# Petition for Writ of Certiorari — National Federation of Federal Employees v. Cheney > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_1273%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1990 - **Citation:** 496 U.S. 936 ## Text Pt Tt aoe ee SV= LOOT ft) wa o wm No. 89- 6 Teaser SAN CRW . ee eat tt ll eee "Naghf Span re In The Supreme Court of the United States October Term, 1989 » a4 NATIONAL FEDERATION OF FEDERAL EMPLOYEES, et al., Petitioners, RICHARD B. CHENEY, SECRETARY OF DEFENSE, et al., Respondents. 4. vw PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT yN a H. STEPHAN GorRDON* General Counsel Auice L. BoDLEy Deputy General Counsel JosHuA F. Bowers Staff Attorney NATIONAL FEDERATION OF FEDERAL EMPLOYEES 1016 16th Street, N.W Washington, D.C. 20036 (202) 862-4454 Attorneys for Petitioners “Counsel of Record COCKLE LAW BRIEF PRINTING CO., (800) 225-6964 OR CALL COLLECT (402) 342-2831 QUESTION PRESENTED Whether Federal employees have standing to enforce a statute and regulations governing a cost comparison of in-house government costs and contractor bids that deter- mines whether Federal employees or contractors will per- form commercial activities for the government. il PARTIES TO THE PROCEEDINGS The National Federation of Federal Employees (“NFFE”) is a labor organization which represents ap- proximately 150,000 federal employees. The National Federation of Federal Employees, Local 273 (“NFFE, Lo- cal 273”) is a chartered local of NFFE which represents a unit of 2,500 employees at Ft. Sill, Oklahoma, including the 462 former employees of the Ft. Sill Directorate of Logistics whose removal is the subject of this litigation. NFFE and NFFE Local 273 were the plaintiffs-appellants in the U.S. Court of Appeals for the District of Columbia Circuit and are petitioners here. The defendants-appellees below were Secretary of Defense Richard B. Cheney (substituted for Frank C. Car- lucci) and then-Secretary of the Army John O. Marsh, Jr., both of whom were named in their official capacities. _. 2a ili TABLE OF CONTENTS Page eo ag a sexy yk nd ave 6 esd 5s 1 EST eee eee 2 STATUTES AND REGULATIONS INVOLVED ...... 2 i Ge ays |S a 3 eo 3 1. Commercial Activity Program - Purpose... 3 2. Commercial Activity Program — History.. 4 3. Commercial Activity Program: The Gov- ernment Versus Contractor Cost Competi- eae aie Le aii eH 6 6 6 ad NN ses oo es 7 B. FEDERAL ROLE IN THE COMMERCIAL AC- PE REPO os snc x sev cescesesscecss 9 1. Preparation of Performance Work State- NS en ee 10 2. Preparation of Most Efficient Organization 10 3. Administrative Appeal Procedure......... 11 a ee 6. Se en 12 Ee 12 B. U.S. District Court for the District of Columbia 13 C. U.S. Court of Appeals for the District of Co- lumbia Circuit Panel Decision ............... 13 D. Order and Statement Denying Rehearing or a eis ease en ness career vers 15 REASONS FOR GRANTING THE PETITION....... 16 QO @ > D. iv TABLE OF CONTENTS - Continued Page NNR os 6:53 24054 KER CSE ends See EE ees 16 Pn 44d bia ede eRe 17 Prudential Standing: Zone-of-Interest ........ 19 Pee MA EIS S550 e oe sense ae esesaues 20 Ae EE tia LNs evans aavakoehweas eaneneees 25 TABLE OF AUTHORITIES Page CasES Allen v. Wright, 468 U.S. 737 (1984) ................. 18 Arnold Tours, Inc. v. Camp, 400 U.S. 45 (1970)........ 24 Association of Data Processing Service Organizations, Inc. v. Camp, 339 U.S. 150 (1970)....15, 18, 19, 21, 24 C.C. Distributors v. U.S., 883 F.2d 146 (D.C. Cir. We ae ae kee Oe eT Ee rs os 15, 17 Clarke v. Securities Industry Association, 479 US. Oy Se apa re Pee 19, 2, 21, 26, 25, 26 Department of the Treasury, I.R.S. v. FLRA, 862 F.2d 880 (D.C. Cir. 1988), cert. granted, 58 U.S.L.W. date (US. Ost. 2 1989) (No. GE-Z1ZB)... «060s es 12 Headquarters, 97th Combat Support Group (SAC), Blytheville Air Force Base, Arkansas v. American Federation of Government Employees, Local 2840, Se UT Ge SEE on. 56 o-dchoe CoA N eNOS EERE RES 12 Investment Company Institute v. Camp, 401 U.S. 617 COUT WN 044 v.50 cae ohh an ae eee Eee nea 14, 24 Valley Forge Christian College v. American United for Separation of Church and State, Inc., 454 U.S. 464 GEST S06 CONST ae's So eae Chak rk oe e a eran meee 18 STATUTES Administrative Procedure Act, 5 U.S.C. Section FOR CRN os ans eeeh net vib eea bene eR eae ea ee a 2, 19 Back Pay Act, 5 U.S.C. Section 5596 (1987).......... 19 Budget and Accounting Act of 1921, as amended, 31 U.S.C. Section 1 vi TABLE OF AUTHORITIES — Continued | Page Contracting for Certain Supplies and Services Re- quired When Cost Is Lower, 10 U.S.C. Section EE ae Ant ee iene ee it ee 7 Cost Comparisons: Requirements with Respect to Retirement Costs and Consultation with Em- ployees, 10 U.S.C. Section 2467 (1988)... 9, 10, 20, 21 National Defense Authorization Act of 1987, Pub. L. 99-661, Sec. 1223(b), 100 Stat. 3972......... passim National Defense Authorization Act of 1989 Pub. ee er eo ccc westéwasoswucesen 20 Office of Federal Procurement Policy Act of 1974, ee aan PO SU, FUE. go vccescuceecewssus 2,5 Office of Federal Procurement Policy Act Amend- ments of 1979 Pub. L. 96-83, 93 Stat 648 (cod- ified at 41 U.S.C. Section 401 et seq.).......... passim REGULATIONS oe ee en rrr 2, 6 eee GRUMON FUE CUI)... evr ecnereesseres 8, 9 Cr SUN Fume CODD... 0 o.oo re ccwesceesens 9, 12 ee feo sss ce ay exe ne Nee . passim OOD oo, oi baw a ve u¥eetsseenenerns 2 OO ss rales eee sanyo secs wrens 5 ADMINISTRATIVE AND EXECUTIVE MATERIALS Executive Order No. 12615................. a oy 40 oe Bureau of the Budget Bulletin 55-4................... ° vil TABLE OF AUTHORITIES - Continued Page MISCELLANEOUS 1979 U.S. Code Cong. & Ad News at 1499-1501...... 5 134 Cong. Rec. H 2714, April 29, 1988 ... 10, 11, 21, 22 Government Accounting Office: Federal Produc- tivity: DOD’s Experience Contracting Out Com- mercially Available Activities, B-223693 (Nov. PE ee ae Rte eres cep ee ede a enerees passim = == 7. Ca ey ns — 7 a Pes cae No. 89-__ y 7 In The Supreme Court of the United States October Term, 1989 Lp vw NATIONAL FEDERATION OF FEDERAL EMPLOYEES, Petitioner, RICHARD B. CHENEY, SECRETARY OF DEFENSE, et al., Respondents. a — PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT a 4 Petitioner National Federation of Federal Employees petitions for a writ of certiorari to review the decision of the United States Court of Appeals for the District of Columbia Circuit in this case. 7% _ OPINIONS BELOW The opinion of the circuit court is reprinted in the Appendix at pages 1-61. The decision of the district court, National Federation of Federal Employees v. Carlucct, No. 88-834 (D.D.C. Aug. 11, 1988) (order granting motion to dismiss) and the decision of the D.C. Circuit, National Federation of Federal Employees v. Cheney, 892 F.2d 98 (D.C. Cir. 1989) (order denying motion for rehearing and sug- gestion for rehearing en banc), are reprinted in the Appen- dix at pages 71-74 and 62-70, respectively. ,% -_ JURISDICTION The decision of the United States Court of Appeals for the District of Columbia Circuit was entered on Au- gust 25, 1989. The order denying appellant’s Motion for a Rehearing and Suggestion for Rehearing En Banc was entered December 22, 1989. This Court has jurisdiction to review the judgment of the court below under 28 U.S.C. Sec. 1254(1). , » STATUTES AND REGULATIONS INVOLVED This case involves the Office of Federal Procurement Policy Act Amendments of 1979, Pub. L. 96-83, 93 Stat. 648; The National Defense Authorization Act of 1987, Pub. L. 99-661, Sec. 1223(b), 100 Stat. 3972 (codified at 10 U.S.C. Sec. 2304 note (Supp. V 1987)), repealed and re- codified Pub. L. 100-370, Sec. 2(a) (1), July 19, 1988, 102 Stat. 851; (codified at 10 U.S.C. 2462(b) (1988)) and the Administrative Procedure Act, 5 U.S.C. Sec. 702 (1982). This case also involves Executive Order No. 12615, 52 Fed. Reg. 44853 (1987), reprinted in 31 U.S.C. Sec. 501 (Supp. 1989); The Federal Acquisition Regulation, 48 CFR Sec. 7.3 (1988); Office of Management and Budget Circular A-76. All statutes and regulations are set forth in the appendix with the exception of OMB Circular A-76 which has been lodged with the Clerk of the Court. & ww STATEMENT OF THE CASE A detailed description of the purpose and history of the government commercial activity program is set forth to properly frame the case for Court review. This descrip- tion is necessary because the union contends that the D.C. Circuit’s decision is based on outdated principles enunci- ated in statutes and regulations of the 1950s and 1960s while failing to consider the statutory and regulatory framework of the present day commercial activity pro- gram. A. BACKGROUND 1. Commercial Activity Program — Purpose The federal government’s commercial activity pro- gram is intended to reduce the cost of government by seeking the least expensive source of commercial ser- vices. Examples of government commercial activities are vehicle maintenance, food services and laundry services. The commercial activity program is set forth in the Office of Management and Budget (“OMB”) Circular A-76 (1983 ed.).1 These procedures determine the least ' OMB Circular A-76 was originally issued in 1966 and subsequently was revised in 1967, 1979 and 1983. See OMB Circular A-76 (Revised) para. 4.b. (August 4, 1983). The Circu- lar summarized a policy of the Bureau of the Budget developed in Bureau Bulletins issued in 1955, 1957, and 1960. Id. The 1983 Circular revision is the focus of this appeal. expensive source of services by comparing in-house gov- ernment costs and private contractor bids. Ideally, ihis cost comparison results in the selection of the least ex- pensive source of service. Commercial activities presently performed by federal employees must be retained in-house unless a cost com- parison indicates a private contractor can accomplish the same quality job at lower cost. For newly proposed com- mercial activities, an agency must conduct a cost compar- ison unless in-house performance is not feasible. The commercial activity program excludes some gov- ernment functions from performance by the private sec- tor. This exclusion applies to functions so closely related to the public interest that they must continue to be per- formed by federal employees. Functions excluded from competition with the private sector are referred to as “inherently governmental”, e.g., criminal investigation prosecutions, conduct of foreign relations, and direction of intelligence services. 2. Commercial Activity Program —- History When first established in the 1950s, the commercial activity program presumed that private contractors were less expensive than federal employees. This policy has gradually been rescinded, and the modern program makes no presumption of which source is cost effective. Today, the commercial activity program relies on a cost competition between in-house government costs and pri- vate contractor bids to determine the cost effective source of commercial services. The first commercial activity directive, the 1955 Bu- reau of the Budget Bulletin 55-4, instructed agencies to rely solely on private contractors for commercial ser- vices.2 The 1955 Bulletin permitted exceptions to relying on private contractors only in cases where use of private contractors would not be in the public interest. See Gov- ernment Accounting Office, Federal Productivity: DOD’s Experience in Contracting-Out Commercially Available Activities, B-223693 at 10 (Nov. 1988) (hereafter cited as “GAO Report”). In 1967, the commercial activity program introduced competition between in-house government costs and the private contractor bids. Unfortunately, the 1967 commer- cial activity program lacked guidance on how to conduct a cost comparison. This resulted in each agency or instal- lation applying different cost comparison formulas with mixed results. In 1974, Congress created the Office of Federal Pro- curement Policy (“OFPP”) within OMB and gave it au- thority to draft government-wide procurement regulations. Pub. L. 93-400, 88 Stat. 976. In response, the Office of Federal Procurement Policy expanded OMB Cir- cular A-76 and included a uniform cost comparison for- mula agencies must apply when comparing in-house costs and contractor bids. 44 Fed. Reg. 20559 (1979). In 1979, Congress amended the OFPPA with instruc- tions to expand the procurement regulations. 1979 U.S. * Bureau of the Budget Bulletin 55-4 was promulgated pursuant to the Budget and Accounting Act of 1921, as amended 31 U.S.C. Sec. 1 et seq. Code Cong. & Ad. News at 1499-1501; 93 Stat. 648. In response, OFPP incorporated OMB Circular A-76 into the Federal Acquisition Regulations governing government versus contractor performance. 