Petition for Writ of Certiorari — American Federation of Government Employees v. United States
Supreme Court brief2002
Ask Donna
What actually matters in this document.
Text
FILED
UO 01 664 oct 22 2008
es: i
IN THE
Supreme Court of the Anited States
AMERICAN FEDERATION OF GOVERNMENT
EMPLOYEES, AFL-CIO, et al.,
Petitioners,
s
UNITED STATES,
- Respondent.
Petition for a Writ of Certiorari to the
United States Court of Appeal
for the Federal Circuit
PETITION FOR A WRIT OF CERTIORARI
MARK D. ROTH
General Counsel
AMERICAN FEDERATION OF
GOVERNMENT EMPLOYEES,
AFL-CIO
80 F Street N.W.
Washington, D.C. 20001
(202) 639-6415
MARTIN R, COHEN *
Assistant General Counsel
for Litigation
AMERICAN FEDERATION OF
GOVERNMENT EMPLOYEES,
AFL-CIO
Suite 117
10 Presidential Blvd.
Bala Cynwyd, PA 19004
(610) 660-0316
* Counsel of Record Counsel for Petitioners
October 22, 2001
WILSON-EPES PRINTING Co., INC. — (202) 789-0096 — WASHINGTON, D.C. 20001
® kB so
\\
\
QUESTION PRESENTED
Did the Federal Circuit err when it ignored the language
and intent of the extensive 1996 amendments made to 28
U.S.C. § 1491, the primary jurisdictional statute of the United
States Court of Federal Claims, and failed to recognize in this
case the intent of Congress that the entire range of APA based
Scanwell v. Shaffer procurement cases, including those like
the instant case, that had been heard since 1970 in the District
Courts, would henceforth be heard in the United States Court
of Federal Claims?
ii
PARTIES TO THE PROCEEDINGS
In addition to the petitioner named in the caption, the
following parties, who were appellants below, petition this
Court for a writ of certiorari to the U.S. Court of Appeals for
the Federal Circuit:
American Federation of Government Employees,
AFL-CIO, Local 1482, William J. Gately, and Michelle
Jo Evans.
TABLE OF CONTENTS
Rati ERA a eae
CONSTITUTIONAL AND STATUTORY PROVI-
SSE RS a
eh cece ace gf EE EES SRE SESE CR ae
| PRET Rea
REASONS FOR GRANTING THE PETITION...........
I. The Federal Employees Who Filed This
Action Should Have Been Found To Have
Been “Interested part[ies] Objecting to . . . [an]
Alleged Violation Of Statute or Regulation In
Connection With a Procurement” As That
Phrase Was Used By Congress In Crafting 28
U.S.C. § 1491(bX(1) In §12 of the Admin-
istrative Dispute Resolution Act of 1996...........
II. The Court Below Misinterpreted The Lan-
guage And Legislative History Of Amended
28 U.S.C. § 1491(6) By Ignoring The
Directive From Congress That The Purpose Of
The Amended Language Was To Empower
The United States Court of Federal Claims
With Full Jurisdiction of All of The Contract
Protests And Related Matters That Had Been
Heard In Federal District Courts Since 1979
Pursuant To Scanwell Laboratories, Inc. v.
Shaffer, 424 F.2d 859 (D.C. Cir. 1970).............
(iii)
~~
WN NY NY WH
Lif.
iv
TABLE OF CONTENTS—Continued
The Court Below’s Misreading of 28 U.S.C.
§ 1491(b)(1) Comprehensively Concluded
That Only An “Interested Party” As Narrowly
Defined In the Competition in Contracting
Act, 31 U.S.C. §3551(2), Could Proceed
Before It and Thus It Failed To Recognize
That Full Scanwell Jurisdiction Had Been
Imparted to the COFC by Congress In The
ADRA, And That Under That Scanwell
Jurisdiction Plaintiffs Like The Plaintiffs
Here, Had Been Found To Have “Prudential
CS MO TCR TE ESE AEST eae
etic cecsceiereceonsartncsrantiiviaisaeniaseniiaamaatameunbibaisnies
APPENDICES:
A.
B.
Cc.
Opinion of the U.S. Court of Appeals for the
I Oe
Opinion of the U.S. Court of Federal Claims,
I cc tsaesvoriechcesaccbcinriasnominausshinddcsncaasidantelliichiaads
TRIAL, © Ae Ce iirrnicctenereiraionunene
. Administrative Dispute Resolution Act of 1966,
I
28 U.S.C. Section 1491 [before 1996
i i niicaiutisstaxishtiliniiadiinmensdinspinabianainiannenioen
Office of Management & Budget Circular No.
Di Mi ii iesiaseaderena. ith Gievinciimainasaia naadiaaaaaaabiabadiianiicuns
_ Diebold v. United States, district court on
remand (unpublished opinion of 8/13/95)............
. House Conference Report No. 104-841,
9/25/96, regarding § 12 of the ADRA of 1996 ...
Page
11
18
la
Sa
45a
48a
52a
54a
63a
74a
v
TABLE OF CONTENTS—Continued
Page
I. Congressional Record—Senate Proceeding &
Debate of 9/30/96 Regarding § 12 of ADRA,
142 Cong. Rec. at 11848-01
- Vi
TABLE OF AUTHORITIES
CASES Page
American Federation of Government Employees
v. United States 258 F.3d 1294 (Fed. Cir.
AIL ) .2<cs0scesesecansesicentasibmeametmmaiitinaasiebciinmmnennien passim
American Federation of Government Employees
v. United States, 46 Fed. Cl. 586 (2000)............. passim
American Federation of Government Employees,
Local 2119 v. Cohen, 171 F.3d 460 (7th Cir.
EDD) ...0:sesecnossansiahenessieneamietauadbinisilaaeteaneeioieie 14 |
Ballerina Pen Company v. Kunzig, 433 F.2d a
$206. CEA. Car. Fir iticacictesscteseetacenstiniionensrseserese 14
CHE Consulting, Inc. v. United States, 47 Fed.
C1, SBE CE icccscdacactslintintenidteintatteteneenserens soak 13
Clarke v. Securities Indus. Ass'n, 479 U.S. 388
(19D) .scicscrinsscrencsinidenniiimtanibeiiaiiphiamenimnss 16
Contractors Eng’s Int'l v. Department of
Veterans Affairs, 47 F.2d 1298 (Sth Cir.
ODI ) ..nnccocnsncpssecshsuntanislataipeiiesiaiiumbaietichaaticane 4
Diebold v. United States, 947 F.2d 787 (6th Cir.
1991), petition for rehearing denied, 961 F.2d
7 (Ge Cie, Backseat caitnninciene 10, 16
Diebold v. United States, Civil Action No. C90-
0001-L(A) (W.D. Kentucky 1993) ................ 10, 16, 17
Emory Worldwide Airlines, Inc. v. United States,
__ F.3d __, 2001 WL 995322 (Fed. Cir. August
31, 2001 (No. 01-5075) .......ccceecesteceeseeeeseeeeeees 11
National Credit Union Admin. v. First Nat'l
Bank and Trust, 522 U.S. 479 (1998)..........:000+ 16
National Federation of Federal Employees v.
Cheney, 883 F.2d 1038 (D.C. Cir. 1989), cert.
denied, 496 U.S. (1990) .........csssccessssresssssseeeeeeees 17
Phoenix Air Group, Inc. v. United States, 46 Fed.
Cl. 90 (2000)........eseceseseseees Teiscdabesiaists cobicansies 6
vii
TABLE OF AUTHORITIES—Continued
Page
Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d
th ce! , SRE. TG SOR passim
Toibb v.Radloff, 501 U.S. 157 (1991) ....c.cececcecssee. 9
STATUTES
A oe p PEASE Aan aS 4
BD aes © BOOTIE) sicicncecsesesivecocsonecsvssseoscescorees 8, 10
Fe EEE Diesiinsscstsrnivinevesncndecsachegrentiemmmcaes 2
eg itt fC eee eae passim
a Oe ID oa ccsceicdevisosensademsseeensspenaesene passim
Pe I a ccccctitaniessishernitaeeneecs 7
I © OU ii icitscncininicesesonasaliacsiocsceccen 10
aS al | ees eee ae 15
Fe Ish IO OO sncsinericcntsuitetnninncvtinieseereniainss 5, 6, 12, 15
OE I Oe GO 0 Bini cninsicvsiaiesesninsnenseseroseesscs 10
REGULATIONS
SE ee COE BOI vas cnesetssecinenesererssinnmnede, 10
MISCELLANEOUS
Administrative Dispute Resolution Act of 1996,
P.L. No. 104-320, § 12, 110 Stat 3870, 3874... 8, 12
Administration Dispute Resolution Act of 1996,
P.L. No. 104-320, § 1491(b)(1) [ADRA].......... passim
Administrative Procedure Act, 5 U.S.C. § 701 et
“ee eg, COE DEY DETR ase oC 5, 9, 13, 14
American College Dictionary, Random House,
ROE REITs TRS SEE 8
Article II, U.S. Constitution............cccccccccccccsscseees 12
Claybrook, The Initial Experience of the Court
of Federal Claims in Applying the Admin-
istrative Procedure Act in Bid Protest Actions-
Learning Lessons All Over Again, 29 Pub.
2 Ee 1. REESE eee 15
Vili
TABLE OF AUTHORITIES—Continued
Competition in Contracting Act, 31 U.S.C.
es SIE SAI sictvsdicinienineisscndsinenisicetibesbinidenseannianveadaseni a
Federal Activities Inventory Reform Act of 1998,
Pub. L. No. 105-270 (1998) [FAIR Act) ...........
PERE Se icecitsniesiiniciicnicitiilyeinctacinititaenndiantetmerieieeneees
H.R. Conf. Rep. No. 104-841 (1996)..........cccesees
Mason, Bid Protests and the U.S. District
Courts—Why Congress Should not Allow The
Sun To Set On This Relationship, 26 Pub.
Cs Ed, FP CI i ctecicilethniiinhateatbicccimenttatneseies
Office of Management and the Budget Circular
No. A-76 [OMB Circular A-76] (Revised
1999) and Supplemental Handbook....................
Schooner, Fear of Oversight: The Fundamental
Failure of Businesslike Government, 50 Am U.
ic 7 Gere iiicccdtnnhiinecchicibceneniaeibbineatestanee
The Budget and Accounting Act of 1921 ..............
The Office of Federal Procurement Policy Act
Pam D a OE AGF svcsatittccrsssrinitttsresinareisnressis
142 Cong. Rec. at § 11848-50 0... eeeeeseeeeenees
Page
10, 15
10, 16
16
IN THE
Supreme Court of the United States
No.——
AMERICAN FEDERATION OF
GOVERNMENT EMPLOYEES, AFL-CIO, et al.,
Petitioners,
Vv.
UNITED STATES,
Respondent.
Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Federal Circuit
PETITION FOR A WRIT OF CERTIORARI
OPINIONS BELOW
The opinion of the United States Court of Appeals for
the Federal Circuit is reported at 258 F.3d 1294 (Fed. Cir.
2001). (App. la-14a.) The opinion of the United States Court
of Federal Claims is reported at 46 Fed. Cl. 586 (2000).
(App. 15a-44a.)
2
JURISDICTION
The judgment of the Court of Appeals was entered on
July 23, 2001. (App. la-14a.) The Petition for a Writ of
Certiorari was due on October 22, 2001. This Petition was,
therefore, timely filed on October 22, 2001. The jurisdiction
of this Court is invoked under 28 U.S. C. § 1254(1).
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED
This case involves 28 U.S.C. § 1491(b)(1), (App. 45a-
47a.), and the language added to that provision by § 12 of the
Administrative Dispute Resolution Act of 1996 (ADRA),
Pub. L. No. 104-320, 110 Stat. 3870, 3874 (1996). (App. 48a-
51a.) This case also involves the Office of Management and
the Budget Circular No. A-76 and the three procurement
statutes pursuant to which it was issued. (App. 54a-62a.)
STATEMENT
A. Background
The Defense Logistics Agency (DLA), a subunit of the
United States Department of Defense, operates a warehouse
at the Marine Corps facility at Barstow, California. DLA
decided to subject the warehouse operation at Barstow to a
public-private competition pursuant to Office of Management
and Budget Circular No. A-76 (Revised 1999)[hereinafter
OMB Circular A-76] and its Supplemental Handbook. '
(App. 3a-4a.) The goal of such a competition is to decide,
based on objective criteria, whether a private company can
perform the targeted workload more economically than
efficiently organized federal employees who are currently
performing the workload. The most cost effective of the
' OMB Circular A-76 was issued pursuant to three federal statutes and
has been the primary set of rules for public private competitions in the
federal sector for over twenty years.
3
competing entities wins the right to perform the workload.
The competition at Barstow became a contest between the
selected most cost effective private contractor, EG&G
Logistics, Inc. (“EG&G”) and the public bid, which was a
costed-out evaluation of the Most Efficient Organization
(“MEO”) that could be envisioned by DLA for performing the
workload with federal civilian employees. (App. 15a, fn.1, 16a.)
Under OMB Circular A-76, ¥ 6-g, and related laws, it was
always apparent that the federal employees who were and/or
would be performing the workload in question were “directly
affected parties” with respect to the A-76 cost comparison.
See OMB Circular A-76, 4 6-g. (App. 57a.) In performing the
cost comparison between EG&G and the MEO, DLA
permitted several items to be costed too high for the MEO
and several items to be costed too low for EG&G. (App. 21la-
23a.) Because of these costing and competition impro-
prieties, DLA concluded that EG&G was the low bidder and
the workload was awarded to EG&G. An administrative
appeal was denied by DLA. (App. 20a-21a.) The instant
legal action followed. The two individual plaintiffs worked
for DLA in the Barstow warehouse operation and they both
would have been employed in the MEO had the MEO been
the winning bidder. (App. 16a, fn.2.) Given that EG&G was
the winner of the public-private competition, both individual
plaintiffs will lose their federal/civil service employment with
DLA and will, at best, be offered a job with EG&G paying
less in salary and benefits than they would have earned had
they worked for DLA as part of the MEO. This will cause
serious harm to the plaintiffs and their families. (App. 36a,
fn. 21.)
B. Proceedings Below ;
Plaintiffs, two federal sector civilian employees of the
Barstow, California, Defense Logistics Agency (DLA), and
their union sought both preliminary and permanent
declaratory and injunctive relief with regard to what they
4
believed was an illegal award of a contract to a private
company to operate the DLA warehouse in Barstow. (App.
2la-22a.) They filed their complaint in the United States
Court of Federal Claims on March 16, 2000. In essence, their
com-plaint alleged that they were entitled to have the
agency’s decision to award a contract for the operation of the
DLA warehouse to private contractor EG&G pursuant to
OMB Circular A-76 reversed because, had A-76 procedures
been properly followed, the award would have been made to
DLA, the public bidder. The complaint and accompanying
affidavits established that the individual plaintiffs would have
been able to continue their federal careers with DLA had
DLA been awarded the workload. (App. 36a.)
A briefing calendar for cross motions for summary
judgment was set forth by the trial judge, the briefs were filed
and the matter was argued on May 1, 2000. A decision was
issued on May 10, 2000, which concluded that the plaintiffs
lacked prudential standing and, hence, their complaint was
dismissed. (App. 43a-44a.) The court appears to have con-
cluded that the plaintiffs lacked prudential standing under the
primary jurisdictional statute alleged, 28 U.S.C. § 1491(b), as
well as under general concepts of prudential standing which
have evolved in federal district court litigation under 5 U.S.C.
§ 702, a provision of the Administrative Procedure Act,
(“APA”). (App. 29a-34a.) The court examined in detail the
legislative history of § 12 of the Administrative Disputes
Resolution Act of 1996 (“ADRA”), P.L. No. 104-320, 110
Stat. 3870 (1996), which had amended 28 U.S.C. § 1491(b)
so that the Court of Federal Claims would have expanded
jurisdiction of contract disputes. The trial court found that
this legislative history explicitly directed that the Court of
Federal Claims, pursuant to § 12 of the ADRA, was to have
jurisdiction of Scanwell? type cases, which theretofore had
? Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859 (D.C. Cir. 1970).
