source: Caselaw Access Project

author: LEVENTHAL, Circuit Judge: BAZELON, Chief Judge, LEVENTHAL, Circuit Judge:

license: Public Domain

text:
    NORTHEAST CONSTRUCTION COMPANY v. George ROMNEY, Secretary of Housing and Urban Development, and Elmer B. Staats, Comptroller General of the United States. BIRD ASSOCIATES, INC., Appellant. NORTHEAST CONSTRUCTION COMPANY v. George ROMNEY, Secretary of Housing and Urban Development, et al. BIRD ASSOCIATES, INC., Appellant. NORTHEAST CONSTRUCTION COMPANY v. George ROMNEY, Secretary of Housing and Urban Development, et al., Appellants, Bird Associates, Inc.
    Nos. 71-1650, 71-1891 and 71-1893.
    United States Court of Appeals, District of Columbia Circuit.
    Argued Nov. 8, 1972.
    Decided March 6, 1973.
    Rehearing Denied June 6, 1973.

      Roger K. Zuker, Oxon Hill, with whom Gary R. Alexander, Marlow Heights, Md., was on the brief, for appellant in Nos. 71-1650 and 71-1891.
    Eloise E. Davies, Atty., Dept. of Justice, with whom L. Patrick Gray, III, Asst. Atty. Gen. at the time the brief was filed, Harold H. Titus, Jr., U. S. Atty., and Alan S. Rosenthal, Atty., Dept. of Justice, were on the brief, for appellants in No. 71-1893. Thomas A. Flannery, U. S. Atty. at the time the record was filed and Morton Hollander, Atty., Dept. of Justice, also entered appearances for appellants in No. 71-1893.
    Abraham J. Harris, Washington, D. C., for appellee.
    Before BAZELON, Chief Judge, and TAMM and LEVENTHAL, Circuit Judges.
   LEVENTHAL, Circuit Judge:

This appeal is from a preliminary injunction enjoining the Secretary of Housing and Urban Development (HUD) from awarding a contract, for the rehabilitation of certain public housing units in the Anacostia section of Washington, D. C., to anyone other than the plaintiff, Northeast Construction Company. We reverse.

I. Material Facts; and District Court’s Order

The invitation for bids issued in January 1971 incorporated the provisions of the “Washington Plan,” which requires a prospective contractor to complete an “Appendix A” specifying his estimated total employment under the contract in designated trades over a four year period and the percentage of minority group employees to be included (“minority” being Negro, Spanish surname American, Oriental and American Indian), within prescribed ranges established by the Secretary of Labor. The execution of Appendix A, or its equivalent, is made prerequisite to eligibility for a contract award for federal construction projects costing in excess of $500,000 by an order promulgated by the Secretary of Labor on June 1, 1970, implementing Executive Order 11246, as amended, requiring equal employment opportunity by federal contractors.

When the bids were opened on March 11, 1971, the two low bidders were found to be Northeast with a bid of $1,047,500 and Bird Associates, with a bid of $1,094,645. The plaintiff was thus the low bidder by $47,145. However, upon examining Northeast’s bid, HUD’s contracting officer noted that the company had failed to supply its goals for minority manpower employment in Appendix A. When the omission was called to the attention of Northeast’s president, who was present at the opening, he pointed out that he had signed the Appendix in the two places provided thereon for signature. He stated that, by signing Appendix A on its 4th and 12th pages, he had thereby intended to commit himself to employ at least the minimum percentage of minority workmen specified by the Government. Two days later, by letter to the Government he reduced this oral commitment to writing. On April 6, 1971, HUD advised Northeast that it was ineligible for the contract award, since its bid was not deemed responsive to the bid invitation.

Northeast immediately protested the rejection to the Comptroller General. On June 7, 1971, the Comptroller General advised Northeast that its failure to submit specific goals for minority manpower utilization made it ineligible for the contract award.

The Comptroller General noted that the invitation in terms expressly requires that the bid as filed contain a completed Appendix A, with specific goals for minority manpower utilization, and even provides blanks to be filled out by the bidder, by trade and time period. He concluded that under 41 C.F.R. § 1-2.405, this omission was not a deviation that could be waived or corrected.

On June 10, HUD sent a notice of intent to award the contract to Bird Associates. On the following day, Northeast filed this action, naming as defendants both the Secretary and the Comptroller General.

The District Court granted a preliminary injunction on June 21, 1971, stating:

The Court does not agree that plaintiff’s bid was not responsive. The signatures of plaintiff’s president on Appendix A was sufficient to bind it to employ the minimum percentage of minority workmen. The failure to copy these figures in the blanks provided was at most a minor irregularity covered by the provisions of 41 C. F.R. § 1-2.405, which allows for their correction. It should be noted in this context that the requirement that bids be responsive and that no modifications are allowed after opening is to protect the integrity of the bidding system. It is to prevent a bidder from gaining an unfair advantage over other bidders by altering or withdrawing his proposal after other bids have been revealed. Exceptions to the strict responsiveness rule are allowed so that the government can accept advantageous bids that deviate only in minor detail, such as in form. Here plaintiff’s bid was non-responsive only in the foi;m in which it indicated that it intended to employ at least the specified minimum percentages of minority workers.

In a Memorandum opinion of August 23, 1971, denying reconsideration, Judge Gasch stated:

The Court notes that Appendix A does contain a specific requirement that the blanks be filled out. The Court also notes that Appendix A specifically permits a bidder to adopt his own form for replying to the requirements of Appendix A, requiring only that it be “substantially similar.” The Court concludes that if a contractor agrees to make a good faith effort to commit himself to the minimum range of percentages indicated in Appendix A that he has thereby substantially complied with the requirements of Appendix A.
* * -x- * -x- -x-
Since Northeast committed itself both orally and in writing to employ the specified minimum range of minority group workmen, the Court interprets this as substantial compliance with the provisions of Appendix A. It is also noted that Northeast’s bid was the first bid opened and that Northeast’s oral commitment was received before the opening of any other bids. Its written commitment was received a day or so later and in view of the provisions respecting the correction of minor errors heretofore noted in the Code of Federal Regulations, 41 C.F. R. 1-2.405, the Government should have permitted the low bidder to make the corrections indicated in his written communication, even if it was unwilling to accept the oral representation to that effect.
* * -x- * * -X-
The Court concludes that absent substantial reasons to the contrary, a low bidder is entitled to the award. There 'was no rational basis for concluding that a contractor who committed his organization to the requirements of Appendix A and who was the low bidder by approximately $47,000 was not entitled to this award. To rule otherwise under these circumstances was to act arbitrarily and capriciously.

We conclude that the preliminary injunction should be reversed. We are mindful of the broad latitude and discretion vested in the trial court, and do not predicate our reversal on any difference of approach as to such matters as its finding that plaintiff was threatened with irreparable injury, and that grant of injunctive relief is responsive to the balancing of the equities and conveniences of all parties. But a preliminary injunction must be reversed even where no abuse of discretion exists as to such matters, when the trial court has proceeded upon a premise as to the rule of law which the appellate court deems erroneous. We conclude that underlying the District Court’s conclusion of law, that plaintiff is likely to succeed on the merits, is an erroneous legal premise that requires reversal.

II. Pertinent Principles

1. The District Court’s memorandum adverts to certain matters that, on reflection, we find to be not material. We refer, for example, to the fact that plaintiff’s bid was opened first. If it was sufficient in law as a bid, it would make no difference whether it were opened first or last, and counsel for plaintiff-appellee agreed, when pressed at oral argument.

2. Similarly as to the statements of plaintiff’s representatives, at the bid opening and later in writing, that its intention in signing Appendix A was to commit plaintiff to hire the mínimums in the range of percentages set forth in Appendix A. The question is, at best, the effect of the bid as signed and submitted. Certainly if it did not bind plaintiff, the later statements could not cure the omission. The effect of such an approach would be to permit a bidder who repented his bid — perhaps on seeing that his bid was too far below the next bidder to be economically sound — to step away from the matter by simply failing to supply the omission.

3. A legal question arose whether a contractor who omitted the specific goals had bound himself, whether he might successfully argue that he had failed to complete the indispensable prerequisite for any commitment; that the contract document must be construed strictly against the party who prepared it [the Government], and as prepared the document did not provide for a commitment in the absence of insertion of specific goals.

Is the procurement officer required to resolve this legal question, which at the very least the wording of the Appendix sought to avoid? Even if he projected as probable that a Federal court would ultimately rule, as Judge Gasch did, that there was such a commitment, is the procurement officer required to buy a lawsuit ? Is not the Government’s interest in this commitment important enough to require it in the bid, as filed, in the form of specific goals, without any question as to supplementation, and without any if, ands, or buts ?

4. The problem thus far discussed supports the reasonableness of the procurement officer’s rejection of the bid. There must also be taken into account that this is not a case where the requirements of the bid in question were initiated by the authorities handling the procurement, or even by their agency. These provisions were mandated by the Secretary of Labor. The paragraph incorporating Appendix A into the IFB states that the appendix “stipulates Contractor responsibilities under government requirements for affirmative action to assure compliance with Equal Employment Opportunity Requirements of Executive Order 11246 for Federally involved Construction Contracts.”

