580 F.2d 496
188 U.S.App.D.C. 233, 24 Cont.Cas.Fed. (CCH) 82,219
LODGE 1858, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, et al.
James E. WEBB, Administrator, National Aeronautics and Space
Administration, et al., Appellants.
LODGE 1858, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, et al.
James E. WEBB, Administrator, National Aeronautics and Space
Administration, et al.
Appeal of NATIONAL COUNCIL OF TECHNICAL SERVICE INDUSTRIES.
Nos. 76-1821, 76-1934.
United States Court of Appeals,
District of Columbia Circuit.
Argued Jan. 21, 1977.
Decided March 20, 1978.
Rehearing Denied April 19, 1978.
Appeals from the United States District Court for the District of Columbia (Civil Action No. 3261-67).
Gil Zimmerman, Special Atty., Dept. of Justice, Washington, D.C., for appellants in No. 76-1821.
Rex E. Lee, Asst. Atty. Gen., and Irving Jaffe, Deputy Asst. Atty. Gen., Washington, D.C., were on the brief for appellants in No. 76-1821.
Ronald R. Glancz and Harry R. Silver, Attys., Dept. of Justice, Washington, D.C., also entered appearances for appellants in No. 76-1821.
James F. Fitzpatrick, Washington, D.C., with whom Stephen M. Sacks, Washington, D.C., was on the brief, for appellant in No. 76-1934, also entered appearances for appellee, National Council of Technical Service Industries in No. 76-1821.
Edward L. Merrigan, Washington, D.C., for appellees.
Before Mr. Justice CLARK, of the Supreme Court of the United States, and MacKINNON and ROBB, Circuit Judges.
Opinion for the Court filed by Circuit Judge MacKINNON.
MacKINNON, Circuit Judge:
A reduction-in-force (RIF) was announced at the Marshall Space Flight Center in Huntsville, Alabama (Marshall and MSFC), on December 6, 1967. 764 federal government employees were originally affected, though this was later reduced to only 166. The RIF procedure requires that employees be laid off only if they cannot be placed in alternative available positions for which they are qualified at Marshall. NASA utilized the services of both government employees and independent technical service contractors who in turn hired their own employees (contractor employees).
Appellants here are several former individual employees of Marshall, who have been displaced by the RIF, and the union. Their complaint, in its most essential terms, is that NASA was employing many technical service workers at Marshall supposedly as independent contractors, but actually with a degree of control by NASA and with other characteristics that made them functionally employees of the United States. It is alleged that such an arrangement would violate the Civil Service laws,5 and that if they were actually employees of the United States, the arrangement would allegedly also violate NASA's own statute, and its collective bargaining agreement. If the contracts with the independent technical services contractors which are here in question, were, for these reasons, illegal, appellants contend that they should then be set aside and that civil service employees, rather than being terminated by the RIF, should be permitted to take over the positions filled under the agreements with the contractors.
* The case has a long litigational history. The complaint was filed in 1967, and dismissed by the district court on April 24, 1968 for failure to exhaust administrative remedies. We vacated the dismissal and remanded the case on April 21, 1970. On November 30, 1973, the district court granted partial summary judgment in the remanded cause, ruling that if any of the workers employed pursuant to the independent contracts were functionally employees, the plaintiffs would have relief. In an exercise of the discretionary doctrine of primary jurisdiction, the district court held the proceedings in abeyance for 60 days, during which the
matter (was) . . . referred to the United States Civil Service Commission with directions to apply the "Pellerzi Standards" and determine whether the relationship of "employer-employee" existed on December 6, 1967, and exists at the present time between National Aeronautics and Space Administration and the contractor non-civil service employees involved in this case . . .
The "Pellerzi Standards," referenced in the trial judge's order, figure importantly in this appeal. In October of 1967, General Counsel Pellerzi of the U.S. Civil Service Commission issued an opinion concerning the legality of certain contracts at the Goddard Space Flight Center. That opinion set forth six specific criteria for determining whether the individuals furnished by the independent contractors were employees of the contractors or of the United States. If all six criteria were present, an arrangement that had been considered an independent contract should instead, in the Commission's view, be treated as employment.
