public Contract Law Journal

Curran v. Laird,83 the D. C. Circuit held that the president of the Na tional Maritime Union, suing on behalf of all the members of that

organization, had standing to com

plain of alleged illegal engagement of foreign-flag vessels by the Mili

tary Sea Transportation Service for the purpose of transporting mili

tary cargoes to South Vietnam, in violation of a statute requiring the use of American vessels for such

purpose. At the outset, Judge Le venthal found plaintiff "plainly . . .

aggrieved in fact" on the theory that "(a) requirement that the Sec

retary (of Defense) use American

flag vessels will expand employ ment opportunities for the mem bers of the NMU who man those vessels."84 Similarly, Judge Robin son found the requisite aggrieve

ment in the denial to plaintiffs of

employment opportunities said to result from the use of contractor

personnel ?in short, an economic

injury from unlawful com

petition.85

Although economic injury re

sulting from lawful competition cannot by itself confer standing upon a party to question the legal ity of a competitor's operations,86

where a claim is made of com

petitive injury as a result of a viola tion of statutory or constitutional

requirements, there is standing "when the particular statutory pro vision invoked does reflect a legis lative purpose to protect a com

petitive interest."87

In this manner, the provisions of the Administrative Procedure Act

authorizing judicial review of

agency action at the instance of a

person "adversely affected or ag

grieved . . . within the meaning of a relevant statute"88 by such action,

are invoked in these so-called

"competitor's suits."89 As to the

standard to be applied in identi

fying a "legislative purpose," it ap pears that no explicit statutory pro vision authorizing suit is necessary to confer standing where the

plaintiff is "within the class of per

will he presented in an adversary context and in a form historically viewed as capable of

judicial resolution." Flast v. Cohen, supra note 79, at 101; see also Baker v. Carr, supra note 79, at 204.

83. Supra note 80. 84. Id. at 124. 85. Lodge 1858, American Fed. of Govt. Employees v. Paine, supra note 67, at 892. In

view of the nature of the aggrievement found sufficient in Cu r ran, (/I/fry whether a reduction in force is a necessary event before a union of civil servants can bring a suit such as this.

Denial of Employment opportunities, or of opportunities for promotion, for civil service

personnel as a result of the presence of contractor employees may be sufficient. 86. Hardin v. Kentucky Utilities Co., supra note 79, at 5-6; cases cited at note 76, supra. 87. Hardin v. Kentucky Utilities Co., supra note 79, at 6. 88. 5 U.S.C. 702. 89. Association of Data Processing Serv. Organizations v. Camp, supra note 79 at 152. See

discussion at note 51, Lodge 1858, American Federation of Government Employees v. Paine,

supra note 67, at 891. The Administrative Procedure Act judicial review provisions amount to a waiver of sovereign immunity as to those cases they encompass. Scanwell Laboratories, Inc. v. Shaffer, supra note 80, at 873-874.

16




sons that the statutory provision was designed to protect,"90 and, further, that,

... in the absence of a contrary in dication the courts will entertain even an action brought by an aggrieved competitor if there can fairly be at tributed to Congress, expressly or

impliedly, a purpose of protecting competitive interests like those of

complainants.91

Moreover, for the purpose of

determining standing in ruling on a motion to dismiss for lack there

of, it is only necessary for a court to find that a statute or legislative scheme "arguably" protects the

plaintiffs. Whether it does so in fact must be determined on trial of the merits.92

Judge Robinson found the NASA plaintiffs to arguably be within the realm of protection said to be afforded them by the NASA authorization statute, which recites, in pertinent part, that

In the performance of its functions the Administration is authorized ... to appoint and fix the com

pensation of such officers and employ ees as may be necessary to carry out

such functions. Such officers and em

ployees shall be appointed in accor dance with the civil-service laws .. ,93

Of this provision, Judge Robin son said:

By my appraisal, the congressional

mandate limiting NASA's employment of contractor employees arguably brings its civil service employees within the zone of interests it protects, and bestows

standing upon the individual appel lants to contest the legality of NASA's

implementation of its work force at Marshall through service support con tracts.94 (emphasis added).

