VALIDITY OF EXECUTIVE ORDER PROHIBITING GOVERNMENT CONTRACTORS FROM DISCRIMINATING IN EMPLOYMENT PRACTICES ON GROUNDS OF RACE, COLOR, RELIGION, OR NATIONAL ORIGIN Executive Order No. 10925 of March 6, 1961, 26 F.R. 1977, requiring inclusion in Government contracts of a clause prohibiting Government contractors from discriminating in employment practices on grounds of race, color, religion, or national origin and imposing sanctions for noncompliance, is a valid exercise of Presidential authority. The order is an exercise of the power of the United States to fix the terms and conditions on which it will purchase supplies and services. It implements and effectuates the policy of the United States against the use of governmental powers to promote or perpetuate discriminations based on race, religion, color, or national origin. The regulations promulgated by the President's Committee on Equal Employment Opportunity confer adequate procedural protection on contractors and other persons covered by the nondiscrimination clause. HONORABLE LYNDON B. JOHNSON, SEPTEMBER, 26, 1961.* The Vice President of the United States. MY DEAR MR. VICE PRESIDENT: This is in response to your request, made, with the concurrence of the President, in your capacity as Chairman of the President's Committee on Equal Employment Opportunity, created by Executive Order 10925, March 6, 1961, 26 F.R. 1977, for my formal opinion concerning the authority of the President to require the inclusion, in Government contracts, of the contract clause set forth in section 301 of the order, and to prescribe the sanctions and penalties set forth in section 312 of the order. You state that your request has been made in view of certain questions that have been raised concerning these features of the order. *Released for publication October 26, 1965. I. History of the Nondiscrimination Clause The requirement that Government contracts contain a clause prohibiting the contractor from discriminating against employees or applicants for employment by reason of race, creed, color, or national origin has been an established part of Government contracting policy for the past twenty years without interruption. It has been maintained by Executive orders of four successive Presidents-Presidents Roosevelt, Truman, Eisenhower, and Kennedy-as follows (omitting minor amending orders): President Roosevelt: Executive Order 8802, June 25, 1941, 6 F.R. 3109 Executive Order 9346, May 27, 1943, 8 F.R. 7183 See also letter to the Attorney General, Nov. 5, 1943, 8 F.R. 15419 President Truman : Executive Order 10308, Dec. 3, 1951, 16 F.R. 12303 President Eisenhower: Executive Order 10479, Aug. 13, 1953, 18 F.R. 4899 Executive Order 10557, Sept. 3, 1954, 19 F.R. 5655 President Kennedy: Executive Order 10925, March 6, 1961, 26 F.R. 1977 In Executive Order 8802 President Roosevelt declared: “*** the policy of the United States that there shall be no discrimination in the employment of workers in defense industries or Government because of race, creed, color, or national origin, and * * * the duty of employers and of labor organizations, in furtherance of said policy and of this order, to provide for the full and equitable participation of all workers in defense industries, without discrimination because of race, creed, color, or national origin." By Executive Order 9346 this policy was extended to all contracting agencies of the Government and, by his letter to the Attorney General of November 5, 1943, President Roosevelt made it clear that the policy was mandatory. Subsequent Executive orders have continued the nondiscrimination provision as a mandatory requirement in defense and nondefense contracts alike. The wording of such provisions has changed over the years, in the direction of greater detail and explicitness, but the basic intent has remained constant. Beginning with Executive Order 8802, these various orders have also established or continued a committee or other body within the executive branch, variously designated and constituted, which was authorized to receive and investigate complaints of noncompliance, and to take appropriate action to redress grievances and achieve compliance with the nondiscrimination policy. So far as I am aware, the President's authority to require such a nondiscrimination clause has never been challenged in the courts. The Comptroller General has recently stated: "The inclusion of nondiscrimination clauses in contracts let by the executive branch has been mandatory since 1941. See Executive Order No. 8802, June 25, 1941. So far as we are aware the propriety of clauses of the type under consideration has never been seriously questioned by any responsible administrative or judicial tribunal; nor has the Congress seen fit to proscribe the use of such clauses by appropriate legislation." Dec. B-145475 (April 21, 1961, 40 Comp. Gen. 592).1 II. The President's Authority to Require Inclusion of a Nondiscrimination Clause in Government Contracts A. The United States Has Power to Fix the Terms and Conditions on Which It Will Purchase Supplies and Services In Perkins v. Lukens Steel Co., 310 U.S. 113, 127 (1940), the Supreme Court held: "Like private individuals and businesses, the