5
been heard only by the United States District Courts, added to
its contract claims jurisdiction. The trial court explicitly
rejected an argument by the government, that the term
“interested party” in. the newly amended 28 U.S.C.
§ 1491(b)(1), (App. 46a.), should be held to limit the jurisdic-
tion of the court to actions brought by an “interested party” as
that term was used and defined in another procurement
related statute, the Competition in Contracting Act (“CICA”),
31 U.S.C. § 3551(2).? (App. 32a.) |
Thus in reaching its conclusion that the federal employees
and their union had not established prudential standing, the
trial court, in light of this legislative history, made a specific
analysis pursuant to the APA based Scanweil line of cases,
and concluded that these plaintiffs did not have prudential
standing. The court did not decide any other issue. However,
it indicated in its decision that it did appear that the plaintiffs
had established all of the elements of constitutional standing.’
The plaintiffs presented evidence to support their claim that
the required competition with a realistic and fair cost
comparison was not performed by DLA as required by the
Federal Activities Inventory Reform Act of 1998, Pub. L.
105-270 (1998), (“FAIR Act”) and/or OMB Circular A-76
and that had such a study been properly performed, the MEO,
the public bid, would have been the winner. (App. 21a-23a.)
The court below did not rule on this issue.
The federal employees and their union filed a notice of
appeal on June 6, 2000. They argued, in summary, that the
> That statute defines “interested party” as “an actual or prospective
bidder or offeror whose direct economic interest would be affected by the
award of the contract or by failure to award the contract.”
* “If this court were to reach the issue, however, it would conclude
that these plaintiffs satisfy the injury-in-fact test. There is no question
but that some union members will lose the opportunity to retain their jobs
as members of the MEO because of the cost comparison results. Their job
loss is reasonably traced to the alleged errors in the cost comparison and
would be redressed if they were to prevail.” (App. 36a, fh.2.)
6
ADRA amended language of 28 U.S.C. § 1491(b) was clear
enough on its face to indicate that they had standing since
they were interested parties in the public private competition
which led to the loss of their jobs. Alternatively, they argued
that since the ADRA clearly intended to give the full
Scanwell jurisdiction of contract disputes to the Court of
Federal Claims and since under that line of cases they
should have been found to have established prudential
standing, such standing should have been found in the instant
case. On July 23, 2001, the United States Court of Appeals
for the Federal Circuit issued its decision it the case. That
court rejected without discussion the argument that the
language of the revised statute was clear on its face that the
federal employees and their union had standing because they
were interested parties in the public private competition
which had been held in a manner which violated various
procurement statutes and regulations. Finally, the court
concluded, without any convincing references, and in direct
conflict with the findings of the trial court, that while the
legislative history of § 12 of the ADRA nientioned giving the
Court of Federal Claims Scanwell jurisdiction, it would limit
this grant of jurisdiction to only filings by disappointed
bidders as opposed to the more expansive APA based
jurisdiction that had been established in the United States
District Courts under Scanwell. Furthermore, the court
concluded, without any reference to the statute or its legisla-
tive history, that “interested party” as used in § 1491(b)(1)
would be taken to mean the same as “interested party” in the
CICA, 31 U.S. C. § 3551(2). (App. la-14a.)°
* Curiously, the court below did not even comment on the numerous
Court of Federal Claims decisions, in addition to the decision in this case,
which had opined that the words “interested party” in § 1491(b)(1) has a
different and broader meaning than the words “interested party” in the
CICA. Those cases are listed in Phoenix Air Group, Inc. v. United States,
46 Fed. Cl. 90, 101-103 (2000).
7
REASONS FOR GRANTING THE PETITION
This case merits the Court’s review because the Federal
Circuit has decided an important question of federal law that
has not been but should be settled by this Court.© The Federal
Circuit has incorrectly decided that the 1996 amendments to
the jurisdictional statute of the COFC, with regard to pre and
post contract award disputes, 28 U.S.C. § 1491(b), only added
post award contract disputes brought by a disappointed
bidder, whereas the language of the amendments themselves
as well as their legislative history indicate that the full range
of Administrative Procedure Act based contract actions that
had previously been heard in Federal District Courts was to
be heard by the United States Court of Federal Claims. The
Federal Circuit is the only circuit court which will review this
matter, since it has exclusive jurisdiction of appeals from the
COFC. A split in the circuit courts is thus not a possibility.
28 U.S.C. § 1295(a)(3).’
° The Federal government enters into contracts valued at over 200
billion dollars per year. The ability of aggrieved individuals and
entities to challenge illegalities pertaining to this massive procurement
activity and to thus act as a corrective force against these illegalities
will be significantly influenced by the improperly circumscribed
jurisdiction of the United States Court of Federal Claims (“COFC”)
articulated in the instant case by the Federal Circuit. See generally
Schooner, Fear of Oversight: The Fundamental Failure of Businesslike
Government, 50 Am U. L. Rev. 627, 629-631, 688-690 (2001).
’ “The United States Court of Appeals for the Federal Circuit shall
have exclusive jurisdiction- * * * * * (3) of an appeal from a final
decision of the United States Court of Federal Claims.”
8
I. The Federal Employees Who Filed This Action
Should Have Been Found To Have Been “Inter-
ested partiies}] Objecting to . .. [an] Alleged
Violation Of Statute or Regulation In Connection
With a Procurement” As That Phrase Was Used
By Congress In Crafting 28 U.S. C. § 1491(b)(1)
In § 12 of the Administrative Dispute Resolution
Act of 1996.
The 1996 ADRA amended language of § 1491(b)(1),
without any reference to the legislative history of ADRA, —
gives the plaintiffs in this case the right to have the merits
of their case heard. Clearly the plaintiffs here, federal
employees who would lose their federal jobs and livelihood if
the contract was awarded to EG & G, were “interested
part[ies}] objecting to . . . any alleged violation of statute or
regulation in connection with a procurement or a proposed
procurement.” ® When legislative language is clear on its
face, as it is here, there is no reason to scrutinize the legisla-
* § 1491(b)(1) states in pertinent part that the COFC “shall have
jurisdiction to render judgment on an action by an interested party
objecting to . . . the award of a contract or any alleged violation of statute
or regulation in connection with a procurement or a proposed
procurement.” In The American College Dictionary, Random House,
1955 edition, the first two meanings of the word “interested” are as
follows: “1. Having an interest in something; concerned; 2. Participating;
having an interest or share; having money involved.” It seems obvious
that employees who have been involved in formulating the Most Efficient
Organization, who have been kept advised of the A-76 process and the
public private competition pursuant to statute, i.e., 10 U.S.C. § 2467(b),
who might lose their jobs, federal careers and financial resources as the
result of such competition, and who are explicitly identified as “directly
affected parties” by OMB Circular A-76 itself, meet both of these
definitions of the word “interested.” While it could be argued that in a
legal sense they are not themselves bidders in the competition, OMB
Circular No. A-76 itself refers to them as “directly affected parties”
(emphasis added). (App. 57a, | g.)
9
tive history. Toibb v. Radloff, 501 U.S. 157, 162 (1991).
This argument was made by the federal employees to the
court below and was rejected without explanation. (App. 8a-9a).
II. The Court Below Misinterpreted The Language
And Legislative History of Amended 28 U.S.C.
§ 1491(b) By Ignoring The Directive From
Congress That The Purpose of The Amended
Language Was To Empower The United States
Court of Federal Claims With Full Jurisdiction of
All of The Contract Protests And Related Matters
That Had Been Heard In Federal District Courts
Since 1979 Pursuant To Scanwell Laboratories, Inc.
v. Schaffer, 424 F.2d 859 (D.C. Cir. 1970).
The United States Court of Federal Claims, the trial court
here, concluded in this case that while 28 U.S.C. § 1491(b\(1)
as amended in 1996 did manifest an intent to give that court
both pre-existing COFC pre contract award jurisdiction and
APA based post contract award jurisdiction, the post contract
award claims of the federal employees and their union in this
matter did not reflect that these plaintiffs had “prudential
standing” under the applicable APA criteria. On appeal the
employees and their union argued that by referring directly to
the language chosen by Congress in 1996, they were entitled
to have their claims heard since they were clearly “interested
_part[ies}] ... objecting to a violation of statute or regulation
in connection with a procurement” which followed the OMB
A-76 public private cost competetion action that they allege
was performed illegally. Alternatively, the employees and
their union argued that under an APA analysis of prudential
standing, as engaged in by the trial court after it had set forth
an extensive review of the legislative history of the 1996
ADRA amendments, they should have been found to have
met the standard for prudential standing, as articulated by the
Supreme Court, since they were within the zone of interest of
10
the three statutes upon which OMB Circular A-76 was issued
and other related laws and regulations.”
In addition the employees and their union argued that the
pre ADRA_ Scanwell line of cases included at least one
district court case that found that plaintiffs like them did have
“prudential standing” and that hence under the amended
§ 1491(b)(T) they should have been found to have “prudential
standing.”
The Federal Circuit disagreed with the court below’s
careful and correct analysis of the legislative history of the
ADRA and concluded that only part of the APA based post
contract award jurisdiction which had existed in the United
States District Courts under Scanwell was covered in
amended 28 U.S.C. § 1491(b)(1). According to the Federal
Circuit, only disappointed bidders as defined by the CICA
could bring post contract award actions in the COFC under
the amended statute.'® Since the employees and the union
* OMB Circular A-76 was issued pursuant to three statutes: the Budget
and Accounting Act of 1921 (31 U.S.C. §§ 1 ef seq.); the Office of
Federal Procurement Policy Act Amendments of 1979, (41 U.S.C.
§§ 401 et seg.), and the FAIR Act. It has been adopted by reference in
various statutes and regulations. See e.g. 10 U.S.C. § 2467(b) and 32
C.F.R. §§ 169 and 169a. In an exhaustive analysis of the statutory basis
of OMB Circular A-76 the Sixth Circuit has found it to be “law to apply”
for purposes of an action brought pursuant to the APA. Diebold v. United
States, 947 F.2d 787 (6th Cir. 1991), petition for rehearing en banc
denied, 961 F.2d 97 (6th Cir. 1992). On remand in that case the District
court concluded that the federal employees and their union did have
“prudential standing” under the APA to challenge a contract award
made pursuant to an OMB Circular A-76 public-private competition.
(App. 63a-73a.) See supra, Ill .
'° While there are several clear references in the legislative history to
adding the Scanwell jurisdiction to the COFC’s jurisdiction, there is
absolutely no mention of tailoring the new statute's jurisdictional contours
to conform to the jurisdiction under CICA or to the General Accounting
Office, GAO, line of cases issued pursuant thereto. 142 Cong. Rec.
§ 11848-50. (App. 84a-85a.) The Federal Circuit’s adoption of the CICA
11
were not disappointed bidders, the Federal Circuit reasoned,
the plaintiffs clearly had no right to proceed under 28 U.S.C.
§ 1491(b)(1).!!
The federal employees and the union which brought this
case in the Court of Federal Claims asserted in the court
below that they should have been found to have standing
under ADRA amended 28 U.S.C. § 1491(b)(1), which was
intended by Congress to give to both the Court of Federal
Claims and the United States District Courts congruent and
broadened jurisdiction of both pre and post contract award
claims for four years. After four years, i.e., as of January |,
2001, if Congress took no action, the jurisdiction of the
United States District Courts was to expire. See § 12(d) of the
ADRA.”? (App. 50a.)
jurisdictional standard is in direct conflict with the legislative history of §
1491(b)(1) and finds no support in the language of the statute itself.
'' The Federal Circuit made no APA based analysis of standing and
completely ignored the APA “prudential standing” analysis of the trial
court that had been challenged on appeal by the plaintiffs.
'2 Congress took no action, so as of that date the COFC has had
exclusive jurisdiction of all of the Scanwell cases that had previously been
heard by the district courts. Emory Worldwide Airlines, Inc. v. United
States, _ F.3d__, 2001 WL 995322 (Fed. Cir. August 31, 2001)(No. 01-
5075), at WL page number 7. (“Consequently, it is clear that the Court of
Federal Claims is the only judicial forum (sic) to bring any governmental
contract procurement protest.”)
12
il!. The Court Below’s Misreading of 28 U.S.C.
§ 1491(b)(1) Comprehensively Concluded That
Only An “Interested Party” As Narrowly Defined
In the Competition in Contracting Act, 31 U.S.C.
§ 3551(2), Could Proceed Before It and Thus It
Failed To Recognize That Full Scanwell Juris-
diction Had Been Imparted to the COFC by
Congress In The ADRA, And That Under That
Scanwell Jurisdiction Plaintiffs Like The Plaintiffs
Here, Had Been Found To Have “Prudential
Standing.” "
The court below was the first appellate court to be
presented with the question of what meaning to give to the
recently amended 28 U.S.C. § 1491(b)(1).'* The court did
not simply conclude that the employees and the union in this
' A useful history of government contracting law and the importance
of the now expired APA based jurisdiction of the United States District
Courts to review complaints regarding contract awards can be found in
Mason, Bid Protests and the U.S. District Courts—Why Congress Should
not Allow The Sun To Set On This Relationship, 26 Pub. Cont. L.J. 567,
568-574, (“As the sole Article III judicial forum that reveiws government
procurement decisions, the U.S. District Courts (district courts) have been
deciding procurement complaints under the authority of the Admin-
istrative Procedure Act (APA) for more than twenty-five years.” /d. at
569). The ADRA amendments to § 1491(b) included a sunset provision
which stated that absent new legislation during a four year experimental
period during which both the COFC and the district courts would both
have comprehensive. jurisdiction of these matters, the jurisdiction of the
United States Districts Courts to hear any of these matters would expire
on January 1, 2001. No legislation with reference to this issue was passed
during this time period. Hence, at the present time, only the COFC has
jurisdiction of these matters.
'* The Federal Circuit will be the only Circuit Court presented with this
issue, since § 1491(b\(1) defines the type of contract award matters that
can be filed against the United States in the COFC and all appeals from
the COFC are heard by the Federal Circuit. § 12 of the ADRA dramatic-
ally amended this statute in 1996,
13
specific case were not “interested parties” as that term was
used in the amended statute, but rather comprehensively
concluded, after only a surface review of the legislative
history of the statutory language,’* that “Congress intended
to extend the jurisdiction of the Court of Federal Claims to
include only post-award bid protest cases brought under the
APA by disappointed bidders, such as the actual plaintiff in
Scanwell.” (App. | 1a-12a.)
The court below ignored several very significant matters
that, when properly considered, indicate that Congress
intended a very broad grant of jurisdiction to the COFC under
the amendments of the ADRA in 1996. In the first place, the
legislative history includes an unequivocal Conference
Committee Report which was issued after the different
versions of this statute were passed by the House and Senate.
H.R. Conf. Rep. No. 104-841, at 10 (1996) (“It is the
intention . . . to give the Court of Federal Claims exclusive
jurisdiction over the full range of procurement protest cases
previously subject to review in the federal district courts and
the Court of Federal Claims.” ) (App. 79a.) The cases which
had been “previously subject to review in the federal district
courts” were those that followed the line of analysis set forth
in Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859 (D.C.
Cir. 1970). Scanwell was a seminal finding that under the
APA, 5 U.S.C. § 701 et seq., any party suffering injury as the
result of an illegality connected to an award of a con-
tract by the federal government was entitled to seek
'S The trial court in this matter, in contrast, comprehensively studied
the legislative history of the 1996 amendments made to 28 U.S.C.
. § 1491(0) and concluded that “{iJn construing the ADRA, this court
would fail to give effect to the language of the statute, as well as
. In accord: CHE
Cl. 331, 338-339 (2000).