Appendix A is substantially the same as the contents of the Washington Plan, adopted by the Secretary of Labor, and published in the Federal Register for December 22, 1970, 35 F.R. 19352 ff; see 41 C.F.R. § 60-5.1 et seq. This is an order by the Secretary of Labor, which provides, 40 C.F.R. § 60-5.21:

“Sec. 60-5.21 Order.
After full consideration and in view of the foregoing it is:
(a) Ordered:
(1) That no contracts or subcontracts shall be awarded for Federal and federally-assisted construction in the Washington, D. C., Standard Metropolitan Statistical Area on projects whose estimated cost exceeds $500,000 unless the bidder completes and submits, prior to bid opening, the document identified as Appendix A, Notice of Requirement for Submission of Affirmative Action Plan to Ensure Equal Employment Opportunity or a substantially similar document, which shall include specific goals of minority manpower utilization for each trade designated below which will be used by the contractor on all of his work within the Washington, D. C. Standard Metropolitan Statistical Area during the term of his performance of the contract, such goals to be established by the contractor at least within the ranges established by these rules.
(2) A bidder who fails or refuses to complete or submit such goals shall not be deemed a responsive bidder and may not be awarded the contract or subcontract, but such goals need be submitted only for those trades to be used in the performance of the Federally-involved contract. In no case shall there be any negotiation over the provisions of the specific goals submitted by the bidder after the opening of bids and prior to the award of the contract, (emphasis supplied).

The authority of the Secretary of Labor is established by Executive Order 11246, Equal Employment Opportunity, 30 C.F.R. 12319 (Sept. 24, 1965), which provides:

Sec. 201. The Secretary of Labor shall be responsible for the administration of Parts II and III of this Order and shall adopt such rules and regulations and issue such orders as he deems necessary and appropriate to achieve the purposes thereof.
* * * * %
Sec. 205. Each contracting agency shall be primarily responsible for obtaining compliance with the rules, regulations, and orders of the Secretary of Labor with respect to contracts entered into by such agency or its contractors.

The local plans are issued by the Department of Labor to implement the requirement of E.O. 11246 that contractors “take affirmative action” to ensure employment for minorities. “The Labor Department interpretation of the affirmative action clause must, therefore, be deferred to by the courts.” Contractors Ass’n of Eastern Pa. v. Secretary of Labor, 442 F.2d 159, 175 (3d Cir. 1971).

With Federal departments and agencies, and their procurement officials, being mandated to comply with Labor Department regulations, and with those regulations mandating the information that must be contained in the bids when filed, we do not think a procurement official can be held to be unreasonable if he follows his mandate. Indeed, we think a serious question would arise whether the procurement official could take it on himself to justify a departure from the Labor Department’s mandate by reference to 41 C.F.R. § 1-2.405, which provides that in case of a “minor informality or irregularity” the contracting officer shall either give the bidder an opportunity to make a correction or shall waive the deficiency. That provision of the Federal Procurement Regulations treats a defect in a bid as “immaterial and inconsequential” if it lacks significance “as to price, quantity, quality or delivery.” This must, however, be read in conjunction with the basic procurement statute that awards or bids shall be made “to that responsible bidder whose bid, conforming to the invitation for bids, will be most advantageous to the Government, price and other factors considered.” 41- U.S.C. § 253(b). And whether a bid complies in all material respects with the invitation depends on whether the method and timeliness of submission maintains the integrity of the procurement system. 41 C.F.R. § 1-2.301.

Appellee’s counsel seizes, dramatically, on certain language in 41 C.F.R. § 1-2.-405. That regulation begins by stating that a minor informality is one pertaining “to some immaterial or inconsequential defect or variation of a bid from the exact requirement of the invitation for bids, the correction or waiver of which would not be prejudicial to other bidders.” It goes on to state: “Examples of minor informalities or irregularities include: * * * (b) Failure to furnish required information concerning the number of bidder’s employees.” This provision, of long standing in government contracts, certainly antedating the minority employment plans relates to a distinct and different subject — employment capability at the time of the bid — which does not involve any commitment. What the Washington Plan, and Appendix A, called for was a statement of specific goals for the future period, not as of the time of the bid, and a commitment for minority utilization. The specific command of the Appendix A regulation clearly states and reiterates a bid lacking the pertinent information concerning projected employers and specific goals will be deemed nonresponsive. Whether or not other bidders would be prejudiced by subsequential insertion, the Government’s broad policy objective may be prejudiced by the omission.

Appellee’s reliance on the “Minor Informalities” regulation overlooks a well-established distinction between the responsibility of the bidder and the responsiveness of the bid, a distinction discussed in 48 Comp.Gen. 291 (1968). Questions of bidder responsibility essentially relate to whether a given bidder has the necessary resources and experience to perform a given job, and advertised bids often request material pertinent in this regard. As the Comptroller General has stated, however, bidder responsibility is ultimately a question of fact:

Recognizing the desirability, both from the standpoint of administrative convenience and from that of the prospective bidders who may be saved useless expense and effort, of including in invitations for bids some notice to bidders of minimum standards to be applied in determining the qualifications of bidders,' we feel nevertheless that the statement of such qualifications should not be considered as having the effect of transforming the purely factual question of responsibility into a legal question of conformity to the invitation.

Questions of the “responsiveness” of the bid, on the other hand, relate to “conformity with the invitation” and are generally not curable after bid opening. In our judgment, the example in 41 C.F.R. § 1-2.405, of failure to furnish required information concerning the number of employees at time of bid relates to responsibility, where the Government may want to know whether a particular bidder has the employment capability to perform the contract. Since such questions are not material to bid openings, though they well may be to contract award, after procurement authorities conduct appropriate inquiries, their absence is properly considered to be a “minor informality.”

In the case before us, however, as Appendix A plainly indicates, the information pertinent to minority utilization goals, including both number of employees during the period of performance and minority percentage had — under directive of the Secretary of Labor —been made a question of “responsiveness” to the bid pointing toward obtaining effort and obligation from all responsive bidders. That regulation overrides any general concept that the characteristics of a bidder relate to responsibility rather than responsiveness, and makes it clear that in this context what was involved was information necessary for “responsiveness” of the bid. While usually the “experience” of the bidder is a matter of responsibility, there are occasions when it rises to the level of responsiveness of the bid — provided this is made clear in the invitation for bids. See 52 Comp.Gen — (No. B-175254, August 16, 1972).

This is not the case of a bidder who may claim he was misled by two inconsistent provisions in the specifications furnished to him. Here the specifications furnished him were clear and specific, and they were ignored. He cannot realistically be heard to say that he was relying on the minor irregularities clause of 41 C.F.R. § 1-2.405(b). If he knew that much about government procurement, he knew enough to know that he was governed by the regulation, with directions, in Appendix A, that were both specific and reiterated.

Whatever the latitude provided to a procurement official under 41 C.F.R. § 1-2.405 in ease of a conventional procurement question, the matter stands on an entirely different footing when the question arises under one of the clauses that have been inserted, over the years, into the “clauseology” of today’s government contract. Congress and the President have increasingly had recourse to the procurement power for nonprocurement objectives, as “a device for the accomplishment, implementation, or even formulation of important national policies and goals, as a sophisticated technique for public administration as well as procurement .... conditioning the award or the terms of government procurement contracts in order to promote national social or economic standards or goals that in themselves had no immediate relevance to supplying the particular procurement need.”

The difficulty posed by this case is that the mold of our recent decisions giving the disappointed bidder a remedy in case of action that either disregards or arbitrarily and unreasonably misapplies procurement regulations, has been used for the casting of a challenge taken to a provision of a regulation issued for a social or economic objective. Such social or economic objectives may be sufficiently related to procurement considerations in a broad sense and over the long run to validate use of the procurement power by Congress or the President. However, when, as is only natural, a department or agency with particular interest or concern in the social or economic problem has been given government-wide authority for the administration of this program now incorporated into the public contracts system, the controversy cannot be meaningfully considered solely in terms of standard procurement regulations, or by presuming authority in the procurement officials, typically located in other departments and agencies, to disregard the mandate of the department given responsibility for the new program. The procurement official would have no basis for saying that the information that the agency given responsibility — here, the Department of Labor — required be included in the bid as filed was only a formality, lacking in consequence, etc.

5. This does not mean that the disappointed bidder is lacking in remedies. He could contend that the Labor Department’s requirement is invalid. Ultimately, he could bring an action in District Court to enjoin that department from persisting in its regulation, or for declaratory relief. Initially, he could combine a protest to the procurement officer that he should be given the award with a protest to the department involved that its regulations should be amended, or applied, so as to permit supplementation after award. Certainly the procurement system is well acquainted with requirements as to responsibility that may be satisfied after the filing of the bid. See e. g., Ocean Electric Corp. v. Laird, supra note 15. But whether that is satisfactory depends on the needs of the agency responsible for issuance of the (government-wide) requirement. Some opportunity must be given that agency to consider the objection of the disappointed bidder and the question whether his proposal satisfies its regulatory needs. That opportunity is a precondition to judicial intervention, under the principle of exhaustion of administrative remedies.

The District Court erred in proceeding to preliminary injunction, on a hypothesis that plaintiff would probably prevail on the merits in establishing that the omission in the bid was waivable or eorrectible, in the absence of any administrative recourse whatever to the responsible department. The Government brief argues to this court that the plaintiff’s omission in the bid frustrated the policy of the Labor Department’s “affirmative action” Washington Plan. At oral argument, plaintiff’s counsel contended that the material omitted was needed by the Labor Department solely for statistical purposes, and that the Labor Department’s requirement that this material be contained in the bid as filed was unnecessary to its purpose. But in the absence of any recourse to the Labor Department, we do not have the administrative consideration that is a precondition to sure-footed judicial analysis.