Government enjoys the unrestricted power to produce its own supplies, to determine those with whom it will deal, and to fix the terms and conditions upon which it will make needed purchases. In that case the Court had before it the provisions of the Walsh-Healey Act (41 U.S.C. 35-42) requiring a contract stipulation to pay not less than the prevailing minimum wages, as determined by the Secretary of Labor, for persons 1 The Comptroller General held in this decision that although the Architect of the Capitol was a part of the legislative branch and therefore not bound by Executive Order 10925, he might in his discretion insert a nondiscrimination clause in the contracts he let. employed in the industry in the locality. The Court pointed out that the Government may "obviate the possibility that any part of our tremendous national expenditures would go to forces tending to depress wages and purchasing power and offending fair social standards of employment." This, said the Court "does not represent an exercise by Congress of regulatory power over private business or employment. In this legislation Congress did no more than instruct its agents who were selected and granted final authority to fix the terms and conditions under which the Government will permit goods to be sold to it." 310 U.S. at 128-29 (1940). B. The Executive Branch Has Discretion to Contract on Such Terms as Are Not Inconsistent With Legislation Except to the extent that legislative action has either required or prohibited certain types of Government contracts or certain provisions to be included in such contracts, the executive branch of the Government has discretion to contract in such manner and on such terms as it considers appropriate to the discharge of its constitutional and statutory responsibilities. E.g., United States v. Tingey, 5 Peters 115, 127 (1831); United States v. Linn, 15 Peters 290, 315-16 (1841); United States v. Hodson, 10 Wall, 395, 406–8 (1870); Jessup v. United States, 106 U.S. 147, 151–52 (1882); Muschany v. United States, 324 U.S. 49, 63 (1945); Kern-Limerick, Inc. v. Scurlock, 347 U.S. 110, 116 (1954). As the Comptroller General has pointed out, there is no legislation prohibiting use of the nondiscrimination clause. Moreover, the basic statutes regulating Government procurement policy have expressly granted discretion to the executive branch to determine the terms on which it will contract, subject to those general requirements and specific prohibitions which have been prescribed by the statutes. As to advertised contracts, the executive branch has discretion to determine the terms of specifications and invitations for bids which are appropriate to achieve the broad statutory objectives and to award contracts to that responsible bidder whose bid, conforming to the invitation, will be most advantageous to the Government, price and other factors considered. Negotiated contracts may be of any type which will promote the best interests of the Government. Federal Property and Administrative Services Act, June 30, 1949, c. 288, 63 Stat. 395, secs. 303, 304 (41 U.S.C. 253, 254); Armed Services Procurement Act, February 19, 1948, c. 65, 62 Stat. 22-23, secs. 3 and 4 (10 U.S.C. 2305, 2306). These statutes, and the applicable congressional committee reports, recognize the discretion of the executive branch to determine appropriate procurement policies within the framework established by Congress. The Federal Property and Administrative Services Act authorizes the President to "prescribe *** policies and directives, not inconsistent with the provisions" of the act (sec. 205, 40 U.S.C. 486). The committee reports on that act state that Congress laid down "broad standards for advertising, reserving appropriate discretion in the agency." S. Rept. 475, 81st Cong., 1st sess., p. 25; H. Rept. 670, 81st Cong., 1st sess., p. 23. The committee reports on the Armed Services Procurement Act, on which the procurement provisions of the Federal Property and Administrative Services Act were patterned, referred to the "necessity for reserving to the services broad discretion" within the procurement framework established by Congress. H. Rept. 109, 80th Cong., 1st sess., p. 18, and stated the purpose of Congress to "place expanded authority and responsibility in the hands of those charged with the procurement function." S. Rept. 571, 80th Cong., 1st sess., p. 3. C. In Fixing the Terms on Which the United States Will Make Purchases, Both the Legislative and the Executive Branch May Implement the Public Policy of the United States It is well settled that, in the exercise of its power to "fix the terms and conditions under which the Government will permit goods to be sold to it" the United States may take into consideration, and implement, the public policies of the United States. See Perkins v. Lukens Steel Co., supra (p. 129). Thus various statutes require provisions in Government contracts relating to wages, hours, and working conditions, Walsh-Healey Act, 41 U.S.C. 35-42; Davis-Bacon Act, 40 U.S.C. 276a-276a-5; Eight Hour Law, 40 U.S.C. 321–325; provisions requiring the contractor to use materials and supplies produced in the United States, Buy American Act, 41 |