48 CFR Section 7.3 (1988); App. 80. The current OMB Circular A-76, (1983 ed.), issued pursuant to the OFPPA, substantially improved the com- petitive position of the in-house government operation when pitted against contractor bids in the cost compari- son. The Circular requires agencies to conduct an efficien- cy study that determines the most efficient in-house organization. Only after maximizing in-house efficiency may an agency calculate the in-house cost placed in com- petition with the contractor bid. GAO Report at 13. In 1987, Congress reviewed the effectiveness of OMB Circular A-76. In a note provision of tne 1987 National Defense Authorization Act, Congress instructed the Sec- retary of Defense to ensure cost comparisons were “real- istic and fair”. Pub. L. 99-661, Sec. 1223, 100 Stat. 3972. To accomplish this objective, the Act elevated the following Circular A-76 costs comparison factors to law: “the costs of quality assurance, technical monitoring of the perform- ance of such function, liability insurance, employee re- tirement and disability benefits and all other overhead costs.” Id. Each of these factors was previously included in the cost comparison formula, and the 1987 Defense Act did not alter the existing cost comparison in OMB Circu- lar A-76 (1983 ed.).3 3 In 1988, Congress reorganized numerous commercial activity note provisions of the Department of Defense (Continued on following page) eile In 1987, President Reagan signed Executive Order 12615 (Nov. 1987), which set forth the scope o the current commercial activity program. App. 83. This Executive Order requires ail agencies to schedule commercial activ- ity competitions for each of the government commercial activities presently performed by 750,000 federal employ- ees. See GAO Report at 28. Agencies must subject no less than 3% of the federal employee positions to the cost competition each year until such time as all federal em- ployee costs have been pitted against contractor perfor- mance through the OMB Circular A-76 cost comparison procedure. App. 83. In November 1988, the Government Accounting Of- fice reported that between 1980 and 1987, the Department of Defense had conducted 78% of all federal government commercial activity studies. GAO Report at 8. In approx- imately half of the Department of Defense Commercial Activity studies, the cost comparison resulted in a deci- sion to retain federal employee in-house performance. GAO Report at 15 3. Commercial Activity Program: The Government Ver- sus Contractor Cost Competition. The cost competition of the commercial activity pro- gram is a multi-step process resulting in a strictly (Continued from previous page) Authorization Acts. The cost comparison provision of the 1987 Act was recodified as “Contracting For Certain Supplies And Services Required When Cost Is Lower”, 10 U.S.C. Section 2462 (1988). regimented cost comparison of in-house cost and contrac- tor bids. The first step of a commercial activity review is to define the performance standards (quality, timeliness, quantity) of the work the commercial activity expects to perform in the future. These standards are incorporated in a written document called the Performance Work State- ment (“PWS”). Developing an accurate PWS is critical to the cost study process because it is the basis for determin- ing the in-house cost estimate and contractor bids. GAO Report at 13. The second step is a government study to determine the most efficient in-house organization (“MEO”). The government next determines the cost to operate the MEO. The Government Accounting Office recently described the MEO performance cost as the “government bid” to perform the commercial activity. GAO Report at 13. The government solicits bids from the private sector based on the work standards in the PWS. 48 CFR Section 7.302(a)(1)(1988); App. 81. All contractor bids are re- viewed and only one is selected as best qualified. This single remaining contractor bid remains in competition for the contract. Finally, in accordance with the strict requirements of OMB Circular A-76, Part IV, a cost com- parison is conducted between the remaining contractor bid and the cost of in-house performance. Id. at 7.302(a) (2) (1988) App. 81. A tentative award to either in-house or contractor performance is determined by the outcome of the cost comparison formula. Id. Affected parties, including the contractor and federal employees, may file an administrative appeal based solely on compliance with the cost comparison pro- cedures. Id. at Section 7.302(c)(1988); App. 81; OMB Cir- cular A-76, Part I(1)(7) at I-15. The administrative appeal board is appointed by the agency conducting the com- mercial activity study and must issue its decision within 30 days of receipt of an appeal. Final award of the commercial activity is made with the comple.ion of the appeal process. If the competition results in an in-house award, the agency must implement the MEO within six months. OMB Circular A-76, Part I(E) (5) at I-12. B. FEDERAL EMPLOYEE ROLE IN THE COMMER- CIAL ACTIVITY PROGRAM Federal employees play an integral role in prepara- tion of a commercial activity study and the related ad- ministrative appeal procedure. The National Defense Authorization Act of 1989 contained a note provision requiring agencies to consult federal employees on a regular basis during preparation of two crucial docu- ments that control the eventual cost of in-house opera- tion. Pub. L. 100-998, Sec. 33, repealed and recodified Pub. L. 100-456, Sec. 331(a), 102 Stat. 1957 (codified at 10 U.S.C. Section 2467(a) 1988) (hereafter “Cost Comparison Act”). Additionally, if a cost comparison results in a contractor award, federal employees have standing to challenge the award in the administrative appeal pro- cedure. 48 CFR Section 7.307 (1988); OMB Circular A-76, Part I, 1(7). ei 10 1. Preparation of Performance Work Statement The Cost Comparison Act requires agencies to con- sult regularly with federal employees during preparation of the Performance Work Statement (“PWS”). 10 U.S.C. Section 2467(b) (1) (A). The PWS establishes the stan- dards of work on which contractors base their bids. The legislative history indicates Congress added this require- ment due to frequent omissions in the PWS of the work to be performed. 134 Cong. Rec. H2714-15, April 29, 1988 (Statement of Rep. Skelton). Congress concluded that the omissions resulted in under-bids by contractors and mul- ti-million dollar cost overruns when contractors were required to perform the work omitted from the PWS. Id. Regular consultation with federai employees is designed to ensure that all work being studied is reflected in the PWS. Id. In urging passage of the Cost Comparison Act, Rep. Skelton stated that federal employees would be mo- tivated to ensure that the PWS is complete because it would guarantee that contractor and in-house costs would be based on the same work standards. Id. at H2715. 2. Preparation of Most Efficient Organization The Cost Comparison Act also requires that agencies regularly consult federal employees during preparation of the Most Efficient Organization. 10 U.S.C. Section 2467(b) (1) (A). The MEO is the end result of the in-house cost efficiency study conducted during a commercial ac- tivity study. OMB Circular A-76, Part I(E) (1) at I-12. The cost of performing the MEO is the “government’s bid” a 1] compared against the contractor bid in the cost compari- son process. GAO Report at 13. The commercial activity regulations require the MEO to remain confidential dur- ing its preparation to prevent disclosure to competing contractors. Nevertheless, an agency must solicit efficien- cy suggestions from the federal employees. OMB Circular A-76, Part I(E) (2) at I-12. Federal employees performing an activity are ideally situated to recommend and imple- ment efficiency improvements. When urging passage of the Cost Comparison Act, Rep. Skelton recognized that Federal employees would be motivated to make efficien- cy recommendations because, without a competitive MEO, a private contractor will replace the federal em- ployees. 134 Cong. Rec. H2714-15, April 29, 1988. 3. Administrative Appeal Procedure OMB Circular A-76 (1983 ed.) was promulgated pur- suant to the Office of Federal Procurement Policy Act, 1979 Amendment, which required the Office of Federal Procurement Policy to promulgate efficiency regulations and to “promote fair dealings and equitable relationships among the parties in Government contracting.” Pub. L. 96-83, Sec. 2(12); 93 Stat. 648. In response, OMB Circular A-76 was amended to include the designation of federal! employees as “affected parties”, with standing to appeai violations of the cost comparison through the administra- tive appeals procedure. OMB Circular A-76, Para. 6(g) (affected parties); OMB Circular A-76, Part I, I(7) at I-14 (administrative appeal procedure). The Appeals Board jurisdiction is limited to reviewing compliance with the 12 cost comparison formula and the Board must issue deci- sions within 30 days of receipt of an appeal. 48 CFR Section 7.307 (1988). An administrative appeal outside the agency conducting the commercial activity study is pro- hibited. OMB Circular A-76, Part I, 1(2) & (3) at I-15.4 The federal employees in the instant case completed the ad- ministrative appeal procedure prior to seeking judicial relief. PROCEEDINGS BELOW A. Facts In 1980, the U.S. Army Training and Doctrine Com- mand (“TRADOC”) directed the Army Fort Sill Director- ate of Resource Management to conduct a commercial activity review of the Fort Sill Directorate of Logistics (“DOL”). The Directorate of Logistics provides support, maintenance, transportation and supply functions for Fort Sill, Oklahoma and surrounding installations. In May 1987, after a seven year commercial activity study, a cost comparison resulted in a tentative award of the DOL function to a private contractor. The union appealed mul- tiple violations of the cost comparison through the ad- ministrative appeals procedure. Among the violations raised in the appeal were inflation of the in-house cost, 4 However, the Federal Labor relations Authority has held that the cost-comparison and other mandatory aspects of the commercial activity program are subject to grievance/arbitra- tion. Headquarters, 97th Combat Support Group (SAC), Blytheville Air Force Base, Arkansas v. American Federation of Government Employees, Local 2840, 22 FLRA 656 (1986); See also Department of the Treasury. I.R.S. v. FLRA, 862 F.2d 880 (D.C. Cir. 1988), cert. granted, 58 U.S.L.W. 3212 (U.S. Gct. 2, 1989) (No. 88-2123). ee | tare ee i 13 artificialiy high overhead and support costs, and an im- proper calculation of private contractor conversion costs and profit provisions. The Army administrative appeal board granted portions of the union appeal but conclud- ed that the changes in the cost comparison were insuffi- cient to overturn the award to the private contractor. B. U.S. District Court for the District of Columbia On March 29, 1988, the union sought injunctive and declaratory relief in the United States District Court for the District of Columbia to halt the Army’s planned con- version to contractor performance on October 1, 1988. The union case relied on the many Army violations of both OMB Circular A-76 and the cost comparison provi- sions of the 1987 Defense Authorization Act. In dismiss- ing the case, the U.S. District Court held that federal employees lacked standing to enforce either OMB Circu- lar A-76 or the cost comparison provisions of the Defense Act. C. U.S. Court of Appeals for the District of Columbia Circuit Panel Decision A panel of the U.S. Court of Appeals for the District of Columbia Circuit upheld the District Court, finding that federal empioyees were not within the zone of inter- est of the statutes relied upon. The court reviewed the legislative history of the Office of Federal Procurement Policy Act of 1979 and the Budget and Accounting Act of 1921, as amended, and concluded it was Congress’ intent to promote federal government efficiency. Additionally, the Court concluded that the Office of Federal Procure- ment Policy Act, 1979 Amendment, and the 1987 National a | 14 Defense Authorization Act required agencies to rely on the private sector for commercial services. App. 28 & 31. Thus, in the court’s view, Congress had not contem- plated reliance on federal employees to challenge agency violations of these efficiency related statutes. App. 28 & 31. Furthermore, the court found that the interest of federal employees in continued employment is in conflict with an efficient government. App. 28 & 31. Therefore, federal employees could not be within the zone of inter- est of statutes which relied on private contractors for the | services presently performed by federal employees. App. 28 & 31. The majority concluded that the interest of federal employees in seeing that agencies comply with the procurement regulations was no different than that of the general public. App. 33. a In a vigorous and lengthy dissent, Judge Mikva crit- icized the majority for disregarding the Supreme Court’s zone of interest test and for misreading the legislative history. App. 53-56. Judge Mikva concluded that the plain language of the statutes and regulations demonstrated Congress’ intent that the comparison of in-house govern- ment and contractor costs result in the selection of the least expensive source of commercial government ser- vices. App. 57-58. This bottom line approach favors the | source that is least expensive. As Judge Mikva pointed | out, the only way a federal employee performing a com- | mercial activity will retain employment is by assisting the : agency to reach cost efficiency. App. 49-50. Judge Mikva | identified decisions of the Supreme Court holding that business interests in profits bring a party within the zone of interest of a statute when pursuit of profits result in furtherance of the congressional purpose. See Investment 15 Company Institute v. Camp, 401 U.S. 617 (1971); Arnold Tours, Inc. v. Camp, 400 U.S. 45 (1970); Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150 (1970); App. 43. Judge Mikva found no difference be- tween a federal employee's interest in wages and a com- pany’s interest in profits. App. 43-44. D. Order and Statement Denying Rehearing or Review En Banc Three days prior to issuance of the panel’s decision in the instant case, the D.C. Circuit issued C.C. Distribu- tors v. U.S., 883 F.2d 146 (D.C. Cir. 1989) in which the court held private contractors have standing under the 1987 Defense Authorization Act to enforce an OMB Circu- lar A-76 cost comparison. On the basis of the conflict between these decisions, the union filed a Motion for Rehearing or Suggestion for Review En Banc. The court denied the union motion and reiterated that the interest of federal employees in continued government employ- ment conflicts with the efficiency goals of Congress. App. 66. The court also stated that federal employee interest in a fair procurement procedure was no different than the interest of the general public. App. 65. Judge Mikva dissented and, in a statement joined by Chief Judge Wald and Judge Edwards, criticized the court’s decision as a “perverse use of the standing doc- trine.” App. 70. The dissent observed that the legislative goals of efficiency and economy would be promoted only when the least expensive source of services was obtained. App. 67. The dissent reiterated that the plain language of the statute indicated neutrality between federal employee and contractor performance. App. 67. The dissent also accused the majority of manufacturing a preference for private contractors through a selective reading of the legislative history. App. 69. a 4 REASONS FOR GRANTING THE PETITION A. Introduction The federal government commercial activity program is a multi-billion dollar activity. Taken together, the stat- utes governing the commercial activity program constitu- te an unequivocal order to reduce costs by achieving commercial activity cost efficiency. Congress’ instruc- tions, in the Budget & Accounting Act of 1921, as amended, 31 U.S.C. Section 1 et seq., and in the Office of Federal Procurement Policy Act, as amended, 41 U.S.C. Section 401 et seq., constitute a general command to im- prove efficiency. These statutes delegated authority, first to the Bureau of the Budget, and later to its successor, the Office of Management and Budget, to create a regulatory scheme that promotes procurement efficiency. Pub. L. 96-83, Sec. 649, 93 Stat. 649 App. 75-77. More recently, Congress endorsed the efficiency mechanism created by the Office of Management and Budget when it incorpo- rated portions of the OMB Circular A76 cost comparison in a note provision of the 1987 National Defense Authori- zation Act. Pub. L. 99-661 Section 1223(b), 100 Stat. 3977 (codified at 10 U.S.C. Section 2304 note (Supp. V 1987)); repealed by Pub. L. 100-370, Section 2(a)(1), (recodified at 10 U.S.C. Section 2462(b) (1988)). 