14
relief. See Mason, supra, at 573. (“In 1970 the D.C. Circuit
extended the Superior Oil rationale to a bid protest
in its monumental decision in Scanwell Laboratories, Inc.
v. Shaffer.””)
In deciding that Congress must have meant that only the
type of plaintiff that existed in Scanwell itself, i.e., a
disappointed bidder, was to be given the right to sue in the
COFC under the amended § 1491(b)(1), because that section
represented a waiver of sovereign immunity, the Federal
Circuit was clearly misguided. (App. 12a.) Scanwell juris-
diction was added to the jurisdiction of the COFC, and
Scanwell was already based on the APA, which in its own
right is an explicit waiver of sovereign immunity. Therefore,
to interpret the grant of the Scanwell jurisdiction in the
ADRA narrowly, i.e., only to the type of plaintiff that existed
in Scanwell, misses the point that everything that was
included in the Scanwell jurisdiction had already been
circumscribed by the district courts in their application of the
APA, which itself was a waiver of sovereign immunity.'°
'© Over the years since 1970, district courts have found numerous types
of plaintiffs, other than disappointed bidders, to have prudential standing
to obtain judicial review of post award contract actions pursuant to the
APA based analysis of Scanwell. See e.g. Ballerina Pen Company v.
Kunzig, 433 F.2d 1204 (D.C. Cir. 1970\A decision by the government to
award a contract with no competition was allowed to be challenged by a
contractor who would have been a bidder had there been a competition.);
Contractors Eng’s Int'l v. Department of Veterans Affairs, 947 F.2d 1298,
1300 (Sth Cir. 1991 (Holding that whether subcontractor has standing to
challenge agency action depends on whether plaintiff has standing under
traditional APA standing requirements.); American Federation of
Government Employees, Local 2119 v. Cohen, 171 F.3d 460 (7th Cir.
1999)(Federal employees and their union found to have prudential
standing under a Scanwell APA analysis to challenge the outsourcing to a
private company of the production of certain armaments without any
competition even though a statute appeared to require that said
armaments be produced by those federal employees if they could do it less
expensively.)
15
In addition, the court below totally ignored the reality that
had Congress wanted to define the new jurisdiction of the
COFC narrowly with regard to the post award Scanwell
actions that it was adding to the COFC’s jurisdiction, so that
it conformed to the concept of “interested party” as that term
was defined under CICA, it could easily have explicitly done
so. It did not. In addition, the language it did choose is very
expansive and is a closer fit to § 702 of the APA than it is to
the narrow definition under CICA.'’ Thus, the language
gives the right to file in the COFC to an “interested party
objecting to . . . any alleged violation of statue or regula-
tion in connection with 4 procurement or a proposed
procurement.” “
'7 The court below suggested that, because Congress used the term
“interested party” in the ADRA amendment to § 1491(b)(1), it would be
reasonable to assume that Congress expected the definition of that term in
the CICA to also apply to the use of that term in § 1491(b)(1). (App. 13a-
14a.) This conclusion is not logical. § 1491(b)(1) does not mention the
CICA definition, and furthermore the statement of who may bring suit in
§ 1491(b\(1) is not in any way similar or parallel to the definition of
“interested party” found in the CICA. 31 U.S.C. § 3551(2). See
Claybrook, The Initial Experience of the Court of Federal Claims in
Applying the Administrative Procedure Act in Bid Protest Actions-
Learning Lessons All Over Again, 29 Pub. Cont. L.J. 1, 45-49, 47 (1999).
(“Fourth, the term ‘interested party’ is not so peculiar that it must be
afforded the CICA statutory definition or none at all. To the contrary, the
logical interpretation is that it means the same as the APA’s ‘adversely
affected or aggrieved party,’ i.e., a party with standing to complain about
the agency’s decision as Congress defined it in the APA.”). The afore
cited article sets forth a detailed and reasoned analysis as to why the
COFC “should review standing under the APA standard” in effectuating
amended § 1491(b\(1). /d. at 45-49.
'S The employees did argue below that since under OMB Circular A-
76 they are explicitly identified as “directly affected parties” in an A-76
competition such as the one held in the instant case, and since they also
clearly have the right to administratively appeal the outcome of the A-76
competition, they should also be entitled, directly under this language of
16
Finally, had the Circuit Court properly recognized that the
full APA based Scanwell jurisdiction was included in the
jurisdictional grant in § 1491(b)(1), as did the trial court,'? it
should then have recognized that under the decision in
Diebold v. United States, 947 F.2d 787 (6th Cir. 1991),
petition for rehearing en banc denied, 961 F.2d 97 (6th Cir.
1992), and the decision on remand in that case, Diebold v.
United States, Civil Action No. C90-0001-L(A), W.D. Ken-
tucky, April 12, 1993, unpublished, (App. 63a-73a.), the
federal employee plaintiffs and their union here, who are in
all ways similarly situated to those in Diebold, did have
“prudential standing” to pursue this matter: “We believe the
interests the complaint herein seeks to protect are squarely
within the interests to be served by the legislation.” /d. at
p. 10. (App. 69a.)
§ 1491(b)(1) , to pursue this matter on the merits without any reference to
the acquired Scanwell jurisdiction or to the APA.
'? The trial court concluded that the full Scanwell APA based
jurisdiction had been transferred to the COFC; however, it ignored the
holding in Diebold, on remand, which found that similarly situated
employees to those in the instant case and their union, did have prudential
standing to pursue their case because they were within the zone of interest
of OMB Circular A-76 and the statutes pursuant to which it was issued.
The trial court’s APA analysis was flawed in that it looked at only the
most recently promulgated of the three statutes upon which OMB Circular
A-76 is based, the FAIR Act, and concluded that its language and
legislative history did not show an intent to grant standing to federal
employees. This analysis ignored the holdings of this Court that a
plaintiff can be in the “zone of interest” of a statute for APA prudential
standing purposes even if there is no mention of such type plaintiff or the
benefitting of such type plaintiff in that statute. National Credit Union
Administration v. First National Bank and Trust, 522 U.S. 479, 499
(1998); Clarke v. Securities Indus. Ass'n, 479 U.S. 388, 399-400 (1987).
The Circuit Court did not rule on this aspect of the employees’ appeal
since it incorrectly concluded that the full Scanwell APA based
jurisdiction had not been transferred to the COFC by the ADRA
amendments to § 1491(b)(1).
17
Since the Federal Circuit’s analytical approach incorrectly
rejected using a Scanwell based APA approach as mandated
by Congress, it totally avoided the necessity of reviewing and
overturning the trial court’s erroneous understanding of the
pre ADRA Scanwell caselaw.”” The granting of this petition
will enable the Court to correct a serious misreading of an
important jurisdictional statute which now pertains to all
court litigation regarding protests of contracts entered into by
the federal government. Upon full consideration by this
Court the misreading of the language of § 1491(b)(1) by
the Federal Circuit should be overturned and corrected. This
matter should then be remanded to that court with
directions to perform an APA based Scanwell analysis of the
COFC’s decision..
2° The plaintiffs in Diebold v. United States, supra, were federal
employees who had lost their job, like those here, because of an
improperly effectualed OMB Circular A-76 public private competition.
On remand in Diebold in 1995 the district court concluded, pursuant to a
standard APA based analysis under Scanwell, that those employees and
their union did have “prudential standing” to have their case heard and it
ruled in their favor on the merits. Since Congress’ intent in drafting
§ 1491(bX(1) was to empower the district courts and the COFC to hear
“the full range of cases previously subject to review in either system,”
142 Cong. Rec. S11849( (daily ed. Sept. 30, 1996)(statement of Sen.
Levin), (App. 89a.), finding that the plaintiffs here have prudential
standing is fully in conformity with Congress’ intent in its 1996
amendments to § 1491(b\(1). While there are pre ADRA Scanwell cases
which had held to the contrary, National Federation of Federal
Employees v. Cheney, 883 F.2d 1038 (D.C. Cir. 1989)split decision),
cert. denied, 496 U.S. 936 (1990), the “full range of cases previously
subject to review” as of 1996, when the ADRA amended § 1491(b)(1),
would have to include the 1995 ruling in Diebold.
18
CONCLUSION
For the foregoing reasons, the Petition for a Writ of
Certiorari should be granted.
* Counsel of Record
October 22, 2001
Respectfully Submitted,
MARK D. ROTH
General Counsel
AMERICAN FEDERATION OF
GOVERNMENT EMPLOYEES,
AFL-CIO
80 F Street N.W.
Washington, D.C. 20001
(202) 639-6415
MARTIN R. COHEN *
Assistant General Counsel
for Litigation
AMERICAN FEDERATION OF
GOVERNMENT EMPLOYEES,
AFL-CIO
Suite 117
10 Presidential Blvd.
Bala Cynwyd, PA 19004
(610) 660-03 16
Counsel for Petitioners
APPENDICES
la
APPENDIX A
UNITED STATES COURT OF APPEALS
FEDERAL CIRCUIT
No. 00-5090
AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES,
AFL-CIO, American Federation of Government Employees,
local 1482, William J. Gately and Michelle Jo Evans,
Plaintiffs-Appellants,
Vv.
UNITED STATES,
Defendant-Appellee.
DECIDED: July 23, 2001
Before NEWMAN, LOURIE, and SCHALL, Circuit Judges.
SCHALL, Circuit Judge.
The American Federation of Government Employees,
AFL-CIO, the American Federation of Government
Employees, Local 1482, William J. Gately, and Michelle Jo
Evans (collectively, “Appellants”) appeal the decision of the
United States Court of Federal Claims that dismissed their
complaint for lack of standing. Am. Fed’n Gov't Employees,
AFL-CIO v. United States, 46 Fed. Cl. 586 (2000) (“AFGE’”).
The court determined that Appellants lack standing to
challenge a cost comparison analysis of the Defense Logistics
Agency (“DLA”) because their interests do not come within
the zone of interests protected by either the Federal Activities
Inventory Reform Act (“FAIR”), P.L. No. 105- 270, 112 Stat.
2a
2382 (1998), reprinted in 31 U.S.C. § 501 (Historical and
Statutory Notes), or 10 U.S.C. § 2462 (1994). Because we
determine that Appellants lack standing under 28 U.S.C.
§ 1491(b)(1), we affirm the decision of the Court of Federal
‘Claims, but on a different ground.
BACKGROUND
I.
The FAIR requires executive agencies to identify the
activities they perform that are not “inherently governmental
functions.” FAIR, § 2(a). Each year, the head of each agency
must submit a list to the Office of Management and Budget
(“OMB”) of all such activities (a “FAIR list”). Jd. The FAIR
also requires that when an agency considers contracting with
a private sector source for the performance of such an
activity, it must select the source using a competitive process
that includes a “realistic and fair” cost comparison analysis.
Id. § 2(d), (e). The FAIR provides that certain parties,
including employees of an organization within an executive
agency that is performing or that might perform the activity,
as well as labor organizations that include such employees in
their membership, may bring an administrative challenge to
the “omission of [the] particular activity from, or [the]
inclusion of [the] particular activity on, a [FAIR] list.” /d.
§ 3(a), (b).
Since a date prior to the enactment of the FAIR, OMB
Circular No. A-76 (“OMB A-76”) has governed the per-
formance of commercial activities by executive agencies.
OMB A-76 reflects the view that “the [glovernment should
not compete with its citizens” and that “it has been and
continues to be the general policy of the [g]overnment to rely -
on commercial sources to supply the products and services
the [glovernment needs.” OMB A-76 provides that “the
[gjovernment shall not start or carry on any activity to
provide a commercial product or service if the product or
3a
service can be procured more economically from a com-
mercial source.” OMB A-76 requires agencies to perform
cost comparison analyses to determine whether a commercial
product or service should be provided by the agency or by a
private sector source. In performing a cost comparison
analysis, the agency is to compare the bid of the private sector
source with the cost of providing the good or service with
government facilities and personnel (the agency’s “Most
Efficient Organization” or “MEO”).' OMB A-76 provides
for the administrative review of cost comparison decisions,
and permits federal employees who would be affected by the
decision, as well as their representatives, to seek such review.
The provisions of OMB A-76 are consistent with the FAIR
and OMB A-76 has remained in effect since enactment of
the FAIR.
Il.
On April 30, 1999, the DLA issued a solicitation for bids
for the performance of defense material distribution services
(“depot services”) at the Defense Distribution Depot in
Barstow, California. The solicitation was issued in support of
a cost comparison study conducted under OMB A-76. The
cost comparison study was designed to determine whether the
depot services could be performed more economically by a
private sector source or by the DLA’s MEO.
The DLA determined that EG&G Logistics, Inc.
(“EG&G”) won the competition among private sector sources
because EG&G had submitted the lowest- priced, technically
acceptable proposal. Accordingly, the DLA proceeded to
compare EG&G’s bid to that of the MEO. While this
comparison process was pending, Congress enacted the
' The MEO is not necessarily an existing organization, “but is the
organization the agency would establish if it were competing the
work.” AFGE, 46 Fed. Cl. at 588 n. 1.
ans te
da
FAIR. Pursuant to the FAIR, the DLA listed the depot
services on its FAIR list.’
On January 5, 2000, the DLA determined that EG&G’s bid
was about $2.5 million lower than the MEO’s; accordingly,
the DLA tentatively decided to contract out the depot services
to EG&G. Appellants William J. Gately and Michelle Jo
Evans are federal employees who allege that they will be part
of the MEO if the depot services are performed by the DLA
but will be displaced if the depot services are contracted out
to EG&G. The union appellants represent Mr. Gately and Ms.
Evans and other similarly situated federal employees.
Pursuant to OMB A-76, Appellants and EG&G submitted |
administrative appeals of the cost comparison decision to the
DLA Appeal Authority. As a result of these appeals, the cost
comparison was recalculated, but EG&G’s bid remained
lower than that of the MEO by about $2.2 million.
Accordingly, the Appeal Authority upheld the tentative
decision to award the contract to EG&G.
Il.
Appellants filed suit in the Court of Federal Claims
to challenge the Appeal Authority’s decision. Appellants
argued that the DLA had failed to conduct a proper price
comparison as required by OMB A-76, by § 2(e) of the FAIR,
and by 10 U.S.C. § 2462(b).? The government moved to
dismiss the complaint, arguing that Appellants do not have
standing to challenge the cost comparison decision in the
Court of Federal Claims.
? It does not appear from the record that Appellants challenged the
inclusion of the depot services on the DLA’s FAIR list.
710 U.S.C. § 2462 requires the Department of Defense to obtain
certain supplies and services from the private sector if a cost comparison
analysis indicates that a private source can provide the supply or service at
a lower cost.
5a
The court considered whether Appellants have standing
under 28 U.S.C. § 1491(b)\(1), which gives the Court of
Federal Claims jurisdiction over bid protest cases. AFGE, 46
Fed. Cl. at 591. The relevant language in that statute provides
that the court has “jurisdiction to render judgment on an
action by an interested party objecting to a solicitation by a
Federal agency for bids or proposals for a proposed contract
or to a proposed award or the award of a contract or any
alleged violation of statute or regulation in connection with
a procurement or a proposed procurement.” 28 U.S.C.
§ 1491(b)\(1) (Supp. V 1999). Because the statute does not
define an “interested party,” the court looked to its legislative
history to determine whether Congress intended the term to
include federal employees such as Appellants. AFGE, 46 Fed.
Cl. at 592-97.
The court noted that, prior to the enactment of
§ 1491(b)(1), the Court of Federal Claims had jurisdiction
over only pre-award bid protest cases, while federal district
courts had jurisdiction over post-award bid protest cases. /d.
at 592-93. The court determined that the prior jurisdiction of
the Court of Federal Claims was based on 28 U.S.C.