While the Court's basic approach in solving the issue of standing to sue appears sourid, the choice of this statute as one arguably protect ing plaintiffs is questionable. The

matter of civil service employees being arguably within its ambit is one thing; the court's apparent conclusion that the purpose of the statute was to proscribe the use of

support service contracts by NASA is quite another.

The legislative history of the bill does not reflect any concern with

competition for civil servants from

employees of private contractors.

Judge Robinson asserts that

Even to give NASA a degree of flex ibility in staffing, Congress has ex

cepted but 425 of the many thousands of NASA jobs from the civil service laws. And while thus so over

whelmingly subjecting NASA to the civil service laws, Congress has

specifically rejected Administration

requests that the federal salary laws be waived for all officers and employees of the new agency.95

90. Association of Data Processing Serv. Organizations v. Camp, .supra note 79, at 155.

91. Curran v. Laird, supra note 80, at 126. 92. Association of Data Processing Serv. Organizations v. Camp, supra note 79, at 156.

93. 42 U.S.C. 2473(b)(2). On the other hand, it is provided in 42 U.S.C. 2473(b)(5) that NASA may "enter into and perform such contracts ... as may be necessary in the conduct of

its work." 94. Lodge 1858, American Fed. of Govt. Employees v. Paine, supra note 67, at 893.

95. Id. at 892, citing H.R. Rep. No. 1770, 85th Cong., 2d Sess., at 18 (1958) {see infra, note

96 and 97) and H.R. Rep. No. 1170, 87th Cong., 1st Sess., at 7-9 (1961) (on bill requiring annual report from NASA as to pay and qualifications of its scientific and engineering

personnel, and to increase authorizations and controls with respect to so-called "supergrade"

(i.e., GS- 16 through GS- 18) civil servants.)_

17



Public Contract Law Journal _

An examination of the cited re

port of the Select Committee on

Astronautics and Space Explor ation96 reveals that the dis

agreement between the Adminis tration and the Congress, and the intent of the legislation finally enacted, was not over the possi

bility of non-Federal persons doing the work of NASA, but rather, over what compensation was to be

paid personnel in the actual em

ploy of the agency, the Adminis tration being of a desire to exempt NASA from the salary limitations of the General Schedule and the Classification Act of 1949 so as to be in a better position to attract to its ranks highly qualified in dividuals to fill technical and scien tific positions. Apparently, Con

gress did not share this view.97 Of course, the court's holding pur ports to be merely a threshold de

termination, leaving it to the Dis trict Court on remand to ultimately determine whether the statutory scheme entitles plaintiffs to protec tion. It is suggested that the latter court could well find against plaintiffs respecting the intent of this statute.

The importance of legislative in tent in this area was recently point ed up in Arnold Tours, Inc. v.

Camp,98 in which the First Circuit concluded that the plaintiff travel

agency lacked standing to chal

lenge the right of national banks to

engage in the travel business. The court said:

They (Arnold Tours) have produced no scintilla of evidence tending to show that Congress was specifically con cerned with the competitive interests of

travel agencies; nor have they shown

enough evidence of concern for gener al business competitors to create a

"zone" within which they are arguably

96. H.R. Rep. No. 1770, supra note 95. At page 18, the following appears: "(Sec. 2) represents a substantial revision of the corresponding language in the administration bill, which waived the Federal salary laws for all of the new agency's officers and employees and based their pay instead on wage rates prevailing for non-Federal employees performing similar work."

97. At page 9 of the House report, supra note 96, there appears the following statement:

"(The Administration) provision would have exempted the agency completely from the Classification Act of 1949. No limit was set either to the rates of pay or to the number of

recipients. While recognizing that the agency wou'd need authority to pay higher com

pensation than the Classification Act allows, in order to recruit and hold qualified scientists and engineers, your committee concluded that unlimited authority was unnecessary and would lead to harmful consequences. With unlimited authority to fix rates of pay, the new

agency could make raids on the scientific and engineering personnel of other agencies engaged in programs of equally high priority. In turn, it could still be outbid by private companies holding cost-plus contracts with the Federal Government. This competition with other agencies and with private contractors might cause a pay spiral that would greatly increase the cost of all programs requiring scientific and engineering services, and, in addition to widespread harmful effects, would defeat the purpose of the pay provision. Certain other consequences of unlimited authority to fix rates of pay, such as the distortion of the civil-service retirement system, would also be undesirable."