17 The Circuit Court’s decision in the instant case, and in the related decision, C.C. Distributors v. U.S., 883 F.2d 146 (D.C. Cir. 1989), created case law that frustrates rath- er than furthers the efficiency purposes of the OFPPA, the Budget and Accounting Act, and the 1987 Defense Autho- rization Act. The defeat of the Office of Management and Budget commercial activity efficiency procedures will be- come apparent over the next several years as the execu- tive branch implements Executive Order 12615 (Nov. 1987). Pursuant to this Executive Order, agencies will conduct cost studies of the commercial activities present- ly performed by 750,000 federal employees. In studies where an agency underestimates in-house costs, the con- tractors will have standing to file an administrative ap- peal and if the error is not corrected, the contractors may seek judicial relief. However, in commercial activity stud- ies that underestimate contractor performance, federal employees will have standing only in an administrative appeal forum within the very agency that has violated the commercial activity regulations. In effect, contractors have access to the power of the courts to correct agency violations of law, but federal employees are left without a neutral forum even when facing the elimination of their jobs. This is clearly not what Congress intended when it passed legislation requiring that federal employees be regularly consulted throughout each step of the commer- cial activity study to ensure agency compliance with com- mercial activity regulations. B. Analysis The D.C. Circuit has disregarded this Court’s prece- dent by denying the union standing under the Office of 18 Federal Procurement Policy Act of 1979 and the 1987 National Defense Authorization Act to enforce the cost comparison provisions of OMB Circular A-76.° The law of standing is based on a set of constitutional and prudential requirements. To establish standing under Article III of the Constitution, a litigant must plead an injury in fact fairly traceable to the conduct complained of and likely to be redressed by the relief request. Allen v. Wright, 468 U.S. 737, 751 (1984). Prudential standing re- quires that the “plaintiff's complaint fall within ‘the zone of interests to be protected or regulated by the statute or constitutional guarantee in question.’ ” Valley Forge Chris- tian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 474-75 (1982) (quoting Association of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 153 (1970) (footnote omitted)). The District Court con cluded that the union satisfied the constitutional require- ment for standing on the basis that private contractor performance of the Army Fort Sill Directorate of Logistics resulted in terminations, demotions, transfers and forced early retirement for the existing federal employee work- force. Injury to the employees would have been > The union asserted standing under the OFPPA and the 1987 Defense Authorization Act throughout this litigation but did not assert standing under the Budget & Accounting Act of 1921. The D.C. Circuit sua sponte reached the issue of union standing under the Budget and Accounting Act of 1921. Nev- ertheless, the OFPPA, 1987 Defense Act and the Budget and Accounting Act of 1921, as amended, all mandate procurement efficiency and the arguments presented herein on the OFFPA and 1987 Defense Act apply with equal force to the Budget and Accounting Act. 19 prevented by the granting of declaratory and injunctive relief. Partial relief remains available though reinstate- ment and backpay pursuant to the Backpay Act, 5 U.S.C. Section 5596. C. Prudential Standing: Zone-of-Interest The union asserted standing pursuant to Section 702 of the APA, which grants standing to a person “aggrieved by agency action within the meaning of a relevant stat- y as 4 ute.” 5 U.S.C. Section 702 (1982) 1 "7 * . . ~] . ] = +h r+ 1h , ) +_ainmt ~ 1987), the Court acknowledged that the zone-of-interest + + . vo - 7(\9 t +h 4 p ana wi test 1s a gloss on section 702 of the APA and provides < I , 1 : + , Y - _ P ~ . —_ Some limits On access to tne COurts ilu at SYO mowever +} ' > } } + | 1] > > ho 7: mrnh 17D nr y h> tih,. + the Court emphasized in ( Ke tnat “[tjne test is 1 I TY) ant to ho Special] iemandineg a nart ular +h ro ALLO aii \ UC CS} ecCldily MCimidialiy ail MWailiLt Uldl LilcCit P I need be no indication ofa congressional] Purpose to Dene- 5 t t 1 1 a4 ry T . + Tl fit the would-be plaintiff 4/9 U.S. at 399-400. The Courts test for ZOne-Of-interest is satisfied by a mere ‘5 ‘ } tar rT) th ry ¢ ) t rerg - plausible relationship” between the interests pri I 5 va | hh th ~] Yr ++ vo +h ry ] na roira > y , . ; oy ' ; ino 4 naead Dy tne fT laintift ana tne VOLICIES undergiraing . ; "7 ~ - P ~ ’ _ . rH + yy + , , , 7 + ’ L } f 7 thy ne Statutory framework. /d. at 396. 399 tUD. IN Clarke, tne ( + af 7. | tho vk + > ; +> ; Ticial \ourt reaffirmed the presumption in favor of judicial I i r Vip ry ~ly 71 +}, > ' saa) 7 } . ] try rr h +71 » | ho AC VICW COMNCIUQAING (Nal WOUIG-DE PDialntii{s 2h£tUUIG VC 4 s 4 + ] +} + h] 1 iT) : ce } 1O } rn weE)N ri) ry WeEU LTitO court uniess tney aTe MmOt even aQrs UuaDI\ 5 j 1 thin th, > 7 Try wil -~1T) rr + } 5 roc dq ‘ ] r rq wWithni mime Zone-of-interests to be protected or reguilatec 1 rJ sO" 4 ry ry rnp } | , + {oO 4 Yor90te , + hota DY (Ne Statute ia at 35Y Quoting 4ISSVUCIUTION O L/uULM 5 s ’ ra | , , 3907 ~ = , + - ‘ ‘ 20 In cases where the would-be plaintiff is not the ex- pressed subject of the contested statute, the zone-of-inter- est test denies standing only if “the plaintiff interests are sO marginally related to or inconsistent with the purposes implicit in the statute that it cannot reasonably be as- sumed that Congress intended to permit suit.” Clarke, 479 U.S. at 399. D. D.C. Circuit Decision The D.C. Circuit ignored the relaxed requirement for standing expressed by this Court in Clarke by denying union standing under the Office of Federal Procurement Policy Act of 1979 (“OFPPA”) and the 1987 National Defense Authorization Act (“Defense Act”). The D.C. Cir- cuit’s decision is based on an erroneous interpretation of the federal employees’ role in the commercial activity program and a misapplication of this Court’s instructions on the zone-of-interest test. 1) Contrary to the D.C. Circuit finding, the statutory and regulatory schemes are replete with evidence that Congress considered federal employees a critical compo- nent of the commercial activity program. Significantly, agencies are required by statute to consult with federal employees at each of the critical steps in a commercial activity program. 10 U.S.C. Section 2467(b) (1988).® © The 1989 National Defense Authorization Act, Pub. L. 100-989, Sec. 331, contained the provision integrating federal employees into the OMB Circular A-76 procedures. This statu- tory provision was repealed during the next sesion of Congress during a reorganization of the commercial activity statutory (Continued on following page) 21 — Federal employees must be regularly consulted during preparation of the work standards on which all in-house bids and contractor bids are based. Id. Again, federal employees must be consulted during construction of the efficiency study that constitutes the government bid for the commercial activity. Id. The legislative history is as brief as it is clear. See 134 Cong. Rec. H2714, April 29, 1988 (Statement of Rep. Skelton). Congress determined that federal employees were highly motivated to police agency compliance with the commercial activity regula- tions and brought them into the process accordingly. /d. If Congress had concluded that federal employees’ interests were in conflict with government efficiency, Congress would have deleted federal employees from the adminis- trative appeal procedures of OMB Circular A-76. See J. Mikva’s dissent, App. 54. Instead, Congress enacted legis- lation integrating federal employees into each critical step of the commercial activity procedures. Additionally, Congress amended the OMB Circular A-76 cost comparison components with the Cost Compar- ison Act to include the retirement costs of both contrac- tors and federal employees. 10 U.S.C. Sec. 2467(a) (1988) (Continued from previous page) provisions and recodified as “Cost Comparisons: requirement with respect to retirement costs and consuitation with employ- ees.” Pub. L. 100-456, Sec. 331(a), 102 Stat. 1957 (codified at 10 U.S.C. Sec. 2467 (1988)). The Court may consider the 1989 National Defense Authorization Act cost comparison provision when determining whether federal employees are within the zone-of-interest of the Office of Federal Procurement Policy Act and the 1987 National Defense Authorization Act. See Association of Data Processing, Inc. v. Camp, 397 U.S. 150, 155-56 (1970); Clarke v. Securities Industry Association, 479 U.S. 388, 396-97 (1987) eT NO nN The legislative history indicates that Congress found the absence of retirement costs in the OMB Circular A-76 procedure resulted in “faulty” cost comparisons which sometimes resulted in erroneous awards to contractors. 134 Cong. Rec. H2714, April 29, 1988 (Statement of Rep. Skelton). In fact, the cost study at Fort Sill was cited by Rep. Skelton as an example of a faulty cost comparison. Id. In dismissing the union’s case, the D.C. Circuit ig- nored Congressional action expressly passed to improve the position of federal employees in the OMB Circular A-76 cost comparison. 2) The D.C. Circuit interpreted federal employee in- terest in continued employment as conflicting with gov- ernment efficiency. App. 28 & 31. To the contrary, the administrative scheme makes the federal employee inter- est in continued employment inseparable from efficiency in government. Executive Order No. 12615 requires agen- cies to schedule each federal employee position for a cost competition. Id. Section I(d), App. 84. Federal employees intent on maintaining employment in a commercial activ- ity will be highly motivated to ensure an accurate PWS and an ideal MEO. Only with accurate and efficient in- house operations will a commercial activity be retained in-house. Employee failure to ensure in-house efficiency will result in a loss of employment to a contractor through the OMB Circular A-76 cost comparison. This administrative scheme ensures that all federal employees interested in continued employment, by necessity, have an interest in government efficiency. Moreover, federal employees are the only available plaintiff to correct an agency underestimate of contractor costs. If an agency accepts an underestimate of the cost of 23 contractor performance, the contractor will not protest and the agency will not sue itself to correct the error. There are no advocates in the process other than the federal employees who have an interest in ensuring com- pliance with the regulatory procedures that prohibit an underestimate of contractor costs. See J. Mikva’s dissent, App. 50. 3) The D.C. Circuit’s conclusion that the 1987 Defense Act favored contractor performance is based on a selec- tive reading of the legislative history and conflicts with the plain language of the Act. While the legislative histo- ry suggests that some members of Congress favored pri- vate contractors, the actual language of the relevant Statutes favors neither contractors nor federal employces. The 1987 Defense Authorization Act requires agencies to conduct “realistic and fair” cost comparisons. 10 U.S.C. Section 2304 note, App. 75. This straightforward language certainly does not suggest a bias toward contractors. Nothing in this brief statutory provision suggests federal employees should be cast aside regardless of in-house or contractor costs. The OFPPA is equally neutral. This Act declares that it is the policy of Congress to promote efficiency and does not designate a priority other than cost effectiveness. Pub. L. 96-83, Sec. 12, App. 78. In dissent, Judge Mikva responds to the panel’s stat- utory analysis by stating: If Congress wanted to establish a presumption that the private sector is always more economi- cal than the government, why did it continue to permit time consuming, lengthy cost compari- sons before each and every contracting deci- sion? If Congress favored the private sector, why did it not require the government to use ee a aaa .S...2.242Q0; SS 24 private enterprise for every function which is not “inherently governmental in nature”? The reason Congress acquiesced in OMB’s provider- neutral decision-making strategy is that its in- terest was, first and last, in saving money - an interest which [the union’s] suit is not only con- sistent with but promotes. NFFE v. Cheney, No. 88-834 (D.C. Cir. Aug. 25, 1989) (Mikva, J., dissenting). App. 54. 4) Finally, the D.C. Circuit charged that a federal employee’s interest in continued employment is neither marginally related to nor consistent with the goals of Congress. This conclusion is wholly at odds with the Supreme Court’s decisions in Administrative Procedure Act zone-of-interest cases. In Association of Data Processing Service Organizations. Inc. v. Camp, 397 U.S. 150, 156-58 (1970), the first zone-of- interest case, the Court held that the plaintiffs’ interest in profits was more than marginally related to the Congres- sional purposes for enacting a statute restricting banking activities. The Court concluded that the business interest in profits provided sufficient motivation to place the data processing companies within the zone-of-interest neces- sary to enforce the bank laws. Id. Similarly, in Arnold Tours, Inc. v. Camp, 400 U.S. 45 (1970), this Court held that travel agents in competition with banks offering non- traditional bank services satisfied the zone-of-interest test for standing to enforce restrictive regulatory bank laws. In Investment Company Institute v. Camp, 401 U.S. 617 (1971) (“ICI”), the Court held that an interest in profits was sufficient to confer standing on a securities industry group seeking to challenge regulations permitting banks to enter the securities field. Subsequently in Clarke, the icant eine pi Court made clear that the zone-of-interest test was not meant to be especially difficult. 