Secretary of Labor, supra; United States v. Mississippi Power & Light Co., supra. For specific criticism of the Anglo-Canadian Shipping decision, see Mezines, Stein and Gruff, 4 Administrative Law § 23.01(5), 1977; Tomlinson, "Discovery in Agency Adjudication," 1971 Duke L.J. 89 (1971).
The government's position as to the authority of the Executive Order is further strengthened by the principle, noted above, that its authority with respect to contractors is extensive and that it may set the terms upon which those wishing to deal with it must operate. See Perkins v. Lukens Steel Co., 310 U.S. 113, 60 S. Ct. 869, 84 L. Ed. 1108 (1940); AFL-CIO v. Kahn, supra, slip op. at 23; United States Brewers Ass'n Inc. v. EPA, 195 U.S.App.D.C. 160, 170, 600 F.2d 974, 984 (D.C.Cir. 1979); See also King v. Smith, 392 U.S. 309, 333, 88 S. Ct. 2128, 20 L. Ed. 2d 1118 (1963). Here, the government, acting through the President's Executive Order and the Secretary of Labor's regulations has determined that one wishing to do business with the government must agree to mutual pre-hearing discovery. While, to be sure, the government has no power by contract to bind others to abide by invalid regulations,
regulations are likely to be regarded as reasonable and valid if they operate in an area where the government has extensive authority, and the field of government contracts is, obviously, such an area. Cf. Northeast Construction Co. v. Romney, 157 U.S. App. D.C. 381, 485 F.2d 752; Contractors Ass'n of Eastern Pa. v. Secretary of Labor, supra.
The principal regulations here at issue, moreover, were issued not by a subordinate official but they stem directly from an Executive Order promulgated by the President. That Order has a special status. It has been determined validly to implement the Federal Property and Administrative Service Act of 1949 (FPASA), 40 U.S.C. § 486(a). Contractors Ass'n of Eastern Pa. v. Secretary of Labor, supra, 442 F.2d at 170; AFL-CIO v. Kahn, supra, slip op. at 14-17. The Court of Appeals for this Circuit, in the recent AFL-CIO case which validated President Carter's Executive Order establishing voluntary wage and price standards, emphasized the broad discretion possessed by the President under the Act. In that case the court stated that Section 205 of the Act "grants the President particularly direct and broad-ranging authority over those larger administrative and management issues that involve the Government as a whole. And that direct presidential authority should be used in order to achieve a flexible management system capable of making sophisticated judgments in pursuit of economy and efficiency" (footnote omitted).
See also Northeast Construction Co. v. Romney, supra, 157 U.S.App.D.C. at 389-390, 485 F.2d at 760-61.
In examining the validity of the discovery provisions
of the Executive Order and its implementing regulations,
it is useful also to note the prevalence of such pretrial procedures throughout the administrative sphere.
In fact, as early as 1963, the temporary Administrative Conference of the United States, Committee on Compliance and Enforcement, urged federal agencies to adopt as much of the discovery portion of the Federal Rules of Civil Procedure as seemed appropriate.
This liberal attitude toward discovery is represented in several recent decisions. See Smith v. Schlesinger, 168 U.S.App.D.C. 204, 217-218, 513 F.2d 462, 475-76 (1975) and cases cited.
Based upon these considerations, the Court concludes that the applicable Executive Order and the implementing regulations are valid, and that they sustain the validity of the orders of the ALJ and the Secretary which require Uniroyal to produce records and documents, answer interrogatories, and produce personnel for depositions.
Plaintiff further argues that, even assuming the discovery regulations to be valid, neither they nor the Executive Order authorize debarment as a sanction for their violation.
More specifically, plaintiff claims that the authority to debar found in sections 202(6) and 209(a)(6) extends only to violations of the substantive nondiscrimination provisions of the Order, as distinguished from violations of discovery or inspection orders. That contention is not persuasive for, insofar as the debarment sanction is concerned, the Order makes no such distinction.
