DATE: April 14, 2005

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

SOURCE: Federal Register, April 14, 2005, Vol. 70, No. 71, page 19679

AGENCIES: Government Accountability Office (GAO)

ACTION: Final Rule

SYNOPSIS: GAO finalizes, without changes, its proposal 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 the proposed rule, see the December 20, 2004, FEDERAL CONTRACTS DISPATCH Government Accountability Office (GAO); Protests by Federal Employees in Actions Under OMB Circular A-76.

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."

EFFECTIVE DATE: April 14, 2005.

FOR FURTHER INFORMATION CONTACT: Daniel I. Gordon (Managing Associate General Counsel), Michael R. Golden (Assistant General Counsel), Linda S. Lebowitz (Senior Attorney), or Paul N. Wengert (Senior Attorney), 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."

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-293590.2; 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 [Competition in Contracting Act], 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 - it wrote to Congress: "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.

On December 20, 2004, GAO published a proposed rule that would implement Section 326 by making the following changes to GAO's protest regulations:

GAO received comments from two federal agencies, five organizations representing contractors, seven unions, and three individuals. However, GAO concluded that the comments suggested changes that were not in conformance with the statutory language, so it has decided to adopt the proposed rule as final without changes.

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