On December 21, 1973, the district court clarified its order to the Civil Service Commission. At issue was a supplement to the Pellerzi opinion that had been prepared by the successor General Counsel Mondello of the U.S. Civil Service Commission (J.A. 1512). The court instructed that "the Mondello Supplement . . . did not add any new or different standards or cancel or delete any of the 'Pellerzi Standards' but reaffirmed them and supplied the classification thereof" (J.A. 442).
The U.S. Attorney had submitted instructions to the United States Civil Service Commission as to the correct standard to use, but the district court in an order of April 2, 1974 refused to approve those instructions. On May 30, 1974, the Civil Service Commission issued its report on the Marshall contracts.
The Commission's report was thorough and exhaustive. It reached the conclusion that none of the contracts involved in this case were impermissible. The district court, after reviewing the Commission's report, disagreed. Thirty-two contracts are involved in this case; the court held that twenty-two of them were invalid, two more were partially invalid, and eight were permissible (J.A. 434-35). The Administrator of NASA and the intervenor National Council of Technical Service Industries brought this appeal.
Appellants reiterate their objections to plaintiffs' standing, but these matters have already been settled on previous appeal. In brief recapitulation, the plaintiffs here, and their union, would benefit from a voiding of the allegedly impermissible contracts. There would be substantial retroactive benefits and substantial future benefits except in the rare case that NASA immediately abolished all of the jobs the contractors were filling, or immediately provided for legitimate contracts to cover them. These possibilities are not so likely of realization, however, as to make the relief sought by plaintiffs purely speculative within the meaning of Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976). Furthermore, the statutes and regulations protecting rights of federal civil service employees constitute a "pervasive legislative scheme governing the relationship between the plaintiff class and the defendant class in a particular regard" within the meaning of Cort v. Ash, 422 U.S. 66, 82, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975). And permitting a private cause of action to prevent abuses of that legislative scheme would not interfere with the statutory purpose or with concerns of federalism. Cort v. Ash, 422 U.S. at 78, 95 S.Ct. 2080.
Accordingly, we turn to the merits of the appeal. The basic question presented is whether the support service contracts in effect at the Marshall Space Flight Center violate the personnel procurement restrictions of the NASA enabling act as set forth in 42 U.S.C. § 2473(b)(2) or whether they fall within the range of the broad contracting authority granted to NASA by 42 U.S.C. § 2437(b)(5).
Subsection (b)(2) of the act provides as follows:
(b) In the performance of its functions the Administration is authorized
(2) To appoint and fix the compensation of such officers and Employees as may be necessary to carry out such functions (listed in subsection (a)). Such officers and Employees shall be Appointed in accordance with the civil service laws and their compensation fixed in accordance with chapter 51 and subchapter III of chapter 53 of Title 5, Except that (A) to the extent the Administrator deems such action necessary to the discharge of his responsibilities, he may appoint not more than four hundred and twenty-five of the scientific, engineering, and administrative personnel of the Administration without regard to such laws . . .
(Emphasis added). This section states only that NASA's employees shall be covered by the civil service and compensation laws, except that 425 NASA Employees can be appointed without regard to those laws. The exception was intended to enable NASA to recruit qualified scientists, engineers, and other personnel on a prompt basis without regard to civil service limitations.
Subsection (b)(5) specifically concerns support service contracting, which is the focus of appellee's challenge. That section provides:
In the performance of its functions (under the National Space Program) the Administrator (NASA) is authorized
(5) without regard to section 529 of Title 31, to enter into and perform such Contracts, leases, cooperative agreements, or Other transactions as may be necessary in the conduct of its work and on such terms as it may deem appropriate, with any agency or instrumentality of the United States, or with any State, Territory, or possession, or with any political subdivision thereof, or with Any person, firm, association, corporation, or educational institution. To the maximum extent practicable and consistent with the accomplishment of the purpose of this chapter, such contracts, leases, agreements, and other transactions shall be allocated by the Administrator in a manner which will enable small-business concerns to participate equitably and proportionately in the conduct of the work of the Administration . . . .
42 U.S.C. § 2473(b)(5) (emphasis added). This section embodied the American response to the shattering effect that the Soviet's Sputnik had on our international stature in the post-World War II era. Congress reported that there was a need to catch and overtake the Soviets by having NASA command the resources of the nation in a super effort to accelerate our space effort; the specter of Soviet superiority in an area with strong security overtones was unacceptable. The section epitomizes the Congressional intent to grant NASA the necessary authority and discretion to mount the gargantuan effort. In explaining its intent with respect to this broad grant of power, the House Report stated:
Paragraph (5) gives the Administrator Broad authority to enter into and perform Contracts, leases, agreements, and other transactions, On such terms and for such periods As he deems appropriate, with Any public or private Agency, firm, educational institution, or other Person. (emphasis added.)
