NCJ Number
65482
Journal
Harvard Law Review Volume: 92 Issue: 5 Dated: (MARCH 1979) Pages: 1148-1159
Date Published
1979
Length
12 pages
Annotation
THE SEVENTH CIRCUIT COURT'S HOLDING THAT THE GENERAL ACCOUNTING OFFICE (GAO) IS AUTHORIZED TO EXAMINE ALL RECORDS RELATED TO THE COST OF PRODUCTS PURCHASED BY THE GOVERNMENT FROM PRIVATE COMPANIES IS CRITIQUED.
Abstract
SINCE 1951, MOST NEGOTIATED CONTRACTS BETWEEN THE FEDERAL GOVERNMENT AND PRIVATE CONTRACTORS HAVE CONTAINED A STATUTORY PROVISION AUTHORIZING THE GAO TO EXAMINE THE CONTRACTOR'S BOOKS AND RECORDS WHICH ARE 'DIRECTLY PERTINENT' TO THE GOVERNMENT CONTRACT. IN 1974, THE GAO ATTEMPTED TO USE THIS PROVISION AS A MEANS OF OBTAINING DETAILED COST INFORMATION FOR A CONGRESSIONAL SUBCOMMITTEE FROM SIX PHARMACEUTICAL COMPANIES DOING BUSINESS WITH THE GOVERNMENT. ELI LILLY AND CO., ONE OF THE SIX COMPANIES, SOUGHT DECLARATORY AND INJUNCTIVE RELIEF IN FEDERAL DISTRICT COURT, ARGUING THAT THE COST RECORDS SOUGHT WERE NOT 'DIRECTLY PERTINENT' TO LILLY'S CONTRACTS WITH THE GOVERNMENT. THE DISTRICT COURT HELD FOR THE PLAINTIFF, BUT WAS REVERSED BY THE SEVENTH CIRCUIT, WHICH PLACED HEAVY RELIANCE ON HEWLETT-PACKARD CO. V. UNITED STATES, THE ONLY REPORTED COURT DECISION WHICH HAD CONSIDERED THE PARAMETERS OF CONTRACTUAL ACCESS TO BUSINESS RECORDS. IN HEWLETT-PACKARD, GAO'S AUTHORITY TO INQUIRE INTO THE BOOKS AND RECORDS OF GOVERNMENT CONTRACTORS WAS DETERMINED TO BE VERY BROAD. IN AFFIRMING GAO'S EXTENSIVE AUTHORITY OF RECORDS EXAMINATION, THE COURT MISSED THE CHANCE TO STATE THE GAO'S AUTHORITY TO PURSUE AN INVESTIGATION SHOULD VARY ACCORDING TO THE SOURCE OF THE INITIATIVE. A GAO INVESTIGATION PROPERLY ORDERED BY CONGRESS NEED NOT BE JUSTIFIED ON THE BASIS OF GAO'S CONTRACTUAL AUTHORITY, BUT SHOULD BE CONSIDERED AS IF PERFORMED BY CONGRESS THROUGH THE GAO. IF, ON THE OTHER HAND, GAO UNDERTAKES AN INVESTIGATION ON ITS OWN INITIATIVE, A CONTRACTUAL PURPOSE SHOULD BE CLEARLY SHOWN. FOOTNOTES ARE PROVIDED. (RCB)