author: WILKEY, Circuit Judge: FAHY, Senior Circuit Judge,

text:
    KENTRON HAWAII, LIMITED, Appellant, v. John W. WARNER, Secretary of the Navy, et al. INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AFL-CIO, an Unincorporated Association Local 1260, International Brotherhood of Electrical Workers, AFL-CIO, Appellant, v. John W. WARNER, Secretary of the Navy, et al.
    Nos. 71-2038, 72-1099.
    United States Court of Appeals, District of Columbia Circuit.
    June 15, 1973.
    Fahy, Senior Circuit Judge, dissented and filed opinion.

      David H. Lloyd, James A. Dobkin, and Stephen M. Sacks, Washington, D. C., were on the brief for appellant in No. 71-2038.
    Thomas X. Dunn, and Elihu I. Leifer, Washington, D. C., were on the brief for appellant in No. 72-1099.
    Harold H. Titus, Jr., U. S. Atty., John A. Terry, Robert M. Werdig, Jr., and Joseph F. McSorley, Asst. U. S. Attys., were on the brief for appellee.
    P. Gordon Stafford and David L. Reichardt, Washington, D. C., were on the brief for intervenor/appellee, Dynalectron Corp.
    Before FAHY, Senior Circuit Judge, and ROBINSON and WILKEY, Circuit Judges.
   WILKEY, Circuit Judge:

This case arises on appeal from a summary judgment entered below against appellants’ challenge to the award of a negotiated cost-plus-award-fee government contract. The service contract involved here provides for the operation and maintenance of the Pacific Missile Range Facility (PMR). Appellant Kentron Hawaii, Limited (Ken-tron) was the previous incumbent contractor and is a disappointed bidder for contract renewal. Appellant International Brotherhood of Electrical Workers (IBEW) has represented various numbers of employees at PMR both before and after the contract award challenged here. Intervenor-appellee Dynalectron Corporation (Dynalectron) was the successful bidder, and is currently performing at PMR, having been awarded the contract by the Navy Regional Procurement Office, Los Angeles (Navy) on 21 May 1971.

Appellants claim that the contract was illegally awarded. They seek both reversal of the summary judgment granted on appellee Navy’s cross-motion below and grant of a motion for summary judgment on their own behalf.

Ever since Scanwell Laboratories, Inc. v. Shaffer, those adversely affected by the award of government contracts have had standing to challenge the legality of procurement decisions. However, they bear a heavy burden of showing either that (1) the procurement official’s decisions on matters committed primarily to his own discretion had no rational basis, or (2) the procurement procedure involved a clear and prejudicial violation of applicable statutes or regulations.

There are two principal grounds for appellants’ challenge. First, they claim that the contracting officer’s acceptance of Dynalectron’s bid was improper. That argument variously turns on allegations that the successful bid was non-responsive, unfeasible and illegal. Second, appellants urge that the Labor Department’s failure to make a wage determination, allegedly in violation of the Service Contract Act, fatally flawed the contract award. They ascribe error either directly to the Labor Department’s decision, based on information available to it, or indirectly to the Navy’s failure to forward adequate wage data. Since we find none of these arguments persuasive, we affirm the decision of the District Court.

I. Facts

The predecessor PMR service contract, performed by Kentron, had an expiration date of 31 July 1971. Preparations for the award of a successor contract began with the forwarding of a requisition from PMR to the Navy on 6 May 1970.

As early as 29 July 1970 Kentron requested the Navy to procure an area wage determination from the Labor Department, pursuant to the Service Contract Act of 1965, 41 U.S.C. § 351 et seq. On 5 August 1970 the Navy, as required by § 12-1005 of the Armed Services Procurement Regulations, submitted a Standard Form 98 (entitled “Notice of Intention to Make a Service Contract”) to the Wage and Hour Division of the Department of Labor.

Two items of ultimate controversial importance must be noted here. First, although Item 7 of the SF 98 instructed the Navy to enclose “whatever information [was] readily available on wages and fringe benefits being paid in the locality,” no wage information of that nature was ever forwarded. Second, the Department of Labor decided not to make a wage determination. On 3 September 1970 a report from the Labor Department advised the Navy that no pre-existing wage determination was applicable to any of the labor categories at any of PMR’s scattered locations, and that no new wage determination would be issued. On 15 October 1970 Kentron was so notified.

In the meantime, the Navy had issued a solicitation for the PMR service contract. Twenty-one firms responded, and the sixteen considered potentially qualified were issued Requests for Proposals. Initial responses were submitted on 26 October 1970. Thereafter, the Navy’s analysis and further negotiations narrowed the field of competitors to three remaining companies: Kentron, Dynalectron, and Bendix Corporation.

During this entire period labor organization had been going on among Ken-tron’s employees. By December 1970, in addition to the 23 employees previously represented by the Inland Boatman’s Union, 57 employees had accepted IBEW as their bargaining representative. The Navy decided to deal with this unstable situation (1) by warning the prospective contractors to take account of possible unionization, and (2) by insisting, by way of an amendment to the Request for Proposals on 1 March 1971, that the proposals specify firm maximum wage rates, beyond which the Government would not be obligated to reimburse the service contractor ultimately selected.

On 19 March 1971 the three competitors submitted their best and final offers. By 1 April 1971, 234 of the 375 employees at PMR had been organized. After the Navy completed cost analyses and evaluations which rated all three competitors as equally technically qualified, on 21 May 1971 the contract was awarded to Dynalectron “on the basis of the lowest potential cost exposure to the Government.”

On 22 May 1971 Kentron protested the award of the contract to the Comptroller General. On 3 June 1971 IBEW also filed a protest. The Comptroller General issued his opinion, No. B-173061, denying both protests, on 30 July 1971. On that same day Kentron and IBEW filed their complaints in the District Court. The cases were subsequently consolidated. Accompanying applications for temporary restraining orders were denied on 2 August 1971. On 1 December 1971 appellants’ motions for summary judgment were denied and appellee’s cross-motion for summary judgment was granted.

II. Acceptance of Dynalectron’s Proposal

A. Non-responsiveness

Kentron suggests that the contracting officer had a duty to reject Dynalectron’s bid as non-responsive to the Request for Proposals. Specifically, they complain that Dynaleetron offered first-year maximum wage rates which were generally lower than those actually paid by Kentron immediately prior to the termination of its contract. When the Navy amended the Request for Proposals to urge all bidders to take the possibility of unionization into account, Kentron responded by increasing its proposed maximum wage rates. They are essentially now contending that such a decision to increase maximum government-reimbursable costs above current levels was the only reasonable and responsive approach.

Since this was not an advertised sealed-bid procurement, the concept of “responsiveness” does not carry the strict overtones here which it would in that context. In negotiated procurements, the very concept of responsiveness is a subject of negotiations. However, even if a strict and technical interpretation of that concept were to be applied here, Dynalectron’s bid is in fact responsive to the precise and specific requirements of the amended Request for Proposals.

The Navy RFP directed that “maximum labor rates should contain any cost contingency you consider necessary with due regard to unionization activities in progress and/or pending . . . . ” (Emphasis added.) Further, an “essential” requirement specified that all offerers had to propose “firm maximum average labor rates.” The RFP stated that “[a]ny proposal not complying with this requirement [i. e., provision for firm máximums] is not acceptable.” No set minimum wage levels were specified.

Kentron contends that it was fundamentally unfair to award the contract to an offerer whose judgment as to the likely outcome and consequences of the current unionization activity differed from its own. We do not agree. The essence of any procurement process is that competing offerers must at some point make independent business judgments and stick by them. In a negotiated procurement, once every competitor knows what factors are to be taken into consideration, it is the very difference between one offerer’s judgment and that of another which allows the contracting officer to choose the proposal most advantageous to the Government, The propriety of soliciting divergent opinions is particularly obvious in cases where, as here, the very structure of the contract insures that an error in judgment in the accepted proposal will redound solely to the harm of the contractor. If unionization did force Dynalectron’s actual wage rates above the proposed máximums, the resulting “cost overrun” would still not be reimbursable.

Acceptance of Kentron’s argument would entail either (1) an artificial result dictated by a non-Service Contract Act minimum wage level set at Ken-tron’s current actual rates, or (2) constant renegotiation until all offerers proceeded on the same assumptions. Under either of those scenarios, Ken-tron, as the incumbent contractor facing no phase-in costs, would inevitably have a built-in advantage. Procurement negotiations would become a costly, ill-attended and meaningless formality; here, Kentron could confidently expect to retain its contract indefinitely. That result would hardly be fair to competitors willing to take reasonable risks of cutting into their own profit.

B. Feasibility

Even though Dynalectron’s proposal was responsive on its face, the contracting officer retained discretion to reject it as unrealistic. Kentron argues that he abused his discretion in this case by failing to do so. Since decisions on cost realism and feasibility are squarely within the area of the contracting officer’s expertise, this court cannot second-guess such a determination unless it is not supported by any reasonable basis. Conversely, in order to prevail on this ground, Kentron would have to demonstrate that the contracting officer could only reasonably have concluded that Dynalectron’s proposal was not feasible. Since no one has contended that potential “cost-overruns” were likely to drive Dynalectron into bankruptcy, Kentron’s argument of unfeasibility must rest on the assertion the Dynalectron’s bid would inevitably cause labor strife serious enough to interfere with performance of the service contract.

