Bowsher v. Merck & Company, Inc.

PETITIONER: Bowsher
RESPONDENT: Merck & Company, Inc.
LOCATION: Mobile, Alabama

DOCKET NO.: 81-1273
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 460 US 824 (1983)
ARGUED: Dec 01, 1982
DECIDED: Apr 19, 1983

ADVOCATES:
Jerrold J. Ganzfried - on behalf of the Petitioner
Philip A. Lacovara - on behalf of the Respondent

Facts of the case

Question

Media for Bowsher v. Merck & Company, Inc.

Audio Transcription for Oral Argument - December 01, 1982 in Bowsher v. Merck & Company, Inc.

Audio Transcription for Opinion Announcement - April 19, 1983 in Bowsher v. Merck & Company, Inc.

Warren E. Burger:

The judgment and opinion of the Court in Bowsher against Merck & Company and the consolidated case will be announced by Justice O'Connor.

Sandra Day O'Connor:

These cases come to us on writ of certiorari to the United States Court of Appeals for the District of Columbia Circuit.

Merck & Company entered into three fixed-price negotiated contracts with governmental agencies for the sale of pharmaceutical products.

The contract prices were based on Merck's catalog prices.

As required by statute, each contract contained a standard access-to-records clause granting the Comptroller General the right to examine any "directly pertinent" records involving transactions related to the contract.

Relying on these clauses, the Comptroller General demanded that Merck permit access to cost records pertinent to the contracts, including records of costs of direct materials, labor, and overhead, and support for the prices charged.

Merck refused to comply and sought a declaratory judgment in the District Court that the Comptroller General's access demand exceeded his statutory authority.

The District Court granted partial summary judgment for each party, permitting access to records of direct costs, including manufacturing and delivery costs, but barring access to records of indirect costs, including research and development, marketing and promotion, distribution, and administrative costs, except to the extent that those costs were included in the direct costs items.

The Court of Appeals affirmed and we also affirm.

The legislative history of the access to records provisions reveals two conflicting congressional aims.

On the one hand, Congress wanted to equip the General Accounting Office with a tool to detect fraud, waste, inefficiency, and extravagance in Government contracting.

On the other hand, by adding the words directly pertinent in the statute, Congress also intended to restrict to some degree, the Comptroller General's access power in order to prevent Government snooping into contractor's nongovernmental business affairs.

In this case, the appropriate balance between the public interest served by thorough GAO investigations and the private interest in freedom from governmental intermeddling in the contractor's private business affairs weighs in favor of access to Merck's direct cost records but against access to Merck's indirect cost records.

The fact that the records here were sought for the purpose of either conducting an economic study of the pharmaceutical industry or securing information desired by individual members of Congress does not negate the General Accounting Office's authority to examine the directly pertinent records.

Justice White joined by Justice Marshall has filed an opinion concurring in part and dissenting in part.

Justice Blackmun joined by Justice Stevens has also filed an opinion concurring in part and dissenting in part.

Warren E. Burger:

Thank you Justice O'Connor.