proof is on the plaintiff to establish that such a presumption is invalid; the agency does not have to prove on its record that it has acted properly, as McGregor suggests. See, e.g., Michigan Citizens for an Indep. Press v. Attorney Gen., 695 F. Supp. 1216, 1219 (D.D.C. 1988), aff'd, 868 F.2d 1285 (D.C. Cir. 1989)("plaintiff has the burden of proving that the [agency's] action fails under this standard."). With these guidelines, we address the specific defects alleged by plaintiff.
1. Adverse Impact
McGregor first alleges that the Committee's rulemaking was arbitrary and capricious because it did not adequately investigate or analyze the adverse impact on past or current contractors, as required under the JWOD Act. Complaint, Second Count. We find that McGregor has failed to demonstrate that the Committee acted unlawfully in this respect.
As mentioned above, the Committee's own regulations require that it find that the addition to the procurement list "would not have a serious adverse impact on the current or most recent contractor." 41 C.F.R. § 51-2.6(a)(1). Committee regulations further require that such a determination be based on a consideration of "the possible impact on the contractor's sales," "whether or not that contractor has been a continuous supplier to the Government . . . and is, therefore more dependent on the income from such sales to the Government," and any comments the contractor submits. 41 C.F.R. § 51-2.6(d). We find that the Committee acted in accordance with these regulations in considering the impact of its decision on McGregor and that McGregor's claim is without merit.
First, McGregor suggests that the Committee did not sufficiently investigate the current and cumulative impact on McGregor's sales. McGregor states, for example, that the Committee members received no information regarding the potential impact of adding 0996 to the Procurement List. See Pl. Mem. Supp. Summ. J. at 37. The record, however, shows the contrary to be true. When providing the Committee members with the "vote package," the Committee staff submitted a summary of the impact data and McGregor's comments concerning potential impact and its length of time as a government contractor. See AR at 140. The impact summary included Dun and Bradstreet reports concerning McGregor and the other contractor of 0996, a review of their government contracts for 0996, and a finding that such contracts accounted for 2.7% of McGregor's current sales. Id. It also included a calculation of the cumulative impact on McGregor of all items which had been added to the Procurement List in the prior three years, totaling 3.8%. Id.
Second, McGregor suggests that, even with these figures, the Committee staff should have inquired into the "true impact of the transfer" on McGregor's sales. Pl. Mem. Supp. Summ. J. at 38. The Committee is under no obligation under its regulations, however, to seek further information from McGregor. In a similar challenge to a prior Committee determination, this Circuit found that a review of GSA contracts, bid sheets, and Dun and Bradstreet reports provided an adequate investigation of impact and noted that "the Committee was not under any obligation to solicit information directly from Barrier." Barrier Industries, Inc. v. Eckard, 190 U.S. App. D.C. 93, 584 F.2d 1074, 1082-83 (D.C. Cir. 1978). We agree with defendants that the onus was on McGregor to present other data in its comments which might have justified a different finding. See, e.g., Def. Comm. Mem. Supp. Summ. J. at 38. McGregor, however, failed to do so, noting only generally in its comments that "it would be significantly affected by the loss of sales." AR at 113.
We turn then to the ultimate question of whether the Committee acted unreasonably in concluding that there was no "serious adverse impact" on McGregor or the other current contractors, given the available impact data. We do not find unreasonable the Committee's conclusion that a 2.7% loss of sales is not "serious" enough to exclude 0996 from the Procurement List. In fact, in Lordship I, 615 F. Supp. 970, 975 (E.D.Va. 1985), rev'd on other grounds, 791 F.2d 1136 (4th Cir. 1986), the court upheld the agency's determination that a loss of business of nearly three times this amount (7.3%) "was not serious enough to warrant voting against the proposal." We therefore cannot say that the Committee acted arbitrarily and capriciously in its assessment of adverse impact.
2. Fair Market Price
McGregor, in its Third Count, alleges that the Committee failed to conduct an adequate fair market price analysis. McGregor's concerns appear to be two-fold: first, that the Committee failed to explain the basis for arriving at its fair price determination; and second, that the Committee did not independently investigate NIB's findings that the workshops could produce 0996 at that price. See Pl. Mem. Supp. Summ. J. at 36-37.
