William O. Douglas

“ While the Court's opinion discusses this legislative history, I read the opinion as resting primarily on the Court's reading of certain executive regulations issued under the authority of the procurement law. In this I think the Court errs-for two reasons. First, if I am right in the view that the statute recognizes that federal procurement is not to be immunized from the impact of valid state economic legislation, then any regulations to the contrary are completely invalid. ”

“ The acquisition of title by the United States is not sufficient to effect that exclusion. It must appear that the State, by consent or cession, has transferred to the United States that residuum of jurisdiction which otherwise it would be free to exercise. * * * In this instance, the Supreme Court of Washington has held that the State has not yielded exclusive legislative authority to the Federal Government. ”

“ The plain meaning of these references to price regulation is that both Congress and the Departments concerned assumed such price regulation would apply to government purchases. Unless this assumption is made, there would be no reason for believing that competition would be 'impracticable' in these areas. For, absent the duty of suppliers to comply with uniform price regulations, it would not be 'impracticable' to advertise for bids at competitive prices. ”

“ Milk, however, does not fit the category of commodities for which that exception was designed. Moreover, the statutory exception to formal advertising is merely permissive; the procurement officer 'may' negotiate for articles to be resold but he is not required so to do. He is free to purchase by formal advertising from the responsible bidder whose bid 'will be the most advantageous to the United States.' [24] Whether he negotiates milk contracts or uses competitive bidding is made dependent by the federal statute on his informed discretion, not on state price-fixing policies. ”

“ Whatever method is used-formal advertising or negotiation-'competitive proposals' must be 'solicited from all such qualified sources of supplies or services as are deemed necessary by the contracting officer to assure such full and free competition as * * * to obtain for the Government the most advantageous contract-price, quality, and other factors considered.' [11] If advertising for bids is used, the contract is to be awarded 'to the lowest responsible bidder.' [12] Moreover, even when advertising for bids is not used, competitive standards are not relaxed. ”

“ Policy-wise, it might be better if state price-fixing systems were honored by federal procurement officials. It is urged that if that were done substandard producers of some suppliers would lose the advantage they may enjoy in competitive bidding. Congress could of course write that requirement into the law. Congress has written into the Act certain provisions of that character. It has required that contractors or manufacturers pay not less than the minimum wage as determined by the Secretary of Labor to be the prevailing wage ”

“ Experience had shown that the formalized ritual of competitive bidding was often unwieldy and uneconomical. For example, competitive bidding was not suited to contracts involving secret projects, nor for contracts involving items for which there was no effective competition between sellers. For these types of procurement, the bill proposed direct negotiation between the Government and available suppliers. ”

“ That is clearly not enough. Competition must be increased; competition must be had even in negotiated purchasing; and all negotiated purchasing must be further reduced.' Cong.Rec., June 7, 1962, p. 9234.
If there had been a desire to make federal procurement policy bow to state price-fixing in face of the contrary policy expressed in the Regulation, we can only believe that the objectives of the Act would have been differently stated. ”

“ There also remains another uncertainty concerning the purchases and sales of milk out of nonappropriated funds. There is a dispute over where some of these sales are made. Each of the three enclaves has numerous units acquired at various times, some of which may be subject to 'exclusive' federal jurisdiction and some of which may not be. California earnestly claims that some sales out of nonappropriated funds were made on units of land over which the United States does not have 'exclusive' jurisdiction. ”

“ There is simply no support in any of the pertinent legislative materials for the conclusion that Congress, solely in order to save a few dollars, intended to permit federal agencies to subvert general and nondiscriminatory state regulatory measures which promote health, safety, or better working or economic conditions. ”

“ Apart from the clear import of these references, it is also significant to note that both the Departments and the sponsoring congressional committees were aware of the fact that governmental price fixing would affect the nature of competition for procurement contracts. Yet not once did any spokesmen for the Departments question or even mention the rule of the Penn Dairies decision, of which they could hardly have been unaware. [64] Indeed, they consistently testified that § 2 (c) (10) was, as to regulated prices, merely a restatement of the existing law. ”

“ Milk used for the first two categories of use is paid for with appropriated funds, while that used in the clubs and exchanges is purchased with nonappropriated funds. Prior to January 1959, the milk supplies purchased with appropriated funds and used at those installations were obtained as a result of competitive bidding and on terms below the minimum prices prescribed by the Director of Agriculture of California. The Director advised distributors that the State's minimum price regulations were applicable to sales at Travis. ”

“ And, to repeat, the procurement officer when he negotiates is controlled by 20 separate factors, one of which is 'comparison of prices quoted,' [26] and none of which relates in any manner whatsoever to the price-fixing policies of a State.
The fact that the cost of products sold at commissaries benefits commissary purchasers does not make the commissary any the less a federal agency. Cf. Standard Oil Co. of California v. Johnson, supra. Congress authorizes the payment for commissary supplies from appropriated funds. ”

“ The main question in this case is whether California can enforce her minimum wholesale price regulations as respects milk sold to the United States at three military installations [1] (Travis Air Force Base, Castle Air Force Base, and Oakland Army Terminal) located within California and used for strictly military consumption, for resale at federal commissaries and for consumption or resale at various military clubs and post exchanges. ”

“ I, § 8, cl. 17, of the Constitution, which reads in relevant part: 'The Congress shall have Power * * * To exercise exclusive Legislation in all Cases whatsoever' over the District of Columbia and 'to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings.'
The power of Congress over federal enclaves that come within the scope of Art. ”

“ Secondly, while the legislative history of the 1947 Act contains only a few references to the specific problem of priceregulated industries, these references clearly reflect an acknowledgment that state price regulations are to apply to suppliers doing business with the Government. ”

“ The only issue in this case is whether a State may itself enforce its regulatory legislation against those who deal with the Federal Government.↑ 62 Stat. 21, as amended, 10 U.S.C. §§ 2301-2314, 26 U.S.C.A. §§ 2301-2314.↑ It should be noted that the Court's decision today is likely to affect federal as well as state price regulation. For example, a large part of the milk marketing regulation in the United States is presently accomplished under federal marketing orders pursuant to § 8c of the Agricultural Adjustment Act, as amended, 7 U.S.C. § 608c, 7 U.S.C.A. § 608c. ”

“ That might well permit procurement officers under some circumstances to purchase at state-fixed prices. But competitive bidding is the rule, not the exception. There is not a word in the legislative history of the 1962 Act [21] which indicates a congressional policy to uproot the Regulation or to change it. It was, indeed, repeatedly approved. See S. Rep.No.1884, 87th Cong., 2d Sess.; H.R.Rep.No.1638, 87th Cong., 2d Sess., Parts I and II; Cong. Rec., June 7, 1962, p. 9231 et seq. Four years before the 1962 Act was passed California Comm. ”