Indeed, Congress expected that NASA would invoke the participation of private industry and of educational institutions in embarking on the nation's space effort. On June 2, 1958, during House consideration of the act, Speaker McCormack, Chairman of the House Select Committee on Astronautics and Space Exploration, emphasized that NASA's growth would occur principally through contracts with industry and not through the addition to civil service personnel:According to NA(S)A witnesses, The contemplated expansion of functions under the new agency will take place largely by means of contract work rather than through research conducted by the agency itself. At present, the NA(S)A employs approximately 8,000 people. The NA(S)A witnesses estimated that the increase in agency personnel would not be more than several hundred. Even with considerable allowance for error in their estimate, It seems likely that the number of new Federal employees in the near future will be relatively small. In other words, the full benefit of this expending (Sic ) program Will accrue to private enterprise."
104 Cong.Rec. 9918 (1958) (emphasis added). These remarks had obvious reference to the practices authorized by Subsection (b)(5) and it is the execution of the very policies referred to in Speaker McCormack's speech that Lodge 1858 claims violates the statute.
At the same time that Congress enacted the enabling act which compelled NASA to produce a mammoth space effort, "the number of civil service personnel that could be hired was limited due to personnel ceilings imposed within the Federal Civil Service." Thus, it is not surprising that "support service contracts (were) a way of life at Marshall Space Flight Center from its beginning (in 1960)."
Because of this background, the personnel ceilings on civil service employees, the urgency for the program as expressed by Congress, and the broad contracting authority given to the Administrator, including the direction to favor small business, "NASA and MSFC officials apparently believed they had a mandate in the law to develop a Government/Industry/Education Space team." The result was that NASA and Marshall resorted to support service contracts as the alternative means of overcoming the civil service personnel ceilings. This practice was regularly disclosed to Congress in its budget requests and the resulting appropriations based thereon are an indication of congressional approval. If anything more were needed to approve the practice of using extensive support service contracts, it came in 1971 and 1972 when Congress directed reductions in NASA's Civil service work force at the same time that it continued to approve its budget requests for funds to meet its obligations under its support service contracts that were in existence.
Appellee contends that "NASA was to perform all its statutory functions under the 1958 Act with (quoting subsection (b)(2)) 'employees appointed in accordance with the civil service laws.' " According to appellee, the only exceptions to this rule are the 425 employees described in the statute itself (Br. at 37-38). This argument completely disregards the significance of subsection (b)(5) which follows and bears directly upon support service contracting. As already discussed, the employees of these contractors are not Appointed employees within the meaning of subsection (b)(2). Subsection (b)(5) is more than an exception to subsection (b)(2); it covers a different situation altogether. Appellee cites numerous passages for legislative history all stating that NASA employees shall be appointed in accordance with the civil service laws. Appellee's use of these passages does not account for the difference between employees of contractors under subsection (b)(5) and employees of the United States appointed under subsection (b)(2).
Appellee further argues that subsection (b)(5) is not a license to evade and circumvent subsection (b)(2) (Br. at 44). This begs the question: unless NASA treats the employees of the contractors as subsection (b)(2) appointed employees, subsection (b)(5) is not being used to circumvent subsection (b) (2). Nothing in 31 U.S.C. §§ 665(a), 665(b) is to the contrary: those sections provide that no officer or employee of the United States shall employ personal service or involve the Government in contracts or other obligations beyond the authority of law. Subsection (b)(5) authorizes support services contracts, and Title 31 is not violated so long as the contractor's employees are not treated as employees within the meaning of the civil service laws. In this regard, appellee states:
No federal agency, including NASA, may award its regular work functions to non-Civil Service employees, through the use of corporate intermediaries, contracts or any other device, without first obtaining specific statutory authority from Congress to exclude such work from the federal classified Civil Service.