The same considerations govern the District Court’s conclusion that the bid as submitted substantially complies with the invitation, which permits use of Appendix A or “a substantially similar document.” Under Appendix A the bidder is required to submit, for each of the various trades, and for all work done in the Washington area (not merely the work on this contract) the total number of employees to be used and the number of minority employees to be included in that total.

There was no way for the procurement official to supply these figures even assuming, arguendo, that the bidder could be taken in law to have made a commitment to hire minority employees to the extent of the specific goal percentage that was the minimum acceptable under Appendix A. The document filed by plaintiff cannot be considered “substantially similar” to a properly completed Appendix A unless one is prepared to assert that the missing data are of no real consequence to the Government’s program administered by the Labor Department. And here there was no presentation of the question to the Labor Department.

Reversed.

BAZELON, Chief Judge,

dissenting:

I agree with the majority that a bidder’s statement of minority hiring goals is a legitimate and significant interest of government contracting officers. The rub in this case is that the government’s procurement regulations clearly state that a bidder’s failure to submit the number of his employees is a “minor informality or irregularity.” Perhaps that regulation should be amended to indicate that the number of minority employees is not a minor item. Until the amendment is made, bidders have the right to expect that contracting officers will follow the mandatory requirements of their own regulations.

The error in Northeast’s bid falls precisely into the category described in 41 C.F.R. § 1-2.405 as “minor informalities or irregularities”. As explained in the majority opinion, “Appendix A” calls for information on the total number of employees on the contract in each designated trade, and the number of minority employees in each trade. That information was a required part of the bid package. Thus Northeast’s failure to fill in the blanks on “Appendix A” was a “Failure to furnish required information concerning the number of bidder[’s] employees”. Such a failure is set forth in the procurement regulations as an example of a minor informality. In such a case, the regulations provide as follows: “The contracting officer shall either give the bidder an opportunity to cure ... or waive such deficiency, whichever is advantageous to the government.” (emphasis added).

The continuing mystery in this case is why the contracting officer refused to follow the established procedure for dealing with minor informalities. Given the importance of “Appendix A”, it is understandable that the government would not choose to waive the deficiency in Northeast’s bid. Eliminating that alternative, the contracting officer was required to allow Northeast to correct its oversight. Had the officer accepted Northeast’s letter curing the deficiency, he would have achieved both of his legitimate objectives: award to the lowest bidder, and a written commitment to specified hiring goals.

It was suggested at oral argument that Northeast’s bid was rejected because its mistake on “Appendix A” demonstrated a lack of true commitment to minority hiring. This is a reasonable concern. The success of minority hiring programs depends on something more than mechanical compliance with numerical requirements. The government is justified in demanding that its contractors demonstrate a sincere interest in equality of opportunity.

Northeast contends, however, and I agree, that its error demonstrates not disinterest, but merely confusion. Even when measured against other government forms, where clarity is hardly a watchword, “Appendix A” is a remarkably obtuse document. It does not surprise me that a building contractor with little or no legal experience might assume that, in signing that portion of the form which set forth the government’s hiring goals, he was committing himself to adhere to those goals. There is no reason to believe that Northeast’s misreading of “Appendix A” evidenced bad faith; even if it did, that evidence would at least be offset by the firm’s rapid submission of a separate, written commitment to minority hiring goals.

If the government is genuinely interested in enhancing minority employment in the building trades, it should think twice before requiring strict accuracy in the completion of arcane bureaucratic forms. It has been reported recently that small construction firms — including many minority firms — have been unsuccessful in competing for work on Washington’s subway system largely because these firms cannot afford the legal and accounting expertise necessary to prepare a conforming bid. The very existence of 41 C.F.R. § 1-2.405 indicates that the government is aware of this problem.

Neither the contracting officer nor the GAO has explained why the regulation was not followed in this case. The majority opinion deals with this problem by suggesting that standard procurement regulations should not govern contract provisions designed for “nonprocurement objectives.” This is an intelligent and valid distinction, and the government’s contracting experts may well decide to incorporate it into federal procurement regulations. Until they do, however, I do not think we can apply such a rule. To do so would be unfair to Northeast and other contractors who have never been informed of it, and would impair the “public interest in having agencies follow the regulations which control government contracting.”

The majority opinion implies that the order of the Secretary of Labor implementing the “Washington Plan” creates a “mandate” requiring government procurement officers to disregard the regulations set forth at 41 C.F.R. § 1-2.405. Here again the government may wish to amend its regulations to establish that this is so. At present, however, the existence of two contradictory regulations creates an ambiguity which must, of course, be construed against the government and in favor of the private contractor. M. Steinthal & Co. v. Seamans, 147 U.S.App.D.C. 221, 225, 455 F.2d 1289, 1303 (1971).

The majority cites three Comptroller General decisions which draw a distinction between the responsibility of a bidder and the responsiveness of a bid. All three decisions involved cases where a bidder’s capacity to do the work was questioned. The responsibility/responsiveness distinction has been an important one in that context, but it hardly contributes to the resolution of the case before us. There is no dispute here as to Northeast’s experience or capacity to perform. I do not fully understand the rationale for applying the distinction to the facts at hand. If the majority is suggesting that Northeast’s mistake was a question of responsiveness, I agree: and I agree that such questions “are generally not curable after bid opening.” But the general rule has certain exceptions, which are set forth explicitly in the federal procurement regulations. This case clearly falls into one of the specific exceptions. Under existing regulations, Northeast’s failure to supply the number of its employees is curable, and the contracting officer was required to give Northeast the opportunity to cure.

It may be that the government is unwilling — for political purposes or otherwise — to state clearly in its regulations that minority employment is not a trivial matter. The majority and I share the view that minority hiring programs are of great importance. If the executive branch agrees, I would hope that this case will stir it to clarify its regulations on the point.

For the reasons stated above, I think Judge Gasch’s order was eminently correct.

ORDER

On consideration of appellee’s petition for rehearing it is ordered by the Court that appellee’s aforesaid petition is denied.

BAZELON, Chief Judge, dissents from the denial of rehearing. ■

SUPPLEMENTAL OPINION

LEVENTHAL, Circuit Judge:

We have considered appellee’s petition for rehearing, and have sought and reeeived supplemental memoranda. On reconsideration, we conclude that our decision was correct.

Perhaps there should be added to the original opinion the notation not only that the “minor informality” provision of 41 C.F.R. 1-2.405 was promulgated in 1960, long prior to the Washington Plan of October 1970, but also that an almost identical provision had been included in the Armed Services Procurement Regulations since 1955. See 32 C.F.R. 2-405. The latter provision has been understood to relate directly to the Small Business Act.

The enactment of the Small Business Act in 1953 rendered the size of a firm significant for procurement purposes.

Under implementing regulations issued by the Small Business Administration the number of employees which a small business might have within the small business definition varied from industry to industry. See 41 Comp. Gen. 739-40 (1962). Bidders were asked to state the number of their employees so that contracting officers might determine whether their firms came within the relevant SBA small business definition. Such information clearly went to the “responsibility” of the bidder rather than to the “responsiveness” of the bid, since it did not affect the bidder’s legal obligations. The term “number of employees” as used in the “minor informalities” provision relates to a firm’s capacity and capabilities, to a matter of “responsibility”. The recent Armed Services Regulations amendment pairing the term with “size status” reinforces this view.

The number of employees of Northeast Construction Company within the meaning of the regulation, as indicated in the transcript of the proceedings below, was “three officers”. The bidder by executing Appendix A was required to show the “estimated total employment for the trade on the contract,” and “the number of minority group employees and their percentage of the total” for the years 1971 through 1974. The two kinds of data are clearly unrelated ; one goes to the “responsibility” or “eligibility” of the bidder, the other goes to the “responsiveness” of the bid.

Northeast makes a contention based on the placement of § 1-2.405 in the Regulations, but on analysis we find this to be inconclusive.

We think it right to add that the wording of § 1-2.405 presented a strong legal argument in this case, which commended itself to the District Court although we did not find it conclusive.

Under the circumstances, the District Court can take this into account in determining whether and to what extent damages should be assessed on the injunction bond.

TAMM, Circuit Judge, concurs.

      . The District Court issued a preliminary injunction on June 22, 1971. The Government moved for reconsideration. On August 23, 1971, following a hearing at which intervenor Bird Associates Inc., also an appellant, was also heard, the court continued the injunction in full force and effect. It is from that order that the Secretary on September 28, 1971, took an appeal. Bird has also taken an appeal.

      . The plan in its entirety is included in the Code of Federal Regulations at 41 C.F.R. § 60-5 (A. 315-22) ; a model appendix similar to that provided by HUD to the bidders in this case is found at 41 C.F.R. § 60-5.30. Executive Order 11246, as amended, is included in 30 F.R. 12319 (1965), 32 F.R. 14303 (1967), and 34 F.R. 12985 (1969).

      . The first part of Appendix A is a “Notice of Requirement for Submission of Affirmative Action Plan to Ensure Equal Employment Opportunity.” This part provides spaces where a bidder may insert his goals for minority manpower utilization in designated working trades during the term of his performance of the contract “in conformity with the Requirements, Terms and Conditions of this Appendix A hereinafter set forth.” App. 21. The “Requirements, Terms and Conditions” are contained in and comprises the second part of Appendix A. App. 24-32. On the sixth and seventh pages of Appendix A the Requirements, Terms and Conditions set out the percentage ranges within which contractors’ goals for minority employment in the designated trades are to be set.

      . While the Government disputes whether this oral statement was made, its position on appeal is that this is immaterial since an oral commitment would not cure a defect in the bid.

