MOTION TO COMPEL COMPLIANCE WITH SUBPOENA GRANTED: March 25, 1993 GSBCA 12322-P XEROX CORPORATION, Protester, v. GOVERNMENT PRINTING OFFICE, Respondent. Frederick W. Claybrook, Jr., James J. Regan, Stephanie B. N. Renzi, Devon Engel, and John E. McCarthy, Jr., of Crowell & Moring, Washington, DC; and Harry C. Orenstein and Robert J. Patton of Xerox Corporation, McLean, VA, counsel for Protester. Roy E. Potter and Kerry L. Miller, Office of the General Counsel, Government Printing Office, Washington, DC, counsel for Respondent. WILLIAMS, Board Judge. On March 3, 1993, Xerox Corporation (Xerox) filed the instant protest claiming that the Government, acting through the Government Printing Office (GPO) and Department of Defense (DOD), induced Xerox to invest millions of dollars preparing a complex proposal in response to a solicitation that was issued, continued, and canceled in violation of procurement law and regulation. GPO as the entity which canceled the solicitation was designated the respondent by the Clerk's Office of the Board. Although DOD entities were invited to participate in the protest as intervenors, none chose to do so. This matter comes before the Board on Protester's Motion to Compel Compliance with Subpoena and the Department of Defense Inspector General's (IG's) Motion Opposing Protester's Motion to Compel. The IG claims that certain documents responsive to the subpoena are subject to the deliberative process privilege; protester claims that they are not. At issue are four categories of documents: (1) a Quick- Reaction Draft Report Regarding the Air Force Information Publishing Service (AFIPS) Solicitation, issued by the IG on November 27, 1992; (2) portions of the IG audit exit conference briefing materials and notes; (3) portions of the Air Force's mark-up of the draft audit report; and (4) portions of a memorandum for the Secretary of Defense dated December 4, 1992. The Board ruled orally on the motion on March 19, 1993, and concluded that even though portions of the documents fell within the deliberative process privilege, the privilege was not absolute and was overcome in this case by protester's need for the documents to litigate its case. Background On May 20, 1992, the GPO issued a solicitation for AFIPS. The statement of work stated that the contract would provide technical and administrative information publishing services to support a wide range of customers worldwide in the Air Force, Army, Navy, and other DOD agencies. Xerox claims that when GPO initially issued the solicitation the Government had not performed the required acquisition planning, that duplicate services were available through another contract, the Joint Computer Aided Acquisition and Logistics Support (JCALS) contract which DOD awarded in December 1991, that although the Defense Printing Service (DPS) was the central printing authority for DOD, the Government acted without its approval, and that the Government had not determined which agency, the Air Force or DPS, would manage and control the procurement. Complaint 10. Protester further alleged: 20. The government did not have a definite intent to award a contract under the Solicitation at the time it issued Amendment 2. . . . [U]pon information and belief: . . . . b. on July 17, 1992, the Air Force Audit Agency issued a memorandum to the DoD Assistant Inspector General for Audit stating that 'the AFIPS/902-S program is being transferred to the Defense Printing Service' and outlining five areas of concern that the DoD Inspector General should investigate, including the possible overlap between the 902-S Solicitation and JCALS and the fact that the procurement should have been designated as a 'major system acquisition' but had not been and failed to receive required oversight as a result. Additionally, the memorandum suggested that adequate acquisition planning had not been performed, stating: The program manager could not provide [the Air Force Audit Agency] with a statement of need, program management directive, cost versus benefit analysis, functional economic analysis, or test and evaluation master plan. Without these plans and analyses, the AFIPS/902-S program may have a very high risk of failure. c. the government was aware, or should have been aware, that it had not performed adequate acquisition planning and had not met major system acquisition requirements; d. the government knew, or should have known, that the 902-S Solicitation would be or had been transferred from the Air Force to DPS; and e. the government knew, or should have known, that all elements of programs that duplicated any portion of JCALS would be eliminated. Complaint 20. Draft Quick-Reaction Report on the AFIPS 902-S Procurement Program The IG issued a draft Quick-Reaction Report, or audit report, on November 27, 1992. The audit was in response to requests from the Air Force Audit Agency and Congressman