A. Section 209 of the Executive Order provides in subsection (a)(5) for the debarment of a contractor who fails "to comply with (equal employment opportunity) provisions of the contract." Those provisions are set forth in section 202,
and they contain in provision (4) a requirement that the contractor comply with all rules, regulations, and relevant orders of the Secretary, and in provision (5) requirements that the contractor furnish all information and reports required by the Executive Order and the rules, regulations and orders of the Secretary, and permit access to its books, records, and accounts. Moreover, section 212 provides that the Comptroller General shall be notified when a contractor is debarred "because of noncompliance with the contract provisions (specified in Section 202) . . .," not merely, as plaintiff would have it, only because of noncompliance with the substantive provisions of that section.
Subsection (6) of section 202 reaffirms that "(i)n the event of the contractor's noncompliance with the nondiscrimination clauses of this contract or with any such rules, regulations, or orders . . . " the contractor may be debarred.
The phrase in subsection (6) "such rules, regulations, or orders" plainly refers to those which the Secretary of Labor is empowered, and indeed required, by section 201 to adopt to achieve the purposes of the Order. The same "rules, regulations, and orders" are repeatedly referred to throughout the Order, E. g., in sections 202(4) ("rules, regulations and relevant orders"), 202(5) ("rules, regulations, and orders"), 202(6) ("such rules, regulations, or orders"), 202(7) ("rules, regulations, or orders"), 202(5) ("implementing rules, regulations or orders") 202(7) ("rules, regulations, or orders"), 202(5) ("implementing rules, regulations or orders"), 208(a) ("rules, regulations, or orders") and 209(a) ("such rules, regulations, or orders"), for a variety of purposes. They clearly refer to All rules, regulations, and orders validly promulgated by the Secretary under the Executive Order, and not, as plaintiff contends, to all rules except those regarding discovery procedures.
In this regard, the Court must also consider the purpose of the Executive Order and of the program which it implements. From the very outset and through its various amendments and reenactments the Order was designed, in the context of government contracts, to provide a speedier and more efficacious means of redressing discrimination than was possible through other means, including federal court litigation.
Over $ 100 billion is distributed each year through federal contracts and grants. As was stated in Morgan, "Achieving National Goals Through Federal Contracts: Giving Form to an Unconstrained Administrative Process," 1974 Wisc.L.Rev. 301, 303-4 (1974):
If Blacks truly are guaranteed equal employment opportunities in all federally-funded programs . . . that in itself will be a major start toward equal opportunity in society. If each federal contractor is required to be "clean' in his nongovernment business as well, the potential impact of an equal opportunity clause will be even greater . . . Achieving social objectives by contract may meet less delay then seeking out and punishing criminally those who violate particular standards . . . It may still be true, however, that compliance with particular standards is easier to achieve when the requirements are made a part of something the contractor wants and the cost of compliance is borne at least in part by the government.
The government's power with respect to its procurement contracts is broad. Such contracts may be terminated by the government for its convenience, E. g., 41 C.F.R. § 1-8.700 Et seq., and contractors may be debarred by the government from receiving further contracts as long as the debarment is effected in accordance with due process and the government's own regulations. To require the government to go to federal court to debar a contractor who is in noncompliance with its contract with the government would not only subvert the process of Executive Order 11246 but turn government contract law on its head.
Plaintiff's claim that the debarment sanction is not authorized for noncompliance with procedural regulations under the Order at either the investigatory or adjudicatory stage of the administrative proceedings runs counter to these purposes. To be sure, the Secretary of Labor may in this respect be able to impose lesser sanctions, such as the exclusion of certain parties or testimony, or the striking of certain claims or defenses. See 41 C.F.R. § 60-30.15(j). However, particularly during the investigatory stage, these options are likely to be unavailable as a practical matter.
During investigations the Department will typically be acting solely based upon single or small groups of employees' complaints of widespread discrimination. Prior to their verification, the government could not, in good faith, allege a pattern or practice of discrimination, nor could such an allegation, if made, rationally serve as an admission by the contractor on account of his failure to supply requested documents. Since the sole means for verifying such complaints is reference to personnel and other employment records of the contractor, access to them is essential if the administrative procedure is to advance at all.