      . See Comptroller General’s ruling B-172581, p. 3:
      Section 1 of Appendix A states:
      “ * * * unless the bidder completes and submits, prior to bid opening, this document designated as Appendix A * * * which shall include specific goals of minority manpower utilization for each trade designated below * * * during the term of his performance of the contract, such' goals to be established * * * at least within the ranges established by this Appendix % * *
      sjc sfc sjs :*!

        “A bidder who fails or refused to complete or submit such goals shall not be deemed a responsive bidder and may not be awarded the contract * * *. In no case shall there be any negotiation over the provisions of the specific goals submitted by the bidder after the opening of bids and prior to the award of the contract.
      “To be eligible for award, each bidder will be required to comply with this Appendiw for the hereinbefore designated trades to be used during the term of the performance f he contract * * (Emphasis supplied.)
      In addition, paragraph 2 of amendment No. 1 states:
      “ * * * Bidder is cautioned to complete Appendix A as required therein and return the completed Appendix A with the bid. Failure to do so shall cause the bid to be rejected as nonresponsive.” (Emphasis supplied.)
      In view of the above, and as set forth below, we do not agree that a failure to submit specific goals for minority manpower utilization is a deviation which can be waived or corrected.

      . 41 C.F.R. 1-2.405 permits a contracting officer to waive or permit correction of “a minor informality or irregularity . which is merely a matter of form and not of substance . . . pertain [ing] to some immaterial or unconsequential defect or variation of a bid.

      . The requirements of Appendix A are flexible in that good faith effort only is specified. Also a percentage range is provided. The obvious purpose of Appendix A is to encourage the employment of minority workmen. Where the sizes of the categories composing the actual work force are the subjects merely of estimates, the Government’s requirement that the contractor apply a range of percentages to that estimated figure seems to be nothing more than an estimate on an estimate. By committing itself to employ the specified percentage of minority workmen, the low bidder, Northeast, is in practical effect every bit as committed as the second low bidder Bird, which has filed out the range of percentages on a yet unknown work force.

      . Delaware and Hudson Ry. Co. v. United Transportation Union, 146 U.S.App.D.C. 142, 158, 450 F.2d 603, 619, cert. denied 403 U.S. 911, 92 S.Ct. 2209, 29 L.Ed.2d 689 (1971).

      . Appendix A says “The following are hereby submitted by the undersigned bidder as its goals for minority manpower utilization . . . to be achieved on all work ' of the bidder within the Washington, D. C. . . . Area during the terms of his performance of this contract in the trades specified below in conformity with the Requirements, Terms and Conditions of this Appendix A hereinafter set forth.” And those Terms say: “The contractor’s . goals established within the above ranges shall express the contractor’s . . . commitment of the percentage of minority personnel who will be working in each specified craft. . . .”

      . The contention that there was no “commitment” in a bid with omissions, might well gain legal force from a favorable factual setting, if the contractor’s Federal work had sufficient minority employment, but a breach was claimed in that his other work going on at the same time did not have sufficient minority employment, and all this was sought to be made the basis of, say a debarment from further Government contracts.

      . 41 C.F.R. § 1-2.405:

        Minor informalities or irregularities in bids

        A minor informality or irregularity is one which is merely a matter of form and not of substance or pertains to some immaterial or inconsequential defect or variation of a bid from the exact requirement of the invitation for bids, the correction or waiver of which would not be prejudicial to other bidders. The defect or variation in the bid is immaterial and inconsequential when its significance as to price, quantity, or delivery is trivial or negligible when contrasted with the total cost or scope of the supplies or services being procured. The contracting officer shall either give the bidder an opportunity to cure any deficiency resulting from a minor informality or irregularity in a bid or waive such deficiency, whichever is to the advantage of the Government. Examples of minor informalities or irregularities include:
      (a) Failure of bidder to return the number of copies of signed bids required by the invitation for bids.
      (b) Failure to furnish required information concerning the number of bidders’ employees.
      ijs sfc sfc jj; •}:

      . 41 U.S.C. § 253(b):
      (b) All bids shall be publicly opened at the time and place stated in the advertisement. Award shall be made with reasonable promptness by written notice to that responsible bidder whose bid, conforming to the invitation for bids, will be most advantageous to the Government, price and other factors considered : Provided, That all bids may be rejected when the agency head determines that it is in the public interest so to do.

      . 41 C.F.R. 1-2.301:
      (a) To be considered for award, a bid must comply in all material respects with the invitation for bids so that, both as to the method and timeliness of submission and as to the substance of any resulting contract, all bidders may stand on an equal footing and the integrity of the formal advertising system may be maintained.

      . The “Minor Informality” provision was first promulgated on February 20, 1960. 36 Fed.Reg. 1510, 1516 (1960).

      . 39 Comp.Gen. 173, 178 (1959), accord 48 Comp.Gen. 291, 297 (1968).

      . See Ocean Electric Corp. v. Laird, 154 U.S.App.D.C. 24, 473 F.2d 154 (D.C. Cir., 1972) (security clearance matter of “responsibility” of bidder and not material to bid opening, but essential only prior to the performance of work).

      . See J. Whelan, Underlying Values in Government Contracts, 10 J.Pub.Law 298 (1961).

      . H. Leventkal, Public Contracts and Administrative Law, 52 A.B.A.J. 35, 36-37.

      . Scanwell Laboratories, Inc. v. Shaffer, 137 U.S.App.D.C. 371, 424 F.2d 859 (1970); Steinthal & Co. v. Seamans, 147 U.S.App.D.C. 221, 455 F.2d 1289 (1971).

      . See Contractors Ass’n of Eastern Pa. v. Secretary of Labor, supra, 442 F.2d at 170 (“it is in tlie interest of the United States in all procurement to see that its suppliers are not over the long run increasing its costs and delaying its programs by excluding from the labor pool available minority workmen”).

      . Air Reduction Co. v. Hickel, 137 U.S.App.D.C. 24, 420 F.2d 592 (1969); Contractors Ass’n of Eastern Pa. v. Secretary of Labor, supra.

      . “Finally, the thrust of the Washington Plan is the concept of affirmative action, embodied in Executive Order 11246, which it implements. The court below by characterizing plaintiff’s failure to commit to specific goals as a mere failure ‘to copy figures in the blanks provided’ (Opinion, June 22; A. 76) or ‘to do the arithmetic said to be required by Appendix A’ (Opinion, August 24; A. 331) clearly misconstrued the policy underlying this equal employment opportunity program. The Washington Plan anticipates that the construction contractor will make a knowing and thoughtful commitment based upon his own employment and recruitment situation. Thus, contrary to the view of the district court, there is no warrant for the substitution of government prescribed goals for the bidder’s individual goals.” Govt.Brief at p. 19.

      . Or at least to say that the Labor Department cannot reasonably require that the information be supplied with the bid, and refuse to permit it to be furnished on a pre-award supplement.

      . 41 C.F.R. § 1-2.405 (b).

      . The situation is so serious that the Washington Metropolitan Transit Authority reeently created an agency to help minority firms in preparing future bids. The Washington Post, Dec. 1, 1972, p. Bl, col. 2.

      . Scanwell Laboratories, Inc. v. Shaffer, 137 U.S.App.D.C. 371, 376, 424 F.2d 859, 864 (1970).

      . A pertinent section of the Act, at 15 U.S.C. § 632 provides:
      For the purpose of this title * * * a. small business concern shall be deemed to be one which is independently owned and operated and which is not dominant in its field of operation. In addition to the foregoing criteria the Administration, in making a detailed definition, may use these criteria among others: Number of employees and dollar volume of business. (July 30, 1953, c. 282, Title II, § 203, 67 Stat. 233). [Emphasis supplied].

      . The ASPE amendment has been construed by the Comptroller General, in one unreported opinion, B-170026, decided December 14, 1970, where it was argued in a bid protest that:
      The company failed to state whether or not it is small business as required by page 2 of Standard Form 33 at 33A. (P. 4).
      The Comptroller General ruled:
      ASPE-405(ii) [the equivalent of 41 C.F.E. 1-2.405 (b)] specifically includes the bidder’s failure to make a representation concerning his size status as an example of the type of minor informality that can be waived. Therefore, it is of no consequence that the company failed to indicate in its bid whether it is a small business concern.

      . A review of the record indicates that in fact the firm consists of three officers and one full time employee who acts as field supervisor, thus the correct number should have been “four.” All construction workers were to have been furnished by subcontractors (Joint Appendix, Vol. I, pp. 115-117).

      . Page Communications v. Froehlke, 155 U.S.App.D.C. 1. 475 F.2d 994 (1973).


author: WYZANSKI, Senior District Judge:

text:
    AMERICAN MARITIME ASSOCIATION, Appellant, v. Maurice H. STANS, Individually, and as Secretary of Commerce, et al., Appellees.
    No. 71-1799.
    United States Court of Appeals, District of Columbia Circuit.
    Argued Nov. 3, 1972.
    Decided June 11, 1973.

      Joseph A. Klausner, Washington, D. C., with whom John M. Drewry, Washington, D. C., was on the brief for appellant.
    Leavenworth Colby, Atty., Dept. of Justice with whom L. Patrick Gray, III, Asst. Atty. Gen., at the time the brief was filed, and Alan S. Rosenthal, Atty., Dept. of Justice, were on the brief, for appellee Stans.
    Edward Schmeltzer, Washington, D. C., with whom Robert A. Peavy, Washington, D. C., was on the brief for appellee, United States Lines, Inc.
    Robert T. Basseches, Washington, D. C., with whom Warner W. Gardner and Mark L. Evans, Washington, D. C., were on the brief, for appellee, Liner Council, American Institute for Merchant Shipping.
    Before BAZELON, Chief Judge, MacKINNON, Circuit Judge, and WYZANSKI, Senior United States District Judge for the District of Massachusetts.