As of the time of the contract award, Kentron’s dire predictions were merely self-serving speculations with which the contracting officer could reasonably disagree. Unionization was proceeding, but the extent of its ultimate success was largely unpredictable. If the contracting officer based his decision on the assumption that unionization would totally fail, or if that scenario were necessary for the success of Dynalectron’s proposal, then we would be forced to label his decision unreasonable. However, even if successful unionization is taken into account, a prediction of crippling labor strife would remain highly speculative.

Presumably, newly unionized employees would be quite likely to press for higher wages. Labor strife might result if those demands were not met; but then again it might not. Indeed, if the labor relations at PMR had turned as sour as Kentron suggests, the contracting officer might reasonably have concluded that a confrontation and work stoppage was inevitable, no matter who obtained the contract award.

Dynalectron’s proposal did take the likelihood of rising wage rates into account. It contained an annual wage escalation rate of 1.8% per year — which represented an increase over the 1.4% figure used by Kentron during, the ten years of its prior performance. In addition, the proposed maximum wage rates only set the limit for government reimbursement. There was nothing to indicate that Dynalectron, with one eye on its reputation as a competent government contractor, might not yield to some union pressure and assure continuing performance by cutting into its own profit margin and raising actual wages above the reimbursable maximum.

Finally, even if the contracting officer could only reasonably foresee great union pressure, and limited contractor ability to absorb higher costs, an effective work stoppage was still not the only reasonably predictable result. Dynalectron is a service company of long standing and with much experience. It had specialized staffs and personnel rosters of its own, so that it was not necessarily dependent on the willingness of incumbent workers to transfer to its payroll. While not overwhelmed with the contracting officer’s prescience, nor willing to say that we would have come to the same conclusions in the first instance, this court must agree with the District Court’s finding that, given the information available to him at that time, the contracting officer could reasonably believe Dynalectron’s assurances of satisfactory performance.

C. Illegality

Appellants further assert that Dynalectron’s proposal was illegal in that it postulated a violation of the “successor employer” doctrine and made violation of the National Labor Relations Act inevitable. If that were the case, award of the contract would obviously have been improper.

To the extent that the successor employer doctrine might in some instances require a new employer like Dynalectron to honor the collective bargaining agreement of its predecessor, this argument fails on two grounds. At the time the contract was awarded, this aspect of the doctrine did not apply to government contractors. In addition, there simply was no existing collective bargaining agreement to be honored.

Arguably, the successor employer doctrine might have applied to require Dynalectron to engage in good faith bargaining with the employees’ representatives before effecting a unilateral change in their terms and conditions of employment. Although the determination of whether or not Dynalectron would in fact be classifiable as a “successor employer” would have been highly technical, and arguably difficult to make accurately at the time of the contract award, we find no inherent illegality in Dynalectron’s proposal even if we proceed on the premise that the contracting officer should have anticipated application of the doctrine, plus a requirement of good faith bargaining, in this case.

Kentron’s position that a refusal to bargain in good faith would necessarily occur is, once again, purely an exercise in speculation. Dynalectron’s plan did envision some efforts to avoid unionization ; but it simply did not postulate disobedience to legal duty should that eventuality occur. Certainly the duty to bargain in good faith does not include a duty to raise, or even stabilize, wages.

Kentron attempts to buttress its claim by pointing out that there was indeed a subsequent refusal to bargain which required NLRB intervention. Even if the perspective of hindsight could be properly used to judge the contracting officer’s decision, it should be noted that the NLRB issued a bargaining order to remedy that situation. Dynalectron has agreed to comply with that order. If anything, subsequent events have provided a clear demonstration that Dynaleetron’s plan was not dependent on “destruction” of the unions and that good faith bargaining is not inconsistent with continuing performance of the contract under Dynalectron’s proposed terms.

III. Failure To Issue a Wage Determination

Appellants’ second major claim is that the contract award was fatally flawed by failure to comply with the Service Contract Act of 19 65. The Act requires that, subject to certain exceptions, every covered service contract must contain a provision specifying the minimum wages and fringe benefits to be paid to the various classes of service employees performing thereunder. These minimum conditions are to be set by the Secretary of Labor, or his authorized designee, in the form of a “wage determination.” Wage determinations are to be made “in accordance with prevailing rates for such employees in the locality, which in no case shall be lower than [$1.60 per hour].” No wage determination was ever issued to cover the service contract in this case.

Appellants’ claim of error is really twofold in nature. First, they claim that, even on the basis of the information available to it, the Labor Department in this case abused its limited discretionary power to exempt certain contracts from the requirements of the Service Contract Act. Second, they argue that the Navy violated the clear mandate of the Act by failing to forward wage information which was “readily available.” Since they contend that this unforwarded information could have affected the Labor Department’s decision not to issue a wage determination, the Navy’s violation of this ministerial duty is claimed to rise to the level of a fatal procedural irregularity.

A. The Labor Department’s Decision James Hall, Deputy Assistant Administrator of the Wage and Hour Division, Employment Standards Administration, made the decision not to issue a wage determination covering the PMR service contract. He did so pursuant to the statutory exemption clause, which permits the Department of Labor to “provide such reasonable limitations” and “make such rules and regulations allowing reasonable variations, tolerances and exemptions to and from any and all provisions of this chapter [the Service Contract Act] as he may find necessary and proper in the public interest or to avoid serious impairment of the conduct of Government business.”

We agree with the District Court that this authority to grant exemptions cannot be given the broad reading which appellees seek and which the Comptroller General, and the Labor Department, have given it in the past. The implemeriting Labor Department regulation exempts all contracts from the statutory-requirement that they contain minimum wage data reflecting a wage determination if, in fact, no wage determination has been issued for any of the classes of employees involved at that “locality.” Standing alone, this regulation seems reasonable enough; for it only excuses failure to comply with an impossible requirement. However, neither this regulation nor any other sets standards governing the Labor Department’s basic decision on whether to issue a wage determination in the first place.

The Service Contract Act clearly did not intend to leave solely to the whim of the Labor Department the important decision not to issue a wage determination in any given case. If the statute is not to be swallowed by the exemption clause, this decision must itself be guided by the standards which that clause sets forth. The Labor Department’s failure to reiterate these standards in a special regulation cannot avoid their application to each and every concrete decision. To the extent that the Comptroller General’s decision implies that the Labor Department has unlimited discretion in deciding whether to issue a wage determination, we must join the District Court in holding to the contrary.

On the other hand, the corollary of the view that such discretion is limited is that the Labor Department does have authority to withhold a wage determination in some cases. By the terms of the statute itself, those cases include instances in which refusal to issue a wage determination is justified as necessary and proper in the public interest or to avoid serious impairment of government business. Even under a restricted reading of these standards, this service contract was a prime candidate for exercise of the exemption power.

There has been considerable dispute over exactly why Hall decided not to issue a wage determination. Since there is conflicting evidence as to some of the alleged reasons, Kentron argues that, at the very least, a remand for trial is in order to resolve this factual question. To the contrary, careful scrutiny has convinced us that all of the alleged reasons which are potentially supportable by probative evidence fit within the statutory standards. Conversely, we perceive no genuine issues of material fact as to the nonexistence of those alleged reasons which would not have been permissible under the statute.

Whichever set of motives is selected from among those for which evidence exists, Hall’s decision was within the proper range of his discretion. Determining exactly which motive dominated would be an unnecessary exercise. Therefore, the existence of some unresolved factuaí disputes as to exactly which of these motives were operative does not preclude our affirmance of the District Court’s grant of summary judgment.

By his own admission, Hall’s decision not to issue a wage determination involved “a variety of considerations.” However, in order to provide a general focus for our discussion, we must stress that his justification revolved primarily around his desire to properly allocate scarce Labor Department resources. This motivation permeated what in reality were three separate decisions. Three distinct types of wage determination could have been issued: a complete wage determination covering all the relevant labor categories and establishing mínimums for the general area; a partial wage determination covering only some labor categories but, as to those, establishing mínimums for the general area; and a wage determination setting mínimums solely for the employees in PMR’s scattered enclaves. We must separately analyze Hall’s decision as to each one of these three possibilities.

1. Failure to Issue a Complete Area Wage Determination

Appellants admit that Hall had in his possession a very limited amount of information concerning wage rates prevailing in the general localities surrounding PMR’s sites. That data was only sufficient to support a wage determination covering about one third of the employees. With regard to a general area wage determination, Hall’s decision not to proceed stemmed from his reluctance to commit the staff which would have been necessary to compile further data.

During the relevant period, the Department of Labor was receiving about 24,000 Standard Forms 98 per year. Because it was physically impossible to do more with thoroughness and accuracy, the Department responded with wage determinations for about 40 percent of these. If the statutory exemption standards allowed for such internal allocation of Labor Department resources under any circumstances, then that sort of decision seems eminently reasonable here. The Pacific Missile Range service contract involved relatively few employees, a great diversity of job classifications, and a wide geographical distribution of employment sites. Hall decided that the staff resources which would have been required for an adequate survey were far out of proportion to potential benefits and could be much more effectively employed elsewhere. Even if we could review his decision de novo, we would agree.

Furthermore, we hold that the statutory exemption standards did give the Labor Department discretion to allocate its own resources in this fashion. Such allocation actually furthered the purpose of the statute and, in effect, constituted a determination that such action was “necessary and proper in the public interest.” Since the statute itself both assigns an “enormous regulatory task” and tempers that assignment with broad language authorizing exemptions where necessary, this court will uphold the Department’s discretionary decision, in this case, to focus scarce resources on key problem areas in order that the basic statutory purpose could be fulfilled.