§ 1491(a) and, therefore, was limited to claims “‘founded
upon . . . amy express or implied contract.”” Jd. at 593
(quoting 28 U.S.C. § 1491(a) (1994)). Thus, “[dJisappointed
bidders were the only parties who had standing to bring a bid
protest” in the Court of Federal Claims. /d. The court
determined that the prior jurisdiction of the district courts was
based on the Administrative Procedure Act (“APA”),
5 U.S.C. §§ 702-706. Id. (citing Scanwell Labs., Inc. v.
Shaffer, 424 F.2d 859 (D.C.Cir.1970) (holding that a
disappointed bidder could challenge the award of a govern-
ment contract in a district court pursuant to the APA)). The
court noted that standing under the APA is governed by
5 U.S.C. § 702, which confers standing on “‘a person... .
adversely affected or aggrieved by agency action within the
meaning of a relevant statute.”” /d. (quoting 5 U.S.C: § 702
6a
(1994)). The court stated that “[t]he requirements for estab-
lishing standing under the APA are well settled. Claimants
. . . Must demonstrate that: (1) they have suffered sufficient
‘injury-in-fact;’ (2) that the injury is ‘fairly traceable’ to the
agency’s decision and is ‘likely to be redressed by a favorable
decision;’ and (3) that the interests sought to be protected are
‘arguably within the zone of interests to be protected or
regulated by the statute . . . in question.’” Jd. at 595 (quoting
Nat’l Credit Union Admin. v. First Nat'l Bank & Trust Co.,
522 U.S. 479, 488, 118 S.Ct. 927, 140 L.Ed.2d 1 (1998) (third
alteration in original)).
The court determined that one purpose behind § 1491(b)(1)
was to give the Court of Federal Claims and the district courts
concurrent jurisdiction over all bid protest cases, so that “both
courts [could] hear ‘the full range of cases previously sub-
ject to review in either system.’”” Jd. at 593 (quoting 142
Cong. Rec. $11849 (daily ed. Sept. 30, 1996) (statement of
Sen. Levin)). The court therefore reasoned that “interested
parties” in § 1491(b)(1) should be interpreted as including
everyone “who had standing in either court under each
forum’s [prior] jurisdiction over bid protest cases.” Jd. at
593, 595. Thus, although Appellants would not have had
standing under § 1491(a), the court reasoned that they might
have standing under § 1491(b)(1) if they “would have had
standing in [a] federal district court under the APA.” Id.
at 595.
_ The court proceeded to apply to the Appellants the three-
part test for standing under the APA. The court did not
decide whether Appellants meet the “injury-in-fact” or “trace-
ability” prongs because it determined that they are not within
the zone of interests that either the FAIR or 10 U.S.C. § 2462
are designed to protect. Jd. at 597-600. The court concluded
that Appellants “cannot establish standing under the APA and
therefore are not ‘interested parties’” under § 1491(b)(1). Jd.
at 600. The court therefore granted the government’s motion
to dismiss Appellants’ complaint for lack of standing.
Ta
Appellants appeal the dismissal to this court. We have
jurisdiction pursuant to 28 U.S.C. § 1295(a)(3) (1994).
DISCUSSION
“Whether a party has standing to sue is a question that this
court reviews de novo.” Prima Tek II, L.L.C. v. A-Roo Co.,
222 F.3d 1372, 1376 (Fed.Cir.2000). The precise question
presented by this appeal, whether federal employees or their
union representatives have standing to challenge an executive
agency cost comparison decision in the Court of Federal
Claims, is one of first impression.
Our analysis begins with the language of. the statute on
which the jurisdiction of the Court of Federal Claims is
based:
(b)(1) Both the Unites [sic] States Court of Federal
Claims and the district courts of the United States shall
have jurisdiction to render judgment on an action by an
interested party objecting to a solicitation by a Federal
agency for bids or proposals for a proposed contract or
to a proposed award or the award of a contract or any
alleged violation of statute or regulation in connection
with a procurement or a proposed procurement. Both
the United States Court of Federal Claims and the
district courts of the United States shall have jurisdiction
to entertain such an action without regard to whether suit
is instituted before or after the contract is awarded.
(2) To afford relief in such an action, the courts
may award any relief that the court considers proper,
including declaratory and injunctive relief except that
any monetary relief shall be limited to bid preparation
and proposal costs.
(3) In exercising jurisdiction under this subsection,
the courts shall give due regard to the interests of
national defense and national security and the need for
expeditious resolution of the action.
8a
(4) In any action under this subsection, the courts
shall review the agency’s decision pursuant to the
standards set forth in section 706 of title 5.
28 U.S.C. § 1491(b). As recognized by the parties and by the
Court of Federal Claims, the statute confers standing on “an
interested party objecting to a solicitation by a Federal
agency,” but does not further define who is encompassed by
the term “interested party.”
Appellants argue that the term should be construed
according to its ordinary dictionary definition, and that they
are “interested parties” because they stand to lose their jobs if
the depot services are contracted out to EG&G. Alternatively,
Appellants argue that “interested party” should be interpreted
as encompassing parties who satisfy the APA requirements
for standing, and that they satisfy those requirements because
they fall within the zone of interests protected by OMB A-76
and the FAIR.‘
The government argues that “interested party” should
be construed in accordance with a related statute, the
Competition in Contracting Act (“CICA”), 31 U.S.C.
§§ 3551-56. The CICA governs the bid protest jurisdiction of
the General Accounting Office (“GAO”), and defines the
term “interested party” as follows:
The term “interested party”, with respect to a contract or
a solicitation or other request for offers . . . . means an
actual or prospective bidder or offeror whose direct
economic interest would be affected by the award of the
contract or by failure to award the contract.
31 U.S.C. § 3551(2) (Supp. IV 1998).
* Although the Court of Federal Claims’ decision primarily addresses
whether appellants are within the zone of interests of the FAIR,
Appellants’ arguments focus on whether they are within the zone of
interests of OMB A-76.
9a
Because the plain language of the statute does not resolve
this issue, we look to the legislative history of § 1491(b)(1)
for an indication of congressional intent. See, e.g., Toibb v.
Radloff, 501 U.S. 157, 162, 111 S.Ct. 2197, 115 L.Ed.2d 145
(1991). The statute was enacted as part of the Administrative
Disputes Resolution Act of 1996 (“ADRA”), P.L. No. 104-
320, 110 Stat. 3870 (1996). Senator Cohen, who offered the
bid protest provision at issue as an amendment to the pending
ADRA legislation, described the provision as “expand[ing]
the bid protest jurisdiction of the Court of Federal Claims.”
142 Cong. Rec. S$11848 (daily ed. Sept. 30, 1996) (statement
of Sen. Cohen). He explained that, without the legislation,
the court only had jurisdiction over pre-award bid protests
and that the bill would give the court “both pre and post-
award jurisdiction.” Jd. He noted that Scanwell “held that a
contractor can challenge a Federal contract award in Federal
district court under the [APA],” and described problems he
saw with the concurrent jurisdiction of the Court of Federal
Claims and district courts over bid protests. /d. He explained
that the bid protest provision included a sunset clause which
would repeal the “district courts’ Scanwell jurisdiction.” Jd.
Senator Levin, who, together with Senator Grassley, had
introduced the ADRA legislation, commented on th> prob-
lems of concurrent jurisdiction over bid protests, and
remarked that the Acquisition Law Advisory Panel had
recommended that there should be only one forum for bid
protests. /d. at S11849 (statement of Sen. Levin). He
described the bid protest provision of the ADRA as
“consolidat[ing] the jurisdiction of the Court of Federal
Claims and the district courts,” such that before the sunset
provision took effect, “[e]ach court system would exercise
jurisdiction over the full range of bid protest cases previously
subject to review in either system.” /d. Then, after the sunset
provision took effect, “the jurisdiction of the district courts
would terminate, and the Court of Federal Claims would
exercise exclusive judicial jurisdiction over procurement
10a
protests.” Jd. at $11849- 50. See also H.R. Conf. Rep.
No. 104-841, at 10 (1996) (“It is the intention . . . to give the
Court of Federal Claims exclusive jurisdiction over the
full range of procurement protest cases previously subject
to review in the federal district courts and the Court of
Federal Claims.”).
This legislative history indicates that Congress intended to
confer on the Court of Federal Claims jurisdiction previously
exercised only by district courts under Scanwell. The ques-
tion is what Congress meant when it referred to “Scanwell
jurisdiction.” As discussed above, prior to the ADRA, the
Court of Federal Claims had jurisdiction over only pre-award
protests, while, under Scanwell, the district courts had
jurisdiction over post-award protests. The ADRA gave the
Court of Federal Claims jurisdiction over post- award
protests. Thus, the ADRA clearly conferred the Court of
Federal Claims with “Scanwell jurisdiction” inasmuch as it
permitted the Court of Federal Claims to hear post-award
protests. Moreover, while pre-ADRA protests brought in the
Court of Federal Claims were governed by a narrow standard
of review, see Keco Indus., Inc. v. United States, 203 Ct.Cl.
566, 492 F.2d 1200, 1203- 04 (1974), the ADRA expressly
made the APA standard of review applicable to all bid protest
actions, 28 U.S.C. § 1491(b)(4). IJmpresa Construzioni
Geom. Domenico Garufi v. United States, 238 F.3d 1324,
1331-33 (Fed.Cir.2001).
The issue presented by this appeal, however, is whether
Congress intended to expand the class of parties who can
bring bid protest actions in the Court of Federal Claims.’ On
* Impresa presented the issue of whether a bidder who had been
eliminated by the contracting officer from the competitive range of bids
due to unacceptable technical proposals had standing to bring a bid protest
action under the current version of § 1491(b)(1). /mpresa, 238 F.3d at
1333-34. In deciding that issue, we stated that we were not required to
“resolve whether the 1996 amendments [to the statute] have liberalized
lla
the one hand, Congress could have intended the Court of
Federal Claims’ “Scanwell jurisdiction” to encompass com-
plaints brought by disappointed bidders only. The vast
majority of cases brought pursuant to Scanwell were brought
by disappointed bidders. Scanwell itself involved a
disappointed bidder, and the Court of Appeals for the D.C.
Circuit has characterized Scanwell as holding “that a
disappointed bidder on a government contract was a person
aggrieved under the APA and had standing to seek a limited
review of the contract award.” Int’l Eng’g Co. v. Richardson,
512 F.2d 573, 579 (D.C.Cir.1975). See also Free Air Corp. v.
FCC, 130 F.3d 447, 450 (D.C.Cir.1997) (describing Scanwell
and other cases as holding that “sufficiently viable runners-up
in a procurement process have standing to allege that an
illegality in the process caused the contract to go to someone
else”). This court also has described Scanwell standing
narrowly. Southfork Sys., Inc. v. United States, 141 F.3d 1124
(Fed.Cir.1998) (“The essence of ‘the Scanwell doctrine,’
which Congress intended 28 U.S.C. § 1491(aX(3) to make
applicable to the Claims Court, is that an unsuccessful bidder
has standing to challenge a proposed contract award. . . .”).
Thus, in conferring the Court of Federal Claims with
“Scanwell jurisdiction,” Congress may have intended the
court to exercise jurisdiction over disputes brought by
disappointed bidders only.
On the other hand, because Scanweil itseif is based on the
APA, Congress could have intended to give the Court of
Federal Claims jurisdiction over any contract dispute that
could be brought under the APA. Because the language of
the standing requirements by adopting the APA standard,” because we
determined that the bidder had “an economic interest” in the contract
award and, therefore, satisfied even “the more stringent ... standard” of the
CICA. /d. at 1335. Impresa therefore did not resolve the question before
us today.
12a
5 U.S.C. § 702 is quite broad,° parties other than actual or
prospective bidders might be able to bring suit. Seg, e.g.,
Ballerina Pen Co. v. Kunzig, 433 F.2d 1204 (D.C.Cir.1970)
(determining that an incumbent contractor had standing to
challenge an agency’s award of a contract to the National
Industries for the Blind under the APA even though it was not
a disappointed bidder because the agency had not awarded
the contract through the traditional bid system).
In resolving this issue, we are guided by the principle
that waivers of sovereign immunity, such as that set forth
in § 1491(b)(1), are to be construed narrowly. See, e.g.,
McMahon v. United States, 342 U.S. 25, 27, 72 S.Ct. 17, 96
L.Ed. 26 (1951) (“{S]tatutes which waive immunity of the
United States from suit are to be construed strictly in favor of
the sovereign.”). With that principle in mind, we interpret the
references in the legislative history to the “Scanwell
jurisdiction” of the district courts as references to the district
courts% jurisdiction over bid protest cases brought under the
APA by disappointed bidders, like the plaintiff in Scanwell.
This interpretation is supported by the legislative history of
the ADRA, which describes Scanwell as permitting “a
contractor to challenge a Federal contract award.” 142 Cong.
Rec. $11848 (statement of Sen. Cohen) (emphasis added).
It also is supported by the narrow reading courts have
given standing under Scanwell, as discussed above. When
construed in this manner, the legislative history of
§ 1491(b)(1) suggests that Congress intended standing under
the statute to be limited to disappointed bidders.
The language chosen by Congress, while not unambiguous,
supports this construction. When defining standing under
° The relevant part of the statute provides, “A person suffering legal
wrong because of agency action, or adversely affected or aggrieved by
agency action within the meaning of a relevant statute, is entitled to
judicial review thereof.” 5 U.S.C. § 702.
13a
§ 1491(b)(1), Congress did not use the broad language of the
APA, “[a] person suffering legal wrong because of agency
action, or adversely affected or aggrieved by agency action,”
5 U.S.C. § 702. In addition, Congress did not explicitly
invoke the APA standing requirements, although it did
explicitly invoke the APA standard of review. See 28 U.S.C.
§ 1491(b)(4) (“In any action under this subsection, the courts
shall review the agency’s decision pursuant to the standards
set forth in section 706 of title 5.”). We therefore are not
convinced that Congress, when using the term “interested
party” to define those who can bring suit under § 1491(b)(1),
intended to confer standing on anyone who might have
standing under the APA.
The term Congress did choose to define standing under
§ 1491(b), “interested party,” is a term that is used in another
statute that applies to government contract disputes, the
CICA. As set forth above, the CICA explicitly defines that
term as “an actual or prospective bidder or offeror whose
direct economic interest would be affected by the award of
the contract or by failure to award the contract.” 31 U.S.C.
§ 3551(2). Section 3551, by its own terms, applies only to
contract disputes decided by the Comptroller General of the
GAO pursuant to 31 U.S.C. §§ 3551-56. However, the fact
that Congress used the same term in § 1491(b) as it did in the
CICA suggests that Congress intended the same standing
requirements that apply to protests brought under the CICA to
apply to actions brought under § 1491(b)(1). We therefore
construe the term “interested party” in § 1491(b)(1) in
accordance with the CICA, and hold that standing under
§ 1491(b)(1) is limited to actual or prospective bidders or
offerors whose direct economic interest would be affected by
the award of the contract or by failure to award the contract.
This construction is consistent with the legislative history of
§ 1491(b)(1), which, as discussed above, indicates that
Congress intended to extend the jurisdiction of the Court of
Federal Claims to include post-award bid protest cases
l4a
brought under the APA by disappointed bidders, such as the
plaintiff in Scanwell.
Because Appellants here are not actual or prospective
bidders or offerors, they do not have standing to challenge the
DLA’s cost comparison analysis or its decision to award the
depot services contract to EG&G.
CONCLUSION
For the foregoing reasons, the order of the Court of Federal
Claims dismissing Appellants’ claim for lack of standing is
AFFIRMED.
COSTS
Each party shall bear its own costs.
15a
APPENDIX B
UNITED STATES COURT OF FEDERAL CLAIMS
No. 00-130C
AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES,
AFL-CIO, American Federation of Government Employees,
AFL-CIO, Local 1482, William J. Gately,
and Michelle Jo Evans,
Plaintiffs,
Vv.