98. 428 F.2d 359, 361 (1st Cir. 1970). The Supreme Court later reversed, disagreeing with the Circuit's view of Data Processing and finding no legislative materials supporting the Circuit Court's ruling, 39 U.S. Law Week 3226 (Nov. 23, 1970).

18




included. . . . The decision in Data

Processing*9 was not based on the word

ing of the statute, but on a showing that Congress, in connection with au

thorizing entities to engage in data pro cessing for banks, had protection of data processing competitors specifically in mind. Plaintiffs have demonstrated nothing else. Clearly the Court did not feel that the mere fact that they were in competition with the defendant bank gave them standing.

As indicated earlier,100 Judge Robinson did not consider whether

plaintiffs could look to the Reten tion Preference law101 as estab

lishing a zone of protection. While this may be so as an arguable mat

ter, an ultimate conclusion on the matter would be likely not to favor them. The legislative materials on the Veterans' Preference Act of 1944102 clearly indicate that its pur pose was to give special consid eration to veterans of World War II in federal employment in order to aid in their readjustment and

rehabilitation, express gratitude for their service in the armed

forces, and to generally encourage and reward military service.103

Specifically regarding the retention

provisions, it appears to have been intended that

Veterans should be accorded special consideration in connection with any reductions in total personnel which it may be necessary for Federal agencies to work out from time to time.104

It can be seen, therefore, that the purpose of this legislation was to favor one group of civil servants over another, as opposed to estab

lishing protection for individuals in the civil service from external threats. However, it would not seem unreasonable to infer the

requisite Congressional intent to

protect the integrity of the Civil Service from the general provisions defining and establishing the same, which define federal employ ment,105 and require that all ap pointive positions in the Executive branch be filled through the com

petitive civil service unless ex

cepted therefrom by or under stat

99. Association of Data Processing Serv. Organizations v. Camp, supra note 79. An earlier decision that Arnold Tours lacked standing was remanded by the Supreme Court for reconsideration in the light of Data Processing.

100. See note 77, supra, and accompanying text. 101. 5 U.S.C. 3501 et seq. See notes 39-40 and accompanying text.

102. H.R. Rep. No. 1289, 78th Cong., 2d Sess. (1944); S. Rep. No. 907, 78th Cong., 2d Sess. (1944); 90 Cong. Rec. 3501-3507 (Apr. 17, 1944).

103. See letter dated Feb. 26, 1944 from President Roosevelt to the Hon. Robert Ram

speck, Chairman of the House Civil Service Committee: "I believe that the Federal Govern

ment, fun tioning in its capacity as an employer, should take the lead in assuring those who are in the armed services that when they return special consideration will be given to them in their efforts to obtain employment. It is absolutely impossible to take millions of our young

men out of their normal pursuits for the purpose of fighting to preserve the Nation, and then expect them to resume their normal activities without having any special consideration shown them." See also, Hilton v. Sullivan, 334 U.S. 323 (1948); Mitchell v. Cohen, 333 U.S. 411 (1948); White v. Gates, 253 F.2d 868 (D.C. Cir. 1958).

104. Letter from President Roosevelt, supra, note 103. 105. 5 U.S.C. 2104 (officers) and 2105 (employees). See Stapleton v. Macy, 304 F.2d 954

(D.C. Cir. 1962); Adelstein v. Macy, 265 F.Supp. 171 (E.D.N.Y. 1967); 20 Comp. Gen. 443

(1940).