2. Failure to Issue a Partial Wage Determination

Appellants argue that Hall could still have issued a wage determination covering those labor categories for which he had enough data. Then, they urge, the Navy could have interpolated wage rate mínimums for the remainder of the employees. Indeed, they charge that the real, but improper, reason for his decision was his reluctance to inject the Navy into this process of interpolation.

If any evidence indicated that Hall decided not to make a wage determination on that ground, we would be compelled to remand for resolution of that factual issue by trial. If Hall acted as he did merely to avoid Navy interference in collective bargaining, then his decision would have to be viewed as improper.

The Navy did express the concern that interpolating rates would confuse the procurement process, which arguably could amount to “serious impairment of Government business.” However, the Navy’s major concern was the avoidance of “rate setting” during labor negotiations. “Rate setting” is at the core of the statute’s purpose and operation. By definition, every wage determination interferes with free collective bargaining —so the prospect of “rate setting” would be most unlikely to constitute a valid ground for exemption. More importantly, there were in fact no labor negotiations in progress when Hall made his decision. Even if the Navy’s squeamish concern could theoretically justify Hall’s decision, it cannot do so in this case because, as articulated, it was simply based on a misapprehension of the facts.

On the other hand, the record negates any material issue of fact on this point. Nothing therein points to the Navy’s concern about rate-setting as an operative reason for Hall’s decision. The Navy has repeatedly voiced this rationale — but its views at best constitute an outsider’s characterization and more accurately reflect its own reasons for not pressing the Labor Department for a different decision. Hall’s subordinate Tyburski, did make some notes during this period which indicate his sympathy with the Navy’s view — but he did not make the decision. Hall was the official charged with making the decision; and he was the one who actually made it. Only his rationale is relevant to the analysis here. The District Court had before it the best possible source of evidence on this issue — Hall’s own deposition and statement of reasons. In those documents Hall flatly renounces any policy against rate setting and labels the Navy’s characterization as a “misquotation.”

From all that appears in the record, Hall’s decision not to make a partial wage determination was, again, based on a desire to allocate Labor Department resources in an effective manner. The Navy feared involvement in the process of “conforming” rates for two thirds of the labor categories with those set for one third by Hall. Such an interpolation would require agreement between the Navy, the contractor and the employees’ representative. What Hall feared was the likelihood that these three parties would not be able to agree. For, if that occurred, the mandatory responsibility for interpolating rates would once again revert to his overtaxed staff. Hall was well aware that “if there was no agreement . . . [he] would again be faced with the issue.” He also knew that, since some of the labor categories covered by the contract would then be covered by a wage determination, determination of minimum rates for the rest of the contract employees would be mandatory. We cannot find that Hall’s exercise of his discretion to deploy his resources elsewhere was without a rational basis.

3. Failure to Issue an Enclave Wage Determination

Finally, appellants claim that Hall should have made an “enclave” wage determination. The Service Contract Act provides for a determination of wage levels prevailing “in the locality.” Under certain circumstances, the Labor Department has treated the specific enclave where a service contract is to be performed as the relevant “locality.” In this event, the wage determination may be based on wage data which stems primarily from the enclave and it will apply only to employees under the contract. Hall declined to make such a wage determination ; appellants argue that his reasons for doing so were improper.

Hall’s recital of the reasons for his decision reveals two distinct and independent bases for his reluctance to make an enclave determination. The first once again relates to the need to allocate Labor Department staff resources. Even though Hall knew that Kentron’s past wage rate data were available, he felt that an accurate wage determination would require further investigation. On the basis of the information he knew was available, he would still have required verification that the wages listed in Kentron’s records were actually paid and that they were not out of line with other wages being paid in the enclaves, if any. As will be discussed, some of his concern about verification would have been removed if the Navy had forwarded information in its possession. However, on the basis of the data Hall actually had, and given the scattered location of the relevant enclaves, we must again conclude that his decision not to commit the necessary staff resources was within the bounds of- his discretion.

Hall further stated that, even if he knew precisely what Kentron had paid in the past (and, presumably, that Ken-tron alone occupied the relevant enclaves), he would still have refused to issue a wage determination on that basis alone. A broader sort of “verification,” based on data relating to analogous labor categories in the general area, would have been required but was not available. In effect, Hall was acting under a policy, recommended by his superiors, to avoid making enclave determinations under most circumstances.

Appellants do not deny that Hall acted under such a policy. Rather, they claim that policy conflicted with the Labor Department’s own “Manual of Policies and Procedures for Administration of the Service Contract Act.” Although there has been some debate over whether the Manual was actually binding on the Department, we will proceed on the assumption that it was and therefore that Hall’s actions were improper if they conflicted with its commands. There was no such conflict. The Manual merely provides that the Secretary’s delegate may elect to limit the “locality” covered by a wage determination to an isolated federal installation. While it permits such an approach, the Manual does not compel it. Neither does the Service Contract Act. Hall’s policy decision fitted within the discretion given to him by the Manual itself; and it simply did not violate any legal requirement.

Furthermore, there was a rational basis for application of that policy in this case. Enclave wage determinations afford the incumbent contractor an opportunity for “last minute artificial inflating of rates in anticipation of the contract renewal,” thereby dampening competition from other possible offerers. Contrary to Kentron’s arguments, there is little reason for the incumbent to refrain from such a tactic. On renewal, the Government, not the contractor, will bear the burden of increased costs. Given Kentron’s long incumbency, and the resultant seniority of its employees, there was reason to believe that Ken-tron’s wage rates might have, perhaps unintentionally, outstripped those prevailing in the general area. Certainly that possibility was sufficient to support Hall’s demand for verification by area wage data. As far as he knew, no such data were available; nor did he have the resources to generate such information. Once again, we find a rational basis for Hall’s decision.

B. The Navy’s Error

Appellants complain that the Navy failed to forward critical wage data to the Labor Department with the Standard Form 98 or at any later time. To the extent that this information was “readily available” to the Navy, such inaction clearly violated the Service Contract Act and the Armed Services Procurement Regulations. If a Navy error of this sort was causally related to the Labor Department’s refusal to issue a wage determination, then the procurement procedure for this service contract was fatally flawed.

There were two sets of data which should have been, but were not, forwarded by the Navy. When the Standard Form 98 was submitted, on 5 August 1970, the Navy knew of and could have sent along Kentron’s records of actual wages paid during its prior performance of the contract. After the best and final offers had been submitted, the Navy received from Kentron, and could have forwarded, wage data relating to similar labor categories at nearby NASA ranges on Kokee and Kauai.

While the Navy apparently simply ignored its ministerial duty to transmit these collections of information, further inquiry is necessary regarding the possible impact of such error on the Labor Department’s decision. It appears from the very nature of Hall’s reasons for refusing to make a wage determination that, even if the Navy had punctually complied with its transmittal duty, the information at issue could not have affected the Labor Department’s decision.

As IBEW admits, Hall knew that Kentron’s past wage data were available. If it had been forwarded, he would have learned that it was satisfactorily “verified” as to the amounts actually paid. However, that revelation would have left unfulfilled his further reasonable demand for verification based on similar rates prevailing in the general area.

Kentron strenuously urges that such area rate verification would have been available if the Navy had forwarded its “white paper” on comparable wages at Kokee and Kauai. This argument conveniently overlooks the fact that the “white paper” was not in the Navy’s hands, and thus not “readily available” for forwarding, until after the best and final offers were in. That was just too late. The Armed Services Procurement Regulations provide that the Labor Department’s response to a Standard Form 98 (i. e., a wage determination) “shall not be effective” if received later than 10 days before the date established for initial receipt of proposals, unless there is a reasonable time to notify the offerers thereof. A fortiori, a wage determination received after best and final offers have been submitted would not have been effective. In the face of imminent expiration of the prior service contract, and the need for a four-month phase-in period, renegotiation on the basis of a belated wage determination would obviously have been impractical at that time. Therefore, forwarding of the new Kokee and Kauai data would have been, at best, a futile gesture. Failure to do so was, in that sense, harmless error.

We conclude that the Navy’s neglect of its duty to forward information could not have been causally related to Mr. Hall’s refusal to issue a wage determination. Our decision is made with full awareness that Mr. Hall acknowledged that he would have made such a determination if there had been sufficient data. In response to hypothetical questions, he merely stated the obvious: if he had had sufficient information, he would not have based his decision in any part on the problem of committing the resources required to compile more. We do not doubt his related statement that an incoming Form 98 which had full and adequate information attached would have stood out as exceptional. However, our analysis of the possible reasons for his decision makes it clear that no wage determination would have issued even if the Navy had performed its duty with alacrity and good will. At best, a timely Form 98 might have arrived with Ken-tron’s wage data, but not with the sort of additional “analogous data” which we have discussed above and which Hall said would have distinguished one Form 98 from the majority of others.

In effect, Hall was asked if he would have made the wage determination if he had had data type A and data type B. He said yes. But Hall never had type B, and the Navy never had type B until after the bid date had passed, so the Navy’s failure to forward type B data had no causal connection with Hall’s decision-making.

Appellants claim that, once any Navy error was shown, the Government should have borne the burden of showing that the Labor Department’s decision complained of would not have been affected. To the contrary, even if such a burden might eventually have shifted to the Government, it would not have done so until the appellants had shown that Hall’s decision could have been influenced by the unforwarded data. One complaining of procedural irregularity in the procurement process must first show that the alleged error at least potentially affected the substantive result. Appellants have not met their burden in this respect.