Yet if plaintiff is correct, the only meaningful sanction that may be employed against a recalcitrant government contractor who refuses such access is to begin the cumbersome and time-consuming process of seeking enforcement of its discovery requests in federal district court.
Such a procedure would substantially undermine the purposes and the effectiveness of the Executive Order, and a construction of the Order mandating it should therefore not be adopted unless clearly required. Far from being required under the instant regulatory scheme, such a construction is expressly contradicted by the language of the Executive Order.
Plaintiff additionally claims that the Secretary's own regulations, 41 C.F.R. § 60 Et seq., do not authorize debarment. In that respect, plaintiff refers primarily to the fact that section 60-30.15(j) of the regulations does not specifically list debarment as a sanction. That circumstance is inconsequential, however, for the provision does not purport to be exhaustive.
There is no reason to include debarment in a section obviously intended to enlarge upon sanctions (such as debarment) which are already authorized elsewhere.
Moreover, other sections of the regulations clearly contemplate the possibility of debarment in the circumstances of this case. Section 60-1.26(a) (1), for example, provides that violations of the Order or the implementing OFCCP regulations "may result in the institution of administrative proceedings" to seek appropriate relief. Once it is determined that the Order or regulations have been violated, appropriate sanctions may be imposed through an administrative enforcement proceeding,
and if there is reason to believe that substantial or material violations (or the threat of substantial or material violations) of the contractual provisions of the Order or of the rules, regulations, or orders issued pursuant thereto, have occurred, the matter may either be referred to the Solicitor of Labor to institute administrative enforcement proceedings or to the Department of Justice for court action.
Section 60-1.26(a)(2). By including the proviso that "no order for debarment from further contracts or subcontracts pursuant to section 209(a)(6) of the Order shall be made without affording the contractor an opportunity for a hearing, either administrative or judicial," this section both sanctions and sets forth the proper procedure for use of the debarment remedy in those circumstances. That procedure was complied with in the instant case.
B. Plaintiff further contends that even if debarment was generally authorized, the Secretary abused his discretion in failing to consider other, lesser sanctions. That argument is not, however, available here.
First, it is clear from the careful consideration which the Secretary gave to this matter, in a 68-page opinion which comprehensively examined Uniroyal's repeated violations, that he regarded debarment to be an appropriate sanction. At issue was more than a casual refusal to comply with a relatively insignificant discovery request. The documents sought by the government from Uniroyal went to the heart of the matters pending before the Administrative Law Judge. Among them were the personnel records of the male and female employees of Uniroyal's plant and the records containing their job descriptions both obviously necessary for any determination of sex discrimination. Indeed, Uniroyal had refused to provide access to these documents to the government for several years.
Second, Uniroyal's recalcitrance and discriminatory policies had already been the subject of judicial proceedings and had been documented in court opinions. Thus, in Uniroyal v. Marshall, the Court of Appeals for the Seventh Circuit had found that (579 F.2d at 1062):
While the government has responded to Uniroyal's discovery requests, Uniroyal in turn has been largely uncooperative and dilatory. By securing several extensions of time, it delayed its response to the government's request for more than three months. When it did respond, Uniroyal refused to supply large blocks of information, contending that the requested information was irrelevant, confidential, beyond the scope of the proceeding, or physically unavailable. The government subsequently procured several orders from the administrative law judge compelling Uniroyal to provide more complete answers. Uniroyal was still unwilling to accommodate, and on May 10, 1977 it raised for the first time the contention that the Secretary of Labor lacked authority to issue the pre-hearing discovery rules.
Likewise, in Chrapliwy v. Uniroyal, Inc., 458 F. Supp. 252 (N.D.Ind.1977), the District Court for the Northern District of Indiana found that Uniroyal, aided and abetted by the United Rubberworker's Union, engaged in massive sex discrimination in violation of Title VII at the very plant under scrutiny here.