McGregor's first concern is that the recommended price of $ 13.02 per box of 0996 is a product of "mathematical calculations" and that "there is no indication how that number was derived." See Pl. Mem. Supp. Summ. J. at 10. We do not find, however, that the Committee is under any obligation to explain the basis of that determination or to accept public comment in its analysis.
As noted, Committee regulations require that the Committee consider whether a workshop is "capable of producing the commodity . . . at a fair market price." 41 C.F.R. § 51-2.6(a)(1). That determination seems to be delegated to the Committee alone since the JWOD Act states that "the Committee shall determine the fair market price of commodities and services . . . ." 41 U.S.C. § 47(b) (emphasis added). We find, moreover, that the JWOD Act's requirement of notice and comment applies only to section 47(a) (the final determination of adding an item to the procurement list) and not to section 47(b) (the determination of fair market price). Furthermore, since the Committee uses a publicly available mathematical averaging formula based on the average price of previous bids in arriving at such a determination, we cannot conclude that its determination of $ 13.02 was arbitrary. See AR at 221-227.
McGregor also appears to believe that the Committee must independently investigate whether the workshops are actually able to produce 0996 at the fair market price, rather than relying on the NIB's findings on this matter. See Pl. Mem. Supp. Summ. J. at 37.
The relevant regulation seems unclear on this point, stating that the Committee must find that the "qualified workshop [is] capable of producing the commodity or providing the service at a fair market price." 41 C.F.R. § 51-2.6(a)(1). According to the Committee, this regulation requires an assessment of capability to manufacture the commodity, but does not require that the Committee double check the workshops' and NIB's assurances that the workshops can produce the item at the pre-set fair market price. See, e.g., Def. Comm. Mem. Supp. Summ. J. at 31. "Neither the Act nor the Committee's regulations imply that the Committee is to serve, or is expected to serve, as business manager or investment adviser to the various nonprofit agencies in the JWOD program." Id., n. 26.
We must defer to the Committee's interpretation on this point, since the JWOD Act does not speak to this issue and the Committee's interpretation is a plausible one. Where a statute is silent on the subject, a "court is obliged to give controlling weight to an agency's interpretation of its own regulation unless it is 'plainly erroneous or inconsistent with the regulation." Transcanada Pipelines, Ltd. v. F.E.R.C., 278 U.S. App. D.C. 299, 878 F.2d 401, 411 (D.C. Cir. 1989). "Deference is particularly required when the agency construction rests on matters peculiarly within the agency's field of expertise." Id.; see also Stuart-James Co., Inc. v. SEC, 273 U.S. App. D.C. 5, 857 F.2d 796, 800 (D.C. Cir. 1988), cert. denied, 490 U.S. 1098, 104 L. Ed. 2d 1002 , 109 S. Ct. 2448 (1989). Accordingly, we find that the Committee was under no obligation to conduct the independent cost assessment which McGregor desired.
McGregor finally contends that the Committee acted arbitrarily and capriciously in determining that the workshops were "capable" of producing 0996 using 75% blind labor. Complaint, Fourth Count. McGregor alleges that "no facts of record support the capability [determination]" and that "McGregor's sworn evidence casts serious doubt on their ability." Pl. Mem. Supp. Summ. J. at 3.
We find, first of all, that the Committee's initial finding of capability was not unreasonable, given the information which it received. In its initial proposal to the Committee, the NIB included capability findings based on on-site inspections. See AR at 4 - 15. The Committee then requested a second evaluation by GSA quality engineers. That study found the workshops capable, provided that the start-up date was delayed to June 1, 1992. See AR 64-97.
McGregor asserts, however, that its comments should have made the Committee question its finding of capability. McGregor's comments described the difficulties and dangers of operating the machinery, leading McGregor to conclude that "production of this item requires a worker to be alert and in control of all his faculties at all times." AR at 118.