       Sitting by designation pursuant to 28 U.S.C. § 294(d).

   WYZANSKI, Senior District Judge:

This is an appeal from the July 12, 1971 order of the District Court dismissing plaintiff’s complaint. See American Maritime Assoc, v. Stans, et al., 329 F.Supp. 1179 (D.D.C.1971).

Plaintiff, American Maritime Association, an association of shipping carriers under the American flag, filed a complaint which, as amended, sought review by the District Court of the Maritime Administration’s final action, a rule made October 13, 1970, sustaining “Legality of certain charters to MSC of vessels built with construction-differential subsidy”, supplemental docket S.244.

Named as defendants were Gibson, Blackwell, and Bowman, officials of the Maritime Administration and of the Maritime Subsidy Board, and Stans, the Secretary of Commerce, who delegated to those three defendants the performance of duties assigned to him by the Merchant Marine Act of 1936, 46 U.S.C. § 1101 et seq., and Reorganization Plan No. 7 of 1961, 75 Stat. 840, and Reorganization Plan No. 21 of 1950, 64 Stat. 1273. Subsequently, the court permitted to intervene, as defendant, American Institute of Merchant Shipping, an association of 12 steamship companies receiving subsidies under the Merchant Marine Act as it read before the October 21, 1970 amendments, 84 Stat. 1018, 46 U.S.C. § 1101 et seq. (Supp.1971). The court also permitted to intervene, as defendant, United States Lines, which had chartered, to Military Sea Transportation Service, certain vessels built with “construction differential subsidies” provided by Title V of the Merchant Marine Act of 1936, 46 U.S.C. § 1151 et seq.

In effect, the amended complaint alleged that the officers named as defendants, in ruling that intervenor defendant United States Lines “will not be precluded from performing for MSTS [i. e., Military Sea Transportation Service] for the charter period (including operational periods offered) by reason of MARAD [i. e., Marine Administration] prohibition,” had violated the Merchant Marine Act.

The claimed violation arose in this context. The Merchant Marine Act of 1936, 46 U.S.C. § 1151 et seq. (Supp. 1971), as it read at the relevant dates, (all of which preceded the amendments made October 21, 1970, 84 Stat. 1018) provided in Title V for “Construction Subsidies” (sometimes called “Construction Differential Subsidies”) and in Title VI for “Operating Subsidies.” Plaintiff, on July 1, 1969, petitioned defendant Secretary Stans to initiate a rule-making proceeding regarding subsidies to ships which carry cargo reserved by law for American flag vessels. November 14, 1969, plaintiff followed with a memorandum asserting that no statutory authority existed for long-time charters to Military Sea Transportation Service of ships built with “construction subsidies.”

Inasmuch as no facts were disputed, the Maritime Subsidy Board, (to which the Secretary of Commerce had delegated the duty to make a rule, the effect of which would determine plaintiff’s petition) decided the matter, after receiving briefs. On October 13, 1970 the Board made its rule, here under review. It rejected plaintiff’s contentions. It upheld the legality of the charters to Military Sealift Command (the new name of Military Sea Transportation Service) of vessels built with “construction subsidies.”

The District Court had jurisdiction to review that October 13, 1970 rule. Administrative Procedure Act, Section 10, 5 U.S.C. § 703. Pacific Far East Line, Inc. v. Federal Maritime Board, 107 U.S.App.D.C. 155, 275 F.2d 184. And its exercise of jurisdiction to sustain the rule resulted in the July 21, 1973 order here on appeal.

Before coming to the merits, we note that deliberately we have skimmed from the case as it now comes to us all references in the District Court’s opinion which recite matters relating to events leading up to and including defendant Gibson’s June 12, 1970 letter. See American Maritime Association v. Stans, et al., 329 F.Supp. 1179, 1181-1183. As Judge Bryant himself recognized, those were irrelevant to the merits to which he properly addressed himself, pp. 1183-1187, and to which we also propose now to address ourselves.

Despite the statutory complexity which swathes Congressional grants of subsidies, especially in maritime legislation, this is a very simple case. There are just two points to be made: first, it is not the law that the only way that the armed services may procure commercial vessels for military use is by Section 902(a) of the Merchant Marine Act of 1936; and second, it is not the law that when the Secretary of Commerce or the Maritime Administration charters to the Military Sealift Command a vessel built with “construction subsidies,” the vessel is not, as the subsidy legislation requires, being operated “exclusively in foreign trade.”

We turn to the first point. By Section 902(a) of the Merchant Marine Act of 1936, 46 U.S.C. § 1242(a), Congress gave the Secretary of Commerce, whenever the President had declared a national emergency, (which it is undeniable was the situation.here) the authority to requisition American vessels. Congress included suitable provisions for compensation and deductions. The opinion of Judge Bryant sets forth the statutory text and references, the legislative history, and the policy considerations. We have nothing to add.

It is plain to us, as it was to the Maritime Administration’s Board and to Judge Bryant, that Section 902(a) provides merely one way, not the exclusive means, by which the armed services may lawfully obtain charter use of commercial vessels. The words of the text so indicate. Moreover, there is a wealth of supporting administrative practice, fully reported to Congress, and reviewed often by it and also by the Comptroller General. We see no need again to picture, nor to seek to augment, the treasure accumulated by Judge Bryant.

The second point involves primarily an interpretation of Section 506 of the Merchant Marine Act of 1936, 46 U.S.C. § 1156. The statute requires that “every owner of a vessel for which a construction-differential subsidy has been paid shall agree that the vessel shall be operated exclusively in foreign trade, or on a round-the-world voyage. . .

The text itself shows that “foreign trade” is used in conjunction with “round-the-world voyage.” The latter obviously is a purely geographical, not a commercial, description. The canon noscitur a sociis suggests that “foreign trade” is also used geographically.

The same interpretation is permitted by the definition set forth in Section 905(a) of the Act, 46 U.S.C. § 1244(a). There it is provided that:

“The words ‘foreign commerce’ or ‘foreign trade’ mean commerce or trade between the United States, its Territories or possessions, or the District of Columbia, and a foreign country.”

To one familiar with legislation, this definition means nothing more than an indication of Congressional intent to reach the ultimate Constitutional boundaries of the “commerce” power under Article I, Section 8, Clause 3. It is not a way of distinguishing between what laymen would denominate commercial (i. e., business) and non-commercial (i. e., non-business) transactions.

Furthermore, the legislative and administrative history referred to by Judge Bryant persuasively supports our conclusion that Congress intended to permit, and the Act does permit, the rule adopted by the Maritime Administration, and the practice of chartering vessels in the manner which led plaintiff to complain.

Judgment of the District Court affirmed.


author: WYZANSKI, Senior District Judge: BAZELON, Chief Judge,

text:
    ASSOCIATION OF AMERICAN PUBLISHERS, INC., et al. v. The GOVERNORS OF the UNITED STATES POSTAL SERVICE et al., Respondents, Direct Mail Advertising Association, Inc., et al., Intervenors. ASSOCIATED THIRD CLASS MAIL USERS, Petitioner, v. The GOVERNORS OF the UNITED STATES POSTAL SERVICE, Respondent, J. C. Penney Company, Inc., and United Parcel Service, Intervenors.
    Nos. 72-1641, 72-1726.
    United States Court of Appeals, District of Columbia Circuit.
    Argued Nov. 6, 1972.
    Decided June 26, 1973.

      Ian D. Volner, Washington, D. C., with whom Richard M. Schmidt, Jr., Washington, D. C., was on the brief, for petitioners in No. 72-1641. Paul Dobin, Washington, D. C., also entered an appearance for petitioners in No. 72-1641.
    J. Edward Day, with whom Lee A. Monroe, Washington, D. C., was on the brief, for petitioner in No. 72-1726.
    Stephen F. Eilperin, Atty., Dept. of Justice, for respondent. Alan S. Rosenthal, Atty. Dept. of Justice, Louis A. Cox, Marvin H. Morse and Israel Convisser, Attys. U. S. Postal Service, also entered appearances for respondents.
    David E. McGiffert, Washington, D. C., was on the brief for intervenor, Direct Mail Advertising Assn, in No. 71-1641.
    Robert L. Kendall, Jr. and Frederick C. Belen, were on the brief for intervenor, United Parcel Service, in No. 71-1641 and 71-1726.
    David C. Todd, Washington, D. C., was on the brief for intervenor Parcel Post Assn., in No. 72-1641.
    Joel P. Stern was on the brief for intervenor J. C. Penney Co., Inc., in Nos. 72-1641 and 72-1726.
    Joseph H. Sharlitt and Neal E. Krucoff, Washington, D. C., entered appearances for intervenor, Mail Advertising Corp. of America, in No. 72-1641.

      Before BAZELON, Chief Judge, TAMM, Circuit Judge, and WYZANSKI, Senior United States District Judge for the District of Massachusetts.

      Sitting by designation pursuant to Title 28, U.S.C. § 294(d).