Under those circumstances it cannot be said that the Secretary abused his discretion in imposing the sanction of debarment instead of some other, lesser sanction, or by not making specific findings with respect thereto.
C. Uniroyal argues with considerable force and conviction that an important public interest is at stake the right to fair and equal access to the market represented by the various government agencies. It further contends with equal vigor that, while no one has an absolute right to a particular contract, every contractor does have a right not to be debarred, that is blacklisted, from generally retaining or receiving government contracts without good and sufficient reason. That much is certainly true.
However, there is also another public interest involved here, one of equal significance and import. A number of Presidents of the United States, beginning with Franklin D. Roosevelt (see note 1 Supra ), have made it a primary national objective that the government shall not buy from those engaged in systematic racial or other improper discrimination. That presidential policy has consistently been endorsed by the Congress, either by express action or by implied consent. Yet it is evident that this policy and program would be nothing more than an empty shell, an abstract statement of principles, unless it is backed by adequate means of enforcement. Effective enforcement, in turn, depends, first, on access to the employment, personnel, and similar records of the contractors; and second, on the availability of meaningful sanctions when such access is denied.
What this case, in the end, comes down to is that Uniroyal, through its obdurate refusal to permit adequate inspection and discovery and thus the conduct of full and fair hearings into charges that it is guilty of discrimination, has stalemated the government's effort to seek to verify whether it is or is not dealing with a company which engages in fair employment practices. By that refusal, it left the government with no choice but to terminate its contractual relationships with Uniroyal, and it left the Court with no choice but to uphold that governmental action.
One final issue remains to be considered. Plaintiff argues that the debarment order is unduly vague, violates due process, and permits arbitrary and capricious action. Actually, it appears that in this respect Uniroyal objects only to that part of the order which debars it from existing and future government contracts "until such time that it can satisfy the Director of OFCCP that it is in compliance with Executive Order 11246." That objection is well taken.
Neither Uniroyal nor the Court has been able to elicit a definitive response as to the meaning of that language. The Court was advised that in order for Uniroyal to be reinstated, the Secretary may well require discovery going beyond that which is the subject of the instant proceeding, and counsel for the government did not exclude the possibility that Uniroyal might be compelled to comply with unspecified substantive requirements including antidiscrimination measures and various kinds of affirmative action which may be imposed by the Secretary. The government relies for this broad interpretation upon language in Section 209(a)(5) that "continuance of contracts may be conditioned upon a program for future compliance approved by the Secretary of Labor." See also 41 C.F.R. 60-1.26 and 60-30.30.
Whatever may be the authority of the Secretary to impose substantive conditions upon a contractor who has been debarred for failing to comply with substantive nondiscrimination provisions of the Executive Order, the Court concludes that he has no such authority where, as here, the contractor was debarred solely for failure to comply with discovery orders. To construe the Executive Order, the regulations, and the Secretary's powers more broadly would raise serious problems of due process and would open the door wide to arbitrary action. The government cannot bootstrap its way from the failure of a contractor to comply with a discovery order to the imposition of substantive affirmative action requirements. Further, a party must be told more than that, in order to be removed from a government blacklist, it must satisfy an administrative official of its compliance with unknown, unspecified, and unpredictable conditions.
To be sure, the Secretary could have imposed the sanction of deeming certain allegations of discrimination to be admitted and, based upon those allegations, made a finding of discrimination. But he did not do so here.
Inasmuch as Uniroyal was debarred for not complying with the Secretary's pre-hearing discovery regulations and orders, it is clear that it is entitled to be relieved from debarment upon compliance with those same regulations and orders. The remedy of debarment must be coextensive with the violation.
The Court therefore finds that Uniroyal need only remedy the discovery violations found by the Administrative Law Judge
to be relieved from debarment.
However, unless and until it rectifies those violations by complying in full with the inspection and discovery orders of the Administrative Law Judge, its debarment stands.