19




ute.106 It appears that in accor

dance with the jurisprudence es

tablished in the decisions discussed

herein, a person properly in the civil service, or an association of

them, should have standing to con

test the status of an individual who in effect has, by application of the

commonly accepted principles of

recognition of a master-servant

relationship, or otherwise, become a de facto federal employee in a manner not authorized by law.107

Concluding his discussion of the

question of the individual stand

ing of the civil service personnel, Judge Robinson found no evidence of any intent on the part of Con

gress to foreclose judicial review of administrative actions of this char acter.108 He found no statute pre

cluding judicial review expressly, nor did he conclude that the action

complained of related to matters

committed by law to agency dis

cretion,109 since the options avail

able to NASA as to permissible methods of obtaining its personnel were limited by statute in the man ner described hereinabove. Judicial review, it appears, can be pro scribed only upon a showing of clear and convincing evidence that such was the intent of Congress, for, as Mr. Justice Douglas has ob

served, "there is no presumption against judicial review and in favor of administrative absolutism."110

While over the years a guiding principle in this area has been that no one has a right to a government contract, and, accordingly, "in the absence of constitutional in hibitions the sovereign can make such contract as it pleases and no one can

object,"111 recent cases

have recognized that here, as in other areas of the law, persons should have standing to complain where they have been harmed as

the result of arbitrary and ca

pricious abuse of this discretion,

106. 5 U.S.C. 2101-2103. See 5 C.F.R. 212.101, 213.101.

107. In Curran v. Laird, supra note 80, at 127, the court considered two statutes together to find them "interrelated parts of a wide-ranging statutory scheme" protecting plaintiffs.

This seems a better approach than reliance on special authorization statutes. While many

agencies are subject to such statutes requiring them to hire from civil service [e.g., 12 U.S.C.

1701(c) (Department of Housing and Urban Development); 42 U.S.C. 2201(d) (Atomic

Energy Commission); 49 U.S.C. 1657(a) (Department of Transportation)], not all agencies and departments are. At one time, by statute all civilian employees in the Office of the

Secretary of Defense were required to come from civil service (? 206, P.L. 87-651, 76 Stat.

519, formerly 10 U.S.C. 1580); however, this provision, enacted in 1962, was repealed in

1966. (? 8(a), P.L. 89-554, 80 Stat. 663). No other provision specifically covers the Depart ment of Defense and the military departments.

108. It is here that some confusion tends to arise between justiciability and standing. 109. Administrative Procedure Act, ? 10, 5 U.S.C. 701(a). 110. Association of Data Processing Serv. Organizations v. Camp, supra note 79, at 157.

See also Abbott Laboratories v. Gardner, supra note 79, at 140- 141; Rusk v. Cort, 369 U.S. 367 (1962).

111. In re. American Boiler Works, 220 F.2d 319, 321 (3d Cir. 1955). See also, Perkins v.

Lukens Steel Co., 310 U.S. 113 (1940); Van Brocklin v. Tennessee, 117 U.S. 151 (1886);

Dugan, Executor v. United States, 16 U.S. (3 Wheat.) 172 (1818); Friend v. Lee, 221 F.2d 96, 100 (D.C. Cir. 1955).

20




and have permitted attacks on

awards of government contracts to

others,112 as well as on other deci sions respecting Federal con

tracting and procurement.113 For a

long while, it has been axiomatic that persons must "turn square corners when dealing with the

Government,"114 and the present trend is probably an effort to lend some reciprocity to this obliga tion.115 The court found the

plaintiffs to have standing by hav

ing made out a prima facie case of abuse of discretion involving al

leged violations of the Federal per sonnel laws, but if on remand, the District Court should find, after

having finally determined the

plaintiffs to be the beneficiaries of some statutory provision, that the civil service laws have not been vio

lated by NASA's use of support service contracts, it might properly go on to conclude that a decision

by NASA officials as to whether to have the work in question accom

plished through contract or by means of civil service employees is

entirely within the discretion of those officials, and not subject to

judicial modification. Such a result is particularly likely in cases ex

pected to arise involving the De

partment of Defense, since deci sions relating to the conduct of the national defense are particularly committed to executive dis cretion.116