479 U.S. at 399. In Clarke, the Court held that a discount broker’s interest in profits was sufficient for standing to assert the public interest in restricting bank activities. Id. at 403.7 This Court has consistently held a corporation’s in- terest in profits may be sufficient to bring a plaintiff within the zone-of-interest of a regulatory statute. Cer- tainly there is no difference between a corporation’s in- terest in profits and an employees interest in a job. Both are necessary for continued economic existence. a 4 CONCLUSION The D.C. Circuit did not address statutes and legisla- tive history indicating the critical role played by valuable federal employees in achieving compliance with the com- mercial activity regulations. Instead, the D.C. Circuit has 7 In Clarke, this Court also emphasized the importance of whether the plaintiff would constitute a reliable attorney gen- eral for litigating the issues of the public interest. Clarke, 479 U.S. at 397 n.12. Here, federal employees are highly motivated to perform the function of a private attorney general when an agency underestimates contractor performance. Enforcement of the regulations requiring an accurate cost comparison fur- thers the federal employees economic interest in continued employment at the same time advances the congressional goal of procurement efficiency. The decision below has the unfortu- nate effect of denying the public any advocate to fulfill the private attorney general’s role when an agency underestimates contractor performance. The Circuit Court’s decision is incon- sistent with Supreme Court precedent and defeats the Congres- sional goal of procurement efficiency. 26 essentially looked past the federal employees’ role in the process and considered only the employees subjective interest in continued employment. In effect, the D.C Circuit test for the zone-of-interest requires an a@ priori showing of no possible conflicts with the statute a plain- tiff relies upon. The Circuit Court’s application of th: zone-of-interest test ignores this Court’s instruction that the test “is not meant to be especially demanding.” More g over, the decision reconstitutes the D.C. Circuit’s restric- tive zone-of-interest test overturned in Clarke v. Securities Industry Assn., 479 U.S. 388, 400 n. 15 (1987) For these reasons, the petition for a writ of certiorari should be granted. Respectfully submitted YY. STEPHAN GORDON* General Counsel Atice L. BoDLey Deputy General Counsel JosHUA F. Bowers Staff Attorney NATIONAL FEDERATION O} FEDERAL EMPLOYEES 1016 16th Street, N.W Washington, D.C. 20036 (202) 862-4454 Attorneys for Petitioners *Counsel of Record ae nmaliiieel ABLE 7 2 aes aderal Employees D.C APPENDIX OF CONTENTS Page v. Cheney, No. Cir. Aug. 25, 1989) ... App. 1 ie j "77 7911 1/00 - 4 ait i tVUWYCES ¢ Cheney, Motion for Recon- Rehearing En . alate , r 415 | i i i ’ - oer? ryit ’ ‘ ‘ i 4 \ ‘4 ii4 4 ‘ ‘ ~ 4 \ ro1isct Wwe Ann | ‘ st 4 i i d > i a > . > > , , } \ ric } as 1? hn 4 ; ry > 4 5 4 , ~~ A =) Z + ’ ‘ ; ‘ ‘ ‘ ; ~ o , 4 \ ‘} "+ 4 4 ‘ , > > ‘ . \ ‘ 4 >| ‘ ‘ @ he Ae ‘| 4 “For ~ Te 5 \ t L/h ls} { I? ¢ ; » fo y ry x Cf ry lia ns, 4 IS SeCCUOI . TD A rrr rr rr rmyor sry »~ VCE i ft Lil t AV 1 i ~ a= ‘ 7 ~~ 4 =) his NX \ ; i Ann 4 y th v Lh) App. 1 UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT Argued March 2, 1989 Decided August 25, 1989 No. 88-5271 NATIONAL FEDERATION OF FEDERAL EMPLOYEES, et al., APPELLANTS Vv. RICHARD B. CHENEY, Secretary of Defense, et al. Appeal from the United States District Court for the District of Columbia (Civil Action No. 88-00834) Joshua F. Bowers, with whom H. Stephan Gordon was on the brief, for appellants. Nathan Dodell, Assistant United States Attorney, with whom Jay B. Stephens, United States Attorney, John D. Bates, and R. Craig Lawrence, Assistant United States Attorney, were on the brief, for appellees. Before MIKVA, SILBERMAN and SENTELLE, Circuit Judges. Opinion for the Court filed by Circuit Judge SEN- TELLE. Dissenting opinion filed by Circuit Judge MIKVA. SENTELLE, Circuit Judge: Appellants, the National Federation of Federal Employees and Local 273 of the National Federation of Federal Employees (collectively “appellants” or “NFFE”), contest a United States Army decision to “contract out” to private contractors the ser- vices formerly provided by government employees of the Directorate of Logistics, Fort Sill, Oklahoma. The District Court held from the bench: (1) that NFFE, pursuant to App. 2 section 702 of the Administrative Procedure Act (“APA”), 5 U.S.C. Section 702 (1982), lacked standing to sue under either Office of Management and Budget (“OMB”) Circu- lar A-76 (Revised) or section 1223(b) of the National Defense Authorization Act of 1987 (“1987 DoD Authori- zation Act”)!; and (2) that administrative decisions to contract out are not subject to judicial review under the APA, 5 U.S.C. Section 701(a). We affirm the District Court’s holding that NFFE lacks standing to bring this action and therefore find it unnecessary to address the reviewability of contracting out decisions. I. BACKGROUND Under OMB guidelines, government agencies must determine “whether commercial activities should be per- formed under contract with commercial sources or in- house using Government facilities and personnel.” OMB Circular A-76 (Revised) para. 1 (August 4, 1983) (“OMB Circular A-76”).2 In 1980, the U.S. Army Training and Doctrine Command (“TRADOC”), pursuant to the Circu- lar, directed the Fort Sill Directorate of Resources Man- agement (“Fort Sill”) to conduct a commercial activity review of the Fort Sill Directorate of Logistics. The ' Pub. L. No. 99-661, Section 1223(b), 100 Stat. 3972 (cod- ified at 10 U.S.C. Section 2304 note (Supp. V 1987)). 2 OMB Circular A-76 was Originally issued in 1966 and subsequently was revised in 1967, 1979, and 1983. See OMB Circular A-76 (Revised) para. 4.b. (August 4, 1983). The Circu- lar summarized a policy of the Bureau of the Budget developed in Bureau Bulletins issued in 1955, 1957, and 1960. Id. The 1983 Circular revision is the focus of this appeal. App. 3 Directorate of Logistics provides support, maintenance, transportation, and supply functions for Fort Sill and surrounding installations. It also operates and maintains a fleet of 500 government vehicles. Over the next four years, Fort Sill conducted an extensive examination of the responsibilities of the Direc- torate of Logistics, separating “commercial” and “govern- mental” activities and formulating all the commercial activities into a Performance Work Standard (“PWS”) for a projected five-year contract term. Fort Sill then deter- mined the in-house Most Efficient Organization (“MEO”) costs based upon the PWS. With this estimate as a base- line, and with other appropriate adjustments,? in Novem- ber 1984, Fort Sill issued a solicitation for bids, referred to as a Request for Proposals (“RFP”), from private contrac- tors to provide the services at that time provided by the Directorate of Logistics based on the same PWS used for the in-house estimate. In response to the RFP, in May 1986, Fort Sill received eight contractor proposals, all of which were evaluated by an Army Source Selection Evaluation Board (“Evalua- tion Board”). As is typical in government contracting, the Evaluation Board met with officials from the eight con- tractors for “discussions” regarding improvements on their proposals. After these discussions, Fort Sill re- solicited bids seeking the contractors’ best and final of- fers (“bafos”). The bafo proposals were received in July 19Ro Most significantly, OMB Circular A-76 requires a ten percent conversion differential be added to contracting costs. App. 4 In August, the OMB revised its policy regarding cal culation of retirement costs for in-house estimates. Like- wise in February 1987, the method of determining costs of a contractors’ social security and thrift plan contribu tions was revised. Based on these changes, TRADOC solicited a second round of bafo bids. All second round bafo proposals were audited by the Defense Contract Audit Agency In May of 1987, the Evaluation Board selected the proposal submitted by Northrup Worldwide Aircraft Ser- vices, Inc. (“Northrup”). In June, Fort Sill compared the selected Northrup proposal, estimated at $53.2 million over the five-year term, with the in-house MEO estimate of $61.4 million over the same period. After TRADOC approval of the selection, Fort Sill announced tentatively an award of the contract to Northrup, which necessarily would result in termination of in-house services. Pursuant to federal and Army acquisition regulations and OMB Circular A-76, an administrative appeal period ran from June 10 to July 22. During the period NFFE directly and through its members appealed the award, alleging several violations of the OMB Circular A-76 Cost Comparison Handbook, including, inter alia, inflated in house employee performance costs, artificially high over- head and support costs,4 and improperly calculated pri vate contractor conversion costs and profit * TRADOC received, inter alia, 330 letters of concern from the NFFE and Directorate of Logistics employees and another 1,131 letters of concern from non-Directorate employees. Joint Appendix (“1.A.”) at 338-39 eee nina ieee nl Board \ eleven appeals and in a fifty-four page decision letter two soard concluded that the ¢ ugh to alter the announc son or to reverse the initial para. 4.b. (J.A. at 39 ine Government A Suant tO a ¢ nyressliona a: Sill contracting out decisior that review, on December 4 Army directed TRADOC t others. App Administrative DABT39-85-R-0001, with Northrup to correct a = | ] , 7 a4 compietion Of Fort Sill received fi i i yn Octobe ea 1GR& \ppellants then filed ort Sill, in its contractin Local 273 of t N FFI yrievance with Fort Sill. S before this Court, appellant been withdrawn. Additio1 ees filed a bid protest wit under the ( ompetitior 8 Stat. 1175 (codified 1 “~ { \ t 5] m4 1987) (J addressed each of fifty-nine al 12 > rt + NeEPOTt Ol oie) = ie) A. at peley SSY , “i ictod 7h Tr) directed Lilai ir 1+ f +h “i i1fsu A 4 c | ; ~ + Uc is - \ 1uU¢ *» + bas 71d ’ is Y¢ T > rr , + + =o a aC a ¢ eft + n the ai - ve > > v Fix’ i ,hr dp} v i > rrey , i Ail >» a 4 ] ~ ‘ j A a 5 4 \ advised ¢t tt 5 Tal 4 tl \ " \ tr + 4 + T> } INC \ T) i Lt cw a Lite IN YO r Ae v¥Cl - _— \ > v A tr ; \ rh ry - ‘ ac 4 ra f y ara [e€ ¢ ‘ y \ _+ 4 . \ V4 . | i | ry r r r ‘ ] A is.> An Army Administrative Appeal } S an: INC Review Board”) consolidated the allegations t, partially substantiating two, and fully sub A nr 4 - if App. 6 comparison procedures set forth in OMB Circular A-76 and the requirements of section 1223(b) of the 1987 DoD Authorization Act.6 Appellants sought injunctive and other relief as necessary and proper.” Appellees moved to dismiss. The District Court granted appellees’ motion from the bench, holding that (1) under section 702 of the APA and the “zone of interest test” appellants lacked standing to sue; and (2) under 5 U.S.C. Section 701(a) the contracting out decision was not subject to judicial review under either the Circular or the 1987 DoD Authorization Act, as the former commits the decision to nonreviewable agency discretion and the 6 Section 1223(b) provides: For the purpose of determining whether to contract with a source in the private sector for the perform- ance of any Department of Defense function on the basis of a comparison of the costs of procuring sup- plies or services from such a source with the costs of providing the same supplies or service by the De- partment of Defense, the Secretary of Defense shall ensure that all costs considered, including the costs of quality assurance, technical monitoring of the per- formance of such function, liability insurance, em- ployee retirement and disability benefits, and all other overhead costs, are realistic and fair. 10 U.S.C. Section 2304 note. ? Appellants also argued that a Northrup employee’s con- flict of interest arising from his prior employment with the Army, where he allegedly had some involvement in this con- tracting out decision, should void the award. Because appel- lants failed to raise this allegation in their complaint before the District Court, the issue was not before that Court and there- fore is not properly before us. App. 7 latter fails to provide any law or ascertainable standards to apply. Transcript of Hearing, National Federation of Federal Employees v. Carlucci at 2-3 (D.D.C. Aug. 10, 1988), J.A. at 8-9. On Appeal, appellants seek reversal of the District Court’s decision on standing and remand for adjudication on the merits. II. ANALYSIS A. APA Standing: The Zone of Interest of the Relevant Statutes. A party must have standing to bring suit in federal court. A court may “refuse to determine the merits of a legal claim, on the ground that even though the claim may be correct the litigant advancing it is not properly situated to be entitled to its judicial determination.” 13 C. WRIGHT, A. MILLER & E. COOPER, FEDERAL PRAC- TICE AND PROCEDURE Section 3531, at 338-39 (1984) Standing focuses on the party and not on the issues sought to be adjudicated. See Flast v. Cohen, 392 U.S. 83, 99 (1968). The requirements of standing are generally separated into two categories: the constitutional require- ments of Article III® anc the prudential requirements * Article Ill requires an actual “Case[]” or “Controvers|y]” tor standing. U.S. CONST. art. III, section 2 cl. 1. In Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464 (1982), the Supreme Court wrote that ‘at an irreducible minimum” this equates to an “ ‘[1] actual or threatened injury as a result of the putatively illegal conduct of the defendant’... ‘[2] fairly ... trace[able] to the challenged action’ and... ‘[3] likely .. . redress[{able] by a favorable decision.” Id. at 472 (citations omitted). Thus injury without (Continued on following page) App. 8 crafted by the Judiciary. See generaliy, Center for Auto Safety v. National Highway Traffic Safety Administration, 793 F.2d 1322, 1328-38 (D.C. Cir. 1986). Prudential standing requires that the “plaintiff's complaint fall within ‘the zone of interests to be protected or regulated by the Statute or constitutional guarantee in question.’ ” Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 474-75 (1982) (quoting Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 153 (1970) (footnote omitted). In the instant case, appellants assert standing under section 702 of the APA. That section provides standing to “[a] person suffering legal wrong because of agency ac- tion, or adversely affected or aggrieved by agency action within the meaning of a relevant statute.” 5 U.S.C. Section 702 (emphasis added). Section 702 and the prudential zone of interest test are intimately related -— the former provides a statutory grant from Congress to an aggrieved party to contest agency action and the latter provides a judicial limitation necessary to ensure that the proper party is asserting the claim against the agency. As the (Continued from previous page) traceability and redressability does not satisfy Article III. See National Maritime Union of America v. Commander, Military Sea- lift Command, 824 F.2d 1228, 1235 (D.C. Cir. 1987) (government contractor’s employees’ “loss of present or future jobs” as a result of contract award to other contractor constituted eco- nomic injury but was “neither fairly traceable to the putatively illegal omission of a wage determination [under the Contract Services Act] . . . nor fairly redressable by the remedy [sought]”). Because we hold that appellants lacks standing on zone of interest grounds, we find it unnecessary to determine if appellants in fact suffered a traceable and redressable injury. AS SP ee. App. 9 Supreme Court has stated, the zone of interest test is “most usefully understood as a gloss on the meaning of [section] 702,” particularly since the ‘principal cases in which the. . . test has been applied are those involving claims under the APA.” Clarke v. Securities Industry Asso- ciation, 479 U.S. 388, 400 n.16 (1987). Thus, we are required to determine whether appel- lants’ interests bring them within “that class of ‘ag- grieved’ persons .. . entitled to judicial review of ‘agency action.” “ Association of Data Processing, 397 U.S. at 157, by the “relevant statute[s],” 5 U.S.C. Section 702, under which the agency acted, thereby conferring upon appel- lants standing to sue. The statutes under which appel- lants assert standing are (1) the two statutes under which OMB Circular A-76 is purported to be authorized, the Budget and Accounting Act of 1921, as amended, ? and the Office of Federal Procurement Policy Act Amend- ments of 1979,19 see OMB Circular A-76 para. 3 (J.A. at 12); and (2) section 1223(b) of the 1987 DoD Authoriza- ticn Act, 10 U.S.C. Section 2304 note, requiring a “realistic and fair” cost comparison in a decision to contract out.’ In Clarke, the most recent and leading Supreme Court statement on the zone of interest test, Justice White, writing for the Court, explained that [t]he zone of interest test is a guide for deciding whether, in view of Congress’ evident intent to * Act of June 10, 1921, ch. 18. 42 Stat. 20 | 1921) (codified at 31 U.S.C. Section l et seq.) Pub. L. No. 96-83, 93 Stat. 648 (1979) (codified at 4] U.S.C. Section 401 et seq.) S€e@ Supra note 6 App. 10 make agency decision presumptively review- able, a particular plaintiff should be heard to complain of a particular agency action. In cases where the plaintiff is not itself the subject of the contested . . . action, the test denies a right of review if the plaintiff’s interests are so mar- ginally related to or inconsistent with the purposes implicit in the [relevant] statute that it cannot reasonably be assumed that Congress intended to permit the suit. 479 U.S. at 399 (emphasis added). Clarke held that the interest of the Securities Industry Association, a trade Association representing securities dealers, was “plaus- ibl{y] relat{ed] to the policies underlying . . . the National Bank Act,” and therefore the Association had standing under that Act to contest an action of the Comptroller of the Currency. Id. at 403. The Court noted that the “test is not meant to be especially demanding; in particular, there need be no indication of congressional purpose to benefit the would- be plaintiff.” Id. at 399-400 (footnote and citation omit- ted). The Clarke Court expressly rejected earlier lower court suggestions that the zone of interest test requires “indication of congressional purpose to benefit the would-be plaintiff.” Id. at 400 n.15 (citing Control Data Corp. v. Baldrige, 655 F.2d 283, 293-94 (D.C. Cir.), cert. denied, 454 U.S. 881 (1981)). Instead, the Clarke formula- tion of the zone of interest test requires that we deny standing only if appellants’ interest is no more than mar- ginally related to or in fact inconsistent with the implicit purposes of the relevant statute. If, after reviewing the relevant statute and its legislative history, we conclude that appellants’ interests are consistent with and more than marginally related to the purposes of the relevant App. 11 statute, appellants have standing to contest an agency action under section 702. Before undertaking our zone of interest inquiry, we must address the parties’ fundamental misunderstanding of the relevant question. The issue is not whether appel- lants’ interests are within the zone of interest of OMB Circular A-76; section 702 clearly requires that the party seeking relief be “legal[ly] wrong[ed] .. . , or adversely affected or aggrieved . . . within the meaning of a relevant statute.” 5 U.S.C. Section 702 (emphasis added). The Cir- cular is not a statute, see, e.g., Ketler, Federal Employee Challenges to Contracting Out: Is There a Viable Forum?, 111 MILITARY L. REV. 103, 110 (1986) (“Circular A-76 pro- mulgates executive branch managerial! policy”), and, al- though promulgated pursuant to congressional authority, the Circular itself cannot grant standing. In Sierra Club v. Morton, 405 U.S. 727 (1972), the Supreme Court stated that where a dispute is otherwise justifiable by an Article III] federal court!? under section 702 of the APA, “the 12 We emphasize that we are here concerned with Article Ill standing, not standing before an Article I administrative tribunal, see, e.g., American Trucking Association v. ICC, 673 F.2d 82, 85 n.4. (5th Cir.), cert. denied, 460 U.S. 1022 (1982); Ecee, Inc. v. FERC, 645 F.2d 339, 349-50 (5th Cir. 1981); Kontag, Inc., Village of Uyak v. Andrus, 580 F.2d 601, 605-08 (D.C. Cir.), cert. denied, 439 U.S. 1052 (1978), or with a situation in which an agency has granted administrative standing and failed to adhere to that grant. See Gardner v. FCC, 530 F.2d 1086, 1090-91 (D.C. Cir. 1976). In fact, NFFE and 1,500 of its members asserted adminis- trative standing and appealed the contracting out decision to the Army Review Board. See J.A. at 338-39. The Review Board apparently granted standing, as it concluded on the merits that some improprieties required minor changes. Administrative App. Rev. Bd., supra, at para. 4.b. J.A. at 391. App. 12 question whether the litigant is a ‘proper party to request an adjudication of a particular issue’ .. . is one within the power of Congress to determine.” /d. at 732 & n.3 (quot- ing Flast v. Cohen, 392 U.S. at 100, other citations omitted). See also Association of Data Processing Service Organizations v. Camp, 397 U.S. at 154 (“Congress can, of course, resolve the question [of standing] one way or another, save as the requirements of Article II! dictate otherwise.”) (citation omitted); State of Alaska v. Department of Transportation, 868 F.2d 441, 444 (D.C. Cir. 1989); Center for Auto Safety 793 F.2d at 1335 (Congress may, by legislation, expand standing to the full extent permitted by Article III, thus permitting litigation by one who otherwise would be barred by prudential standing rule, 4 K. DAVIS, ADMIN- ISTRATIVE LAW TREATISE, Section 24:5, at 226 (2d ed. 1983).13 It is clear then that appellants must be within the zone of interest of the statutes authorizing OMB Circular A-76, not OMB Circular A-76, itself. 13 Professor Davis explains: On the question whether Congress may deter- mine who has standing, the relevant provision could be Article |, which confers upon Congress the power to create legal rights. If Congress may confer rights upon a class of persons, Congress may also confer rights to be plaintiffs. 4 K. DAVIS, supra, Section 24:5, at 226 (emphasis in original). We are not faced with a congressional delegation to the Executive to promulgate regulations on standing. Thus we do not address whether Congress may delegate such authority to the Executive App. 13 1. Budget and Accounting Act of 1921, as amended. The first of the two statutes under which the OMB promulgated the Circular is the Budget and Accounting Act of 1921, as amended, 31 U.S.C. Section 101 et seq. ("1921 Act”). We have found nothing in the 1921 Act or its legislative history indicating that Congress contem- plated in-house federal employees or federal employee “ ‘fa particular] class [of plaintiff] to be ur labor unions as relied upon to challenge agency disregard of the law.’ Clarke, 479 U.S. at 399 (quoting Block v. Community Nutri- tion Institution, 467 U.S. 340, 347 (1984), other citation omitted, brackets in Clarke).’4 Moreover, we have found '* Congress has amended the Act thirteen times since its original enactment: - Budget and Accounting Procedures Act of 1950, Pub. L. No. 784, ch. 946, title I, pt. I, Sections 101, 102, 64 Stat. 832 (1950). See H.R. REP. NO. 2556, 81st Cong., 2d Sess. 1, reprinted in 1950 U.S. CODE CONG. & ADMIN. NEWS 3707, 3707 (an Act “to modernize and simplify governmental accounting and auditing methods and procedures”); - Act of July 28, 1953, Pub. L. No. 161, ch. 256, 67 Stat. 229 (1953) (to provide for a retirement annuity for the Comptroller General); - Act of August 1, 1956, Pub. L. No. 863, ch. 8/4, Section 1, 70 Stat. 782 (1956) (“to improve govern- mental budgeting and accounting methods and pro- cedures, and for other purposes”). See also S. REP NO. 2265, 84th Cong., 2d Sess., 1956 U.S. CODE CONG. & ADMIN. NEWS 3794, 3794); Act of August 25, 1958, Pub. L. No. 85-759, Section 1, 70 Stat. 782 (1958) (an Act “to provide tor (Continued on following page) App. 14 sufficient support in the legislative history to conclude that the interests of in-house federal employees are in fact (Continued from previous page) improved methods of stating budget estimates and estimates for deficiency and supplemental appro- priations”). S. REP. NO. 1866, 85th Cong., 2d Sess. 1, reprinted in, 1958 U.S. CODE CONG. & ADMIN. NEWS 3917, 3917); ~ Act of July 13, 1959, Pub. L. No. 86-87, 73 Stat. 197 (1959) (an Act providing for annuities to widows and children of Comptrollers General); - Act of July 26, 1966, Pub. L. No. 89-520, Sections 1, 2, 80 Stat. 329 (1966) (an Act providing for retirement for Comptroller Generals); ~- Legislative Reorganization Act of 1970, Pub. L. No. 91-510, title II, Section 221, 84 Stat. 1169 (1970). See H.R. REP. NO. 1215, 91st Cong., 2d Sess. 1, reprinted in 1970 U.S. CODE CONG. & ADMIN. NEWS 4417, 4417-18, 4433-34 (an Act providing, inter alia, for improved rules and open proceedings of the Con- gress and granting the Comptroller General the au- thority “to review and analyze the results of Government programs and activities”); ~ Act of March 2, 1974, Pub. L. No. 93-250, Section 1, 88 Stat. 323, 324 (1974). See H.R. REP. NO. 697, 93d Cong., 2d Sess., reprinted in 1974 U.S. CODE CONG. & ADMIN. NEWS 2778, 2779 (to provide for the Director and Deputy Director of the Office of Man- agement and Budget to be appointed by the Presi- dent with the advice and consent of the Senate); ~ Congressional Budget and Impoundment Control Act of 1974, Pub. L. No. 93-344, title VI, Sections 601-604, 88 Stat. 323, 324 (1974). See S. CONF. REP. NO. 924, 93d Cong., 2d Sess. 1, reprinted in 1974 U.S. (Continued on following page) App. 15 inconsistent with the animating purpose of the 1921 Act and, thererore, they are outside the Act’s zone of interest. Cf. id. (Continued from previous page) CODE CONG. & ADMIN. NEWS 3591, 3591 (an Act to assure congressional budget control, provide for the congressional determination of the appropriate level of federal revenues and expenditures, provide a system of impoundment control, establish national budget priorities, and provide for the furnishing of information to Congress by the Executive branch); - Railroad Revitalization and Regulatory Reform Act of 1976, Pub. L. Rev. No. 94-210, title III, Section 311, 90 Siat. 60 (1976). See S. REP. NO. 499, 94th Cong., 2d Sess. 1, reprinted in 1976 U.S. CODE CONG. & AD- MIN. NEWS 14, 15 (an Act to promote revitalization of the railroad industry in the United States); - Comptroller General Annuity Adjustment Act of 1978, Pub. L. No. 95-512, Sections 2-4, 92 Stat. 1799, 1800 (1978); - General Accounting Office Act, Pub. L. No. 96-226, title I, Sections 102-104(b) (1), 94 Stat. 312-315 (1980). See S. REP. NO. 570, 96th Cong., 2d Sess. 1, reprinted in 1980 U.S. CODE CONG. & ADMIN. NEWS 732, 732-33 (an Act to strengthen the GAO as the investi- gative and auditing arm of Congress and to improve budget management and expenditure control rclat- ing to the Comptroller General and the Inspector Generals of the Departments of Energy and Health and Human Services). The Act specifically amends the Budget and Accounting Act of 1921 to provide the GAO with sufficiently broad and comprehensive authority to investigate “all matters relating to the receipt and disbursement and application of public funds,” id. at 2, U.S. CODE CONG. at 733; and, (Continved on following page) App. 16 Generally, in the 1921 Act Congress sought to coordi- nate budgeting procedures and to increase efficiency in 5overnment operations after vast governmental growth during World War I. After the close of the War, the departments and agencies failed to relinquish authority which had enured to them during the War. Congress found departments and agencies duplicating services and decided to centralize the budgeting system under a single office in each of the two political branches. Before enactment of the 1921 Act, each department or agency developed its own budget and submitted it to Congress, through the Secretary of the Treasury.'