   WYZANSKI, Senior District Judge:

In these two actions, brought on the basis of the original jurisdiction conferred on this court by Postal Reorganization Act of 1970, 39 U.S.C. § 3628, Association of American Publishers, Inc., American Library Association, and National Association of College Stores, Inc., (all being petitioners in the first action, No. 72-1641) and Associated Third Class Mail Users, (petitioner in the second action, No. 72-1726) seek review of different orders of the United States Postal Service.

In both cases petitioners named as respondents the Governors of the Postal Service. In 72-1641 the United States Postal Service, an independent establishment of the Executive Branch, created by Act of August 12, 1970, 84 Stat. 720, 39 U.S.C. § 201 et seq., is also named as a respondent.

Clearly the Postal Service was an appropriate respondent inasmuch as Congress provided that it could be “sued in its official name.” 39 U.S.C. § 401(1), as is commonly true of such administrative agencies as the Federal Reserve Board, ICC, FTC, NLRB, and SEC. Indeed it seems that action should have been brought only against it and not the Governors, who are, like Governors of the Federal Reserve Board, or members of the ICC, FTC, NLRB and SEC, not appropriate respondents when a board order is challenged on usual Constitutional, statutory, or similar grounds. The Governors of the Postal Service, unlike the former Postmasters-General, are not heads of a department which has no capacity to sue and be sued as though it were a corporate entity. But inasmuch as in these two cases the Governors have not raised this point, and the petitioners’ error in pleading is one of refined technicality without substantive significance, and one which could easily be corrected, we shall treat the petitions as though they had been amended.

In the first of the two cases joined in this opinion, 72-1641, petitioners seek review of the Service’s June 28, 1972 order. This court allowed United Parcel Service and J. C. Penney Co., Inc. to intervene. In this first case petitioners contend that the Service’s June 28, 1972 order approving the Commission’s attribution of costs and denying an increase in parcel post rates is invalid because the Commission’s attribution was arbitrary and unsupported by evidence and also because the Commission refused to give independent consideration to the educational and cultural value of materials constituting special fourth class mail.

In the second of the two cases, 72-1726, different petitioners seek review of the Service’s June 29, 1972 order eliminating the phasing of the increases in permanent third class mail alleged to be required by Section 3626 of the Postal Reorganization Act, 39 U.S.C. § 3626, and putting in effect increased postal rates recommended by the Postal Rate Commission on June 5,1972.

The main thrusts of the two cases are different. However, they share a common historical and statutory background.

The Postal Reorganization Act, 39 U. S.C. § 101 et seq., substituted for the long-established Post Office Department the Postal Service, as an “independent establishment of the executive branch of the Government” 39 U.S.C. § 201. 39 U.S.C. § 3601 created the Postal Rate Commission also as an “independent establishment of the executive branch of the Government.”

39 U.S.C. § 3622(a) provides that if the Postal Service believes that permanent changes in postal rates are appropriate, it shall request the Commission to submit a recommended decision on rate changes.

Then 39 U.S.C. § 3622(b) requires that upon receiving a request, the Commission shall make a recommended decision, taking into account certain factors, which, for the moment, we need not recite.

Pursuant to 39 U.S.C. § 3625(a), “upon receiving a recommended decision from the Postal Rate Commission, the Governors may approve, allow under protest, reject, or modify that decision in accordance with the provisions of this section.”

Finally, 39 U.S.C. § 3628 provides for judicial review of a decision of the Governors. No doubt, what was contemplated, despite the unfortunate choice of words, was that the review is to be of an order of the Postal Service rather than of a “decision of the Governors,” to which the draftsman of the statute loosely referred. Decisions in the sense of opinions are not reviewable; orders are. Governors are not, but the Service as an entity which Congress made suable is, properly charged as a respondent accountable for legal errors in or implicated in an order of the Service based upon the Governor’s decision. Of course, this does not mean that if personally, or in some official capacity other than as a signatory to an order of the Postal Service, a Governor erroneously, negligently, or willfully injured some person, the Governor might not properly be named in some proceeding a defendant; though we avoid, as unnecessary for decision in this case, the prickly issue as to whether he would be suable as a respondent in this court in a proceeding brought under 39 U.S.C. § 3628.

We now turn from the minor technical point with respect to the appropriate parties to these two cases to consider the merits.

In the first case, 72-1641, petitioners’ challenge is to the June 28, 1972 order implementing the Governors’ decision to increase the postal rates for special fourth class mail while not requiring any increase in parcel post rates.

This is the history of that order.

February 1, 1971 the United States Postal Service, in accordance with the Postal Reorganization Act of 1970, 39 U.S.C. § 101 et seq., submitted to the Postal Rate Commission a request for a recommended decision authorizing increases in postal rates for all major classes and subclasses of mail, except zone rate fourth class mail.

Upon receiving the request the Commission designated a hearing officer called the Chief Examiner.

The Postal Service, in preparing for a hearing before the Chief Examiner, whose duty included taking into account the factors listed in 39 U.S.C. § 3622(b), planned to present evidence showing actual costs and expenses related to postal service previously rendered. The Service in going over its records discovered that postal employees had made errors in the first half of Fiscal Year 1970 by classifying as parcel post, packages actually carried as special rate fourth class mail. To correct the impact of this error the Postal Service used the results of a two-weeks audit, made in November 1969, to shift $35.1 million of attributable costs projected for Fiscal Year 1972 from parcel post to special rate fourth class mail.

Upon submission of that evidence, the Chief Examiner rejected the use of the two-weeks audit as a correct basis for determining appropriate adjustments to the erroneous Fiscal Year 1970 figures. Instead, in order to adjust the erroneous figures, he used the results of the Service’s evidence of its in-office cost system for the Fourth Postal Quarter of 1970. On that basis, he recommended that $20.6 million of attributable costs be shifted from special rate fourth class mail to parcel post. Thereupon, he reached the conclusion that the Postal Rate Commission should recommend a 4.6% increase in parcel post rates.

On review, the Commission itself concluded that there was objection to the methods used by both the Postal Service and the Chief Examiner. It averaged the results of both methods and thus made its own adjustment of attributable costs between parcel post and special rate fourth class mail. It increased the former, and reduced the latter, by $10.2 million. Then it decided that the increase in costs attributable to parcel post did not require any increase in parcel post rates. On June 28,1972, the Governors of the Postal Service approved, and ordered put into effect, the aforesaid decision by the Commission. This is the first order appealed to this court.

Petitioners in 72-1641 attack the June 28, 1972 order on two grounds: first, that the order unlawfully approves the arbitrary and unsupported use by the Commission of estimated costs directly attributable to special fourth class mail “somewhere between” those established by the November 1969, special two-weeks audit and the Fourth Quarter figures for Fiscal Year 1970; and second, that the order unlawfully approves a Commission recommendation reflecting the Commission’s erroneous refusal to give independent consideration to the educational and cultural value of materials constituting special fourth class mail, in alleged contravention of the language and legislative history of the Postal Reorganization Act of 1970.

With respect to the first point, in the language of Justice Douglas in New York v. United States, 331 U.S. 284, 328, 67 S.Ct. 1207, 1230-1231, 91 L.Ed. 1492 (1947):

We start, of course, from the premise that on a subject of transportation economics, such as this one, the Commission’s judgment is entitled to great weight. The appraisal of cost figures is itself a task for experts, since these costs involve many estimates and assumptions and, unlike a problem in calculus, cannot be proved right or wrong. They are, indeed, only guides to judgment. Their weight and significance require expert appraisal.

It would, of course, be the summum bonum if we had accurate figures as to recent costs of carrying special fourth class mail. The only available figures were inaccurate, but were susceptible of rough adjustment. The Postal Service proposed one method of adjustment; the Chief Examiner, another. The Commission regarded each as helpful, but not wholly reliable. So the Commission more or less split the difference. No doubt it would have been possible to straighten out some of the errors or supposed errors of adjustment in either the Postal Service’s or the Chief Examiner’s calculations. And if rate-making were an exact science such a counsel of perfection would be mandatory. But, though courts hesitate so to admit, they know that in the rate-making area, John Selden was prophetic in declaring that in governing it is not juggling, but too much juggling that is to be blamed. In any case, the rough splitting of a difference between two fairly but not wholly satisfactory rate calculations is a familiar permissible technique. It is not like the situation in International Harvester v. Ruckelshaus, 155 U.S.App.D.C. 411, 478 F.2d 615, 1973, where the regulatory administrative agency rejected both the method and the results of an expert body and substituted arbitrarily its own method and prediction. That is a quite different situation from what happened here, where the regulatory administrative agency did not entirely disregard two experts, but found each somewhat in error, and took as its own solution a point somewhere between the two expert figures. When neither of two suggested adjustments applied to inaccurate data is completely satisfactory a rate-making body may fashion its own adjustments within reasonable limits. Market Street Railway Co. v. Railroad Commission, 324 U.S. 548, 560, 65 S.Ct. 770, 89 L.Ed. 1171 (1945); Permian Basin Area Rate Cases, 390 U.S. 747, 800, 817-818, 88 S.Ct. 1344, 20 L.Ed.2d 312 (1968). Since Solomon’s day, to split the difference or to come close thereto has been thought wise, if only because it makes parties more likely to disclose to tribunals the truth.

The second point, which in their brief and undoubtedly in their clients’ views comes first, is the contention of petitioners in 72-1641 that the Commission’s refusal to give independent consideration to the educational and cultural value of materials constituting special fourth class mail contravenes the language and legislative history of the Postal Reorganization Act of 1970 and therefore is an abuse of its authority.