The Committee acknowledged McGregor's concerns, but dismissed them on the basis that the workshops provided supervision by sighted persons and that the agencies took precautions with the machinery to ensure the workers' safety.
Since the finding of capability within blind workshops is within the Committee and NIB's area of expertise, and not within this Court's or McGregor's field of knowledge, we cannot hold such a determination to be unreasonable.
McGregor's complaint regarding capability also concerns the percentage of blind labor employed. McGregor suggests that the JWOD Act requires that 0996 itself be produced by "75% of blind labor." We believe this is an incorrect interpretation of the Act. A "qualified nonprofit agency for the blind" is one which employs blind individuals for not less than 75% of the man-hours "in the production of commodities and the provision of services." 41 C.F.R. § 51-1.2(h). The regulation clearly requires 75% blind labor for the production of all commodities produced, not per product. See also Barrier Industries, 564 F.2d at 1081 (approving Center where "total man-hours of direct labor performed at the Center" exceeded 75 hours). In any case, the Committee has shown that the workshops are qualified, estimating that blind labor would constitute 99% of the workforce producing 0996. See AR at 139.
C. Statutory Claims
McGregor's Fifth and Sixth Counts raise the argument that the Commission exceeded its statutory authority under the JWOD Act.
In its Fifth Count, McGregor states that the Commission violated the Act by acting "as an instrument of the NIB." Complaint, Fifth Count. As in its other arguments, McGregor suggests that no serious evaluation occurred in considering the addition of 0996, and that the Commission rubber-stamped the NIB's proposal.
We do not agree that the Commission yielded its authority to the NIB. Certainly, the NIB played a central role in providing initial information to the Committee. Such a role is authorized by Committee regulations, which permit the NIB to "recommend to the Committee, with appropriate justification including recommended prices, suitable commodities or services for procurement from its workshops." 41 C.F.R. § 51-3.2. The Committee, however, relied on other sources of information, as well, in making its determination. These sources included McGregor's own comments, the comments of IBFI, and the GSA investigation reports. Given this, we do not find that the Committee failed to conduct any independent information-gathering or analysis.
McGregor also contends that the Commission exceeded its statutory authority by granting a "monopoly" to a workshop which had not previously produced the product. Specifically, McGregor argues that the JWOD Act was never intended to allow the Commission to add items to the Procurement List which were not already manufactured by the workshops. See Pl. Mem. Supp. Summ. J. at 6. Plaintiff argues that the provision in the JWOD Act, which authorizes the Committee to establish a procurement list of "commodities produced by" qualified nonprofit agencies, means that the workshops must already be producing those products. 41 U.S.C. § 47(a)(1).
This statutory provision has already been construed in this Circuit. The court in Barrier Industries, 584 F.2d at 1080, in considering the legislative history of the JWOD Act, favored a contrary interpretation from that proposed by McGregor. The court concluded that "nothing in the Act or in its legislative history, or in any regulation, limits set-asides to workshops already manufacturing the commodity involved." Id. "All that is required is that a workshop demonstrate a potential to produce the particular commodity." (emphasis added). We therefore find McGregor's argument to be without merit.
Nothing in the record leads us to believe that the Committee acted either arbitrarily or capriciously in adding 0996 to the Procurement List. For the reasons stated above, we therefore deny plaintiff's Motion for Summary Judgment and grant summary judgment to the defendants. An Order consistent with the above has been entered this date.
JOHN H. PRATT
United States District Judge
Date: 30 Sept 92
EDITOR'S NOTE: The following court-provided text does not appear at this cite in 802 F. Supp. 519.
ORDER - September 30, 1992, Filed
Upon consideration of plaintiff's and defendants' motions for summary judgment, the oppositions, replies, and supplemental memoranda thereto, and the entire record herein, and for the reasons stated in the accompanying Memorandum Opinion, it is by the Court this 30th day of Sept., 1992,
ORDERED that plaintiff's motion is hereby denied; and it is
ORDERED that defendants' motions are hereby granted; and it is
ORDERED that judgment is entered in defendants' favor; and it is
FURTHER ORDERED that this case is dismissed with prejudice.
JOHN H. PRATT
United States District Judge