> The President was never directly linked to this process.'© The congressional committee Overseeing that department or agency would authorize and appropriate that budget re- quest. The total United States budget was never forecast: (Continued from previous page) Federal Managers’ Financial Integrity Act of 1982, Pub. L. No. 97-255, Section 4, 96 Stat. 815 (1982). See H.R. REP. NO. 38, 97th Cong., Ist Sess. 1, reprinted in 1982 U.S. CODE CONG. & ADMIN. NEWS 1885, 1885-86 (an Act to Improve government internal con- trols of each executive agency and to require ongo- ing evaluations and reports under OMB guidelines). Nothing in these amendments or in their legislative history suggests that the interests of federal employees and federal labor unions are more than marginally related to the congres sional purposes behind the 1921 Act. Cf Clarke, 479 U.S. at 399 > See 59 CONG. REC. 8626 (1920) (statement of Sen >moot) (debate on 1920 version of Act vetoed on other grounds by President Wilson: subject matter of 1921 Act substantially unchanged) 16 Id App. 17 thus it was easy for expenditures to exceed revenues because no single office was monitoring total expendi- tures. Additionally, each department and agency audited itself with no confirmation by outside auditors. The 1921 Act established a two-pronged approach to this budgeting (or lack-of-budgeting) crisis. First, Con- 8ress created a Bureau of the Budget, the predecessor to the OMB, within, but quasi-independent of, the Depart- ment of the Treasury. The Bureau was to consolidate all independent budgets of departments and agencies of the United States government, eliminate duplication of ser- vices, and cut funding where services were no longer needed. The national budget of the Bureau, including an estimate of revenues for the next fiscal year, would then become the President's budget which the President sub- mitted as one document to Congress for revision and approval.!7 The second prong of the 1921 Act was the establish- ment of the General Accounting Office (“GAO”) to repre- sent the legislative interest in the budgeting process. The GAO was to be directed by a Comptroller General and Assistant Comptroller General effectively replacing the Comptroller of the Treasury. The Treasury Comptroller had been seriously hampered in effectively controlling Executive branch spending since he served at the plea- sure of the President. The 1921 Act also transferred al} the auditors from the various departments and agencies to GAO so that auditors would not be employed by the department they were auditing A pp 18 Congress considered these two separate offices, the Bureau and the GAO, one within each political branch, as a functional and valid constitutional “check and balance” over the expenditure of funds. Representative James W. Good of lowa, the chief sponsor of the 1921 Act, and Chairman of both the House Committee on the Budget and the House Committee on Appropriations, stated: We provided for [a] system of checks and balances which ought to exist in every well-regulated budget plan. The President originates the bud- get and he transmits it to Congress. It is up to Congress to determine whether it will accept the estimates, whether it will modify them, reduce them, or enlarge them. Congress must then as- sume full responsibility for its acts, just as the President assumes responsibility for his when he makes the budget. After the bill has passed, then, under the execution of the law, we provide for that independent establishment in the gener al accounting office, an office that will be to the appropriations made by Congress what the Supreme Court is to construction of laws that are enacted by Congress. We create this independent establishment [the GAO], answerable to Congress, an estab- lishment that has clerks and accountants, who will go through every department of the Gov- ernment. When they find waste and inefficiency, when they find duplication in the service, they will come to the committee of Congress that has jurisdiction of appropriations and report that fact. That fact will also be communicated to the President of the United States. 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C < - > f - t ; “ ~ "dU - a) ~ ~ —~ ir >» = ' = a wo = ¢ aa . - ~ " — . i - - : - r £ . ; ~ -“ : , . pe v } = 7 $s OU = . ow -_ i . 4 : ‘ ¥~ f« +~ ~ he = 2 3 ‘ . ~~ a = 4 & . / - sa ae nel - gene . = -_ = _ c OL = ‘ : : f va eo a ¢ . ~ cc ~ © COs f& = = a t ~ | af Fa - - v tf ¢ ~ p= ~ — - P ; ~ Sf f Pe ee > S ~ an @ be an - P , = _ - ~ ~ = ® c “ ~ > a am = § . = “ = - — ») = a’ < > + ° c > cr ; per’ o : at DO ‘ " _— ar Cc = S % J - ~ - “ — — . . » Y I 4 ~ ~ ; f 4 om $ ¢ 3 : 5 * 4 7 - ° , j a + ~ 4 >[ - ~ ~ 4 > > - ( 4 — ¢ 2 ; — a - - y — = - — 9 ‘ f = —— ~ o ‘ott = Se t = 4 Jf > f : ¢ . =~ . - . é — — a = » > “ : , 2 ong - — «= if, mt y ,- . ‘ $ & c : » ££. * > > App. 20 Nothing in the legislative history of the 1921 Act suggests that Congress contemplated the protection of employment of federal employees. Indeed, Representa- tive Good’s presentation of the 1921 Act to the 67th Congress suggests a congressional purpose inconsistent with those interests. That is, the Act would require that some federal employees be terminated under the new budgeting process The director of the [Bureau of the Budget] must per- form his work without fear or favor. He must do it with a realization that practically every Senator... will at some time or another be opposed to what he is doing. He must do it with a realization that at some time or another practically every Member of the House will oppose him. .. . Many [federal employee] offices must be abol- ished. Some of the men who are here performing a public service must go heme, and they will have to be sent home; and when such an officeholder comes from your [congression- al] district you will go down and see the [employee's superior] officer in [sic] behalf of the man from your district whom he is discharging, and Senators will go down, and they will make strong pleas showing how this man or that man who is slated to go has been a faithful public servant and why he should be permitted to re- main. When it comes to discharging these men who must be discharged, | say to you it is going to test the backbone ina man who has to do this work; it will try the fiber of the best man that the President can secure. ... We ought not to throw upon the Secretary of the Treasury this duty. . . [because this] App. 21 would simply create disturbance with the other members of the Cabinet whose organizations by such act he was attempting to regulate and con- tro].20 While representative Good made this Statement dur- ing debate on whether the Bureau of the Budget should be under the Department of the Treasury or directly under the Executive Office of the President,?' his state- ments illustrate that Congress was aware that some feder- al employees would lose their jobs after the 1921 Act took effect. He does not hint of any remedy for the severed employees, or Suggest that the employees may assert standing upon an act with which their interests are log- ically inconsistent. Good’s statements support the infer- ence to be drawn from the text of the Act. That is, although Congress was well aware that the reformation of the federal budgeting process would result in a loss of federal jobs, it afforded the discharged employees neither protection nor remedy. Thus, the 1921 Act is fundamen- tally inconsistent with the interests asserted by appel- lants, who, quite understandably complain that the 2° 61 CONG. REC. 981-82 (1921) (statement of Rep. Good) (debate on 1921 Act). *! The House desired an independent Bureau of the Bud- get whose director reported directly to the President, lest the director be unable to cut the budget of his superior agency, the Department of the Treasury. The Senate, fearing that the Secre- tary of Treasury would lose contro] Over a substantial area of his responsibility, preterred the Bureau to be an office within the Treasury. A modest compromise was arranged where the Secretary of Treasury was a figurehead superior over the direc- tor of the Bureau. App. 22 challenged governmental conduct will cause an adverse impact to in-house employees. Appellants may have many “interests,” but for zone of interest purposes we must look to their particular interests, not to the interests amounting to generalized grievances of all citizens. See ASARCO, Inc. v. Kadish, ___ U.S. _, 109 S. Ct. 2037 (1989); City of Los Angeles v. Lyons, 461 U.S. 95, 111-12 (1983). The dissent contends that we proceed from an erroneous “fundamental premise that the employees cannot assert an interest in having the government conform to the law in making a contracting out decision.” Dissent at 5. However, as we have previ- ously held, “ .. . to satisfy the zone of interests require- ment, appellants must establish that their particular interest alleged to have been injured by the [alleged failure of the government to conform to a law] fali within the respective zones of interests intended to be protected or regulated by [that law].” Haitian Refugee Center Gracey, 809 F.2d 794, 812 (D.C. Cir. 1987) (emphasis add- ed). As we noted in Haitian Refugee Center, [i]f any person or organization interested in pro- moting ... protection of the rights created by a statute . . . has an interest that falls within the zone protected or regulated by the statute then the zone-of-interest test is not a test be- cause it excludes nothing. Indeed, such a read- ing would mean that this court ignores the Supreme Court’s decisions that persons who have only a “generalized grievance” about the way in which government operates do not have standing. App. 23 Id. at 813 (citing Schlesinger v. Reservist Comm. to Stop the War, 418 U.S. 208 (1974); United States v. Richardson, 418 U.S. 166 (1974)). Concededly, in Haitian Refugee Center, we conducted our zone of interest analysis without the benefit of the Clarke decision, but nothing in Clarke changes that analy- Sis as it applied in Haitian Refugee Center or in the present case. Indeed, in our recent post-Clarke zone of interest decision, Hazardous Waste Treatment Council v. EPA, 861 F.2d 277 (D.C. Cir. 1988) (per curiam) (“HWTC”), we expressly reapproved our prior understanding of the gen- eralized grievance concept as taught in Schlesinger and Haitian Refugee Center. In HWTC, we expressly reiterated that neither individuals “with only a ‘generalized griev- ance[]’ ” (citing Schlesinger) nor “an Organization” formed “to advance [a generalized] grievance” (citing Haitian Refugee Center) has a sufficient interest to support stand- ing. HWTC, 861 F.2d at 287. Thus, in HWTC, although we found that a trade association had standing as an organi- zational representative of the consumer environmental interest of a member company, we rejected standing to assert claims based solely on the status as representative of competitors of entities allegedly advantaged by the Environmental Protection Agency’s failure adequately to perform a statutory duty. We did so, analyzing the stand Ing question in light of Clarke, and expressly revivified Haitian Refugee Center stating “a rule that gave any such plaintiff standing merely because it happened to be dis- advantaged by a particular agency decision would de- Stroy the requirement of prad®n{ial Standing; any party with constitutional Standing could sue.” Id. at 283. See also - ’ Cargill, Inc. v. Monfort of Colorado, Inc., 479 US. 104 App. 24 114-17 (1986) (holding that threatened loss from increased competition did not alore confer standing on a competi- tor to bring action under the Clayton Act to enjoin a proposed merger). In HWTC, we recognized that the Clarke analysis of the zone of interest test “ ‘denies a right of review if the plaintiff’s interests are so marginally related to or incon- sistent with purposes implicit in the statute that it cannot reasonably be assumed that Congress intended to permit the suit.’ ” 861 F.2d at 283 (quoting Clarke, 107 S. Ct. at 757.) We thus found that the test now requires “less than a showing of congressional intent to benefit but more than a ‘marginal[] rela[tionship]’ to the statutory pur- poses.” Id. (brackets in original).?? In the present case, the legislative history of the Budget and Accounting Act of 1921, as amended, leads us to conclude that Congress did not contemplate in-house federal employees and federal employee labor unions as plaintiffs. Congress carefully crafted a two-pronged checks and balances budgeting process to coordinate the United States budgeting process, eliminate duplication of services, and promote efficiency. Congress knew that some federal employees would be adversely affected and, 22 To be sure, as the dissent points out, we also held in HWTC that “[i]n the absence of apparent congressional intent to benefit, however, there may still be standing if some factor - some indicator that plaintiff is a peculiarly suitable challenger of administrative neglect —- supports an inference that Congress would have intended eligibility.” 861 F.2d at 283. We find no such factor in this case. We will discuss this question further in relation to alleged standing under the National Defense Autho- rization Act of 1987, infra II1A3. App. 25 instead of giving these employees some recourse, inten- tionally removed the director of the Bureau of the Budget from as much external pressure as possible so that he could make the “hard” decision to reduce the employee force where necessary. At most, federal employees’ inter- ests are marginally related to this centralized annual bud- geting process balanced between the Executive and Legislative branches. Cf. Clarke, 479 U.S. at 399. It is moree logical te conclude that federal employees’ interests are “inconsistent.” Id. Appellants alleged particular interest in the instant case is protection of the federal jobs of their members, not governmental efficiency as asserted by them. See infra. If governmental efficiency was appellants’ interest then they would have no greater Article III injury in fact? than any taxpayer opposing a government appropriation See Flast v. Cohen, 392 U.S. 82 (1968) (for a taxpayer to assert standing, the taxpayer must show that the chal- lenged conduct violates a specific constitutional limita- tion imposed on the taxing and spending clause and does not merely exceed the general delegation of powers to Congress); see also Bowen v. Kendrick, 108 S. Ct. 2562, 2579 (1988) (referring to “Flast and the narrcw exception it created to the general rule against taxpayer standing”) Ketler, supra, at 115-16 (“[Flederal employees have ni greater legal interest in or standing to assert allegations of government mismanagement [in the contracting out process] than do ordinary taxpayers.”); see generally, Dis- trict of Columbia Common Cause v. District of Columbia, 858 F.2d 1, 3-4 (D.C. Cir. 1988). 