Obviously this is not a contention that the rates are discriminatory. The claim is that in reaching a rate result, the Commission failed to apply if not the precise language, at least the fair intendment, of the policy declared by and the criteria set forth in the United States Postal Service Act; Act of Aug. 12, 1970, 84 Stat. 719, 39 U.S.C. § 101 et seq. Reliance is placed particularly on parts of the Declaration of Postal Policy in Section 101 of the Act, 84 Stat. 719, 39 U.S.C. § 101 and what may for convenience be called “the factor sheet,” that is the criteria listed, in Section 3622(b) of the Act, 84 Stat. 760, 39 U. S.C. § 3622(b).

Section 101 sets forth as one of many postal policies that “the Postal Service shall have as its basic function the obligation to provide postal services to bind the Nation together through the personal, educational, literary, and business correspondence of the people.”

Section 3622(b) directs that in changing the rate schedule the Commission shall proceed in accordance with the policies set forth in Section 101 of the Act and with the following factors:

“(1) the establishment and maintenance .of a fair and equitable schedule;
(2) the value of the mail service actually provided each class or type of mail service to both the sender and the recipient, including but not limited to the collection, mode of transportation, and priority of delivery;
(3) the requirement that each class of mail or type of mail service bear the direct and indirect postal costs attributable to that class or type plus that portion of all other costs of the Postal Service reasonably assignable to such class or type;
(4) the effect of rate increases upon the general public, business mail users, and enterprises in the private sector of the economy engaged in the delivery of mail matter other than letters ;
(5) the available alternative means of sending and receiving letters and other mail matter at reasonable costs;
(6) the degree of preparation of mail for delivery into the postal system performed by the mailer and its effect upon reducing costs to the Postal Service;
(7) simplicity of structure for the entire schedule and simple, identifiable relationships between the rates or fees charged with various classes of mail for postal services; and
(8) such other factors as the Commission deems appropriate.”

Like most other factors sheets, whether in statutes, A.L.I. Restatements, or comparable compilations, the factors listed are not analogous to a table of atomic weights, or to the multiplication table. The factors are reminders of relevant considerations, not counters to be placed on scales or weight-watching machines.

No one who seeks fairly and equitably to determine a complicated rate structure ought to suppose that there is a correct answer, or even that in the final mix there should have been added a specified number of spoonfuls of each of the ingredients. A conscientious, competent rate-making body proceeds by opening its mind to relevant considerations, and closing its ears to irrelevant ones. It is governed by policies not politics.

A reviewing court under familiar- jurisdictional principles may not, and under human limitations generally could not, reassess the weights given by a rate-making agency to different factors, absent a legislative direction as to precisely what gravity each factor bears. All that the court may properly do is to consider whether the agency did take into account all the relevant factors and no others.

Here the administrative record has abundant indication that the Commission and the Governors heard the relevant and excluded the irrelevant testimony, and made their appraisals with a correct understanding of the Congressional mandate. There is nothing to petitioners’ argument that the Postal Service misunderstood the meaning of Factor 2 — “the value of the mail service actually provided each class or type of mail service to both the sender and the recipient, including but not limited to, the collection, mode of transportation, and priority of delivery.” What “value,” as there used, means is the economic concept of “value-of-service,” an approach which looks to demand factors, “what the traffic will bear.” Payne v. Washington Metropolitan Area Transit Com’n., 134 U.S.App.D.C. 321, 415 F.2d 901, 916 (1968). See J. C. Bonbright Principles of Public Utility Rates (1961), p. 287. It is not possible to regulate rates with any pretense of objectivity if, as petitioners urge, one were to consider educational and cultural value. In those humanistic domains values tend, as Wittgenstein and Valéry constantly reminded us, to be almost wholly emotional. /

Indeed the Commission went as far as it appropriately could when it announced that in weighing the economic impact of postal rate increases, the Commission will be especially alert to guard against the impairment of mail services which make informational, cultural and educational contributions to society.” Nor did the Commission keep the word of promise to the ear, and break it to the hope. The Commission and the Governors prescribed for special fourth class mail rates of fourteen and seven cents at present; twenty-one cents and ten cents after five years. The differential between special fourth class mail rates and other rates was, if anything, narrowed to favor the former. We do not stop to set forth the figures, inasmuch as there is not, and could not plausibly be, any claim, of adverse discrimination. The rate structure is, if anything, slanted favorably to petitioners.

If petitioners are aggrieved by asserted insensitivity to the unquestionably major contributions made to our civilization by the type of mail matter for which they are spokesmen, the remedy is legislative. The very books which petitioners and the court cherish instruct us that the judicial role is, and in a Constitutional democracy should be, limited. Ours is only to determine whether the Postal Service lacked substantial evidence for rates it prescribed, took into account irrelevant considerations, omitted relevant considerations, flouted a statutory command, acted ultra vires, or denied a Constitutional right. Nothing of those types of error is proved here. Petitioners’ complaint is essentially political, not legal. Likewise, the remedy is political, not legal.

In sum, we decline to set aside the Postal Service’s June 28,1972 order.

We turn to 72-1726 to consider the validity of that part of the Postal Service’s June 29, 1972 order which followed the Commission’s recommendation with respect to third class mail rates.

Section 3626 of the Postal Reorganization Act, 39 U.S.C. § 3626, provides for third class mail rates which are to be at a high level immediately unless there is what' is called by the parties here “the phasing of increases in permanent third-class mail rates.” Petitioners in 72-1726 claim that the part of the June 29, 1972 order to which they object by putting the high rates into effect immediately, unlawfully eliminates the phasing of increases.

It is undeniable that the June 29 order puts into effect the Section 3626 increases without gradually “phasing” them. But the reason the Governors, like the Commission, gave for ignoring the “phasing” and making the increase immediate in its total impact was that this is what Congress directed should be the result in a situation where Congress had failed to appropriate funds within the meaning of Section 3627 of the Act, 39 U.S.C. § 3627, which provides:

“If Congress fails to appropriate an amount authorized under section 2401(c) of this title for any class of mail sent at a free or reduced rate under section 3217, 3403-3405, or 3626 of this title, or under the Federal Voting Assistance Act of 1955, the rate for that class may be adjusted in accordance with the provisions of this subchapter so that the increased revenues received from the users of such class will equal the amount for that class that the Congress was to appropriate.”

What the dispute between the parties in 72-1726 turns on is the legal question whether the governors could properly have concluded that Congress had failed to appropriate for the Fiscal Year 1973 for third class regular mail so-called “revenue foregone” funds, i. e., the sum which the Postal Service had determined it would lose because of a rate preference which had been, by the phasing provisions of 39 U.S.C. § 3626, conditionally allowed to third class mail.

There is no factual dispute. The Service asked Congress to appropriate for the Postal Service $1,640.4 million, of which $687.9 million was requested for revenue foregone. The Office of Management and Budget, on behalf of the President, submitted to Congress a total Postal Service Appropriation of $1,424.039 million, of which $471.5 million was for revenue foregone. The Director of OMB wrote to the Postmaster-General a letter, transmitted to Congress, explaining that the President’s request did not include $216 million of revenue foregone funds necessary for phasing third class regular rate and controlled circulation mail. The Postal Service informed Congress that if it failed to restore the $216 million the Postal Service would treat that failure as a failure of revenue foregone for the purpose of applying 39 U.S.C. §§ 3626 and 3627. Congress did not vote the funds requested by Postal Service, and even cut the Budget’s figures by $14.039 million, and made a lump sum appropriation of $1,410 million for the Postal Service.

While petitioners with subtlety and skill weave an argument for their position that Congress did not fail to appropriate the amount required to meet the statutory condition which was precedent to the phasing of the increase in postal rates for third class matter, we are more amazed at its ingenuity than persuaded by its soundness. It seems to us quite plain that if in good faith (which no one denies) the Postal Service specifies how many dollars it must get from Congress in order not to be in the hole with respect to carrying third class mail, then, regardless of Budget officials or others outside the Postal Service, the Postal Service’s conclusion fixes the amount of revenue foregone in so far as that concept is used in 39 U.S.C. §§ 3626 and 3627 or other parts of the Postal Service Act.

We conclude that the petition to set aside so much of the June 29, 1972 order as is attacked in 72-1726 must be denied and dismissed.

Petitions in both 72-1641 and 72-1726 dismissed.

BAZELON, Chief Judge,

concurring with whom Circuit Judge TAMM and Senior District Judge WYZANSKI join:

The Postal Reorganization Act of 1970 resulted from Congress’ determination to remove the Post Office Department from the political arena, and to provide for a system of administrative controls that would guarantee efficient, economical, and equitable operation of the nation’s mails. This case shows' that the Postal Service has some distance to go if it is to reach that goal in fixing rates. My vote to affirm is based, first, on my belief that this lack of progress may be properly laid to the novelty of the undertaking, and, second, on the record’s assurances that the Postal Rate Commission is making a sincere effort to regularize the Postal Service’s procedures and accounting principles.

One troubling aspect of the Postal Service’s approach in this case requires comment. The Act directs that the Postal Rate Commission determine rates in accordance with certain guidelines. The most concrete of these, section 3622(b)(3), establishes the requirement that each class of mail or type of mail service bear (1) the direct and indirect postal costs attributable to that class or type plus (2) that portion of all other costs of the Postal Service reasonably assignable to such class or type.