IV. Conclusion

The award of the PMR service contract followed a lengthy and complicated procurement process. It is certainly true that not every judgment made along the way was a model of prescience. But, stripped to their basic allegations and measured against undisputed facts, appellants’ claims would require this court to substitute its own decisions in place of those made by the government officers to whom primary discretion has been committed. And the relief sought would gravely interfere with the ongoing conduct of the Government’s business. While the contracting officer and the Labor Department had both expertise and limited discretion to make policy, this court brings to a review of their action little more than the fortuitous and ambiguous lessons of hindsight. We can of course insist that procedural fairness and the bounds of discretion be respected. They were. Accordingly, the District Court’s grant of summary judgment in favor of appellees is

Affirmed.

FAHY, Senior Circuit Judge,

dissenting:

I do not think the case as presented to the District Court was susceptible of disposition by summary judgment. I accordingly must dissent from affirmance of the grant of such judgment for the Secretary of the Navy, appellee. The record does not establish that the bidders for the contract and the prospective employees thereunder were not entitled to the benefit of a wage determination by the Department of Labor. For an exemption from the requirement of a wage determination to be valid it must be established by “strong and affirmative evidence” that such exemption was “necessary and proper” to protect the public interest or to avoid serious impairment of Government business. Moreover, the reasons for the exemption are required to be consistent with the remedial purpose of the Service Contract Act, 41 U.S.C. §§ 351-357 (1970), as amended, 41 U.S.C.A. §§ 351-358 (Supp. 1973)

The District Court found, and it is not disputed, that the Navy without adequate justification “failed to comply with the unambiguous language. of the pertinent regulations and SF-98 [Notice of Intention to Make a Service Contract] imposing a mandatory duty to furnish all readily available wage data. The relevance and probative value of such information is to be determined by the Department of Labor, not the contracting agency.” Nevertheless, the court granted summary judgment for the Navy because the court found solely on the basis of the Hall affidavit and deposition that “the evidence is insufficient to conclude that had the Navy supplied the information required and readily available to it the decision of the Department of Labor not to make a wage determination would have been otherwise.” This, I think erroneously, placed the burden upon the unsuccessful bidder to establish, or else suffer summary judgment against it, that had the Navy complied with its duty in the matter, the Labor Department would have made the wage determination. The burden surely was upon the Navy to establish, in a manner free of any material issue of fact, that the determination would not have been made. If, as the court found, “the evidence is insufficient” to enable the District Court to conclude a wage determination would have been made, the Navy was not entitled to summary judgment.

Furthermore, the post factum reasons advanced for the finding that no wage determination would have been made had Navy complied with its obligations are not supported by the record.

The Hall submission by affidavit and deposition clearly indicates that the primary reason that any enclave wage determination was not made was that the Administrator of the Wage and Hour and Public Contracts Division of the Labor Department had prohibited such determinations, as a matter of policy. The Administrator wanted to prevent incumbent contractors from artificially raising wages at the end of their contracts. The fear of such action is not as a matter of law on this record strong and affirmative proof that an exemption for all enclaves as a class is necessary and proper for the protection of the public interest. The effect of the policy is to deny indiscriminately the protections afforded by the Act to a great number of service employees, contrary to the remedial purposes of the Act. Less extreme measures may well avoid the danger feared. Moreover, there is no indication that wages had been raised by the incumbent contractor in this case.

In any event, Mr. Hall’s evidence is that he never determined whether the facilities here involved qualified as enclaves, and he conceded that had the policy been otherwise, respecting enclaves, and had the Navy submitted the required information, he could not say whether or not sufficient resources for verification would have been available. It is therefore clearly conjectural now to postulate as a reason to support the decision not to make an enclave determination the Division’s lack of resources to verify the wage data of Kentron. Such conjecture is not adequate justification to support the exemption as being necessary and proper to protect the public interest or avoid serious impairment of government business.

Lack of Division resources is postulated as the basis also for not making an area or partial wage determination. There is serious doubt that such a reason not to make a wage determination qualifies under any statutory standard consistently with the remedial purposes of the Act. Moreover, the Division was not dependent upon its personnel alone for the compilation of data. Mr. Hall’s judgment that he lacked resources to make such a determination was made in ignorance of information necessary for an informed decision. He did not know what information the Navy had which should have been submitted; he did not know how many of the job classifications listed by the Navy represented service employment, because the Navy’s descriptions were not adequate; he did not know that Kentron had been the incumbent contractor since 1961, or that in its previous contracts there was a schedule of wages, although he did know generally that wage data was available, but not specifically what the Navy had available; hence he was unaware of the need for a wage determination to protect service employees with seniority. His decision was made, moreover, under a possibly mistaken assumption that he had far less time available than the regulations allowed. He admitted that he could not say whether or not he would have been able to make a wage determination had additional time been available.

The Hall affidavit and deposition, considered with the failure of the Navy to comply with its mandatory obligations, and the pure speculation that had it done so a wage determination by Labor could not or would not have been made, presents a record free of that “strong and affirmative evidence” that the exemption of a wage determination, a determination of great importance to employees as well as bidders, was “necessary and proper” to protect the public interest or to avoid serious impairment of Government business. This is aside from the grant of summary judgment for Navy upon an erroneous view of where lay the burden of establishing that the determination would not have been made had the Navy complied with its obligation.

I respectfully dissent from affirmance of the grant by the District Court of summary judgment for appellees.

      . The contract required performance at the Navy’s Pacific Missile Range sites for a period of three years, with one two-year extension option. The sites to be served were located at Barking Sands, Hawaii; Pt. Allen, Hawaii; Pt. Mugu, California; Wake Island; Midway Island; Johnston Atoll; and the USN Wheeling (a Navy tracking vessel).

      . Kentron had been the service contractor at PMR for ten years prior to the expiration of its contract on 31 July 1971.

      . Appellants’ complaints and motions for summary judgment seek both termination of the Dynalectron contract and either reaward to Kentron or resolicitation.

      . 137 U.S.App.D.C. 371, 424 F.2d 859 (1970).

      . See M. Steinthal & Co. v. Seamans, 147 U.S.App.D.C. 221, 233, 455 F.2d 1289, 1301 (1971).

      . See Wheelabrator Corp. v. Chafee, 147 U.S.App.D.C. 238, 244, 455 F.2d 1306, 1312 (1971).

      . 32 C.F.R. § 12.1005 (1972).

      . These were released on 21 August 1970.

      . Joint Appendix (hereafter “J.App.”) at pp. 51 and 53.

      . The Navy evaluated the cost of the various proposals for a five-year period as follows: Dynalectron, $26,252,141.00; Bendix, $28,492,502.00; and Kentron, $29,043,349.00. J.App. at p. 143.

      . Dynalectron’s bid was based on maximum labor rates which averaged $0.13 lower per hour than the actual average wages paid by Kentron at the time its contract was terminated.

      . Since wage rates were the major cost component, this decision clearly lost the contract for Kentron.

      . The amended Request For Proposals stressed that “[e] vaulation [sic] of your best and final offer will be heavily cost oriented in terms of maximum cost exposure to the government.” It further provided, “Note::: Award may be made without further discussion of proposals received: Therefore, proposals should be submitted on the most favorable terms from a price and technical standpoint which the offeror can submit to the government.” J.App. at p. 63.

      . In a post-negotiation clearance, No. LA-11020.1 on 5 May 1971, the Navy specifically noted that, under the circumstances surrounding the PMR contract, “the wage rate aspects of cost proposals can vary widely as each contractor assesses his prospects of arriving at a labor settlement, which except for the incumbent could even include possible avoidance of unionization of the labor force.” J.App. at 143.

      . The Comptroller General has “adhered to the principle that contract [wage] stipulations tending to restrict competition and to increase the cost of performance are unauthorized unless reasonably requisite to the accomplishment of the legislative purpose of the contract appropriation involved, or unless such stipulations are expressly authorized by statute. . . . ” Secretary of Defense, 42 Comp.Gen. 1, 2 (1962).

      . The Comptroller General takes the position that “the award of cost reimbursement contracts requires exercise by procurement personnel of informed judgments whether submitted proposals are realistic as to proposed costs as well as to technical approach” and that such judgments “properly should be left to the discretion of the contracting agencies concerned since they are in the best position to assess ‘realism’ of costs . . . and must bear the major criticism for any difficulties or expenses experienced by reason of a defective cost analysis.” Trans World Airlines, Inc., 50 Comp.Gen. 592, 600 (1971). We wholeheartedly agree.

      . J.App. at pp. 105-06.

      . At page 24, footnote 20, of its reply brief, Kentron apologetically goes outside the record to point out that PMR was shut down by a strike from 28 February 1972 to 10 April 1972. Even if the record contained details concerning that work stoppage, and it were shown to stem solely from Dynalectron’s proposed rates, that would not alter our conclusion that this possibility was highly speculative at the time the contract award was made.

      . See William J. Burns International Detective Agency v. NLRB, 441 F.2d 911 (2d Cir. 1971), upheld as to this ground, 406 U.S. 272 (1972) ; Emerald Maintenance Inc., 188 NLRB No. 139 (1971) ; Trans World Airlines, Inc., 50 Comp. Gen. 592 (1971). Since the time of this contract award, the Service Contract Act has been amended by Act of 9 October 1972, Pub.L.No.92-473, 86 Stat. 789, to provide that previous collective bargaining agreements will set a lower limit on the successor’s actual wages and fringe benefits, unless the Secretary of Labor finds these to be substantially at variance with prevailing rates.