THE UNITED STATES,
Defendant.
May 10, 2000.
OPINION
FIRESTONE, Judge.
This case arises from a solicitation issued by the Defense
Logistics Agency (“DLA”) for a contract to operate three
DLA material distribution depots. The solicitation was part
of a two-step process aimed at determining whether the
services described in the solicitation could be performed more
economically by a private contractor when compared to the
costs of the DLA’s in-house personnel (“MEO”) ‘performing
' The MEO or “most efficient organization” is not the existing in-
house organization, but the organization the agency would establish if it
were competing for the work. In other words, the existing organization is
allowed to make itself more efficient in order to compete. The A-76
Supplemental Handbook provides that “[a]gencies may consider existing
management reinvention, consolidation, re-engineering, personnel classi-
fication, market and other analyses in the identification and development
of the MEO.” Office of Management and Budget, Circular No. A-76,
16a
the same work. In this action brought pursuant to 28 U.S.C.
§ 1491(b)(1) (1994 & Supp. IV 1998), plaintiffs, two federal
employees and their unions,” challenge the DLA’s final cost
comparison which led the DLA to contract out the work.
Plaintiffs contend that the DLA’s cost comparison contains
mistakes in violation of the relevant sections of Office of
Management and Budget Circular No. A-76 (Revised 1999)
[hereinafter OMB Circular A-76] and its Supplemental
Handbook, as well as the Federal Activities Inventory Reform —
Act of 1998, Pub.L. No. 105-270, § 2(e), 112 Stat. 2382,
2383 (codified at 31 U.S.C. § 501 note (Supp. IV 1998))
(“FAIR”) and the Defense Authorization Act, 10 U.S.C.
§ 2462(b) (1994).? The government argues that plaintiffs do
not have standing under the cited statutes to challenge the
cost comparison, and therefore, this action should be
dismissed. Based on the arguments presented by the parties
and discussed below, this court concludes that plaintiffs lack
standing and thus, this court dismisses the action.
Revised Supplemental Handbook, part I, ch. 3, § E (1996) [hereinafter
Supplemental Handbook].
? The individual plaintiffs, William J. Gately, a WG-8 blocker bracer,
and Michelle Jo Evans, a GS-09 distribution facilities specialist, are
currently employed at the Barstow Depot. They claim in their accom-
panying affidavits thet they would likely be included in the MEO if the
work is retained in house, but are likely to lose their jobs or benefits if EG
& G Logistics, Inc. (“EG & G”) is allowed to proceed with its contract.
The unions, American Federation of Government Employees (“AFGE”)
and AFGE Local 1482, allege that they represent the named plaintiffs and
other similarly situated Barstow Depot workers who would also likely be
included in the MEO, but will lose either their job or benefits if EG & G is
allowed to proceed.
’ Plaintiffs focus their objections on the portions of these statutes
and OMB Circular A-76 that govern cost comparisons used to deter-
mine whether to contract out an activity, following a public-private
17a
FACTS
A. The DLA Decision
The facts are set forth in the Administrative Record filed
with this court on March 22, 2000, and may be summarized
as follows. On April 30, 1999, the DLA issued Solicitation
No. SPO-770-99-R-7002 (“solicitation”) seeking proposals
for the performance of defense material distribution services
at the Defense Distribution Depot Barstow, California
(“Barstow Depot”) under a hybrid fixed-price (indefinite
delivery time/indefinite quantity) contract for a three-year
term, with an option for an additional two years. The
performance requirements for the contract were set forth in a
Performance Work Statement (“PWS”) accompanying the
solicitation.
The DLA issued the solicitation in support of a cost
comparison study conducted under OMB Circular A-76.
OMB Circular A-76 states that it is the general policy of the
federal government to rely upon commercial sources to
provide the products and services the government needs. See
OMB Circular A-76 §§ 4-5. OMB Circular A-76 also pro-
vides that in-house performance of a commercial activity is
authorized if a “cost comparison” demonstrates that the
federal agency is operating or can operate the activity at a
lower estimated cost than a qualified commerciai source.
See id.
The DLA designed the subject cost comparison study to
determine whether the services at the Barstow Depot as
described in the PWS could be performed more economically
by the DLA’s MEO or by a private commercial source. The
DLA conducted the cost comparison in two stages, as
outlined in part II of the Supplemental Handbook and in the
solicitation. First, the DLA conducted a competition among
commercial sources to find the lowest-priced, technically-
acceptable proposal. Second, the DLA evaluated the selected
commercial source’s proposal against the MEO’s proposal.
18a:
In accordance with this process, the DLA received seven
proposals from interested private commercial sources. The
DLA established the competitive range and held discussions
with the various private offerors within the range, including
EG & G Logistics, Inc. (“EG & G”), the final contract
awardee in this case. EG & G had initially submitted a
proposal to perform the work for a fixed price of $14.6
million dollars, which it then reduced to $11.9 million dollars
in response to amendment 0011 to the solicitation, which was
issued following discussions between the DLA and offerors
in the competitive range.‘
On November 29, 1999, the DLA selected EG & G as the
best value offeror for comparison with the MEO. On that
same date, the DLA opened the MEO’s sealed cost estimate
of $17 million, which was based on a workforce of 65
employees.’ Before conducting the final cost comparison,
which requires entry of both the private and the MEO cost
proposals on a specified form, the DLA sought to confirm
that both proposals were based on the same scope of work
and levels of performance. Following that evaluation, the
DLA issued solicitation amendment 0013 to allow EG & G to
revise its bid to reflect the same workload estimate used by
the MEO. On December 17, 1999, EG & G submitted its final
proposed price of $11,852,150, based on a workforce of
62 employees.
While the cost comparison process was pending, Congress
enacted the FAIR Act, which now governs the process for
contracting out to private sources services the government
currently provides for itself. Under FAIR, agencies are
required to identify those activities that are “not inherently
* Plaintiffs allege that EG & G never provided any justification for this
lower bid.
* The MEO’s proposed workforce of 65 employees represented a 59%
reduction from current employee levels at the Barstow Depot.
19a
governmental” and thus, appropriate for contracting out to
private sources. See FAIR § 2, 83 Stat. at 2382-83. The
agency is then required to list those activities that are not
inherently governmental with the OMB. /d. The statute
further provides that when determining whether to contract
with a private source for an activity on the list on the basis of
a cost comparison with an MEO, “the head of the executive
agency shall ensure that all costs . . . are considered and
that the costs considered are realistic and fair.” Jd. § 2(e), 83
Stat. at 2383.° The distribution services for the Barstow
Depot at issue in this case were put on the FAIR list on
December 30, 1999.
On January 5, 2000, in accordance with OMB Circular
A-76, FAIR § 2(e), and 10 U.S.C. § 2462(b), the DLA
conducted a formal cost comparison. First, the DLA entered
the MEO’s cost estimate of $17,032,459. Then, the DLA
entered EG & G’s unadjusted cost estimate of $11,852,150.
When the cost comparison was completed, taking into
account a minimum conversion differential of $1,263,433,’
* The cost comparison language contained in section 2(e) of the FAIR
Act, which is quoted above, is virtually identical to the language of the
cost comparison provision in subsection (b) of 10 U.S.C. § 2462, gov-
erning Department of Defense procurement decisions. Section 2462(b)
provides that when determining whether to contract with a private source
the performance of a Department of Defense function on the basis of a
cost comparison with an MEO, “the [head of the agency] shall ensure that
all costs considered . . . are realistic and fair.” 10 U.S.C. § 2462(b). The
plaintiffs here challenge DLA’s compliance with the cost
study “realistic and fair” requirements, under both FAIR and !0 U.S.C.
§ 2462(b), as well as OMB Circular A-76.
’ The minimum conversion differential was calculated as ten percent of
personnel costs and is established to ensure that the government will not
contract out services for marginal savings. See Supplemental Handbook,
part Il, ch. 4, § A.1. Accordingly, a cost difference must be more than the
minimum cost differential for an agency to replace in-house performance
with a private contract.
20a
the total in-house cost of performance of $17,032,459 was
found to be approximately $2.5 million more than the
adjusted cost of EG & G’s performance of $14,521,719.
Based upon these results, the DLA made a tentative
determination to contract out the Barstow Depot operations to
EG &G.
Pursuant to OMB Circular A-76 and 48 C.F.R. § 52.207-
2(c)(1), the award remained tentative until the completion of
a public review period and resolution of any administrative
appeals. OMB Circular A-76 allows for administrative
appeals by various parties, including potentially displaced
federal workers and their unions. See Supplemental
Handbook, part I, ch. 3, § K. OMB Circular A-76 further
provides that it does not “{e]stablish and shall not be
construed to create any substantive or procedural basis for
anyone to challenge any agency action or inaction on the
basis that such action or inaction was not in accordance with
this Circular,” except for administrative appeals under the
Supplement or as provided by FAIR. OMB Circular A-76 § 7
and Supplemental Handbook, part I, ch. 3, § K.7.
AFGE, Barstow Depot employees, and EG & G each
submitted an administrative appeal to the DLA Appeal
Authority (“Appeal Authority”). The Appeal Authority
sustained a number of appeal issues asserted by plaintiffs and
calculated the total effect of these issues on the cost com-
parison. This calculation resulted in a maximum potential
decrease of $1,469,421 in the MEO’s proposed price and
maximum potential increase of $62,284 in EG & G’s price.
The Appeal Authority determined that, even after these
potential adjustments, the price differential between the
MEO’s price and EG & G’s price was $2,242,468, or
$979,035 above the minimum conversion differential. The
Appeal Authority ultimately upheld the DLA’s cost
comparison, stating that “I did not identify any significant
problems with the challenged cost items, either individually
2la
or in the aggregate, such that the tentative decision might be
considered unsupported or in error.” *
B. This Action
On March 16, 2000, following the Appeal Authority’s
March 9, 2000 decision, plaintiffs filed this bid protest action
challenging the DLA’s final decision to award the contract to
EG & G. Accompanying their complaint, plaintiffs also filed
an application for a temporary restraining order and a motion
for a preliminary-injunction, seeking to enjoin performance of
the contract. Based upon the government’s representations to
this court that the agency would temporarily postpone
performance, by order dated March 17, 2000, this court
denied plaintiffs’ application for a temporary restraining
order and consolidated the motion for preliminary injunction
with resolution of the case on the merits.
In this action, plaintiffs challenge the final DLA cost
comparison on the grounds that the DLA failed to conduct a
proper cost comparison in violation of OMB Circular A-76,
10 U.S.C. § 2462(b), and section 2(e) of the FAIR Act. In
particular, plaintiffs allege that the DLA violated the above-
noted statutes and regulation by failing to confirm EG & G’s
costs through a cost realism analysis.” Plaintiffs contend that
* The Appeal Authority did not address the appeal issues raised by EG
& G because it sustained the decision of the agency after evaluating the
appeals of plaintiff AFGE and the Barstow Depot management em-
ployees. At that point, the EG & G appeal became moot, as it could not
change the outcome.
® In support of their claim, plaintiffs cite 48 C.F.R. § 15.404-1(d),
which provides that a cost realism analysis is required to be performed on
cost-reimbursement contracts to determine the probable cost of
performance for each offeror. Pursuant to 48 C.F.R. § 15.404-1(d)\3),
cost realism analysis may also be used to evaluate fixed-price contracts,
such as the one at issue in this case, but is not required for such contracts.
Id. (emphasis added). In addition, plaintiffs contend that a cost realism
analysis was required by the solicitation. -The solicitation lists “cost/
22a
nothing in the record explains EG & G’s $11.8 million price,
which is undisputably 46% lower than the next lowest private
contractor proposal to perform the work. Plaintiffs contend
that EG & G seriously underbid the work. In addition,
plaintiffs argue that EG & G’s final bid understates or omits
numerous other costs that were included in the MEO price.
Most importantly, plaintiffs argue that EG & G violated the
Services Contract Act (“SCA”), 41 U.S.C. §§ 351-354
(1994), and its implementing regulations, 48 C.F.R. § 52.222-
41, by using improper labor classifications. Plaintiffs contend
that this resulted in over $900,000 in illegal savings.'°
Plaintiffs also argue that EG & G failed to include costs for
computer support for data processing, overtime pay for
mobile crane/rigging operations, various transition and
refurbishing costs, and time for sick leave and training.
The government argues that this court must dismiss this
action because, regardless of whether the cost comparison
was proper, these plaintiffs lack the requisite standing to
challenge the cost comparison. The government contends
that every court to examine similar challenges by similarly
situated plaintiffs, regarding compliance with OMB Circular
A-76 and identical cost comparison statutes, has concluded
that displaced federal employees and their unions do not have
standing to challenge cost comparisons. The government
further argues that, should this court conclude that these
price” as the most important evaluation factor for an award under the
solicitation. See solicitation at 226-27. The solicitation further identifies
“realism” and “completeness” of the proposed costs in relation to the
required work under the contract among the bases for evaluating the
“cost/price” factor. /d. at 227.
'° Plaintiffs note that although the AFGE did not raise the labor
classifications issue before the Appeal Authority, it is properly before this
court because it was raised before the Appeal Authority by the Barstow
Depot employees, and may be properly raised for the first time in court,
regardless of whether it was raised below.
23a
plaintiffs have standing, the government is entitled to
judgment on the administrative record. According to the
government, where as here, EG & G was awarded a fixed-
price contract, the government was not required to perform a
cost realism analysis because EG & G is obligated to perform
at the contract price whether or not its costs are realistic. In
addition, the government contends that EG & G factored in
all necessary costs in its final bid. The court heard oral
argument on May 1, 2000.
DISCUSSION
The threshold issue in this case is whether these plaintiffs
may maintain this action challenging the government’s
compliance with the cost comparison requirements of
10 U.S.C. § 2462(b) and section 2(e) of the FAIR Act, which
is now implemented under OMB Circular A-76. The
government contends that these plaintiffs lack standing to
challenge the alleged statutory violations of FAIR and
10 U.S.C. § 2462(b) because they are not “interested parties”
within the meaning of the Tucker Act, as amended by the
Administrative Dispute Resolution Act of 1996 (“ADRA”),
Pub.L. No. 104-320, § 12, 110 Stat. 3870, 3874 (codified at
28 U.S.C. § 1491(b)(1)), which gives the Court of Federal
Claims (“COFC”) jurisdiction over bid protest cases. The
Tucker Act provides in relevant part as follows:
Both the Unite[d] States Court of Federal Claims and
the district courts of the United States shall have
jurisdiction to render judgment on an action by an
interested party objecting to a solicitation by a Federal
agency for bids or proposals for a proposed contract or
to a proposed award or the award of a contract or any
alleged violation of statute or regulation in connection
with a procurement or a proposed procurement. Both
the United States Court of Federal Claims and the
district courts of the United States shall have jurisdiction
24a
to entertain such an action without regard to whether suit
is instituted before or after the contract is awarded.
28 U.S.C. § 1491(b)(1) (emphasis added).
A. “Interested Party” Under the ADRA
Although the ADRA allows only “interested parties” to
maintain a suit to challenge a procurement decision, the
ADRA does not define “interested party.” The government
contends that in such circumstances this court should look to
the definition of “interested party” Congress provided in the
Competition in Contracting Act (“CICA”), Pub.L. No.
98-369, 98 Stat. 1175 (codified as amended in scattered
sections of 10, 31, and 41 U.S.C.), which governs admin-
istrative bid protest jurisdiction before the General Account-
ing Office (“GAO”). CICA defines “interested party” to
mean “an actual or prospective bidder or offeror whose
direct economic interest would be affected by the award
of the contract or by failure to award the contract.”