23 See supra note &. App. 26 2. The Office of Federal Procurement Policy Act Amendments of 1979. In addition to the 1921 Act, OMB Circular A-76 cites as authority the Office of Federal Procurement Policy Act Amendments of 1979 (“OFPPAA”), as amended, 41 U.S.C. Sections 401-420. See OMB Circular A-76 para. 3, J.A. at 12. In 1974, Congress created the Office of Federal Pro- curement Policy?4 to implement recommendations of the Commission on Government Procurement to establish a central body “to provide overall direction of procurement policy for Federal executive agencies.” H.R. REP. NO. 178, 96th Cong., Ist Sess. 1, reprinted in 1979 U.S. CODE CONG. & ADMIN. NEWS 1492, 1492. In OFPPAA, Con- gress amended and extended the life of this Office. After a thorough review of the OFPPAA and its legis- lative history, we have found nothing to suggest a con. gressional purpose more than marginally related to the interests cf federal employees vis-a-vis procurement poli- cy. Throughout the legislative history of OFPPAA and its amendments, Congress emphasized economy and effi- ciency in government operations. Specifically regarding “contracting out,” the Senate Committee on Govern- mental Affairs recognized that there had been a long- standing “executive branch policy of reliance on the pri- vate sector” to improve governmental efficiency as ex- pressed in earlier versions of OMB Circular A-76. S. REP. 24 Office of Federal Procurement Policy Act, Pub. L. No 93-400, 88 Stat. 796 (1974). App. 27 NO. 144, 96th Cong., Ist Sess. 4 (1979). Congress specifi- cally validated this Executive branch policy favoring the private sector in its enactment of the OFPPAA: The new [contracting out] policy is built on three principles: 1. Rely on the private sector. The Govern- ment’s business is not to be in business. If private sources are available, they should be looked to first to provide the commercial or industrial services needed by the Govern- ment. 2. Retain certain governmental functions inhouse. Certain functions are inherently gov- ernmental in nature being so closely related to the public interest as to demand performance by Federal employees. 3. Aim for economy. Use cost comparison. When private performance is feasible and no overriding factors require in-house perform- ance, the taxpayer deserves and expects the most economical performance and therefore rigorous comparison of contract cost versus inhouse cost shouid be used when appropri- ate to decide how the work will be done. Id. See also H.R. REP. NO. 146, 98th Cong., 1st Sess. 8-9 (1983) (quoting the above “government[] policy on con- tracting out” and stating that “[t]hese are wise principles, and in their applicability to all agencies they are entirely consistent with the goal that the Federal procurement system be standardized.”). The policy endorsed in the report does not merely favor the private sector; it en- dorses “reliance” on the private sector. The obvious pre- sumption is that private sector performance is more economical and efficient. Only if the goods or services App. 28 required are “inherently governmental,”25 as none of the services in question are, should the procuring agency look away from the private sector. The third principle’s call for “rigorous comparison of contract cost versus in- house cost,” read in the context of the whole policy, illustrates that Congress wanted in-house costs estimates to be strictly reviewed, so as not to frustrate the first principle’s emphasis on the private sector. Since the legislative history of the OFPPAA endorses the Executive branch policy of reliance on the private sector and the Circular finds authority in the OFPPAA, it is difficult to conclude anything but that the interests ot federal employees are inconsistent with the purposes of OFPPAA. As previously discussed, appellants’ real inter- est in this case is the protection of the federal jobs of its members, not efficiency in governmental operations. If appellants’ real interest in this case was governmental efficiency, they might very well be within the zone of interest of the purposes of the OFPPAA. But again in the assertion of that interest of efficiency, they have no great- er claim to standing than any taxpayers. See pp. 18-20 supra. Their real interest of job protection flies in the face of a policy that federal departments and agencies, 25 “A Governmental function is a function which is so intimately related to the public interest as to mandate perform- ance by Government employees.” OMB Circular A-76 para. 6.e., |.A. at 13. These include, inter alia, criminal investigations; the management of government programs; activities related to combat and combat support; the conduct of foreign relations; the regulations of natural resources; the direction cf intel- ligence operations; and the regulation of industry and com- merce. Id. para. 6.e.1. App. 29 through OMB Circular A-76, should rely on the private sector. Thus appellants’ interests are inconsistent with the purposes of the OFPPAA and not within the zone of interest of that Act. Cf. Clarke, 479 U.S. at 399. Because we hold that appellants’ interests are not within the zone of interest of the Budget and Accounting Act of 1921 or the OFPPAA, the statutory authority for OMB Circular A-76, appellants may not assert standing based on those statutes. 3. National Defense Authorization Act of 1987. Appellants also assert standing under section 1223(b) of the 1987 DoD Authorization Act, 10 U.S.C. Section 2304 note. That section requires the Secretary of Defense to “ensure that all costs considered [in a contracting out decision] . . . are realistic and fair.” See supra note 6. Appellants contend that the legislative history of the Act, which prohibits contracting out of federal firefighter and DoD security guard positions, evidences congressional! intent to provide employee standing because at least some government jobs are protected. Additionally they point out that advocates for federal employees defeated attempts by private contractors to eliminate built-in “bias” in the contracting out process favoring federal emplovees, such as the addition of a ten percent conver- sion differential which must be added to each contrac- tor’s bid. We find appellants’ arguments unconvincing and, after reviewing the legislative history of section 1223(b), conclude that appellants’ interest is inconsistent with the statutory requirement of a “realistic and fair” cost comparison. App. 30 From our review of the legislative history, the phrase “realistic and fair” was added to the Authorization Act to protect the private government contractor in the contract- ing out process against undue built-in “bias” favoring in- house performance of services. In fact, the phrase was added at the behest of government contractors in protest against the ten percent conversion differential. Appellees point to, and we find convincing, the following explana- tion of the “realistic and fair” language found in the Senate Report on the Authorization Act. Realistic and Fair Cost Comparisons DOD handicaps contractors’ bidding on sér- vices and supplies during cost comparisons against retaining these functions in-house. In addition to the existing 10% [conversion] bias used to date, other handicaps are: * Contract Administration Cost - The cost for the government to administer the contract if awarded to a private concern is added to the vendor's bid. * Quality and Technical Assurance Cost - Quality and technical supervision and assurance are costs added to the vendor’s bid when con- tracting out work. * Excessive liability coverage required and unrealistically low costs for government agen- cies. * Overhead costs computed for the govern- ment bid. Agency cost comparison must be made more equal for determination of contracting out. Some DOD organizations have used these hand- icaps to their advantage in determining the cost App. 31 comparison outcome. In addition to opening the door for more competition, the competitions must be conducced on an “apples to apples” basis. S. REP. NO. 331, 99th Cong., 2d Sess. 278, reprinted in 1986 U.S. CODE CONG. & ADMIN. NEWS 6413, 6472. Thus the legislative history shows that the provision for a “realistic and fair” cost comparison was designed to pro- tect the integrity of the contracting out process by resolv- ing “handicaps” against government contractors — the apparent intended beneficiaries of section 1223(b). Obedient to the teachings of Clarke, we must deter- mine whether the interests of the in-house employees are only marginally related to or inconsistent with the pur- pose of the statute. See Clarke, 479 U.S. at 399. As dis- cussed above, appellants’ real interest in a decision to contract out is the protection of the jobs of their members. Private contractors competing to perform the same ser- vices that appellants’ members now perform are the cen- tral threat to these government union members’ jobs. The interests of the in-house federal employees are therefore “antithetical” to the interests of the private contractors because “federal employees present an ‘either-or’ situa- tion in relation to private” contractors. American Federa- tion of Government Employees, Local 1668 v. Dunn, 561 F.2d 1310, 1313 (9th Cir. 1977) (federal employees lack stand- ing to contest a contracting out of an Air Force food service facility). Thus appellants’ interest is inconsistent with the purpose of the section 1223(b) which provides for contracting out where that is the most cost-efficient alternative. It follows that appellants’ interests are not , rn ‘ r a — cS c aa ° ohnt pm hy y : ; f ‘ a — a! — . _“ . > 4 = J ¢ ¢ ome f ¢ ‘ TS ‘ , t ‘ i. a ! s . ; . . — . 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" ~ f s ~ - > >| _ \ 7 + 4 r + h 4 - ° \ i . n ; i) of - ° . r N + ~ ° * ' 4 . ~ 1° i - : - , " App. 34 Congress has indicated no intention to rely on the bu- reaucracy as a plaintiff class, and, indeed, all evidence Is to the contrary. The bureaucratic interest functions inter- nally, as it did in this case in the extensive review con- ducted by the Evaluation Board, the Administrative Appeals Review Board, and the General Accounting Of- fice. See supra, pp. 3-5. In this connection, we note that the dissent turns the “intent to rely” analysis on its head, stating that “the federal employees, and therefore the Union plaintiff here, do have standing unless the statutes or their legislative histories reveal a congressional intent to preclude re- liance on this particular class of plaintiffs.” Dissent at 10 But Supreme Court precedent requires an affirmative not a negative test: “the essential inquiry is whether Congress ‘intended for [a particular] class [of plaintiffs] to be relied upon to challenge agency disregard of the law.’ “ Clarke, 479 U.S. at 399 (quoting Block, 467 U.S. at 347) (other citation omitted). Nothing in Clarke or any other authori- ty cited by the dissent or the parties suggests that the assumed unavailability of other plaintiffs is any more relevant to the intent of Congress in the present context than it was to the determination of the lack of “citizen standing” in Schlesinger. B. Disappointed Bidder Standing. Lastly, appellants assert standing equivalent to that of a “disappointed bidder” in a government contract (Continued from previous page) disadvantage by reason of departmental contracting out would have standing to sue. solicitation and award. Since Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859 (D.C. Cir. 1970), this Circuit has recognized that a disappointed bidder in a government contract award has standing under section 702 of the APA, 5 U.S.C. Section 702, to act as a “ ‘private attorney general,’ ” in order to “prevent[] the granting of [a] con- tract[] through arbitrary or capricious action” amounting to “illegal [agency] activity.” 424 F.2d at 864. See also National Maritime Union of America, 824 F.2d at 1236-38; Orange Park Florida T.V., Inc. v. FCC, 811 F.2d 664, 671-72 (D.C. Cir. 1987); Delta Data Systems Corp. v. Webster, 744 F.2d 197 (D.C. Cir. 1954). The disappointed bidder doc- trine has since been recognized by most circuits?? and Congress affirmatively recognized the doctrine in the 29 See Choctaw Mfg. v. United States, 761 F.2d 609 (11th Cir 1985): In re Smith & Wesson, 757 F.2d 431 (1st Cir. 1985); CACI, Inc.