      . Twenty-three of Kentron’s employees were represented by the Inland Boatman’s Union, which did have a collective bargaining agreement with the company. However, the IBU contract terminated with the expiration of Kentron’s service contract.

      . J.App. at p. 211.

      . 41 U.S.C. §§ 351-58 (1970).

      . 41 U.S.C. § 351(a) (1) (1970).

      . We agree with the appellants’ argument that, if prejudicial procedural error is shown, the identity of the government agency which made the error is irrelevant. See S & E Contractors, Inc. v. United States, 406 U.S. 1, 17, 92 S.Ct. 1411, 31 L.Ed.2d 658 (1972).

      . 41 U.S.C. § 353(b) (1970).

      . See Refuse Service Inc., 46 Comp.Gen. 278 (1966).

      . 29 C.F.R. § 4.5(b) (1972) provides: “To avoid serious impairment of the conduct of Government business, it is hereby found necessary and proper to provide exemption . . . [from the determined wage and fringe benefits section of the Service Contract Act] . . ., but not the minimum wage specified under section 6(a) (1) of the Fair Labor Standards Act of 1938, as amended, ... of all contracts for which no such wage or fringe benefit has been determined for any class of service emxiloyees to be emx>loyed thereunder . . . . ”

      . Congress lias noted and dealt with the Xiroblem presented by the Labor Department’s tendency towards over-expansive reading of the statute’s exemption power. After special oversight hearings, Public Law No. 92-473 was passed on 9 October 1972. It amends the Service Contract Act to label specifically the two previous statutory standards for exemption as “special circumstances” and adds the further qualification that the Secretary must determine that the “limitation, variance, tolerance or exemption . . . is in accord with the remedial xmrpose of this Act to protect prevailing labor standards.” In addition, the exemption section was qualified to provide that it could not be invoked to avoid another new provision requiring wage determinations to be made with regard to all service contracts employing 25 or more employees by 30 June 1973 (and reducing that threshold number in stages of 5 to a limit of 5 through successive years). This strict new amendment grew from the Service Contract Act’s authors’ frustration and anger at the sight of “the Secretary of Labor’s discretion in administering the act . . . [being] stretched . . . [over tlie years] far beyond what the Congress had intended.” II.Rep.No.1251, 92nd Cong., 2d Sess., p. 3 (1972), U.S.Code Cong. & Admin.News 1972, p. 3534. Representative O’Hara went so far as to expound that the government agencies involved had “seemed to. overlook no opportunity to render the act nugatory.” 118 Cong.Rec., H7262 (daily ed., 7 Aug. 1972). However, even if failure to issue wage determinations for two thirds of the contracts subject to the Act was an abuse of discretion, we hold that the contract before us was a prime candidate for exemption. The decision here was rationally aimed at concentrating resources better to fulfill the legislative purpose, not at avoiding use of those resources whenever possible.

      . See J.App. at p. 87.

      . Hall stressed that he acted under Department policy “not to use its resources to issue determinations where the cost involved is high in comparison to the results, taking into account such factors as the number of employees and the availability of wage data.” Hall Deposition at p. 56. He summed up his “statement of reasons” by saying that, taking all the various factors into account, he had “concluded that this was a case in which we would not be justified in expending our limited resources in staff and money.” J. App. at p. 90.

      . See Hall Deposition at pp. 19, 167 and 182.

      . Hall Deposition at p. 87. See also J. App. at pp. 87, 206. Hall had a total staff of eighteen, including clerical employees. Hall Deposition at p. 7.

      . Hall stated that he “had concluded that we would have to make a survey to get information that we could rely on, and that in keeping with the general policy . of using our resources where we think it will do the most good, I had made a judgment decision here that this contract was so scattered out and that the employees many of them, were not service employees . . . that it wouldn’t be worth a candle to spend the money . . . . ” Hall Deposition at pp. 76-77. He pointed out that the lack of resources required an election between irreconcilable demands. Rather than “chase rates in the Pacific,” he chose to concentrate instead on wage determinations likely to affect more employees, “minority groups, and . . . groups of people that are getting very low rates.” Hall Deposition at pp. 174-175.

      . The District Court concluded that the Labor Department’s decision to allocate its own resources was within its discretion to “avoid serious impairment of the conduct of Government business.” J. App. at p. 214. Kentron has argued that this particular exemption power relates only to threats to the procuring agency’s business (i. e., the Navy in this case). We tend to agree with that position. However, even if a narrow construction of “Government business” is required, the Labor Department’s reasonable decision to allocate scarce resources can be validated under the parallel statutory power to make exemptions which are “necessary and proper in the public interest.” Since Hall’s concern with allocating his scarce staff resources appears clearly from the record, and was a valid concern under the statute, we attach little importance to the fact that he verbalized his decision under the alternative statutory standard and we are not bound by the District Court’s acceptance of his formulation.

      . “[0]rdinarily ... a court cannot say that an agency makes an error of law ‘in deciding how best to allocate its resources.’ ” Amalgamated Meat Cutters v. Connally, 337 F.Supp. 737 (D.D.C. 1971), citing Wisconsin v. FPC, 373 U.S. 294, 313-314, 83 S.Ct. 1266, 10 L.Ed.2d 357 (1963). The need for such flexibility was recognized by those opposing efforts to restrict the exemption power’s scope via Pub.L.No. 92-473. See note 28, supra. Rep. Blackburn noted that the new amendment would threaten “the present administrative flexibility to allocate resources available for making wage determinations in those areas and contracts where substantial needs for wage and fringe benefits exist.” 118 Cong. Rec. H7260 (daily ed., 7 Aug. 1972). Further, Rep. Erlenborn emphasized that “[u]nder the present law, he [the Secretary] has sufficient latitude to allocate his limited resources in the most efficient fashion, making wage determinations for those contracts with the substantial majority of workers.” 118 Cong.Rec. H7261 (daily ed., 7 Aug. 1972).

      . The mere fact that Kentron alleges an improper motive on Hall’s part is not enough to compel a remand. Summary judgment may be granted if there are not genuine issues of material fact, even though such issues are technically and formally raised in the pleadings, especially when neither party has rested on those pleadings. See Blackhawk Heating and Plumbing Co. v. Driver, 140 U.S. App.D.C. 31, 85, 433 F.2d 1137, 1141 (1970).

      . See IBEW Brief at p. A-l.

      . See Hall deposition, at pp. 142-45.

      . Hall noted that “29 CFR Section 4.6 (b) would have been applicable. This means that the agency must, starting with the wage rates furnished, agree with the contractor and his. employees (or their representatives) to wage rates which bear a reasonable relationship to the rates furnished.” Hall knew that such a process might be difficult with regard to this contract involving scattered sites and “somewhat exotic job duties.” J.App. at p. 90. See also Hall Deposition at pp. 56-57.

      . As Hall must have known, a service contractor is required, under its contract, to keep corujilete wage data on hand and available to the Government for three years following completion of its contract. 29 C.F.R. § 4.6(g). See Brief of IBEW at p. 29 and Hall Deposition at pp. 14, 137-38.

      . The wage data relating to Kentron’s ten years at PMR were in fact fully verified by the Defense Contract Audit Agency before the Navy made payment thereon.

      . See Hall Deposition at p. 82. 1-Iall had received instructions from the Administrator to “reduce where possible the existing number of . [enclave] determinations and not [to] proliferate them in the future.” J.App. at p. 88.

      . See § 303(b) of the Manual. Kentron’s Brief at p. A-79.

      . J.App. at p. 207.

      . J.App. at p. 105.

      . The District Court found the Navy’s failure to forward all readily available wage data to be “without adequate justification.” J.App. at p. 214. Since the required action was purely ministerial in nature, there can be no question of discretion to modify or ignore this duty.

      . J.App. at pp. 53-54, 64-66. From the nature of the wage scale data in this “white paper,” it appears that it must have been sent to the Navy some time after 1 May 1971.

      . It cannot be persuasively argued that the Kokee and Kauai information, or other comparable data, was “readily available” to the Navy before it was delivered by Kentron. The Navy does not have the capability of launching investigations into prevailing wage rates. The Navy has a narrow statutory duty to serve as a conduit, not a broad mandate to become an extended branch of the Wage and Hour Division of the Department of Labor.

      . 32 C.F.R. § 12.1005-3 (a) (1) (1972).

      . In what he later referred to as “my hypothetical,” counsel for plaintiff Ken-tron asked Mr. Hall the following question :
      If there had been attached to that Form 98 data relating to the past 10 years of wages paid by the incumbent contractor mul analogous data relating to what the incumbent contractor or other employers paid in similar locales for similar jobs . would that have distinguished the Form 98 from the overwhelming majority of the others that you received? [Emphasis added.]
      Mr. Hall answered, “Yes, it would have.” To defense counsel’s subsequent question whether, in that event, Mr. Hall “would have made a wage determination,” he answered, “If there was sufficient wage data.” See Hall deposition at pp. 194-95.

      . Absent a showing here of some specific possible impact of the information which was not forwarded, the Government would be faced with the impossible task of proving the negative when what was to be negatived could itself not be ascertained.