31 U.S.C. § 3551(2) (Supp. IV 1998).
The government contends that engrafting CICA’s defini-
tion of “interested party” onto the ADRA assures that only
those “actual or prospective bidders” with a direct financial
interest in the procurement have standing to sue. The
government goes on to note that the GAO, in applying the
CICA definition, has expressly held that unions representing
potentially dispiaced federal workers, like AFGE here, do not
have standing to challenge a procurement to contract out
services that were previously performed by government
employees because they are not “actual or prospective
bidders.” See American Fed'n of Gov't Employees, B-
219590, 219590.3, 86-1 CPD § 436, 1986 WL 63479
(Comp.Gen. May 6, 1986); National Fed'n of Fed. Employ-
ees Local 2049, B-220838, 85-2 CPD § 454, 1985 WL 53480
(Comp.Gen. Oct.23, 1985); see also GAO letter to Sen. James
Sasser, 1986 WL 63592 (Comp.Gen. Sept.2, 1986). The
25a
government maintains that because these plaintiffs do not
have standing under CICA, they should not be given standing
under the ADRA."'
Plaintiffs argue in response that this court should not limit
the definition of “interested party” in the ADRA to the CICA
definition. They argue that the term “interested party” should
be given its broadest possible meaning and should include
anyone who has a direct economic interest in the procurement
award, regardless of whether or not they could bid. Plaintiffs
suggest that the ADRA allows for review of procurement
decisions by any person who participated in the procurement
process. Plaintiffs argue that because they have a direct
economic interest (in that they may lose their jobs or benefits)
and participated in the agency procurement process, they
have standing under the ADRA to challenge the cost
comparison study underlying the ultimate procurement
decision of the DLA.
Whether potentially displaced federal employees and their
unions are “interested parties” under the ADRA who may
challenge an alleged “violation of statute or regulation in
connection with a procurement” is an issue of first impression
in this court. Although most members of the Court of Federal
Claims have held that the term “interested party” under the
ADRA is not limited to those parties covered by CICA, none
have had to address the issue squarely. See, e.g., Phoenix Air
"In addition, the government argues that the Federal Circuit has
looked to the same definition of “interested parties” as appears in CICA in
determining the scope of the COFC’s jurisdiction under the Tucker Act
before it was amended by the ADRA. See Federal Data Corp. v. United
States, 911 F.2d 699, 703 (Fed.Cir.1990) (citing a definition for
“interested party” in the since-repealed statute governing bid protest
actions in front of the General Services Board of Contract Appeals that is
identical to the CICA definition of “actual or prospective bidder”). There
is no question but that the COFC has looked to the jurisdictional statutes
for the GAO and Contract Boards in defining its own jurisdiction both
before and after the ADRA was enacted.
26a
Group, Inc. v. United States, 46 Fed.Cl. 90, 101-02 (2000);
Winstar Communications, Inc. v. United States, 41 Fed.Cl.
748, 756 (1998); CCL, Inc. v. United States, 39 Fed.Cl. 780,
789-90 (1997); Delbert Wheeler Constr., Inc. v. United
States, 39 Fed.Cl. 239, 245 & n. 11 (1997), aff'd, 155 F.3d
566 (Fed.Cir.1998) (table); ATA Defense Indus., Inc. v.
United States, 38 Fed.Cl. 489, 494 (1997). In each of the
above-cited cases, the Court ultimately determined that the
plaintiffs were actual or prospective bidders who could satisfy
CICA’s “interested party” test.'? That is not the case here.
No one argues that these plaintiffs are actual or prospective
bidders. As such, this court must decide whether these
plaintiffs have standing as “interested parties” under the
ADRA to challenge the statutes and regulations they claim
were violated in connection with this procurement. To decide
this issue, this court must look to the language of the ADRA,
its purpose, and its legislative history, to determine whom
Congress intended to be an “interested party.”
Prior to the enactment of the ADRA, jurisdiction over bid
protests was divided between the COFC, which heard pre-
award bid protest actions under the Tucker Act, 28 U.S.C.
§ 1491(a), and the federal district courts, which heard post-
award bid protest actions under the Administrative Procedure
Act, 5 U.S.C. §§ 702, 704 (1994). Congress enacted the
ADRA in 1996 to expand the jurisdiction of both the COFC
and the federal district courts to allow both courts to hear “the
full range of cases previously subject to review in either
system.” See 142 Cong. Rec. $11848-01, $11849-50 (daily
ed. Sept. 30, 1996) (statement of Sen. Levin). To understand
fully whom Congress intended to have standing under this
'2 Some members of the COFC have held that ourjurisdiction is the
same as the GAO’s under CICA. See, e.g., Ryan Co. v. United States,
43 Fed.Cl. 646, 657 n. 17 (1999); Cincom Systems, Inc. v. United States,
37 Fed.Cl. 663, 669-70 (1997). For the reasons stated above, this court
respectfully disagrees.
PT SS eR nl par ERTL
on esr
Per ee
Ter ere ere
27a
new jurisdictional grant, this court must examine who had
standing in either court under each forum’s pre-ADRA
jurisdiction over bid protest cases.
Before Congress enacted the ADRA, the federal district
courts heard post-award bid protest challenges to pro-
curement decisions under the waiver of sovereign immunity
provided for under the Administrative Procedure Act
(“APA”), 5 U.S.C. § 702. See Scanwell Labs., Inc. v. Shaffer,
424 F.2d 859 (D.C.Cir.1970). A party has standing to bring
an action under the APA if that party is “a person ... adversely
affected or aggrieved by agency action within the meaning of
a relevant statute.” 5 U.S.C. § 702. The court in Scanwell
interpreted this provision to mean that “one who makes a
prima facie showing alleging [that the agency decision was
arbitrary or capricious] has standing to sue [as an aggrieved
person] under section 10 of the Administrative Procedure
Act.” See Scanwell, 424 F.2d at 869.
Accordingly, under Scanwell, the federal district courts
exercised jurisdiction under the APA over bid protest cases
brought by a party challenging a government procurement
decision based on an alleged violation of a procurement-
related statute. Under this authority, federal district courts
exercised jurisdiction over a broad range of plaintiffs who
claimed standing under the APA. See Diebold v. United
States, 947 F.2d 787, 810-11 (6th Cir.1991) (holding that the
government’s decision to privatize an activity was subject to
review under the APA, but remanding the case to determine
whether displaced federal employees and their union had
standing to maintain the suit); see, e.g., Contractors Eng’s
Int'l, Inc. v. U.S. Department of Veterans Affairs, 947 F.2d
1298, 1300 (Sth Cir.1991) (holding that whether subcon-
tractor has standing to challenge agency action depends on
whether plaintiff has standing under traditional APA standing
requirements).
28a
The COFC and its predecessors also exercised jurisdiction
over bid protest cases. The COFC heard challenges brought
by disappointed bidders based on the implied-in-fact contract
found to exist between the government and bidders on federal
procurements, under which the government has a duty to
fairly and honestly evaluate bids. See Southfork Sys., Inc. v.
United States, 141 F.3d 1124, 1132 & n. 5 (Fed.Cir.1998)
(decided under “the law as it stood prior to the 1996
amendments”); United States v. John C. Grimberg Co., 702
F.2d 1362, 1367 (Fed.Cir.1983) (en banc); Heyer Prods. Co.
v. United States, 140 F.Supp. 409, 413, 135 Ct.Cl. 63, 70-71
(1956). This jurisdiction was based on the Tucker Act, which
authorizes the COFC to “render judgment upon any claim
against the United States founded upon . . . any express or
implied contract.” 28 U.S.C. § 1491(a)(1) (1994). Disap-
pointed bidders were the only parties who had standing to
bring a bid protest in this context, because they were the only
parties who could be construed to have this implied
contractual relationship with the government. See Motorola,
Inc. v. United States, 988 F.2d 113, 114 (Fed.Cir.1993);
Control Data Sys., Inc. v. United States, 32 Fed.Cl. 520,
524 (1994).
When Congress enacted the Federal Courts Improvement
Act of 1982 (“FCIA”), Pub.L. No. 97-164, 96 Stat. 25, it
amended the Tucker Act to include exclusive jurisdiction in
the COFC to enter declaratory or injunctive relief in pre-
award challenges to procurement decisions. See 28 U.S.C.
§ 1491(a)(3) (repealed by the ADRA § 12, 110 Stat. at 3874);
John C. Grimberg, 702 F.2d at 1367. Section 1491(a)(3)
provided that:
[t]o award complete relief on any contract claim brought
before the contract is awarded, the court shail have
exclusive jurisdiction to grant declaratory judgments and
such equitable and extraordinary relief as it deems
proper, including but not limited to injunctive relief.
ENP ILNE RISD RE RR aS Canter eh Fs
re Tete the ASSES k bah ee caate be coLiah ake ated ai eh ln Skene 7A ASS Se Rak a Ta
29a
28 U.S.C. § 1491(a)(3) (repealed by the ADRA § 12, 110
Stat. at 3874) (emphasis added). ;
This jurisdictional divide between the federal district courts
which heard post-award bid protest challenges and the COFC
which heard pre-award bid protest challenges was not lost on
Congress. To the contrary, Congress expressly indicated in
the House and Senate reports giving this court pre-award bid
protest jurisdiction under the FCIA, that federal district courts
would continue to have jurisdiction to hear complaints
challenging post-award decisions under the APA. See
S. REP. NO. 97-275, at 22-23, reprinted in, 1982
U.S.C.A.A.N. 11, 32-33 (“{T]he committee does not intend to
alter the current state of the substantive law in this area.
Specifically, the Scanwell doctrine as enunciated by the D.C.
Circuit Court of Appeals in 1970 is left intact. See Scanwell
Laboratories, Inc. v. Shaffer, 424 F.2d 859 (D.C.Cir.1970).”);
H.R. REP. NO. 97-312, at 43 (1981) (“It is not the intent of
the Committee to change existing caselaw as to the ability of
parties to proceed in the district court pursuant to the
provisions of the Administrative Procedure Act in instances
of illegal agency action. See, e.g. Scanwell Laboratories, Inc.
v. Shaffer, 424 F.2d 859 (D.C.Cir.1970).”). Rather, under the
FCIA, Congress specifically expressed an intent to continue
divided bid protest jurisdiction in this court and the federal
district courts, stating that “[t]he dual questions of whether
these powers should even be broader and of whether they
should be exclusive of the district courts will have to wait for
a later date.” H.R. REP. NO. 97-312, at 43.
After 10 years, some in Congress came to believe that this
divided jurisdictional approach was inefficient because it
resulted in a lack of uniformity of law and “unnecessary and
wasteful litigation over jurisdictional issues.” See 142 Cong.
Rec. at $11848-49 (statements of Sens. Cohen and Levin).
Eventually, in 1993, the congressionally-sponsored Acquisi-
tion Law Advisory Panel (the so-called “section 800 Panel”
30a
of the National Defense Authorization Act for Fiscal Year
1991, Pub.L. No. 101-516, § 800, 104 Stat 1485, 1586
(1990)),'? recommended to Congress that it should end
this jurisdictional division and consolidate all challenges
regarding procurement award decisions in the COFC. See
142 Cong. Rec. at S$11849 (statement of Sen. Levin).
Congress did not adopt the full recommendation of the
Advisory Law Panel. Instead, Congress enacted the current
version of the ADRA, which amended the COFC’s Tucker
Act jurisdiction to give both the COFC and the federal district
courts coequal jurisdiction over pre- and post-award pro-
curement decisions. The legislation further provides that
after four years, unless specifically extended by Congress,
federal district court jurisdiction over award decisions will
expire.'* Senator Carl Levin, the legislation’s sponsor,
explained the purpose of the changes when he introduced
the ADRA:
The revised bill we are taking up today contains a
compromise provision that would consolidate the
jurisdiction of the Court of Federal Claims and the
district courts. For 4 years, the consolidated jurisdiction
would be shared by the Court of Federal Claims and the
district courts. Each court system would exercise
jurisdiction over the full range of bid protest cases
'’ Section 800 authorized the Under Secretary of Defense for
Acquisition to establish an advisory panel to review all laws affecting the
DOD acquisition process in order to streamline the procurement process.
See § 800, 104 Stat. at 1586.
'* Section 12(d) of Pub.L. No. 104-270 provided the following sunset
provision:
{t]he jurisdiction of the district courts of the United States over the
actions described in section 1491(b\(1) of titled 28, United States
Code . . . shall terminate on January 1, 2001 unless extended
by Congress.
28 U.S.C. § 1491 note (Supp. IV 1998).
3la
previously subject to review in either system. After
4 years, the jurisdiction of the district courts would
terminate, and the Court of Federal Claims would
exercise exclusive judicial jurisdiction over procurement
protests.
Id. at $11849-50 (emphasis added).
Thus, in enacting the ADRA, Congress intended to give the
COFC “the full range of bid protest cases previously subject
to review in either system.” Jd. Accordingly, the jurisdiction
of the COFC now includes jurisdiction to hear the bid protest
cases that were previously heard exclusively in the federal
district courts, in addition to the same bid protest jurisdiction
it exercised prior to the ADRA.'°
Because the federal district courts’ jurisdiction was not
limited by an implied-in-fact contract theory to actions filed
by “actual or prospective bidders,” the COFC’s jurisdiction
today should not be limited to claims by such persons.
Rather, Congress clarified that the COFC, like the federal
district courts, would be able to hear claims based on “any
alleged violation of statute or regulation in connection
with a procurement or proposed procurement.” 28 U.S.C.
§ 1491(b)(1) (emphasis added). In this last phrase, Congress
created a parallel to the claims previously heard exclusively
by federal district courts under the APA, i.e., those claims
brought by a “person ... adversely affected or aggrieved by
agency action within the meaning of a relevant statute.” '°
'S Likewise, under this court’s reading of the ADRA, until the sunset
provision takes effect in January 2001, federal district court jurisdiction
over bid protest cases now includes bid protest cases that were previously
subject to review exclusively in the COFC, in addition to bid protest cases
that were heard under the APA.
'® The fact that Congress enacted a sunset provision as part of the
ADRA that terminates the federal district courts’ authority to hear bid
protest actions in 200! bolsters this interpretation. It would not make
sense for Congress to eliminate federal district court as a bid protest
32a
5 U.S.C. § 702. In construing the ADRA, this court would
fail to give effect to the language of the statute, as well as
Congress’ clearly stated intent to grant coequal forums, if it
excluded parties who previously would have had standing
to bring a bid protest action in the federal district courts
under the APA from the scope of “interested party” under
the ADRA.
In view of the foregoing, this court concludes that the
ADRA does not limit standing to parties who meet the
definition of “interested party” under CICA. Rather, in
accordance with the words of the ADRA and its legislative
history, this court concludes that the COFC may also hear
challenges to procurement award decisions brought by
persons who would have had standing in federal district court
under the APA to challenge that same procurement
decision.'’
B. APA Standing Requirements
The requirements for establishing standing under the APA
are well settled. Claimants challenging an agency decision
under the APA must demonstrate that: (1) they have suffered
sufficient “injury-in-fact;” (2) that the injury is “fairly
traceable” to the agency’s decision and is “likely to be
forum if it did not believe that the COFC would be available to hear
those cases.
'7 In locking to the APA to define “interested party” standing, the court
notes that there are other terms in the statute, including the term “Federal
agency,” which require definition and which may or may not be limited
by the APA. The purpose of the ADRA is to grant both the COFC and
federal district courts “the full range of jurisdiction previously exercised
in either system.” 142 Cong. Rec. at S$11849-50. Therefore, if the COFC
had jurisdiction, prior to the enactment of the ADRA, over “Federal
agency” procurement decisions that were beyond the reach of federal
district courts under the APA, the ADRA does not diminish that
jurisdiction. See Hewlett-Packard Co. v. United States, 41 Fed.Cl. 99,
104 (1998).
33a
redressed by afavorable decision;” and (3) that the interests
sought to be protected are “arguably within the zone of
interests to be protected or regulated by the statute . . . in
question.” National Credit Union Admin. v. First Nat'l Bank
& Trust Co., 522 U.S. 479, 488, 118 S.Ct. 927, 140 L.Ed.2d 1
(1998) (citations omitted) (alteration in original); Bennett v.