Br. at 53 (emphasis omitted). This statement goes much too far. Congress gave NASA a specific, giant task in need of quick fulfillment and broad power to enter into Contracts as necessary for the performance of its work on such terms as the Administrator thought appropriate. This was specific statutory authority. It is true that NASA cannot treat the employees as its own; otherwise, the employees would be required to be appointed under subsection (b) (2). This brings us to the question whether the contractor's employees were responsible to the contractor or NASA under the standards we find relevant to that determination. Appellee's argument here sheds little light on the basic issue.
Appellee also argues that "regular civilian work functions" cannot be the subject of support services contracts under subsection (b)(5). Yet appellee does not challenge the district court's decision that eight of the contracts covering, Inter alia, security, fire protection, medical services, food services, custodial services, and logistic support were Valid subjects of support arrangements. J.A. 495, 497. This not only belies appellee's argument, but also demonstrates that the crucial question in this case is not merely what functions the contractors performed but whether NASA treated the other questioned contractor's employees as its own employees.
That NASA was authorized to enter into support service contracts by the Act is beyond serious dispute. Subsection (b)(5) gave NASA broad power to contract for support services. The narrower question is whether the contracts validly entered into under subsection (b)(5) were improperly administered so as to treat the contractor's employees as subsection (b)(2) employees which were required to be appointed in accordance with the civil service laws.
The statute most basic to this narrower question is 5 U.S.C. § 2105(a) (1970), which relates to the Civil Service, and defines "employee" restrictively as follows:
For the purpose of this title, "employee", except as otherwise provided by this section or when specifically modified, means an officer and an individual who is
(1) appointed in the civil service by one of the following acting in an official capacity
(B) a Member or Members of Congress, or the Congress;
(C) a member of a uniformed service;
(D) an individual who is an employee under this section;
(E) the head of a Government controlled corporation; or
(F) the adjutants general . . . .
(2) engaged in the performance of a Federal function under authority of law or an Executive act; And
(3) subject to the Supervision of an individual named by paragraph (1) of this subsection while engaged in the performance of the duties of his position.
(Emphasis added.) All three of the statute's subsections must be satisfied for an individual to be deemed an "employee" within the meaning of the Civil Service laws.
It is critical to observe that of the six Pellerzi criteria, only one overlaps with the statute for determining whether a person is an "employee" of the United States, and that is the necessity for Supervision (Pellerzi criterion 6; statute provision 3). "Supervision" is a criterion that in importance far exceeds the others. As used in this context, supervision means control of the individual workman's physical conduct, Kelley v. Southern Pacific Co., 419 U.S. 318, 95 S.Ct. 472, 42 L.Ed.2d 498 (1974), not just oversight; "control (of) the individual in the Performance of his work and (of) the Manner in which the work is done . . . is Usually decisive." Pellerzi Opinion (J.A. 447) (emphasis added). Employees are distinguished from independent contractors most basically by the detail with which the party for whom the work is eventually produced actually supervises the manner and means by which the work is performed; and Degree of control or Supervision is the principal element that differentiates employees and independent contractors at common law, in the state statutory context, and in the context of other federal statutes as well. All this is another way of saying that the practice of giving an order for a specific service or article, with the right to reject the finished product or result, is not the type of supervision or control that converts an individual who is otherwise an independent contractor (such as an employee of a contractor) into an employee.
The situation here involves NASA entering into written contracts with various companies to perform special services. In each contract, NASA looked to the company that hired the individuals to perform certain tasks. However, the individual companies, not NASA, were to furnish the necessary management and personnel. It was the responsibility of each company to supervise, control, and direct the performance of its own employees in fulfilling the contract's requirements. These contracts required the companies to exercise their independent judgment. This is the classic independent contractor relationship.
In actual operation, in those instances which come closest to the employee borderline, NASA generally gave specific orders, usually to the company supervisor, for certain articles and services. "(T)he Contractor (not his employees) were told what to do, when to do it, how it was to be done, the qualification requirements for his key people, how and when to report on his activities, etc." (J.A. 454). But the control over the performance of such requests and the responsibility for the manner in which they would be carried out was in the contracting party and its supervisors. Thus, the specificity of the requests did not transcend the fact that the actual on-the-spot supervision employed to produce compliance was carried out by the contracting company and its employees. The situation was thus very similar to that in Chicago R.I. & P.R. Co. v. Bond, 240 U.S. 449, 456, 36 S.Ct. 403, 406, 60 L.Ed. 735 (1916) where the contractual arrangement was "not the engagement of a servant submitting to subordination and subject momentarily to superintendence, but of one capable of independent action to be judged by its results." This was particularly apparent in a great many of the contracts here because a substantial portion of the contractually acquired services which are in question involved scientific, engineering, technical, and other highly skilled or professional personnel who were fully capable of exercising independent judgment in performing their services and were expected to do so. And, by way of contrast, concerning some of the contracts for the more menial services, where substantial independent judgment was not an ordinary factor, and control and supervision could be more easily found in a mere order, the district court agreed with the Civil Service Commission that supervision was nonexistent in the sense intended by the employee standards.