      . 33 Fed.Reg. § 4.123(b), at 9890 (1968), as amended, 29 C.F.R. § 4.123(b)(1) (1972), which provided:
      (b) Administrative action under section 4(h) of the Act. The authority conferred on the Secretary by section 4(b) of the Act will be exercised with due regard to the remedial purpose of the statute to protect prevailing labor standards and to avoid the undercutting of such standards which could result from the award of Government work to contractors who will not observe such standards, and whose saving in labor cost therefrom enables them to offer a lower price to the Government than can be offered by the fair employers who maintain the prevailing standards. Administrative action consistent with this statutory purpose may be taken under section 4(b) with or without a request therefor, when found necessary and proper in accordance with the statutory standards. No formal procedures have been prescribed for requesting such action. However, a request for exemption from the Act’s provisions will be granted only upon a strong and affirmative showing that it is necessary and proper in the public interest or to avoid serious impairment of Government business. If the request for administrative action under section 4(b) is not made by the headquarters office of the contraeting agency to which the contract services are to be provided, the views of such office on the matter should be obtained and submitted with the request or the contracting officer may forward such a request through channels to the agency headquarters for submission with the latter’s views to the Administrator of the Wage and Hour and Public Contracts Divisions, Department of Labor.
      All exemptions must be justified as “necessary and proper” whether or not a request for an exemption is made. The requirement that a request for an exemption make a “strong and affirmative showing” that the exemption is “necessary and proper” merely informs the party requesting the exemption of the degree of justification required by the Act. The same degree of justification is also demanded of the Labor Department when it exempts a contract though an exemption was not requested since there seems to be no reason consistent with the Act that would require a higher degree of justification when a request is made. The fact is that because of labor negotiations the Navy indicated that it did not want a wage determination to be made. Hall Deposition at 144-145 and Tyburski Memoranddum of Sept. 8, 1970, regarding telephone conversation of Sept. 4, 1970, with the Navy Contract Officer. Although this conversation took place the day after Mr. Hall said he decided not to make a wage determination, the memorandum suggests that the Labor Department was willing to make a wage determination if the Navy so desired.

      . IUd.

      . The Navy’s submission of SF-98 was untimely, without the required explanation as well as without the necessary wage information. 33 Fed.Reg. § 4.4(a) & (b) at 9882 (1968), as amended, 29 C.F.R. § 4.4(a) & (b) (1972) and 34 Fed.Reg. § 12.1005-2 (a) & (b), at 17902 (1969), as amended, 32 C.F.R. § 12.1005-2 (a) & (b) (1972).

      . Since the regulations required the exemption to be justified, as being “necessary and proper in the public interest or to avoid serious impairment of Government business” “with due regard' to the remedial purpose of the statute,” 33 Fed. Reg. § 4.123(b) at 9890 (1968), the burden was on the Navy to present the reasons for the exemption. If the reasons presented are found to be either invalid or insufficient, then the Navy may have the additional burden to prove that the error was harmless, notwithstanding the invalidity or insufficiency of the justification for the exemption.

      . 29 C.F.R. § 1.3 (1972) and 33 Fed.Reg. § 4.164, at 9895-9896 (1968), as amended, 29 C.F.R. § 4.164 (1972).

      . Mr. Hall also may not have known that the contract was for five years since no indication of the duration of the contract was given by the Navy in its submission of SF-98 and appended information.

      . The Hall deposition at 73, 86-89. Appellant suggests that a wage determination could have been made anytime prior to 10 days before the awarding of the contract. 33 Fed.Reg. § 4.5(b) at 9883 (1969), as amended, 29 C.F.R. § 4.5(b) (1972). I refrain from deciding whether this reading of the regulation is correct. If it is correct, then Mr. Hall’s reasons are clearly insufficient.

      . Hall Deposition at 89. The Tyburski Memorandum, note 1, supra, suggests that the Labor Department was willing and able to make a wage determination. Also, Mr. Hall in his affidavit states that he could have made a partial wage determination, but it was a question of resources.


source: Caselaw Access Project

author: PER CURIAM:

license: Public Domain

text:
    Ben YELLEN, M.D. and Raul Loya, on behalf of themselves and all others similarly situated, Appellants, v. Rogers C. B. MORTON, as Secretary of Interior et al.
    No. 72-1545.
    United States Court of Appeals, District of Columbia Circuit.
    Argued June 1, 1973.
    Decided June 18, 1973.
    Anthony Z. Roisman, Washington, D. C., for appellants.
    Carl Strass, Atty., Dept, of Justice, of the bar of the Supreme Court of the United States, pro hac vice by special leave of Court, with whom Kent Frizzell, Asst. Atty. Gen., and Edmund B. Clark, Atty., Dept, of Justice, were on the brief, for appellees.
    Before DANAHER, Senior Circuit Judge, and McGOWAN and LEVEN-THAL, Circuit Judges.
   PER CURIAM:

Plaintiffs bring a class action as electric power customers of the Imperial Irrigation District. The District’s rates are not subject to state regulation in California. It generates part of its power from the hydroelectric potential of the All-American Canal, which was begun in 1932 as part of the Boulder Canyon Project. In 1968 there were 6,974 individuals or corporations using water for irrigation purposes and 30,132 residential users of electricity sold by the District.

The District’s power supply is obtained in part by purchases of power from the Bureau of Reclamation at the Davis and Glen Canyon Dams. By memorandum dated November 27, 1963, Kenneth Holum, Assistant Secretary of the Interior, instructed the Commissioner of the Bureau of Reclamation to insert in all contracts for the sale of power by the Bureau a provision reading:

The parties hereto agree and understand that the purpose of making low cost, federally generated power available is to encourage the most widespread use thereof, and the contractor therefore agrees:
a. That the benefit of federally generated power shall be made available at fair and reasonable terms to all of its customers at the lowest possible rates consistent with sound business principles.

Plaintiffs complain that no regulations have been implemented to enforce this requirement.

Plaintiffs pray that the court require the Secretary of the Interior to comply with the provisions of the Boulder Canyon Project Act of 1928, the Reclamation Laws and the Government’s power contracts with the District, and in consequence that the Secretary be directed “to immediately institute a rate'making proceeding for the purpose of establishing fair and reasonable electricity rate charges by the Imperial Irrigation District to the plaintiffs pursuant to those laws and contracts.”

The District Court granted summary judgment dismissing the case, stating that neither the Boulder Canyon Project Act of 1928, nor the contracts entered into between the United States and the District require the Secretary to regulate rates for the sale of electricity produced at power plants owned and operated by the District. The plaintiffs rely on section 6 of the Boulder Canyon Project Act, 43 U.S.C. § 617e.

We need not consider whether or to what extent authority is given by the provision of section 6 that the Secretary shall prescribe and enforce regulations conforming with the requirements of the Federal Water Power Act of 1920 respecting “control of rates and service in the absence of State regulation or interstate agreement.” The record does not contain any ruling or determination by the Secretary either defining or denying authority. The question is whether he has a duty to institute a rate-making proceeding. Even as to the sale of power at the Davis and Glen Canyon Dams, a separate project, where the Secretary plainly has some source of authority in contract, the Secretary had not taken any action. The District’s published reports, tendered by plaintiffs, indicate power earnings that are not “shocking,” as claimed in appellant’s brief, but rather indicate a ratio between net power operating revenues and total power assets, that is at most slightly over 7%. Plaintiffs did not make even a threshold showing of abuse of discretion or disregard of duty.

Affirmed.

       The Government argues, inter alia, that the Canal, though begun as part of the Boulder Canyon Project, was removed therefrom by § 12 of the Boulder Canyon Project Adjustment Act passed July 19, 1940, 43 U.S.C. § 618k. Plaintiffs reply that § 12 only defines terms as used in the Adjustment Act, which is separate from the 1928 Boulder Canyon Project Act. We need not resolve this issue.


author: WINTER, Circuit Judge:

text:
    LOCAL NO. 150, INTERNATIONAL UNION OF OPERATING ENGINEERS, AFL-CIO, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
    No. 71-1689.
    United States Court of Appeals, District of Columbia Circuit.
    June 20, 1973.

      Bernard M. Baum, Daniel S. Shulman, Robert H. Baum, Chicago, Ill., and J. Albert Woll, Washington, D. C., were on the brief for petitioner.
    Peter G. Nash, Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, Washington, D. C., at the time the brief was filed, Charles N. Steele, and Alan D. Cirker, Washington, D. C., Attys., N.L. R.B., were on the brief for respondent.
    Before McGOWAN, Circuit Judge, and WINTER and MacKINNON, Circuit Judges.

       Sitting by designation pursuant to 28 U.S.O. § 291(a) (1970).

   WINTER, Circuit Judge:

The basic question we must decide is whether an employer may be guilty of an unfair labor practice with respect to a union with which it has executed a pre-hire contract, valid under § 8(f) of the National Labor Relations Act, 29 U. S.C. § 158(f) (1965), to the same extent that it may with respect to a union which has gained recognition and secured a contract after traditional demonstration of its majority support. The question arises from the petition of Local 150, International Union of Operating Engineers, AFL-CIO (the union), to review and set aside the Board’s decision and order holding that R. J. Smith Construction Company, Inc. (the company) did not violate §§ 8(a)(5) and (1) of the Act, 29 U.S.C. §§ 158(a)(5) and (1), when it unilaterally changed existing wage rates at a time that it had a pre-hire contract with the union. 191 N.L.R.B. No. 135 (members Fanning and Brown dissenting). We conclude that the Board’s order is premised upon an erroneous construction of the Act. We therefore set aside its order and remand the case to the Board for entry of an order granting appropriate relief.