Spear, 520 U.S. 154, 162, 117 S.Ct. 1154, 137 L.Ed.2d 281
(1997) (citations omitted).
With respect to the first inquiry, plaintiffs allege that they
satisfy the injury-in-fact test because they stand to lose their
jobs and job benefits if the private contract award is
implemented. Second, plaintiffs contend that if the procure-
ment is set aside, as federal employees likely to be in the
MEO, their injury would be redressed. Plaintiffs further
contend that they satisfy the zone-of-interests test because
they are within the zone of interests to be protected by the
cost comparison statutes they allege were violated, namely
section 2(e) of FAIR and 10 U.S.C. § 2462(b).'*
The government contends, in response, that plaintiffs do
not satisfy the injury-in-fact test because their alleged injuries
are too speculative to establish standing. The government
argues that until the private contract is implemented and the
individual piaintiffs actually lose their jobs or benefits, they
cannot show that they, in fact, have been harmed.'? The
'* In addition, while plaintiffs claim they also are within the zone of
persons covered by OMB Circular A-76, they do not claim that A-76
provides them with judicial standing. Because OMB Circular A-76 is an
executive order and not a statute or regulation, it does not by itself confer
any rights to judicial review. See National Fed’n of Fed. Employees
(“NFFE”) v. Cheney, 883 F.2d 1038, 1043 (D.C.Cir.1989).
'? Because the union-plaintiffs’ standing is derivative of their mem-
bers’ standing, unless the individual plaintiffs can establish standing, the
unions’ standing will also fail. See American Fed'n of Gov't Employees
(“AFGE”) v. Clinton, 180 F.3d 727, 733 (6th Cir.1999); American Fed’n
of Gov't Employees (“AFGE”) v. Cohen, 171 F.3d 460, 465 (7th
Cir. 1999).
34a
government notes that under the rules governing the
contracting-out process, displaced federal workers have
various rights, including the right of first refusal to work for
the new contractor. See 48 C.F.R. § 52.207-3. Thus, the
government argues, until the process is played out, it is not
clear who, if anyone, will be harmed by the contracting-out
decision.
Further, the government argues that plaintiffs’ harm in this
case is not traceable to the alleged cost comparison violations,
but stems from the initial decision to privatize the work,
which plaintiffs do not challenge. In that connection, the
government argues that, even if the plaintiffs were to win
their challenge and the MEO were to do the work, more than
half of the present federal workers would be out of jobs. The
government contends that in such circumstances, the harm
plaintiffs argue here is similar to the harm alleged by
displaced federal workers in American Fed’n of Gov't
Employees (“AFGE”) v. Clinton, 180 F.3d 727, 731 (6th
Cir.1999), in which the Sixth Circuit held that individual
federal employees could not show that their harm was
traceable to violations in the contracting-out process. In that
case, the Sixth Circuit found that the displaced workers’ harm
stemmed from the threshold decision to privatize the work in
the first instance.”” See id. at 732 (holding that plaintiffs’ loss
© This court notes that this traditional standing inquiry into whether
plaintiffs’ harm is fairly traceable to the agency decision is also required
by the ADRA, which provides that a person must show that the alleged
statutory violation arises “in connection with [the challenged]
procurement.” 28 U.S.C. § 1491(b\(1). Thus, while the court recognizes
that the ADRA provides “sweeping” jurisdiction, see Ramcor Servs.
Group v. United States, 185 F.3d 1286, 1289 (Fed.Cir.1999), the ADRA
still requires that a party demonstrate standing, whether in federal district
court or the COFC. See Massachusetts Bay Trasp. Auth. v. United States,
21 CLCt. 252, 257-58 (1990), rev'd on other grounds, 129 F.3d 1226
(Fed.Cir.1997) (“Although established under Article I, the [COFC]
traditionally has applied the case or controversy requirement unless
35a
“results most clearly from the unchallengeable and un-
challenged decision to close bases”).
Finally, the government contends that, even if these
plaintiffs can show injury-in-fact that is fairly traceable to the
agency decision, they are not within the zone of interests to
be protected under the statutes that they allege were violated.
As discussed in greater detail below, the government
contends that displaced federal workers and their unions may
not challenge cost comparisons undertaken to provide the
“best value to the American taxpayer.” See infra pp. 597-98.
The government argues that every court to hear a similar
challenge by displaced workers challenging cost comparisons
under 10 U.S.C. § 2462(b), which contains the identical cost
comparison language now in FAIR, has determined that
displaced federal workers and their unions do not have
standing to challenge the cost comparison process. See, e.g.,
American Fed'n of Gov't Employees (“AFGE”) v. Cohen,
171 F.3d 460, 470-71 (7th Cir.1999); National Fed’n of Fed.
Employees (“NFFE") v. Cheney, 883 F.2d 1038, 1050
(D.C.Cir.1989). The government contends that these plain-
tiffs have not presented any basis for departing from these
precedents.
C. Plaintiffs Are not Within the Zone of Interests of “FAIR”
or 10 U.S.C. § 2462
Because this court agrees with the government that these
plaintiffs are not within the zone of interests to be protected
jurisdiction conferred by Congress demands otherwise.”); and cases cited
therein.
In this instance, this court finds that plaintiffs satisfy this ADRA-
standing requirement because whether the cost comparison performed by
the DLA was improper, as plaintiffs allege, goes to the very heart of the
procurement decision and thus, their injury is “fairly traceable” to the
agency decision and would be redressed by setting the procurement
decision aside.
36a
by the statutes that they allege were violated, it need not reach
the injury-in-fact question.“ Although this court concludes
that plaintiffs’ alleged injuries are fairly traceable to the
procurement decision, i.e., injuries based on statutory
violations “in connection with [the challenged] procurement,”
they cannot show that they are within the zone of interests
protected by the provisions of the statutes that they claim
were violated. Accordingly, they cannot establish that they
are “interested parties” under the ADRA.
During their argument before this court, plaintiffs focused
their standing argument on the alleged violation of section
2(e) of FAIR, which they claim distinguishes this case from
earlier cases that were decided under 10 U.S.C. § 2462(b).
Thus, this court will focus its analysis on FAIR as well. As
discussed above, Congress enacted FAIR in 1998 to
encourage the federal government to contract out to private
sources those governmental services that are “not inherently
governmental in nature.” As its principal sponsor, Senator
Craig Thomas stated in introducing the final bill in the Senate
that Congress intended FAIR to “codif[y] a process to assure
government reliance on the private sector to the maximum
extent feasible.” 144 Cong. Rec. $9104-02, S9105 (daily ed.
July 28, 1998) (statement of Sen. Thomas). To this end,
2" If this court were to reach the issue, however, it would conclude that
these plaintiffs satisfy the injury-in-fact test. There is no question but that
some union members will lose the opportunity to retain their jobs as
members of the MEO because of the cost comparison results. Their job
loss is reasonably traced to the alleged errors in the cost comparison and
would be redressed if they were to prevail. Thus, this case is dis-
tinguishable from AFGE v. Clinton and more like National Air Traffic
Controllers Assoc. v. Pena, 944 F Supp. 1337, 1345-46 (N.D.Ohio 1996),
where on remand from the Sixth Circuit, the court found that air traffic
controllers employed by the Federal Aviation Administration (“FAA”)
and their union had standing to challenge the FAA’s plan to privatize air
traffic control responsibilities at federal facilities. Indeed, the government
has not offered any factual evidence to contest this conclusion.
37a
FAIR establishes a process that directs federal agencies to
review their activities annually and to establish a list of those
activities that are “not inherently governmental,” and
therefore appropriate for contracting out to private sources.
See FAIR § 2(a), 112 Stat. at 2382.
Section 3(b) of FAIR identifies certain persons, including
federal employees and their unions, as “interested parties”
who “may submit to an executive agency a challenge of an
omission of a particular activity from, or an inclusion of a
particular activity on, a list . . . under section 2[(a) of this
Act].” Id. § 3(a)-(b), 112 Stat. at 2383. Once an activity is on
the list, the agency must make the activity available for
competition. See id. § 2(d), 112 Stat. at 2383. Thereafter, if
the agency is required to conduct a cost comparison between
the private source and in-house performance of the work,
FAIR requires that “all costs . . . are considered and that
the costs considered are realistic and fair,” see id. § 2(e),
112 Stat. at 2383, in order to ensure “best value to the
American taxpayer,” 144 Cong. Rec. at $9104 (statement of
Sen. Thomas).
Congress enacted the final FAIR legislation after much
debate and compromise. Indeed, the predecessor FAIR bills,
entitled the “Freedom from Government Competition Act,”
contained very different language from the language
ultimately enacted. See 144 Cong. Rec. at $9104-05 (“[T]
measure reported . . . is significantly different than S. 314 as
introduced.”). The original bills, H.R. 716 and S. 314,
mandated federal agencies to “procure from sources in the
private sector all goods and services that are necessary for or
beneficial to the accomplishment of authorized functions of
the agency,” except under four limited exceptions. H.R. 716,
105th Cong. § 3(a) (1997); S. 314, 105th Cong. § 3(a) (1997).
Based on “many months of discussions among both the
majority and minority on the committee, OMB, Federal
employee unions [including AFGE], and private sector
im
38a
organizations,” Congress substantially modified the FAIR
legislation that was eventually enacted to reflect “a consensus
and compromise.” See 144 Cong. Rec. at $9104 (statement
of Sen. Thomas). The final legislation establishes a pro-
cedure for identifying and listing activities that should be
made available for contracting out. In addition, the final bill
allows for public-private competitions. Senator Thomas
identified this later compromise as a significant revision. See
id. (stating, “I revised my bill when introducing it last year to
include such competitions”).
Plaintiffs argue that because they are included in the
definition of an “interested party” for the purpose of chal-
lenging the lists developed under section 2(a) of FAIR, and
because FAIR preserved the notion of public- private
competitions, their interests are within the zone of interests to
be protected under the entire statute.
Although the plaintiffs’ arguments have some surface
appeal, upon closer scrutiny, it is clear that plaintiffs’
interests with respect to cost comparisons are not within the
zone of interests protected under FAIR. In the plain language
of FAIR, Congress: specifically distinguishes between the
agency’s decision to place a particular activity on the list to
be contracted out, s¢ée FAIR § 2(a), 112 Stat. at 2382, and the
agency’s decision to contract out to a particular source, see id.
§ 2(d)-(e), 112 Stat. at 2383. Section 3(a) of FAIR is
cognizant of this distinction and expressly limits authorized
challenges to “an omission of a particular activity, or the
inclusion of a particular activity on... a list under sec-
tion 2.” Id. § 3(a), 112 Stat. at 2383 (emphasis added).
~The district court recognized standing to challenge the initial
decision to contract out an activity in National Air Traffic Controllers
Assoc., 944 F.Supp. at 1345, in which the court heid that plaintiffs had
standing to challenge the agency's initial decision to privatize certain
functions allegedly in violation certain prohibitions of federal pro-
curement statutes and OMB Circular A-76,
39a
More specifically with regard to standing, section 3(b), which
defines who is an “interested party,” expressly limits
challenges to those “with respect to an activity referred to in
subsection [2](a).” Jd. § 3(b), 112 Stat. at 2383.
If Congress intended to provide “interested party” standing
to challenge cost comparisons pursuant to a public-private
competition under section 2(e), Congress would not have
expressly limited such standing to challenges to the list. /d.
§ 2(e), 112 Stat. 2383. “[W]here Congress includes particular
language in one section of a statute but omits it in another
section of the same Act, it is generally presumed that
Congress acts intentionally and purposely in the disparate
inclusion or exclusion.” Russello v. United States, 464 U.S.
16, 22, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983) (quoting United
States v. Wong Kim Bo, 472 F.2d 720, 722 (Sth Cir.1972));
LeFevre v. Secretary, Dep't of Veterans Affairs, 66 F.3d
1191, 1200 (Fed.Cir.1995) (citing Russello, 464 U.S. at 22,
104 S.Ct. 296). Accordingly, under the plain language,
Congress did not intend for federal employees and their
unions to be able to challenge cost comparisons.
Moreover, no evidence exists in the legislative history of
the FAIR Act that would dictate a contrary result. Congress
recognized that even when an activity is listed as appropriate
to be contracted out, federal employees might be able to
® This court recognizes that employees and their unions are included
under OMB Circular A-76 as “interested parties,” who can admin-
istratively challenge the cost comparison decision administratively and
that Congress was fully aware of the rights provided for under OMB
Circular A-76 when enacting FAIR. See 144 Cong. Rec. at $9104
(statement of Sen. Thomas). This is all the more reason why this court
finds that Congress’ failure to include the cost comparison provision,
section 2(e), within the ambit of section 3 challenges was not a mere
oversight. Congress was aware of the well-settled rule that Executive
Orders do not by themselves establish rights to judicial review. See
Independent Meat Packers Assoc. v. Butz, 526 F.2d 228, 236 (8th
Cir, 1975).
40a
perform that activity more economically than private
contractors. Thus, FAIR allows for a public-private com-
petition under section 2(e). See FAIR § 2(e), 112 Stat. at
2383. However, according to the legislative history, if the
agency conducts a public-private competition, the purpose of
that competition is to provide the “best value to the American
taxpayer;” the purpose is not to support continued employ-
ment by federal workers. See 144 Cong. Rec. at $9104,
quoted supra p. 597.
Plaintiffs argue that in vindicating their interests, i.e.,
preventing the government from contracting out their jobs in
violation of federal procurement statutes, they are furthering
Congress’ interest in providing the most economical result for
taxpayers. In this connection, plaintiffs stress that they are
the only parties in a position to enforce compliance with the
cost comparison provision where the decision is to contract
out the work.
Other displaced federal employees and their unions have
asserted these same arguments in the past to support their
right to challenge cost comparisons performed under the
identical language in 10 U.S.C. § 2462(b). And, as the
government correctly notes, the courts have uniformly
rejected these arguments. Most recently, the Seventh Circuit
in AFGE v. Cohen, }71 F.3d at 470-71, held that displaced
federal workers axvi their unions lack standing to challenge
the governmert’s compliance with 10 U.S.C. § 2462(b).
In applying the 2onme-of-interest test in connection with
10 U.S.C. § 2462\(d), the Seventh Circuit found that federal
workers’ interests were “indistinguishable from that of any
taxpayer, which is insufficient to support standing under the
zone-of-interest test.” /d. at 470-71 (citing NFFE v. Cheney,
883 F.2d at 1047). Relying on longstanding Supreme Court
precedent, that persons with only a “ ‘generalized grievance’
about the way in which government operates do not have
4la
standing,” the Circuit concluded that “without something
more, the federal employees in this case do not pass the test.”
Id. at 471.
The Seventh Circuit further explained that displaced
federal workers cannot show something more based on their
interest in keeping their jobs. As the Seventh Circuit stated,
“the interests of federal emplo t, and the goal of private
procurement are inconsistent.” “ /d. (citing NFFE v. Cheney,
883 F.2d at 1051); see also National Credit Union, 522 U.S.
at 491, 118 S.Ct. 927 (stating that the zone-of-interests test
“denies a right of review if the plaintiff's interests are . . .
marginally related to or inconsistent with the purposes
implicit in the statute”) (citations omitted) (alteration in
original).
Plaintiffs in this case stand in no better position than the
plaintiffs in AFGE v. Cohen. They have not provided this
court with any basis upon which to deviate from the
precedent followed in that case.”* Although AFGE was
* The Seventh Circuit, however, eventually did find plaintiffs were
within the zone of interests of the Arsenal Act, 10 U.S.C. § 4532 (1994),
which “[ujnlike the other statutes cited by the plaintiffs . . . appears to be
aimed at preserving the government's in-house military production
capabilities.” AFGE v. Cohen, 171 F.3d at 473.