Charlie Rose, Chairman, Joint Committee on Printing. The requests expressed concerns regarding acquisition planning, management, and oversight of the AFIPS program. Draft Quick-Reaction Report, Executive Summary; Letter from DOD IG Counsel to the Board, Attachment B (Mar. 18, 1993). The audit objectives were to determine the need for the procurement and to determine if DOD requirements and regulations were followed. Id. Consistent with DOD regulation, the draft was provided to appropriate DOD managers for their review and comments which the IG will consider in preparing its final report. Affidavit of Robert J. Lieberman, Assistant Inspector General for Auditing (Lieberman Affidavit), 10. A quick-reaction format is used when imminent events make it impractical to use a standard draft audit report which normally takes several months to issue. Id. In this case the draft report was issued in a quick-reaction format because proposals for the 902-S procurement were due to GPO on January 29, 1993. Id. The Assistant Inspector General for Audits has raised the deliberative process privilege with regard to portions of this document claiming in pertinent part: As with all draft reports issued by this office, the draft audit report regarding AFIPS was issued to management in order to obtain comments and a statement of corrective action to be taken. The IG, DoD uses this procedure because it wants and needs to consider management's comments in preparing the final report. The draft audit report may be revised as a result of the comments received and further reviews within the Office of the Inspector General. The draft report is a direct part of the deliberative process in that it contains the auditors' preliminary recommendations and opinions on the issues under consideration. As an indication of the preliminary nature of the findings, conclusions, and recommendations contained therein, the draft audit report is signed by one of my subordinates (in the instant case by the Director of Contract Management). After management comments are received and considered, the audit recommendations may be revised. The final audit report, containing the final recommendations of the OIG, DoD, is signed by me or my deputy. Even if a final audit report is issued, the auditor opinions and assessments contained in auditor workpapers and the draft report would continue to be privileged due to their predecisional and deliberative character. Such information must be withheld in order that the audit process and the quality of the final audit report not be harmed. Disclosure of predecisional deliberative information, such as draft audit report and auditor workpapers, to the extent that they do not contain purely factual portions or compilations of a purely factual nature would have a chilling effect on the ability of auditors to provide candid observations and recommendations to each other, to their supervisors, and finally, to management during the audit process. Lieberman Affidavit, 15, 16. He further stated that distribution of IG draft reports outside the Department of Defense is not authorized. Id. 18. Auditors' Memoranda of Exit Conferences In late November 1992, the auditors conducted exit conferences with DOD managers at the end of their field work. Lieberman Affidavit, 20. During the exit conferences, auditors discussed their preliminary findings and conclusions with the DOD managers. Id. The IG provided redacted versions of the exit memoranda which synopsized the discussion during the exit interview. Letter from DOD IG Counsel to the Board, Exhibit C (Mar. 18, 1993). All of the exit memoranda predated the issuance of the draft report on November 27, 1992. Id.; Lieberman Affidavit, 24. Air Force Comments to Draft Quick-Reaction Report The IG produced in full the Air Force's comments on the draft audit report. The comments were in the form of a memorandum for the IG dated December 18, 1992, from the Deputy Assistant Secretary. However, the IG claimed the deliberative process privilege for the "Air Force Mark-Up Copy" of the draft audit report. This document included the Air Force's corrections, comments, and suggested changes to the report including the Air Force's rationale. Memorandum for Secretary of Defense from Inspector General dated December 4, 1992 The IG claimed the deliberative process privilege for a portion of this two-page memorandum which included recommendations and conclusions of the audit. Discussion As we recognized in U.S. West Information Systems, Inc., GSBCA 9103-P, 87-3 BCA 20,204, to support its claim of deliberative process privilege, an agency must establish that: (1) the materials were part of a deliberative process by which policies or decisions were formulated and (2) the materials are predecisional or advisory or recommendatory in nature, expressing an opinion on a legal or policy manual or otherwise are reflective of a