Without supervision by NASA, the employees of the contractors for the supporting services cannot be viewed as employees for subsection (b)(2) purposes who must be appointed in accordance with the civil service laws. In this case, it cannot be said that the Civil Service Commission's decision was in error when on the basis of the facts it found it based its conclusion concerning employee-independent contractor status on the Degree of supervision exercised over the work performed.
The district court did criticize the Commission's insistence that all six of the "Pellerzi " standards be met (J.A. 449). Appellee's argument that the contractor's employees are subsection (b)(2) employees, to the extent it is based on application of the Pellerzi standards, has a facial validity, but it loses its vitality when the activities of the individuals in question are weighed against the all-important sixth standard concerning supervision. For example, had the Commission found that these individuals were not in an employer-employee relationship with NASA even where very close supervision was imposed, because, perhaps, one or several of the other Pellerzi standards was not met, its decision might have been subject to more criticism. In this case, however, the Commission's insistence that all six Pellerzi standards be met was functionally equivalent to a requirement that only the decisive "supervision" standard be met, since There was no contract among the 32 reviewed where the sixth factor NASA supervision was present. It would have been improper for the district court to have rejected the Commission's conclusions simply because it insisted that all six Pellerzi elements coexist. But unless special significance were accorded the critical sixth factor, such an approach would have been equivalent to holding that employee status could be found even in the absence of supervision by the alleged employer. We would disagree generally with such conclusion.
Since we do not disagree with the district court's conclusion that all six Pellerzi elements need not be present, we turn to the all-important matter of how the district court construed the supervision requirement. The court supplanted the Sixth Standard with a test that "requires only a showing that 'the inherent nature of the service, or the manner in which it is provided, reasonably requires, directly or indirectly, federal direction or supervision of contractor employees.' " This tracks some of the language in the Pellerzi opinion but fails to reach an important feature added by the Mondello Supplement which calls attention to the requirement of "supervision . . . by Government employees" (J.A. 1514). The Mondello Supplement recognized that the "touchstone of legality under the personnel laws is whether the contract creates what is tantamount to an employer-employee relationship between the Government and the employee of the contractor" (J.A. 1512). The Supplement recognized that the Basic criteria by which this relationship is judged are set forth in 5 U.S.C. § 2105(a), and stated further:
The six elements . . . relate principally to the third statutory criterion concerning supervision of a contractor employee by a Federal officer or employee. If the contract terms permit such supervision, or if in the actual performance of the contract such supervision is conducted, the test is met.
J.A. 1513 (emphasis added). The standard used by the district court is an incomplete expression of the proper standard by which contracts for services as various as those here involved should be tested. Moreover, that standard focuses incorrectly on what the nature of the questioned service "reasonably requires" and ignores the always critical factor of who actually exercises the supervision over the manner and "performance of the duties of (the) position."
Additional defects in the standard need not be mentioned because we view the decision in Kelley v. Southern Pacific Co., 419 U.S. 318, 95 S.Ct. 472, 42 L.Ed.2d 498 (1974), as strongly persuasive if not completely controlling on the facts here present. Kelley was an employee of Pacific Motor Trucking Company (PMT), a subsidiary wholly owned by the Southern Pacific Company that operates the Southern Pacific Railroad. The two companies had a contractual relationship covering PMT's trucking operations which were operated primarily in conjunction with the railroad operations of its parent company. In accordance with its contract with the railroad, PMT would unload automobiles that had been transported over the rail lines of the Southern Pacific. In the process of such unloading operations, Southern Pacific employees in the area would occasionally consult with PMT employees about the unloading process, but PMT supervisors controlled and directed the actual day-to-day operations.