The Postal Service’s response to this requirement was questionable at best. It proposed that the Commission “attribute” only 49 percent of the ten billion dollars at issue. The remainder, it said, should foe “reasonably assigned.” It presented a schedule of such assignments that, it said, had been derived by two of its employees through the use of a formula. The formula, in turn, was purportedly composed of three factors: (1) the hypothesized elasticity of demand for each class of mail; (2)' the “value” of each class; and (3) the competitive stance of the Postal Service in those cases in which it lacked a legal monopoly. And when application of this vague formula threatened to result in great changes from pre-existing rates, it was simply suspended and an alternative substituted. The Chief Examiner aptly concluded:

Distributing billions of dollars on the basis of thinly supported judgments is not an acceptable method. And it is an invitation to pressures which Congress sought to avoid.

The defects in Postal Service’s proposals were not confined to the scheme it applied. The Chief Examiner stated in his opinion that, as to the entire proposal, he had been unable to satisfactorily reconstruct the derivation of these supposedly “reasonable” cost assignments. Although he explicitly noted that the two staff members had been forthright witnesses, the Chief Examiner was stern in his criticism of this loose approach to development of rate proposals. Nevertheless, he held that they were adequately justified in view of the circumstances, and he contented himself with a recommendation that the assignment of costs on a “reasonable” basis be reduced in future proposals by a more diligent effort to link long-term and indirect costs to the classes of service that gave rise to them.

The Postal Rate Commission disagreed with the harshness of the Chief Examiner’s criticism, but its more tolerant view did not extend to the fundamental problem: an unstructured and well-nigh unreviewable discretion in two individuals to propose allocation of over half the Service’s budget. Instead, the Commission pointed to the pragmatic difficulties that faced the staff: a novel proceeding, a lack of reliable data, and a limited amount of time. But the Commission concluded with an admission of the accuracy of the Chief Examiner’s criticisms by stating that the Postal Rate Commission would itself undertake a rulemaking proceeding to deal with Postal Service’s deficient accounting and cost assignment techniques.

The rates are not set by Postal Service staff, of course, but by the Postal Rate Commission, subject to review by the Board of Governors. Nevertheless, the Chief Examiner rightly noted that Postal Service staff is in a unique position. It alone takes in the full scope of Postal Service operations when presenting its proposals. And it alone is in a position to influence the Postal Service’s day-to-day accounting procedures and record keeping. Outsider challenges to the fundamental approach Postal Service takes to ratemaking are unlikely to meet with stunning success under these circumstances. Yet when this case arose, neither the portion of the Service’s budget subject to “reasonable” allocation, nor the procedures through which the Service prepares its proposals concerning discretionary allocations, were spelled out in statutes or rules.

Section 3622(b)(3) is susceptible of a variety of interpretations, as all parties to this proceeding have recognized. But it is important to note as well that Postal Service’s power to propose rates to the Commission was conferred by Congress in the same Act It would certainly be reasonable to assume that Congress meant the Postal Service to structure its own process for preparing such proposals so that there would be at least a rough correspondence between the amount of money it would diseretionarily allocate and the care with which it prepared and supported those proposals.

Indeed, Congress may have meant to go further. Its stated intent to purge the postal system of “politics” provides a strong indication that the Chief Examiner was correct when he suggested that discretionary or “reasonable” assignment of costs should apply only where Postal Service simply could not “attribute” costs. Under that view, Postal Service could not rectify its errors in this proceeding by merely providing for a more careful “allocation” of the five billion dollars at stake. It would be required to itemize its costs in more detail, determine which classes of service caused them, and attribute those costs solely on that basis. Only very long-term costs and overhead could be “reasonably assigned.”

That question need not be resolved in this case, for the presumptions that surround an initial effort to formulate rates are sufficient to justify the approximations that Postal Service supplied to the Postal Rate Commission here. But, when the Postal Rate Commission establishes guidelines for future rate proposals, it may wish to take a hard look at both the manner in which Postal Service assigns unattributable costs and the amount of costs that it designates “unattributable.”

      . See S.Rep.No.91-912, 91st Cong., 2d Sess. 11 (1970), U.S.Code Cong. & Admin.News 1970, p. 3649.
      Indeed, Congress defined “politics” for the benefit of the regulatory authorities:
      [I]f postal rates and postal classification are going to be established on a basis of charging whatever the traffic will bear to a particular class of mail according to its ability to pay, or what kind of an increase it got last time, or its ‘social acceptability,’ then Congress is clearly better qualified to make such judgments than the Postal Service or any expert commission. Such purely political judgments are the province of Congress.

        Id. Although the Chief Examiner took this admonition to heart, the opinion of the Postal Rate Commission itself manifests a disturbing disregard of Congress intention, including the instruction elsewhere in the Senate Report that rates are to be established “on the basis of expert consideration of the overall value of the service provided and the allocation of costs on a scientific or quasi-scientific basis.” Id.

      For example, in making some adjustments to the Chief Examiner’s recommendations regarding second-class mail, the Commission said:
      The Commission’s recommended rates are designed to meet the statutory requirement to balance costs and revenues. In those instances where our decision reduces the Service’s proposed rates, it is the result of our judgment that the need to establish equitable rates must be balanced with our responsibility to correct existing rate design inequities.
      Postal Rate Commission Opinion, Appendix at 1-267.

      . See Permian Basin Area Rate Cases, 390 U.S. 747, 88 S.Ct. 1344, 20 L.Ed.2d 312 (1968).
      I do not, by the reference, mean to imply that future judicial review will take the course followed by later Natural Gas Act eases. See Southern Louisiana Area Rate Cases II, 483 F.2d 880 (5th Cir., 1973).

      . The Commission concluded the first part of its opinion with the statement:
      In determining thees rates the Commission has accepted the Postal Service’s costing presentation as being appropriate for the present proceeding. However, the Commission intends to institute a rulemaking proceeding for the purpose, among other things, of determining what cost and revenue data should be obtained for use in future proceedings.

      . 39 U.S.C. § 3622(b). Technically, the Postal Rate Commission merely renders a “recommended decision.” But, as the Board of Governors observed in its opinion in this case, the power of the Board to revise that opinion is extremely narrow. See 39 U.S.C. § 3625 (1970).

      . 39 U.S.C. § 3622(b) (3) (1970) (emphasis and numbering added).

      . The Chief Examiner reported that Postal Service’s proposal “attributed” approximately $4.78 billion, and judgmentally distributed $5.06 billion. He observed that this action had 3 primary consequences :
      1. The costs for classes of mail do not reflect the full cost burden they impose on the system.
      2. By not taking present account of predictable long-run cost variability, the method is increasing future cost and rate instability.
      3. By restricting the category of attributable costs, the method enlarges the amount of institutional costs which are distributed to the classes of mail on the basis of Postal Service’s judgmental evaluation of pricing factors instead of on a cost basis.
      He could have added that this action makes review of such “judgmental evaluations” rather difficult.

      . Tlie Chief Examiner pointed out, inter Cíl'ltíj

      No study presented [in evidence] shows that the demand of any class of mail is elastic. It is difficult to estimate what will happen if rates for a class are raised far beyond existing levels because there is no data on the subject.
      And, later in the opinion,
      In this proceeding Postal Service is proposing to use relative elasticity of demand as a major factor in allocating billions of dollars in institutional costs to the various classes 54 of mail. . . . Not only are the measurements of demand presently too cloudy and unreliable for this purpose, but the economics of Postal Service are such that using this method will probably result in discrimination without justification or benefit.
      54. Postal Service tries to avoid this word but that is what it is doing.

      . For example, the Postal Service did not use elasticity of demand in setting rates for first class mail. It argued that the fact that it has a monopoly over this class, and the fact that the class has an extremely low elasticity of demand, “would lead to first class being assigned a heavier proportion of institutional costs than any other class.” Chief Examiner’s Opinion, Appendix at 1-11. Accordingly, it simply substituted the supposed elasticity of demand for the highest of the other classes. Id.

      Despite this adjustment, however, the Chief Examiner found that Postal Service’s distribution of institutional costs “favor second and third-class to the detriment of first-class.” Id. at 1-16.

      . Id. at 1-17. Providing specific cases in which theory failed to appear in practice, the Chief Examiner examined the factor “value of the mail to the recipient” and reported:
      Here, Postal Service becomes involved in social considerations and subjective evaluations which are difficult to apply. For example, Postal Service finds that the contents of second-class mail have a high value because of their “cultural, educational and informations values”, which justify a low price. . . . But as has been noted Postal Service deems the contents of first-class to have a high value which warrants a high price.

        Id. at 1-14.

      . [B]ecause the process is largely subjective, it is impossible to determine which factors — or the extent to which various factors — guided Postal Service in its distribution of institutional costs. As a consequence, one cannot replicate Postal Service’s methods to test their procedures, weightings, or merits.

        Id. at 1-16.

      . Id. at 1-17.

      . See note 3 supra.

      . See note 4 supra.

      . Indeed, the Chief Examiner himself felt sufficiently constrained that he began his rate recommendations with the statement :
      Only the minimum necessary changes will be adopted in the specific rates proposed by Postal Service because the record in this case does not permit the determination of rates on what should be the proper basis.
      Chief Examiner’s Opinion, Appendix at 1-17.

      . Id. at 1-7; Postal Rate Commission Opinion, Appendix at 1-276-80.

      . See 39 U.S.C. § 3622(a) (1970).

      . More precisely, be quoted section 3622 (b) (3) and stated “The paragraph as a whole suggests that assignment of costs was to be carried out as far as it reasonably could be.” Chief Examiner’s Opinion, Appendix at 1-9 (emphasis added).

      . The Commission would be well advised in this undertaking to begin with the excellent opinion of Chief Examiner Seymour 'Wenner. See note 1 supra.