I.

The operative facts are not in dispute and they may be stated suceintly:

The union represents employees in the building and construction industry. The company is a contractor in the building and construction industry. In 1964, the union and the company entered into a collective bargaining agreement, the term of which expired January 1, 1966. The agreement adopted the terms, including t,he wage rates, of a pre-existing master agreement between the union and an employers’ association. R. J. Smith, president of the company, testified before the hearing examiner that when he signed this agreement, he had no intention of paying the wage rates prescribed therein. In fact, the company did not comply with the terms of the contract.

No contract existed between the parties from 1966 until October, 1968. During this period, chronic disagreements between them persisted. On October 8, 1968, the company and the union executed two new collective bargaining agreements, which again adopted the terms and conditions of employment of a master agreement between the union and two employers’ associations. The contracts recognized the union as the exclusive bargaining agent for the company’s equipment operators. The union did not represent, or claim to represent, a majority of the company’s employees at this time or at any time during the term of the contracts. It is undisputed that these contracts were pre-hire agreements, i. e., collective bargaining contracts entered into before the union’s majority status had been certified under § 9 of the Act.

As with the prior contract, the company never intended to, and did not, conform work conditions to the terms of the contracts. After November 1, 1968, the company initiated a policy of unilateral intermittent pay increases for selected individual employees, without prior notice to, or bargaining with, the union. These individual pay increases did not raise the level of wages to those designated in the contracts.

The union filed an unfair labor practice complaint charging the employer with unilaterally changing the terms of the collective bargaining agreement, and refusing to bargain with the union, in violation of §§ 8(a)(5) and 8(a)(1) of the Act. While the trial examiner concluded, inter alia, that the company had violated §§ 8(a)(3) and (1) with respect to the discharge of two employees, he also- concluded that there had been no violation of § 8(a)(5) because the parties were not attempting to establish their bargaining relationship for the first time and because the union at no time had a majority status. The Board adopted his recommended conclusions and recommendations. It reasoned that the pre-hire agreements had been validly executed, but they were not binding because the union failed to achieve majority status and that therefore the company did not commit an unfair labor practice by unilaterally changing the terms and conditions of its employees’ employment.

II.

Section 8(f) of the Act validates prehire agreements in the construction industry by providing in pertinent part that:

It shall not be an unfair labor practice under subsections (a) and (b) of this section for an employer engaged primarily in the building and construction industry to make an agreement covering employees engaged (or who, upon their employment, will be engaged) in the building and construction industry with a labor organization of which building and construction employees are members . because (1) the majority status of such labor organization has not been established under the provisions of section 159 of this title prior to the making of such agreement . Provided further, That any agreement which would be invalid, but for clause (1) of this subsection, shall not be a bar to a petition filed pursuant to section 159(c) or 159(e) of this title.

The significance of § 8(f) is manifest when it is remembered that §§ 8(a)(2) and (1) and 8(b)(1)(A) of the Act collectively require that a representative number of employees be hired and that a majority shall have designated the union as their bargaining representative prior to the execution of a valid exclusive bargaining contract. Without § 8 (f), both of these conditions must be met, else both parties to the contract will have committed unfair labor practices.

Congress adopted § 8(f) in 1959 to solve the problems created by the TaftHartley Act’s extension of the Act to the unique situation prevalent in the construction industry, which had theretofore not been subject to the Act. In most industries other than the construction industry, employment patterns are relatively stable and long-term. But in the building and construction industry,

it is customary for employers to enter into collective bargaining agreements for periods of time running into the future, perhaps 1 year or in many instances as much as 3 years. Since the vast majority of building projects are of relatively short duration, such labor agreements necessarily apply to jobs which have not been started and may not even be contemplated . . One reason for this practice is that it is necessary for the employer to know his labor costs before making the estimate upon which his bid will be based. A second reason is that the employer must be able to have available a supply of skilled craftsmen ready for quick referral.

This arrangement is also advantageous to workers, for it enables a union to know and advise its members of job openings and the union is strengthened in its efforts to maintain wages and working conditions in conformity to the standards in the area. In effect, a construction company typically hires a union before commencing a particular project and before hiring any individual employee in the union. In the normal course of events, as the employer staffs his project from the union’s pool of skilled labor, the union attains majority status among the employees.

The final proviso of § 8(f) makes inapplicable the twelve-month bar to election rule established by § 9(c)(3) of the Act, 29 U.S.C. § 159(c)(3) (1965). Therefore, an employer in the construction industry is not required to wait one year before seeking a representation election after he has entered into a pre-hire agreement. He may petition for an election at any time, and we have little doubt that an employer, who after a reasonable period perceives that he is bound by a collective bargaining agreement with a union whose minority status seems permanent and who can advance reasonable grounds to believe that the union has not and will not achieve majority status, may obtain relief under § 9(c). Similarly, thirty percent or more of the employees may petition under § 9(e) to rescind the purported majority status of the union at any time. See N.L.R.B. v. Irving and McKelvy, 475 F.2d 1265 (3 Cir., 1973).

Since the company has this remedy, we can find no sanction in the language, history, or policy of § 8(f) for permitting an employer to abrogate unilaterally a validly executed pre-hire agreement, or for permitting the employer to commit what is otherwise an unfair labor practice even though at the time of either the union has not achieved majority status. See Irving and McKelvy, supra. It follows that unions, party to pre-hire agreements, have the right to complain of unfair labor practices, including alleged refusals by the employer to bargain collectively, before the union achieves a majority.

The Board contends that § 8(f) merely exempts the parties from unfair labor practice liability when they execute a pre-hire agreement, but does not validate the agreement regardless of the union’s ultimate attainment of majority status. We agree that § 8(f) does not wholly obviate the union’s need ultimately to achieve majority status, but we disagree with the Board’s conclusion that the employer can commit unfair labor practices before the union becomes a majority. To state the history and purpose of § 8(f) is both to reject the contention and to decide the case, because we cannot conceive of such an exercise in futility on the part of Congress as to validate a contract with a union having minority status, but to permit its abrogation because of the union’s minority status. The Board’s interpretation, as exemplified by its application in this case, would frustrate Congress’ purpose of approving pre-hire agreements in the construction industry, for it would render them voidable at will. If the union, or the employer, can neither bring nor maintain unfair labor practice complaints, pre-hire agreements would be virtually unenforceable. We are certain that this was not the purpose of Congress.

Moreover, under the Board’s interpretation, an employer, unhappy with a prehire agreement, can avoid it by discouraging union membership through flagrant unfair labor practices, thereby insuring that the union never attains a majority. This case illustrates that danger. Credible testimony established that the company never intended to comply with its labor agreements; it refused to negotiate with the union; it gave selective pay increases; it fired its only two union employees; and it refused to hon- or the contracts’ hiring hall and union security clauses. Again, we perceive the Congressional purpose to be to the contrary.

Finally, prior Board precedent supports our interpretation of § 8(f). Oilfield Maintenance Co., Inc., 142 N.L.R.B. 1384 (1963), held that an employer was bound to a pre-hire agreement and that therefore its failure to observe its provisions constituted an unfair labor practice. The opinion explained: “Although the majority status of the [union] prior to the commission of the unfair labor practices has not been demonstrated . . ., the [union’s] . . . contract would still be valid under Section 8(f).” Id., at 1387. The opinion “specifically note[d] in this regard the final proviso to Section 8(f) . . . .” Id., at 1387 n. 10.

We hold therefore that an employer, who has entered into a validly executed § 8(f) pre-hire agreement may, after a reasonable period, seek a representation election to challenge an enduring minority union, but until he does and prevails, he should be held to the same standard of conduct in regard to unfair labor practices as an employer who has entered into a collective bargaining agreement with a union certified to have majority status. Therefore, the company committed an unfair labor practice when it unilaterally altered the terms of the contract and refused to bargain collectively with the union, and so we vacate and set aside the Board’s order and remand the case for entry of an order granting appropriate relief.

Order set aside; case remanded.

      . The company also discharged the only two union equipment operators among its non-supervisory personnel. Two weeks later, they were reinstated with full back pay. Upon reinstatement, they became the only employees to receive full contract wages and fringe benefits. The company has not challenged the finding that its discharge of these employees was an unfair labor practice, § 8(a)(3) and (1), and the issue is not before us.

      . The union’s complaint charged that the refusal to bargain also constituted a violation of § 8(d) and this reference is continued in some of the briefs. Section 8(d) defines what constitutes a refusal to bargain and it need not be separately considered.

      . Sen.Rep. No. 187, 86th Cong., 1st Sess. (1959), H.R.Rep. No. 741, 86th Cong., 1st Sess. (1959), both reprinted in 2 U.S.Code Cong. & Adm.News, pp. 2318, 2344-2345, and 2424, 2443-2443 (1959). See 2 Legislative History of the Labor-Management Reporting and Disclosure Act of 1959, 1064(2) (remarks of Sen. Javits), 1070(3) (remarks of Sen. J. F. Kennedy), 1289(3) (remarks of Sen. Gold water) (1959). See also Aaron, The Labor-Management Reporting and Disclosure Act of 1959, 73 Harv.L.Rev. 1086, 1121-1122 (1960) ; Fleming, Title VII: The Taft-Hartley Amendments, 54 Nw.U.L.Rev. 606, 705 (1960).