One day, Kelley was injured in the process of unloading automobiles. Claiming that his injuries were caused by the negligence of the Southern Pacific Railroad, Kelley sued under the Federal Employees' Liability Act (FELA) on the alleged ground that he was covered thereby as an employee of the railroad.
The trial court found that Kelley in his work was within the coverage of the FELA. In support of its judgment it asserted that unloading the automobiles was the "railroad's responsibility," that the railroad supplied the unloading ramps and owned the area where PMT employers worked, that the "responsibility for supervision and control of the unloading operation was (the railroad's)," and that in effect "PMT employees were agents of the railroad . . . in fulfillment of a non-delegable duty of defendant Southern Pacific Company." 419 U.S. at 322, 95 S.Ct. at 475. The Court of Appeals reversed and the Supreme Court granted certiorari.
In an opinion by Justice Marshall, the Supreme Court decided that the trial court applied an erroneous legal standard when it held that Kelley was covered by the Federal Employers' Liability Act because of the "traditional agency relationship" between the railroad and PMT. In its place, the court held that the proper standard required proof of a "master-servant relationship . . . determined by reference to common-law principles." It pointed approvingly to section 220(1) of the Restatement (Second) of Agency that defines a servant as "a person employed to perform services in the affairs of another and who with respect to the Physical conduct in the performance of the services is subject to the other's control or right to control." 419 U.S. at 324, 95 S.Ct. at 476 (emphasis added).
The opinion ruled that Kelley was not (1) a borrowed servant, or (2) employed by two masters simultaneously, and eventually rejected the third possibility that he was (3) a subservant of a company that was in turn a servant of the railroad. While PMT was clearly an agent of the railroad, the opinion stated that a "finding of agency is not tantamount to a finding of a master-servant relationship" and that the "test" applied by the district court was "too broad." A similar characterization seems appropriate for the test used by the district court here. Actually the relationship in this case between the Government and the numerous contractors is not as close as the relationship which existed between Pacific Motor and the parent railroad company. The contracts here were arms-length transactions and not all of the services were rendered on government property. But it is in the nature of the supervision of the contractor's employees that the two cases are most alike: in both cases, the "day-to-day" supervision of the "physical conduct" on "the details of the job performed by the individual (employees of the contractor)" was in the independent contractor and the decision of the Supreme Court with respect to this vital element is completely destructive of the standard used and decision reached here by the district court. Like Kelley, we find that the standard used here by the trial court was "too broad." United States v. Orleans, 425 U.S. 807, 96 S.Ct. 1971, 48 L.Ed.2d 390 (1976), also supports this conclusion.
The district court found a second error in the Commission's test of employee status. The Civil Service Commission made its decision "in accordance with the instructions given by the Office of the U.S. Attorney" (J.A. 515). Those instructions included the following admonition: "with regard to the sixth element, relatively Continuous, close supervision of a substantial number of contractor employees must be present and must be shown to be related to one of the following requirements, '(a) to adequately protect the government's interest, or (b) to retain control of the function involved, or (c) to retain full personal responsibility for the function supported in a duly authorized Federal officer or employee' " (J.A. 515; emphasis added).
The final three specifications of this order are taken verbatim from the Pellerzi Standards. The controversy does not concern them. Rather, the district court found no support in the Pellerzi or Mondello opinions for the word "continuous" modifying "supervision" (J.A. 450-51). The Pellerzi opinion indicated employee status when, all else being present, "(t)he inherent nature of the service . . . reasonably requires directly or indirectly, government direction or supervision of contractor employees . . ." (J.A. 352). The Mondello Supplement interpreted the sixth Pellerzi factor to mean "a requirement for close supervision of contractor employees by Government employees" (J.A. 1514). To construe the phrases "reasonably requires . . . supervision" and "a requirement for close supervision" to mean "relatively continuous, close supervision" (emphasis added), is a very natural and proper interpretation. "Close" supervision, standing alone, evokes the implication of Continuity of supervision. And the modifier "relatively" makes the Commission's standard unassailable. The validity of the statement is further buttressed by its placement in juxtaposition to the assertion that "sporadic supervision of an individual . . . may be ignored" (J.A. 442; emphasis added).