The court also found the union to have standing as a party plaintiff, and had little difficulty reaching that conclusion. Relying on United Federation of Postal Clerks v. Watson,111 the court found that the AFGE was entitled to standing by dint of its exclusive representa tion of the bargaining unit includ

ing the individual plaintiffs under the provisions of Executive Or

112. Blackhawk Heating 8c Plumbing Co. v. Driver, 433 F.2d 1137 (D.C. Cir. 1970); Scanwell Laboratories, Inc. v. Shaffer, supra note 80; Superior Oil Co. v. Udall, 409 F.2d

1115 (D.C. Cir. 1969). 113. Ballerina Pen Co. v. Kunzig, 433 F.2d 1204 (D.C. Cir. 1970) (decision to place

ball-point pens on schedule of blind-made products); Contractors Assn. of Eastern Pa. v.

Secretary of Labor, 311 F.Supp. 1002 (E.D.Pa. 1970) (so-called "Philadelphia Plan" requiring affirmative action by certain government contractors to increase employment of members of

minority groups). 114. Rock Island A. & L. R. Co. v. United States, 254 U.S. 141, 143 (1920). 115. See dissent of Mr. Justice Jackson in Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380

(1947), "But there is no reason why the square corners should constitute a one-way street."

116. Orloff v. Willoughby, 345 U.S. 83 (1953) (duty assignments of military personnel); Curran v. Laird, supra note 79, at 128-133 (activation of reserve merchant fleet); United

States ex. rel. Schonbrun v. Commanding Officer, 403 F.2d 371 (2d Cir. 1968), cert, denied,

394 U.S. 929 (hardship discharge for soldier); Luftig v. McNamara, 373 F.2d 664 (D.C. Cir.

1967) (Vietnam war); Pauling v. McNamara, 331 F.2d 796 (D.C. Cir. 1963), cert, denied, 377

U.S. 933 (nuclear testing); Local 1106, National Fed'n of Federal Employees v. Laird, supra note 26 (closing of military installation); Velvel v. Johnson, 287 F.Supp. 846 (D. Kan. 1968),

afd, sub. nom. Velvel v. Nixon, 415 F.2d 236 (10th Cir. 1969), cert, denied, 396 U.S. 1042

(Vietnam war). See 10 U.S.C. 125(a), authorizing the Secretary of Defense to "take appro

priate action (including the transfer, reassignment, consolidation, or abolition of any func

tion, power, or duty) to provide more effective, efficient and economical administration and

operation, and to eliminate duplication, in the Department of Defense."

117. 409 F.2d 462 (D.C. Cir. 1969).

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der 11491, and the fact that it had

previously been closely associated

with the situation by virtue of its

representation of its members in

negotiations with NASA and the

Civil Service Commission. Quoting from Watson, the court said; "it is

artificial and pointless to cut off

(the union's) representative func

tions at the courthouse door."118

The matter is not without sig nificance, for were it not for the

union's presence as plaintiff, the

defendants could easily moot the

issues by restoring the individual

plaintiffs to their original positions (as happened in Watson).

By parity of reasoning, the court

found that the intervenor, National

Council of Technical Services In dustries (NCTSI), an association of concerns having support services contracts with NASA, also had

standing, and was thus properly

permitted to intervene by the Dis trict Court (over the objections of

both NASA and the AFGE).119 The case is now back in District

Court, and depositions and dis

covery proceedings are in process. In addition, several other actions

have been instituted recently which raise essentially the same issues.