-Federal v. United States, 719 F.2d 1567, 1573-75 (Fed. Cir. 1983): B.K. Instrument, Inc. v. United States, 715 F.2d 713 (2d Cir. 1983); Airco, Inc. v. Energy Research & Development Administra tion, 528 F.2d 1294, 1296 (7th Cir. 1975) (per curiam); Armstrong and Armstrong, Inc. v. United States, 514 F.2d 402 (9th Cir. 1975); Haves International Corp. v. McLucas, 509 F.2d 247 (Sth Cir.), cert denied, 423 U.S. 864 (1975); Merriam v. Kunzig, 476 F.2d 1223, 1241-43 (3d Cir.), cert. denied, 414 U.S. 911 (1973); Keco Indus Inc. v. United States, 428 F.2d 1233, 1236-38 (Ct. Cl. 1970); but see People’s Gas, Light & Coke Co. v. United States Postal Service, 658 F.2d 1182, 1193 n.7 (7th Cir. 1981) (questioning disappointed bidder standing in light of the zone of interest test), Cincinnati Elec. Corp. v. Kleppe, 509 F.2d 1080, 1086 (6th Cir. 1975) (con- tending that the Clarke-rejected requirement of congressional intent to benefit, see Clarke, 479 U.S. at 399-400 & n.15, is necessary for a party to assert APA standing in the “relevant statute” = App. 36 legislative history of the Federal courts Improvement Act of 1982.30 We note that courts have applied disappointed bid- der status to meet both Article III injury requirements?! *9 Pub. L. No. 97-164, 96 Stat. 25 (1982) (“FCIA”). FCIA established the Claims Court which assumed the jurisdiction of the Court of Claims. Congress indicated an intent to retain the disappointed bidder or Scanwell doctrine. The Report of the House Committee on the Judiciary states It is not the intent of the Committee to change exist- ing caselaw as to the ability of parties to proceed in the district court pursuant to the Provisions of the Admiuistrative Procedure Act in instances of illegal agency action. See, e.g., Scanwell Laboratories, Inc Shaffer... . Therefore, the Committee is satisfied by clothing the Claims Court with enlarged equitable powers not to the exclusion of the district courts H.R. REP. NO. 312, 97th Cong., Ist Sess. 43 (1981). The Report of the Senate Committee on the Judiciary agreed By conferring jurisdiction upon the Claims Court to award injunctive relief in the pre-award stage of the procurement process, the Committee does not intend to alter the current state of the substantive law in this area. Specifically the Scanwell doctrine as enun- ciated by the D.C. Circuit Court of appeals in 1970 is left in tact [sic] S. REP. NO. 275, 97th Cong., 2d Sess. 2 U.S. CODE CONG. & ADMIN. NEWS 33 3] a » J see, e.g., National Maritime, 824 F.2d at 1237 (“Most of the cases . . . invoke [the disappointed bidder’s] right as a means to resolve the zone-of-interest question . . . [b]ut we believe that [it] . . . is essential to article III standing in a procurement challenge.”) ~ + >) App. 37 and zone of interest requirements.32 This Circuit has con- sidered “disappointed bidder” status as establishing the bidder’s right to step into the shoes of the public and assert the public interest. In Scanwell Laboratories, Judge Tamm wrote for the Court: [T]here is no right in [the disappointed bidder] to have the contract awarded to it in the event the district court finds illegality in the award of the contract. ... Thus the essential thrust of {the disappointed bidder’s] claim on the merits is to Satisfy the public interest in having agencies follow the regulations which contro} govern- ment contracting. The public interest in prevent- ing the granting of contracts through arbitrary Or Capricious action can properly be vindicated through a suit brought by one who suffers inju- ry as a result of the illegal activity, but the suit itself is brought in the public interest by one acting essentially as a “private attorney gener- al.” Scanwell Laboratories, 424 F.2d at 864. More recently, now - Justice Scalia, while a member of our Court, restated this emphasis on the public interest: the “main Objective” of the disappointed bidder doctrine is “to assure that the government obtains the most advantageou. contract] by complying with the procedures which Congress and ap- plicable regulations have provided.” Delta Data Systems, 744 F.2d at 206. See also Orange Park Florida T.V., 811 F.2d at 672 (“[A] wrongful award of a government contract constitutes a discrete economic injury to unsuccessful bidders, who [then] have an incentive to vindicate the 39 “ See, e.g., B.K. Instrument, 715 F.2d at 719-20; Control Data, 655 F.2d at 293. App. 38 public interest as well as their own by insisting on the integrity of the procurement process.”) (citations omit- ted). While Judge Tamm’s original language in Scanwell Laboratories is broadly phrased, apparently to include as a disappointed bidder anyone “who suffers injury as a result of the illegal activity,” 424 F2d at 864, a decade later he made it clear that disappointed bidder status is unavailable to those who “cannot claim the special rela- tionship found . . . to exist between a bidder and the government; unlike the bidder in the context of a solicita- tion, they have not ‘placed in the hands of the representa- tives of the government the power to bind [it] to a contract.’ ” Control Data Corp. v. Baldrige, 655 F.2d at 293 (quoting Merriam v. Kunzig, 476 F.2d at 1242 n.7. The government is obligated to provide the bidder under this special relationship with a “legally valid” and “fair pro- curement,” National Maritime, 694 F.2d at 1237-38, which presumably fosters competition amongst contractors thereby benefiting the public interest. See Gull Airborne Instruments, Inc. v. Weinberger, 694 F.2d 838, 842 (D.C. Cir. 1982). Not every bidder in a solicitation may assert disap- pointed bidder standing, otherwise nuisance suits could handicap the procurement system. Rather, standing is conferred only to those bidders who are “ ‘within the zone of active consideration’ for the bid’s award.” Nation- al Maritime, 824 F.2d at 1237-38 n.12 (quoting CACI, Inc.- Federal v. United States, 719 F.2d at 1574-75, other citation omitted). See also Morgan Business Assocs., Inc. v. United States, 619 F.2d 892, 896 (Ct. Cl. 1980). Moreover, the special relationship ends once the solicitation and award App. 39 process is complete and the bidder has received his law- ful and fair procurement. See Gull Airborne Instruments, 694 F.2d at 842-43 (disappointed bidder standing does not provide right to challenge contract administration). Neither appellants nor their members bid on a con- tract and, thus, have never placed themselves in the spe- cial relationship by which the government can bind them to the bid. Moreover, with no bid on a solicitation, it is impossible for them to be within the zone of active con- sideration. Thus, we hold that appellants do not have disappointed bidder standing to contest the contracting vut decision made by Fort Sill. As we stated in National Maritime, regarding an assertion of disappointed bidder standing by a union representing employees of an unsuc- cessful bidder, “the right is [the contractor’s], not [the union’s].” 824 F.2d at 1238. II. CONCLUSION For the above stated reasons, we find that appellants lacked standing to contest the Army’s contracting out decision. We therefore find it unnecessary to determine whether administrative decisions to contract out are sub- ject to judicial review. Affirmed MIKVA, Circuit Judge, dissenting: Today this court finds that government employees who stand to lose their jobs as a result of what we must assume - at this stage - to be illegal contracting out decisions are not entitled to g 4 App. 40 raise their claim in court. This is not the first time that our circuit has attempted to restrict the standing of those who may sue under section 702 of the Administrative Procedure Act (“APA”). In a series of cases a few vears ago, including Control Data Corp. v. Baldrige, 655 F.2d 283 (D.C. Cir.), cert. denied, 454 U.S. 881 (1981) and Copper & Brass Fabricators Council, Inc. v. Department of the Treasury, 679 F.2d 951 (D.C. Cir. 1982), this circuit created a demanding test for standing under section 702 using the same zone of interest rubric the majority employs again here. The test was far more difficult to meet than any promulgated by the Supreme Court itself and, not sur- prisingly, the Court specifically disapproved it two terms ago in Clarke v. Securities Industry Association, 479 U.S. 388, 400 n.15 (1987). This lesson is lost on the majority today, who pursue the same goal by only slightly differ- ent means, despite the Supreme Court’s clear signals that the goal itself is inappropriate. Originally, the zone of interest test for section 702 claims was adopted, in Association of Data Processing Ser vice Organizations, Inc. v. Camp, 397 U.S. 150, 153-54 (1970), to enlarge, not restrict, the class entitled to protest administrative action. See American Friends Service Com mittee v. Webster, 720 F.2d 29, 49 (D.C. Cir. 1983). The Supreme Court has repeated loudly and clearly that courts are to welcome those pursuing grievances under the APA. In Abbott Laboratories v. Gardner, 387 U.S. 136, 140-41 (1967), the Court said that “the Administrative Procedure Act’s generous review provisions must be giv- en a hospitable interpretation” and that “only upon a showing of clear and convincing evidence of a contrary App. 41 legislative intent should the courts restrict access to judi- cial review” (internal quotations deleted). In Barlow v. Collins, 397 U.S. 159, 166-67 (1970), the companion case to Data Processing, the Court cautioned that “preclusion of judicial review of administrative action adjudicating pri- vate rights is not lightly to be inferred” and that “judicial review * * * will not be cut off unless there is persuasive reason to believe that such was the purpose of Congress.” In its most recent opinion on the subject, the Court reiter- ated that while the zone of interest test is a gloss on section 702 and provides some limit to access, it “is not meant to be especially demanding,” and there need only be “a plausible relationship” between the interest plain- tiff asserts and the policies underlying the relevant statu- tory framework. Clarke, 479 U.S. at 396, 399, 403. In the 19 years since the Court announced the zone of interest test for section 702 claims, it has yet to find any party before it outside that zone. It has only once found that plaintiffs, though within the zone of interests, were statutorily precluded from bringing suit, in Block v. Com- munity Nutrition Institute, 467 U.S. 340, 348 (1984). See also Clarke, 479 U.S. at 400 (interpreting Block as finding pre- clusion). In Block, the Court found that granting standing for the plaintiffs would have permitted an end run around a carefully constructed administrative review pro- cedure, enacted by Congress to resolve the same kind of complaint as plaintiffs brought, with only limited resort to the court system. Nonetheless, the majority today has found a way to deny standing under section 702 to the plaintiff here. (hat the National Federation of Federal Employees (“NFFE”) satisfies Article III’s standing requirements is App. 42 scarcely in doubt. Its members have suffered substantial injury in fact. The Fort Sill contracting out decision led to the abolition of 401 positions. More than 200 employees were scheduled for discharge, 125 other for demotion. Nor is there a difficult question as to causality or re- dressability. Plaintiff’s claim is that the Army artificially inflated the cost of the most efficient in-house perform- ance of the Fort Sill functions and artificially deflated the cost of converting to using a private contractor, with the result that letting the contract to Northrup only appeared to be the least expensive means of getting the job done when actually in-house services were least expensive. If plaintiff is correct, the distortions certainly are causally related to the Army’s decision to hire Northrup. If plain- tiff could pursue this matter and prove all its claims, the Army decision sub judice would have to be vacated and the Army would be required to choose again the least expensive option, which would be shown to be the in house Services [he majority neither acknowledges nor refutes this Instead, it holds that the union and its members are not within the zone of interests of the Budget and Accounting Act of 1921 (“1921 Budget Act”), the Office of Federal Procurement Policy Act Amendments of 1979 (“OFP PAA”), or the 1987 Department of Defense Authorization \ct (“1987 Authorization Act”). Its reasoning is as fol lows: (1) the federal employees’ real interest is in keeping their jobs; (2) the statutes at issue do not indicate any congressional interest in maintaining or enlarging federal employment — they, in fact, show an interest in reducing employment when it can save money without sacrificing governmental needs; (3) the only way the empioyees can App. 43 assert an interest in enforcing the rules aimed at increas- ing government economy and efficiency is as taxpayers, and under Flast v. Cohen, 392 U.S. 82 (1968), no taxpayer standing is available to challenge these government ac- tions. The majority’s claim — that NFFE’s members are real- ly only interested in keeping their jobs and that this interest is either marginally related to or inconsistent with Congress’ purposes and that the members cannot assert an interest in enforcing the rules applying to con- tracting out decisions except as taxpayers — is wholly at odds with the Supreme Court’s reasoning and decisions in its APA zone of interest cases The data processing companies, in the Court’s first zone of interest case, were really only interested in keep- ing their profits, an interest certainly marginally related to Congress’ purposes in enacting the banking laws, but the Court held that they had standing to enforce the banking laws’ rules restricting bank activities. Data Pro- cessing, 397 U.S. at 156-58. Likewise, the travel agents in Arnold Tours, Inc. v. Camp, 400 U.S. 45 (1970); the invest- ment companies in Investment Company inenlinite v. Camp, 401 U.S. 617 (1971) (“ICI”); and the discount brokers in Clarke, all interested solely in their bottom lire, were permitted to assert the public interest in restricting bank activities In each of these cases, the Court understood plain tiffs’ interest as a desire to hold on to their profits See Data Processing, 397 U.S. at 152; Arnold Tours, 400 U.S. at ICI, 401 U.S. at-620; Clarke, 479 U.S. at 403. In each of these cases, the Court neither found nor suggested that App. 44 such an intercst was to be found among Congress’ pur- poses in enacting the statute that the plaintiffs sued un- der. In Data Processing, the Court specifically distin- guished Flast as irrelevant. Flast, it said, was a taxpayer suit, whereas this was a competitor’s suit and the two “do not necessarily track one another.” Data Processing, 397 U.S. at 152. Thus, the Court has repeatedly granted standing to plaintiffs whose actual motivation is mar- ginally related to Congress’ purposes, but whose asserted interest is consistent with them. See Data Processing, 397 U.S. at 156-58; Arnold Tours, 400 U.S. at 46-47; ICI, 401 U.S. at 620-21; Clarke, 479 U.S. at 403. In the Supreme Court’s most recent zone of interest case, Clarke, the Court made explicit what had been im- plicit in both Data Processing and ICI. “The Court’s con- cern,” it said of the Data Processing decision, “was to ensure that the data processors’ association would be a reliable private attorney general to litigate the issues of the public interest * * *. [Although expressed in relation to Article Ill requirements,] the concern that the plaintiff be ‘reliable’ carries over the ‘zone of interest’ inquiry, which seeks to exclude those plaintiffs whose suits are more likely to frustrate than to further statutory objectives.” Clarke, 479 U.S. at 397 n.12 (some internal quotations deleted). Clarke explains that the Court in JCI did not take issue with the dissent’s assertion that “there was no evidence that Congress had intended to benefit the plain- tiff’s class wh [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_1273%3A1. Public record. Not legal advice.