The district court was not required to send this matter to the Civil Service Commission, but it chose to do so in an exercise of its discretion. " Under the doctrine of primary jurisdiction, a court may entertain an action for permanent relief and defer its consideration of the merits until an agency 'with special competence' in the field has ruled on the issues . . . .This doctrine has application to the (agency) . . . Even assuming that its function is advisory since it has the special competence and experience that is the life and reason of the primary jurisdiction rule." Wheelabrator Corp. v. Chafee, 147 U.S.App.D.C. 238, 248, 455 F.2d 1306, 1316 (1971) (emphasis added). "Whether the agency happens to be expert or not, a court should not act upon subject matter that is peculiarly within the agency's specialized field without taking into account what the agency has to offer . . . ." K. Davis, 3 Administrative Law Treatise (1958) § 19.01 at 5 (discussing primary jurisdiction). In NLRB v. Hearst Publications, 322 U.S. 111, 64 S.Ct. 851, 88 L.Ed. 1170 (1944), the labor board's decision on a statutory question admittedly did not come about because of any discretionary exercise of primary jurisdiction. Nevertheless, the Court's justification for deferring to the Board, even on a matter purely of law, is instructive here:
Everyday experience in the administration of the statute gives (the Board) familiarity with the circumstances and backgrounds of employment relationships . . . . The experience thus acquired must be brought frequently to bear on the question who is an employee under the Act. Resolving that question . . . "belongs to the usual administrative routine" of the Board. . . .
. . . (T)he Board's determination that specified persons are 'employees' under this Act is to be accepted if it has 'warrant in the record' and a reasonable basis in law.
322 U.S. at 130-31, 64 S.Ct. at 860. Here, it is the Civil Service Commission that possesses the expertise. The district court's action in sending the case to the Civil Service Commission rather than an exercise of primary jurisdiction could alternatively be analogized to the appointment of a special master. The time limit given to the Commission for response supports that interpretation of the court's action. If the procedure followed was that of appointing a master, however, the district court's review is every bit as limited as under the primary jurisdiction theory, for Federal Rule of Civil Procedure 53(e)(2) provides: "In an action to be tried without a jury the court shall accept the master's findings of fact unless clearly erroneous."
Here the Civil Service Commission, as noted above, found an absence of supervision in all 32 contracts in dispute. There is substantial support in the record for the Commission's conclusions. While the fact that it believed all six Pellerzi standards had to be met in order for an employer-employee relationship to exist was incorrect, this error did not affect the weight of the Commission's decision on the critical sixth Pellerzi standard on supervision. Under the circumstances of this case, it was error for the court to reject the conclusions of the Commission on the application of the sixth standard to these contracts.
In addition to the foregoing, there are additional grounds for holding that subsection (b)(2) is not controlling here insofar as the contractors' employees are concerned. As this opinion has already stated, the contractors' employees have not been shown by appellee to be employees of the United States who must be appointed in accordance with subsection (b)(2) and concomitantly as civil service employees under the civil service laws. This is because subsection (b) (5) validly authorized NASA to enter into separate contracts under which certain services contracted for were performed by employees of the contractor, and in the performance of such contracts NASA did not treat the contractors' employees in such a manner that they became employees of NASA or the United States.
In urging that we adopt a contrary conclusion particularly in urging us to conclude that contractors' employees cannot be used to perform the agency's work functions in the manner and for the purposes here disclosed appellee effectively reads subsection (b)(5) as though it were contradicted and controlled by subsection (b)(2). Appellee argues that "(t)here is nothing in Section 203(b)(5) of the NASA statute . . . which Repeals Section 203(b)(2) or which authorizes NASA to evade and circumvent Section 203(b)(2) . . ." (Appellee Supp. Br. at 4; emphasis added). This contention is falsely premised on the reasoning that subsection (b)(5) must repeal subsection (b)(2) in order to validate the support service contracts, but such argument fails to give subsection (b)(5) its proper due. It fails to recognize the potential that Congress intended for subsection (b)(5) to assist in the performance of NASA's work. Subsection (b)(5) need not "repeal" subsection (b)(2) in order to achieve its separate status. To the extent that it provides for a Specific manner in which NASA may carry out some of its work, it is a specific exemption from the general provisions of subsection (b)(2) and must be recognized as such.