In Local 476, National Fed. of Fed eral Employees v. Lotz,120 the

plaintiffs alleged that illegal con

trading for personal services re

sulted in a recent reduction in

force affecting personnel of the

U.S. Army Electronics Command, Fort Monmouth, New Jersey. On

May 26, 1970, Judge Coolahan de

nied plaintiffs' motion for a prelim inary injunction and dismissed the

complaint without prejudice for

failure to exhaust administrative remedies. The court ruled that

plaintiffs had failed to demonstrate a likelihood of prevailing on the

merits, for the action as then pos tured was susceptible to dismissal for failure to exhaust; and that

they had not shown a likelihood of

irreparable injury if no injunction were to be granted, since if they were to eventually prevail on the

merits, they would be restored to

their former positions and receive back pay awards. Accordingly, the court refused to restrain the Army from conducting the reduction in

force, and it went on as scheduled, the court similarly refusing to

grant a stay pending appeal. The case is now before the Third Cir cuit. Whether the dismissal for fail ure to exhaust will be affirmed is

problematical in the light of the

position of the Civil Service Com mission with respect to review of claims of illegal contracting out raised in reduction in force ap

118. Lodge 1858, American Fed. of Govt. Employees v. Paine, supra note 67, at 895. 119. Id. On the other hand, in Contractors Assn. of Eastern Pa. v. Secretary of Labor,

supra note 113, at 1007, the plaintiff contractors' association was found to lack sufficient

personal interest in the outcome so as to support standing to contest the "Philadelphia Plan." Individual contractors affected by the proposed plan were allowed to proceed with the

action.

120. Civil Action No. 638-70, District of New Jersey, filed May 20, 1970, later consoli

dated with American Federation of Govt. Employees v. Resor, Civil Action No. 670-70, District of New Jersey, filed May 26, 1970.

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peals. In this case, however,

plaintiffs also made other allega tions dealing with alleged violations of the retention preference law and regulations, and of unfair la bor practices, both of which mat ters are susceptible of adminis trative disposition.

In another Army case, a Federal district judge similarly refused to

issue a temporary restraining order to stave off a reduction in force to

be effective that same day at the

Army Missile Command, Redstone

Arsenal, Alabama. A hearing on a

motion for a preliminary in

junction in that case, which in volves similar allegations as those in the NASA and Fort Monmouth

cases, is pending.121 Other cases

pending challenge the Army's con

tracting with a civilian flying school to provide instruction for student

helicopter pilots, as well as another reduction in force ordered by NASA.

Conclusion Although the final verdict is, of

course, not yet in, it seems, at least for the moment, that the only efficacious remedy for civil service

personnel who feel aggrieved by agency contracting-out practices lies in resort to the courts. It ap

pears that the question of standing has been all but laid to rest, at least

in the District of Columbia circuit, and probably elsewhere as well,

considering the recent pronounce

merits of the Supreme Court on

the matter. It remains to be determined

what substantive law will be applied in determining the merits of these cases as to what is or is not an un

lawful contract for personal ser

vices within the framework of the civil service laws. More likely than not. the courts will adopt, or at

least lend credence to, the indicia

developed by the Civil Service

Commission. In addition, there re

mains for resolution the question of what form judicial relief might take. Possibilities could include set

ting aside the reduction in force

actions and ordering civil servants

separated or downgraded as a re

sult thereof restored to their origi nal positions, together with awards

of back pay; and/or declaratory

judgment condemning certain con

tracting practices, or injunctive re

lief prohibiting the future forma

tion of certain types of contracts.

Some difficulty could arise from

the fact that the contractors are not

before the court; whether any of

these actions could be subject to

dismissal for failure to join in

dispensible parties under Rule 12

of the Federal Rules of Civil Proce

dure could depend on the nature

of the relief requested. Of course,

any form of relief granted to

plaintiffs would ultimately operate to the detriment of the con

tractors?even if relief were limited

to ordering restoration of the

121. Lodge 1858, American Fed. of Govt. Employees v. Resor, Civil Action No.

70-452-NE, Northern District of Alabama, filed June 29, 1970.

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plaintiffs, an agency thereby faced with an excess of personnel would be likely to terminate some of its

support service contracts for con

venience. Since contractors cannot

be bound by the results of proceed ings to which they are not parties, such action would lead to relitiga

tion of the matters de novo in the administrative boards and in the courts. Regardless of the outcome, some interesting case law is surely going to result, and the area prom ises to be controversial for a long time to come.

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service contracting and rights of civil service personnel

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