deliberative process. Id. at 102,345 (citing Mobile Oil Corp. v. Department of Energy, 102 F.R.D. 1, 5-6 (N.D.N.Y. 1983)). The privilege is to be narrowly construed. U.S. West, 87-3 BCA at 102,345-46 (citing J. R. Norton Co. v. Arizmendi, 108 F.R.D. 647,648 (S.D. Cal. 1985)). To qualify for protection, a document "must directly recommend courses or prescribe options for a specific agency decision or policy change." Walsky Construction Co. v. United States, 20 Cl. Ct. 317, 321 (1990). Having conducted an in-camera review of the documents at issue, the Board concludes that portions of the disputed documents come within the deliberative process privilege. The draft audit report is predecisional; it preceded the cancellation decision at issue here, and no final audit report had been issued as of the Board's oral rulings on the motions.[foot #] 1 The opinions and recommendations of the auditors in the draft audit report would come within the privilege, as would portions of the exit conference memoranda of the auditors which reflect their opinions, recommendations, and conclusions. ----------- FOOTNOTE BEGINS --------- [foot #] 1 The final report has since been issued on March 22, 1993. Of course, to the extent any of the preliminary recommendations were adopted in the final report they are no longer privileged. U.S. West, 87-3 BCA at 102,346. _________ ----------- FOOTNOTE ENDS ----------- We note, however, that these documents also contain factual information, including the auditors' findings which would not come within the parameters of the privilege. E.g., U.S. West 87-3 BCA at 102,346 ("The findings give the respondent's candid views on past irregularities, and are not deliberative."). Also, the memoranda at times simply recount statements made to the auditors by the managers, or background events, which are factual. Similarly, the characterization of the AFIPS contract, as well as the description of which agency components had oversight over the procurement are factual. We find that the Air Force mark-up comments are largely incorporated into the Air Force comments which were voluntarily produced and, therefore, that the deliberative process privilege was waived as to those materials. Washington Post Co. v. Department of the Air Force, 617 F. Supp. 602, 605 (D.D.C. 1985). Finally, the memorandum to the Secretary of Defense from the IG simply reiterates the conclusions and recommendations of the auditors which we already have found to be within the privilege. Despite our conclusion that certain of the above documents are privileged, the privilege is not absolute, and is overridden here. In Centel Federal Systems, Inc., GSBCA 12011-P, et al., 1992 BPD 296 (Oct. 1, 1992), we recognized that the privilege may be overridden when necessary to promote the paramount interest of the Government in having justice done between litigants or to shed light on alleged Government misfeasances or in other circumstances where the public's interest in effective Government would be furthered by disclosure. The Board listed five factors to be considered in making such an assessment: (1) the relevance of the evidence; (2) the availability of other evidence; (3) the seriousness of the litigation and the issues involved; (4) the role of the Government in the litigation; and (5) the possibility of future timidity by Government employees. In this case protester seeks to remedy alleged illegalities in the conduct of the AFIPS procurement. The audit report is directly relevant to the protester's claim that the laws and regulations were violated in the AFIPS procurement. Moreover, protester has alleged that the report itself was relied upon by the Government in taking the cancellation action. While other evidence may be available, this draft audit report may, in fact, be an operative event in the procurement decisions at issue here. The exit interviews and Air Force mark-up comments on the report deal with the viability of the AFIPS procurement and compliance with regulation. They, too, are directly relevant to the issues of protest. GPO is a party to the litigation, and DOD actions are at issue; DOD should not be permitted to shield its relevant actions from Board review by claiming the privilege. Finally, we see little possibility of future timidity by Government employees because the protective order will strictly limit disclosure of these documents to counsel of record in this case who have been granted access to protected material. Thus, there should be no risk of a chilling effect on Government employees cooperating with DOD IG in the future, or on the auditors themselves in voicing candid recommendations. Decision Protester's motion to compel compliance with subpoena is GRANTED. The Department of Defense's motion opposing protester's motion to compel compliance with subpoena is DENIED. _____________________________ MARY ELLEN COSTER WILLIAMS Board Judge