The long established rule of statutory construction "gives precedence to the terms of the more specific statute where a general statute and a specific statute speak to the same concern, even if the general provision was enacted later." Simpson v. United States, --- U.S. ----, ----, 98 S.Ct. 909, 914, 55 L.Ed.2d 70 (1978). Here, subsection (b)(2) is general: it is a general authorization for the Administrator to appoint and fix the compensation of such officers and employees under the Civil Service laws to perform NASA's functions to the extent that it may consider desirable, subject to certain personnel limits and with certain leeway in some salaries. Subsection (b)(5), however, is more specific: it is in addition to (b)(2) and it authorizes the Administrator to enter into "contracts . . . or other transactions As may be necessary in the conduct of (NASA's) work and on Such terms as it may deem appropriate " (emphasis added). Thus, as Speaker McCormack clearly stated, Congress intended NASA to perform its assigned functions under Both subsections and in this respect the statute confers a broad discretion upon NASA to use subsection (b)(5) to the extent that it considers "may be necessary in the conduct of (its) work . . . ."
The force of subsection (b)(5) as specifying a separate means, Independent of subsection (b)(2), for performing NASA's functions is further strengthened by its location in the statute after subsection (b)(2). The established rule is that if there exists a conflict in the provisions of the same act, the last provision in point of arrangement must control. Thus, while subsection (b)(5) does not repeal subsection (b)(2), and only conflicts with it to the extent that it provides for additional authority, it is clear that subsection (b)(5) does provide a separate, alternative, independent means of performing NASA's statutory duties which Congress contemplated would be exercised contemporaneously with the authority conferred by subsection (b)(2) in conformance with NASA's discretion and to the extent permitted by funds available from the yearly appropriations of Congress.
Finally, the relative utilization of civil service employees and employees of support service contractors at NASA in the years surrounding the reduction-in-force provides conclusive documentation that Congress intended subsection (b)(5) to authorize the support service contracting which is challenged here. In the fiscal year 1967 NASA budget hearings regarding the use of support service contract personnel, which were held before the Senate Committee on Aeronautical and Space Sciences, NASA stated that during fiscal year 1965, the average number of Contractor employees working at its centers was about 16,800. NASA stated that this figure would rise to about 22,400 in fiscal year 1966 and to about 24,900 in fiscal year 1967, primarily as a result of the increase in operational activities at the Kennedy Space Center. These contractor employees were in addition to NASA's civil service personnel Ceilings for fiscal years 1965, 1966, and 1967 of about 33,200, 33,900, and 34,300 respectively. Thus, although the number of civil service personnel had been estimated to increase by only about 1,100 during those three years, the corresponding increase of about 8,100 contractor employees during the same period, estimated to bring the total to 24,900, in excess of the civil service Ceilings was fully disclosed to Congress, and did not evoke Congressional opposition and Congress adopted the appropriations necessary to pay this very substantial number of contractor employees. As noted above, the Congressional policy of favoring support service contracts while cutting back on civil service employment continued after the reduction-in-force in question here. This demonstrates that subject support service contracts, entered into pursuant to the authority of subsection (b)(5) to the magnitude that eventually evolved, were fully within the intendment of Congress.
Thus, even viewing appellee's argument in its most favorable light, appellee would not prevail: under well-settled rules of statutory construction, on the facts of this case and under the applicable statute, subsection (b)(5) would still operate independently of subsection (b)(2) and authorize NASA to enter into contracts for support services to be furnished by employees of the contractors as it did. And since the contractors' employees here in question are not civil service employees, and are not required to be civil service employees, they are not "competing employees in a reduction in force" within the meaning of 5 U.S.C. § 3502, and are not subject to being bumped by civil service employees. Their contracts were outside the civil service laws, and the manner in which they were carried out did not violate their terms and bring them within those statutes.
For the reasons set forth in this opinion, we find that it was clearly erroneous for the district court to find that 22 of the 32 contracts were invalid In toto and that two others were invalid in part on the ground that persons employed by the contractors under these contracts served in an employer-employee relationship with the United States. We therefore vacate those portions of the Summary Judgment and Order of August 12, 1976 that declared 22 contracts and parts of two others null and void and that declared null and void the 1967 reduction-in-force actions taken by NASA. The portion of the Summary Judgment and Order upholding eight contracts and parts of two others is affirmed. The vacated portions of the judgment are remanded to the district court with instructions to enter judgment for the defendants consistent with this opinion.