      . Sen.Rep. No. 187, supra n. 3, at 2344-2345. See Fleming, supra n. 3, at 702.

      . See Fleming, supra n. 3, at 702-703.

      . See Aaron, supra, n. 3, at 1122; Fleming, supra, n. 3, at 706. Section 9 (c) (3) provides in pertinent part:
      No election shall be directed in any bargaining unit or any subdivision within which in the preceding twelve-month period, a valid election shall have been held.

      . In Irving and McKelvy, the Third Circuit expressly reserved the issue presented in the instant case. In discussing the Board’s decision in the instant case, the Third Circuit thought its case distinguishable because the contract in the instant case had neither a union security nor a dues checkoff clause. Our examination of the record in our case shows that both master agreements had union security clauses, although they did not have dues checkoff provisions. In any event, it is most significant that the Third Circuit concluded that: “[N]othing in either the text or the legislative history of § 8(f) suggests that it was intended to leave construction industry employers free to repudiate contracts' at will.” 475 F.2d at p. 1271.

      . Since in our view, § 8(f) does not insulate an employer in the building and construction industry from the unfair labor practice proscriptions of § 8 (except entering into a contract with a minority union), the company’s obligation to bargain was governed by the provisions of § 8(d) that:
      . . . no party to such contract shall modify such contract, unless the party desiring such . . . modification (1) serves a written notice . . . (2) offers to meet and confer with the other party . . . and (4) continues in full force and effect . all the terms and conditions of the existing contract.....


author: PER CURIAM. ROBB, Circuit Judge,

text:
    UNITED STATES of America v. John C. MATTHEWS, Appellant. UNITED STATES of America, v. Roger RAY, Appellant. UNITED STATES of America v. Alonzo WARREN, Appellant.
    Nos. 72-1075, 72-1076 and 72-1581.
    United States Court of Appeals, District of Columbia Circuit.
    Argued March 14, 1973.
    Decided June 22, 1973.
    Robb, Circuit Judge, filed an opinion dissenting in part.

      Louis Zimmet (appointed by this Court), for appellants in Nos. 72-1075 and 72-1076.
    William J. O’Malley, Jr., of the bar of the U. S. District Court for the District of Columbia, pro hac vice by special order of the Court for appellant in No. 72-1581. Lois R. Goodman (appointed by this Court), was on the brief for appellant.
    John C. Lenahan, Asst. U. S. Atty., with whom Harold Titus, Jr., U. S. Atty., John A. Terry and Kenneth Michael Robinson, Asst. U. S. Attys., were on the brief for appellee.
    Before FAHY, Senior Circuit Judge, and LEVENTHAL and ROBB, Circuit Judges.
   PER CURIAM.

Each of the appellants in these appeals was convicted of (1) possession of unregistered firearms, (2) possession of prohibited weapons, and (3) carrying a dangerous weapon, and was sentenced to a term of imprisonment. We affirm the convictions. The evidence was adequate to enable the jury to find that the possession of the weapons, which were in a car in which appellants were riding, could be knowledgedly attributed to them. In their briefs in this court, but not pressed in oral argument, it is contended that the search of the car which housed the weapons was unlawful under the Fourth Amendment, but we think the search in this case must be held to have been valid under Chambers v. Maroney, 399 ’U.S. 42, 90 S.Ct. 1975, 26 L.Ed.2d 419 (1970).

Though, as stated, we affirm the conviction of appellant Warren, we find merit in the question he raises about his sentence as an adult rather than under the Youth Corrections Act, 18 U.S.C. § 5006 et seq. (1970), the Act, for which he was eligible. His sentence as an adult was imposed prior to the en banc decision of this court in United States v. Coefield, 155 U.S.App.D.C. -, 476 F.2d 1152 (1973), and without the benefit of a report available under section 5010(e) of the Act.

We recognize that the learned trial judge considered the Youth Corrections Act before sentencing Warren but the reasons given for sentencing him as an adult seem not to comport with subsequent judicial developments. This, coupled with the lapse of a substantial time-period since sentencing, with the possible new light now available with respect to this appellant, constrains us to have the sentence reconsidered.

A sentence under the Act does not require the sentencing court to make an affirmative finding that the youth offender would benefit from such a sentence. Under section 5010(d) of the Act the eligible youth is entitled to the opportunity the Apt affords for rehabilitation unless there is an affirmative and explicit finding he would not benefit from treatment under subsections (b) or (c) of section 5010. The relevant data in this case shows that appellant is making progress in the adult facility at Lorton. Such progress in an adult facility, encouraging as it is, is significant evidence appellant would benefit if placed in one of the special facilities Congress has required to be provided for youth offenders, rather than a reason to retain him in confinement as an adult. Yet, when it was brought to the attention of the district judge, his only observation was that since appellant was making progress at the adult facility, there was no need to consider the youth facility. We are obliged to honor the decision of Congress that these special facilities are more advantageous for youth, absent a no benefit finding under the Coefield criteria. As to appellant’s previous record, though it lists a number of juvenile arrests, only two in 1964 resulted in a finding of culpability by the Juvenile Court; and it is significant that with respect to them he was placed on probation, and hence he did not have experience in a custodial setting, as would be the case if sentenced under the Youth Corrections Act.

It also appears that the Act was not utilized because of the court’s disaffection in some respects with the administration of the facilities at Lorton for those sentenced under the Act. This is very troubling to us as a basis for sentencing as an adult, for it runs counter to the congressional plan as particularly evidenced by section 5010(d) of the Act — the “no benefit” provision. Moreover, it does not take into consideration the availability to the Attorney General of youth correctional facilities elsewhere than at Lorton. We think the judge’s understandable concern is not a sound basis for sentencing as an adult, especially in light of the decision in United States v. Alsbrook, 336 F.Supp. 973, at 981-983 (D.D.C.1971), and where, as here, there has been no reference of the matter under section 5010(e) as contemplated by Coefield, and, also, there is an absence of affirmative reasons stated by the court why “the special youth treatment afforded by the Act would be of no value.” United States v. Waters, 141 U.S.App.D.C. 289, at 291, 437 F.2d 722, at 724 (1970).

The judgments of convictions are affirmed. The sentence of appellant Warren is vacated and the matter of his sentence is remanded for further proceedings consistent with this opinion.

ROBB, Circuit Judge,

dissenting in part:

I would affirm all three judgments and sentences. In my opinion the record fully supports the decision of the district judge, after due consideration, to sentence Warren as an adult.

On the evening of October 15, 1970 Warren was driving a Pontiac convertible when the police stopped the car for a traffic violation. The appellants Matthews and Ray and a third man, one Jones, were in the car with Warren. A valid search of the car disclosed a 12-gauge sawed-off shotgun, a 16-gauge sawed-off shotgun, and a .357 magnum pistol. The 12-gauge shotgun was under the rear of the front seat, the 16-gauge weapon was behind the back seat, where it was partially concealed by the “boot cover”, and the pistol was on the back seat. All the weapons were loaded. A .38 caliber cartridge was found in Warren’s pocket and five .38 caliber cartridges were in Matthews’ pocket. These cartridges could be fired in the .357 magnum pistol. A 12-gauge shotgun round was found on the driver’s side of the front seat. Under the front seat on the driver’s side was a pillow case in which two holes had been cut so it could be used as a mask. In the trunk were five men’s hats, six shirts, and four jackets. Also in the trunk was a butt plate that fit the 12-gauge shotgun, which did not have a plate. The contents of the trunk were accessible to the passengers by way of a “split” or slit in the boot that opened directly into the trunk.

The obvious inference from the evidence is that Warren and his companions were a team of robbers, completely equipped with weapons, a mask, and clothing to be used in altering their appearances during a getaway. Warren’s testimony at trial, that he was not aware of the contents of the car, is preposterous.

The majority notes that in 1964 the Juvenile Court placed Warren on probation in two cases. It should be added that in each case the charge was statutory rape. Moreover, beginning in 1964 Warren was frequently in trouble with the police. In 1964 he was placed on probation for petit larceny; in 1965 he was arrested for robbery by force and violence; and in 1966 for assault with intent to commit rape; again in 1966 for robbery by force and violence; and in 1967 for grand larceny. In 1971, while free on bond in the case at bar, he was arrested twice, once for armed robbery and again for assault with a dangerous weapon and violation of the narcotics laws.

I cannot fault the District Court for noting deficiencies in the administration of the Youth Corrections Act. Such deficiencies bore upon the question whether the defendant would be benefited by treatment under the Act and I see no reason why the judge should have closed his eyes to them. In any event the judge’s concern in this regard was not the primary reason for his decision.

Considering the record as a whole I think the action of the district judge was a proper exercise of his discretion. He was justified in concluding as he did that Warren, although young, was a confirmed and hardened criminal who was not fit for treatment as a youth offender.

In my opinion the remand is an unwarranted intrusion into the sentencing process, an effort to substitute the judgment of this court for the judgment of the district judge whose business it was to impose sentence.

I respectfully dissent from the order remanding Warren’s case for resentencing.

      . (1) 26 U.S.C. § 5861(d) (1970); (2) 22 D.C.Code § 3214(a) (1967); (3) 22 D.C.Code § 3204 (1967).

      . We need not consider what the legal situation might be if the District Court had entertained a proceeding, like that in Alsbrook, to consider its concerns over Youth Corrections Act treatment, had also considered the possibility of available facilities other than Lorton, which, under section 5013, might include private agencies, and subsequently found that the program would be of no benefit to the appellant.