DATE: December 20, 2004

SUBJECT: Government Accountability Office (GAO); Protests by Federal Employees in Actions Under OMB Circular A-76

SOURCE: Federal Register, December 20, 2004, Vol. 69, No. 243, page 75878

AGENCIES: Government Accountability Office (GAO)

ACTION: Proposed Rule

SYNOPSIS: GAO (formerly called the General Accounting Office) is proposing to amend its protest regulations to implement Section 326 of the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005 (Public Law 108-375), which authorizes an agency tender official to file a protest against a public-private competition conducted under Office of Management and Budget (OMB) Circular No. A-76, Performance of Commercial Activities, when requested by a majority of the agency employees whose jobs are subject to the competition.

EDITOR'S NOTE: OMB Circular No. A-76 is available at http://www.whitehouse.gov/omb/circulars/a076/a76_incl_tech_correction.html.

For more on the revised OMB Circular No. A-76, see the May 29, 2003, FEDERAL CONTRACTS DISPATCH "Office of Management and Budget (OMB); Revision of OMB Circular No. A-76, Performance of Commercial Activities."

GAO protest regulations are in Title 4 of the Code of Federal Regulations (CFR), Part 21, Bid Protest Regulations, and are available at http://www.gao.gov/decisions/bidpro/bid/bibreg.html.

For more on GAO decisions addressing protests against decisions made under OMB Circular A-76, see the April 20, 2004, FEDERAL CONTRACTS DISPATCH "General Accounting Office Decides Federal Employees Have No Right to Protest Under OMB Circular A-76 Decisions."

For more on Public Law 108-375, see the October 29, 2004, FEDERAL CONTRACTS DISPATCH "Enactment of the National Defense Authorization Act for Fiscal Year 2005."

DATES: Comments must be submitted on or before February 18, 2005.

ADDRESSES: Submit comments by e-mail at RegComments@gao.gov, or by fax: 202-512-9749. Comments may be sent by Federal Express or United Parcel Service addressed to Michael R. Golden, Assistant General Counsel, Government Accountability Office, 441 G Street, NW, Washington, DC 20548. Due to delivery delays, submission by regular mail is discouraged.

FOR FURTHER INFORMATION CONTACT: Daniel I. Gordon (Managing Associate General Counsel), Michael R. Golden (Assistant General Counsel) or Linda S. Lebowitz (Senior Attorney) at 202-512-9732.

SUPPLEMENTAL INFORMATION: On May 29, 2003, OMB revised OMB Circular No. A-76 to expand the use of public-private competitions to improve performance of commercial activities, and to incorporate the principles of Federal Acquisition Regulation (FAR) Part 15, Contracting by Negotiation, into the public-private competition process.

Paragraph F of A-76 Attachment B provides that "a directly interested party" may contest certain agency actions "taken in connection with the standard competition," and the pursuit of such protest "shall be governed by the procedures of FAR 33.103 [Protests to the Agency]." The definition of a "directly interested party" in A-76 Attachment D includes "a single individual appointed by a majority of directly affected employees as their agent."

On June 13, 2003, GAO published a request for comments on whether the revisions to A-76 affect the standing of an in-house entity to file a protest with GAO (see the June 13, 2003, FEDERAL CONTRACTS DISPATCH "General Accounting Office; Protests Under OMB Circular A-76." In the request for comments, GAO noted that the Competition in Contracting Act (CICA) grants it the authority to hear protests, and that CICA states a protest may be filed by an "interested party," which CICA defines as "an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract."

Subsequently, four protests were filed against agencies' decisions under the A-76 standard competition procedures that "contracting-out" the services would be more economical to the government (B-293590.2; B-293590.3; B-293883; B-293887; Dan Duefrene; Kelley Dull; Brenda Neuerburg; Gabrielle Martin, April 19, 2004). In each case, the party bringing the protest was a union official -- "the individual selected by a majority vote of affected employees to represent them on an OMB Circular A-76 competitive sourcing matter."

In all four cases, GAO dismissed the protest. "Our Office's statutory authority to hear bid protests is found in CICA, which establishes the standard for standing to file a protest by allowing a protest to be filed only by an 'interested party' with respect to a contract or a solicitation or other request for offers," wrote GAO. "...Under the current statutory language in CICA -- which is the language we must look to in determining whether a party has standing to protest to our Office -- the in-house entity lacks standing to protest."

GAO concluded the decision by taking a most unusual action. "We recognize the concerns of fairness that weigh in favor of correcting the current situation, where an unsuccessful private-sector offeror has the right to protest to our Office, while an unsuccessful public sector competitor does not. As a result...we are recommending that Congress consider amending CICA to allow protests to be brought on behalf of [the public sector employees]. Accordingly, by letter of today to the Chairman and Ranking Minority Member of the House Committee on Government Reform, the Senate Committee on Governmental Affairs, and the Senate and House Committees on Armed Services, we are transmitting a copy of this decision, with the suggestion that Congress may wish to consider amending CICA to provide for [public sector] standing."

In response to GAO's letter, Congress passed, and President Bush signed, Public Law 108-375 which included Section 326, Bid Protests by Federal Employees in Actions Under Office of Management and Budget Circular A-76. Section 326 authorizes an "agency tender official" (the government official responsible for the government's offer under an A-76 competition) to file a protest against the public-private competition when requested by a majority of the agency employees whose jobs are subject to the competition.

This proposed rule would implement Section 326 by making the following changes to GAO's protest regulations:

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953.

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