> Moreover, several courts have expressly determined that displaced
federal workers and unions do not have standing to challenge a
procurement decision to outsource work on the grounds that plaintiffs
claim is their chief concern here. Plaintiffs claim that the “largest single
error” in the cost comparison is that EG & G won the competition by
violating the SCA, 41 U.S.C. §§ 351-354, and its implementing regu-
lations, 48 C.F.R. § 52.222-43, in identifying job classifications. Although
plaintiffs do not rely on the SCA as a basis for standing, they argue that
labor classifications that violate the act undermine the “fair and realistic”
requirement of the cost comparison provision of FAIR, thereby affecting
their interest in not being deprived of federal employment as a result of an
unlawful procurement process. This same argument has been rejected on
standing grounds. In American Fed'n of Gov't Employees v. Stetson, 640
F.2d 642, 646 (Sth Cir.1981), and American Fed'n of Gov't Employees v.
42a
decided under 10 U.S.C. § 2462, the legislative history
indicates that, Congress had the same purposes in mind in
enacting FAIR that are evident in 10 U.S.C. § 2462(b).
Indeed, as noted above, the cost comparison language
reviewed in AFGE v. Cohen is identical to the language of
section 2(e) of the FAIR Act. See supra p. 589 n. 6. Where
“Congress adopts a new law incorporating sections of a prior
law, Congress normally can be presumed to have had
knowledge of the interpretation given to the incorporated law,
as least insofar as it affects the new statute.” Lorillard v.
Pons, 434 U.S. 575, 580-81, 98 S.Ct. 866, 55 L.Ed.2d
40 (1978).
Although the Seventh Circuit decided AFGE v. Cohen after
FAIR was enacted, the Circuit based its rationale in that case
on a long line of precedent first articulated by the Circuit
Court of Appeals for the District of Columbia in NFFE v.
Cheney, 883 F.2d at 1038. In NFFE v. Cheney, the D.C.
Circuit determined that federal unions and their members
were not within the zone of i interests protected by 10 U.S.C. §
2462(b) (then “section 1223(b)”), ” °which contained the same
cost comparison requirement. See id.
Dunn, 561 F.2d 1310, 1313 (9th Cir.1977), the courts of appeal held that
the SCA was only intended to protect the rights of the employees of
private contractors hired to perform government services, not displaced
federal employees.
© Section 1223(b), the cost comparison provision at issue in NFFE v.
Cheney, was first enacted as Pub.L. No. 99-661, § 1223(b), 100 Stat.
3816, 3977 (originally codified at !0 U.S.C. § 2304 note (Supp. Ill
1985)), but later repealed and recodified in 10 U.S.C. § 2462(b), when
Congress enacted Pub.L. No. 100-370, § 2(aX1), (cX3), 102 Stat. 840,
853-54 (1988) in order to codify several defense authorization statutes,
which were permanent provisions of law but were enacted as free-
standing provisions rather than as amendments to the United States Code
or other appropriate existing laws, See H.R, REP. NO, 100-696, reprinted
in, 1988 U.S.C.A.A.N, 1077,
” The plaintiffs correctly note that the portion of the NFFE decision
which states that the zone-of-interests test requires claimants to show that
43a
Significantly, Congress enacted FAIR after the decision in
NFFE v. Cheney and therefore can be presumed to have had
knowledge of the interpretation given the cost comparison
language in the provision. Congress had the opportunity to
add protections for federal employment at that time, if it
intended to do so. In fact, according to the legislative history,
federal employee unions, including AFGE, actively partic-
ipated in formulation of the FAIR Act. See 144 Cong. Rec. at
$9104, quoted supra p. 597.
Examined against this backdrop, this court is persuaded
that Congress did not intend to include federal employees and
their unions within the zone of interests protected by section
2(e) of FAIR or 10 U.S.C. § 2462(b).” As such, these plain-
they are intended beneficiaries of the statute is no longer good law. The
Supreme Court bas expressly disavowed that reasoning. See National
Credit Union, 522 U.S. at 488-89, 118 S.Ct. 927 (holding that “we
shouldnot inquire whether there has been a congressional intent to benefit
the would-be plaintiff’).
However, the Supreme Court has adopted NFFE's reasoning with
regard to the zone of interests to be protected under federal statutes aimed
at allowing for private competition. For example, in Air Courier Con-
ference v. American Postal Workers, 498 U.S. 517, 528 n. 5, 111 S.Ct.
913, 112 L.Ed.2d 1125 (1991), the Supreme Court expressly stated “[t}he
PES are competition statutes that regulate the conduct of competitors
of the Postal Service. . . . Employees have generally been denied stand-
ing to enforce competition laws because they lack competitive and
direct injury.”
** This court recognizes that in so ruling it is possible that no party will
have standing to challenge the DLA’s cost comparison. This is not,
however, a basis upon which to find standing. See AFGE v. Cohen, 171
F.3d at 471 n. 12 (quoting Schlesinger v. Reservists Comm. to Siop the
War, 418 U.S, 208, 227, 94 S.Ct. 2925, 41 L.Ed.2d 706 (1974)) (“The
assumption that if respondents have no standing to sue, no one would
have standing is not a reason to find standing ... our system of govern-
ment leaves many crucial decisions to the political process.”) (alteration
in original).
44a
tiffs cannot establish standing under the APA and therefore
are not “interested parties” able to maintain this action under
the ADRA.
CONCLUSION
Based on the forgoing, this court GRANTS defendant’s
motion to dismiss. In addition, this court DENIES plaintiffs’
motion for preliminary injunction and cross motion for
judgment on the administrative record. The clerk is directed
to enter judgment accordingly. The parties shall bear their
own costs.
45a
APPENDIX C
UNITED STATES CODE ANNOTATED TITLE 28.
JUDICIARY AND JUDICIAL PROCEDURE PART IV—
JURISDICTION AND VENUE CHAPTER 91—UNITED
STATES COURT OF FEDERAL CLAIMS
28 U.S.C.A. § 1491. Claims against United States generally;
actions involving Tennessee Valley Authority
(al) The United States Court of Federal Claims shall
have jurisdiction to render judgment upor any claim against
the United States founded either upon the Constitution, or any
Act of Congress or any regulation of an executive
department, or upon any express or implied contract with the
United States, or for liquidated or unliquidated damages in
cases not sounding in tort. For the purpose of this paragraph,
an express or implied contract with the Army and Air Force
Exchange Service, Navy Exchanges, Marine Corps Ex-
changes, Coast Guard Exchanges, or Exchange Councils of
the National Aeronautics and Space Administration shall be
considered an express or implied contract with the United
States.
(2) To provide an entire remedy and to complete the
relief afforded by the judgment, the court may, as an incident
of and collateral to any such judgment, issue orders directing
restoration to office or position, placement in appropriate
duty or retirement status, and correction of applicable records,
and such orders may be issued to any appropriate official of
the United States. In any case within its jurisdiction, the court
shall have the power to remand appropriate matters to any
administrative or executive body or official with such
direction as it may deem proper and just. The Court of
Federal Claims shall have jurisdiction to render judgment
upon any claim by or against, or dispute with, a contractor
arising under section 10(a)1) of the Contract Disputes Act of
1978, including a dispute concerning termination of a
46a
contract, rights in tangible or intangible property, compliance
with cost accounting standards, and other nonmonetary
disputes on which a decision of the contracting officer has
been issued under section 6 of that Act.
[(3) Repealed. Pub.L. 104-320, § 12(a)(2), Oct. 19,
1996, 110 Stat. 3874]
(b)(1) Both the Unites ' States Court of Federal Claims
and the district courts of the United States shall have
jurisdiction to render judgment on an action by an interested
party objecting to a solicitation by a Federal agency for bids
or proposals for a proposed contract or to a proposed award
or the award of a contract or any alleged violation of statute
or regulation in connection with a procurement or a proposed
procurement. Both the United States Court of Federal Claims
and the district courts of the United States shall have
jurisdiction to entertain such an action without regard to
whether suit is instituted before or after the contract is
awarded.
(2) To afford relief in such an action, the courts may
award any relief that the court considers proper, including
declaratory and injunctive relief except that any monetary
relief shall be limited to bid preparation and proposal costs.
(3) In exercising jurisdiction under this subsection, the
courts shall give due regard to the interests of national
defense and national security and the need for expeditious
resolution of the action.
(4) In any action under this subsection, the courts shall
review the agency’s decision pursuant to the standards set
forth in section 706 of title 5.
(c) Nothing herein shall be construed to give the United
States Court of Federal Claims jurisdiction of any civil action
' So in original.
47a
within the exclusive jurisdiction of the Court of International
Trade, or of any action against, or founded on conduct of, the
Tennessee Valley Authority, or to amend or modify the
provisions of the Tennessee Valley Authority Act of 1933
with respect to actions by or against the Authority.
CREDIT(S)
1994 Main Volume
(June 25, 1948, c. 646, 62 Stat. 940; July 28, 1953, c. 253,
§ 7, 67 Stat. 226; Sept. 3, 1954, c. 1263, § 44(a), (b), 68 Stat.
1241; July 23, 1970, Pub.L. 91-350, § 1(b), 84 Stat. 449;
Aug. 29, 1972, Pub.L. 92-415, § 1, 86 Stat. 652; Nov. 1,
1978, Pub.L. 95-563, § 14(i), 92 Stat. 2391; Oct. 10, 1980,
Pub.L. 96-417, Title V, § 509, 94 Stat. 1743; Apr. 2, 1982,
Pub.L. 97-164, Title I, § 133(a), 96 Stat. 39; Oct. 29, 1992,
Pub.L. 102-572, Title IX, §§ 902(a), 907(b\(1), 106 Stat.
4516, 4519.)
(As amended Oct. 19, 1996, Pub.L. 104-320, § 12(a), 110
Stat. 3874.)
48a
APPENDIX D
UNITED STATES PUBLIC LAWS
104th Congress—Second Session
PL 104-320 (HR 4194)
October 19, 1996
ADMINISTRATIVE DISPUTE
RESOLUTION ACT OF 1996
An Act to reauthorize alternative means of dispute
resolution in the Federal administrative process, and for other
purposes.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
5 USCA § 571 NOTE
SECTION 1. SHORT TITLE.
This Act may be cited as the “Administrative Dispute
Resolution Act of 1996”.
5 USCA § 571
SEC. 2. AMENDMENT TO DEFINITIONS.
Section 571 of title 5, United States Code, is amended—
(1) in paragraph (3)—
(A) by striking “, in lieu of an adjudication as defined
in section 551(7) of this title,”;
(B) by striking “settlement negotiations,”; and
(C) by striking “and arbitration” and _ inserting
“arbitration, and use of ombuds”; and
49a
SEC. 12. JURISDICTION OF THE UNITED STATES
COURT OF FEDERAL CLAIMS AND THE DISTRICT
COURTS OF THE UNITED STATES: BID PROTESTS.
28 USCA § 1491
(a) BID PROTESTS.—Section 1491 of title 28, United
States Code, is amended—
(1) by redesignating subsection (b) as subsection (c);
(2) in subsection (a) by striking out paragraph (3); and
(3) by inserting after subsection (a), the following new
subsection:
“(b)(1) Both the United States Court of Federal
Claims and the district courts of the United States shall have
jurisdiction to render judgment on an action by an interested
party objecting to a solicitation by a Federal agency for bids
or proposals for a proposed contract or to a proposed award
or the award of a contract or any alleged violation of statute
or regulation in connection with a procurement or a proposed
procurement. Both the United States Court of Federal Claims
and the district courts of the United States shall have
jurisdiction to entertain such an action without regard to
whether suit is instituted before or after the contract is
awarded.
“(2) To afford relief in such an action, the courts
may award any relief that the court considers proper,
including declaratory and injunctive relief except that any
monetary relief shall be limited to bid preparation and
proposal costs.
“(3) In exercising jurisdiction under this sub-
section, the courts shall give due regard to the interests of
national defense and national security and the need for
expeditious resolution of the action.
50a
“(4) In any action under this subsection, the courts
shall review the agency's decision pursuant to the standards
set forth in section 706 of title 5.”.
28 USCA § 1491 NOTE
(b) EFFECTIVE . DATE.—This_ section and_ the
amendments made by this section shall take effect on
December 31, 1996 and shall apply to all actions filed on or
after that date.
(c) STUDY.—No earlier than 2 years after the effective
date of this section, the United States General Accounting
Office shall undertake a study regarding the concurrent
jurisdiction of the district courts of the United States and the
Court of Federal Claims over bid protests to determine
whether concurrent jurisdiction is necessary. Such a study
shall be completed no later than December 31, 1999, and
shall specifically consider the effect of any proposed change
on the ability of small businesses to challenge violations of
Federal procurement law.
(d) SUNSET.—The jurisdiction of the district courts of
the United States over the actions described in section
1491(b)(1) of title 28, United States Code (as amended by
subsection (a) of this section) shall terminate on January 1,
2001 unless extended by Congress. The savings provisions in
subsection (e) shall apply if the bid protest jurisdiction of the
district courts of the United States terminates under this
subsection.
(e) SAVINGS PROVISIONS.—
(1) ORDERS.—A termination under subsection (d)
shall not terminate the effectiveness of orders that have been
issued by a court in connection with an action within the
jurisdiction of that court on or before December 31, 2000.
Such orders shall continue in effect according to their terms
Sla
until modified, terminated, superseded, set aside, or revoked
by a court of competent jurisdiction or by operation of law.
(2) PROCEEDINGS AND APPLICATIONS.—{A) a
termination under subsection (d) shall not affect the
jurisdiction of a court of the United States to continue
with any proceeding that is pending before the court on
December 31, 2000.
(B) Orders may be issued in any such proceeding,
appeals may be taken therefrom, and payments may be made
pursuant to such orders, as if such termination had not
occurred. An order issued in any such proceeding shall
continue in effect until modified, terminated, superseded, set
aside, or revoked by a court of competent jurisdiction or by
operation of law.
(C) Nothing in this paragraph prohibits the
discontinuance or modification of any such proceeding under
the same terms and conditions and to the same extent that
proceeding could have been discontinued or modified absent
such termination.
31 USCA § 3556
31 USCA § 3556 NOTE
(f) NONEXCLUSIVITY OF GAO REME-DIES.—In the
event that the bid protest jurisdiction of the district courts of
the United States is terminated pursuant to subsection (d),
then section 3556 of title 31, United States Code, shall be
amended by striking “a court of the United States or” in the
first sentence.
Approved October 19, 1996.
52a
APPENDIX E
UNITED STATES CODE ANNOTATED
TITLE 28. JUDICIARY AND JUDICIAL PROCEDURE
PART IV—JURISDICTION AND VENUE
CHAPTER 91—UNITED STATES COURT OF
FEDERAL CLAIMS
28 U.S.C.A. § 1491. Claims against United States gen-
erally; actions involving Tennessee
Valley Authority
(a)(1) The United States Court of Federal Claims shall
have jurisdiction to render judgment upon any claim against
the United States founded either upon the Constitution, or any
Act of Congress or any regulation of an executive depart-
ment, or upon any express or implied contract with the United
States, or for liquidated or unliquidated damages in cases not
sounding in tort. For the purpose of this paragraph, an ex-
press or implied contract with the Army and Air Force Ex-
change Service, Navy Exchanges, Marine Corps Exchanges,
Coast Guard Exchanges, or Exchange Councils of the
National Aeronautics and Space Administration shall be
considered an express or implied contract with the United
States.
(2) To provide an entire remedy and to complete the
relief afforded by the judgment, the court may, as an incident
of and collateral to any such judgment, issue orders directing
restoration to office or position, placement in appropriate
duty or retirement status, and correction of applicable records,
and such orders may be issued to any appropriate official of
the United States. In any case within its jurisdiction, the
court shall have the power to remand appropriate matters to
any administrative or executive body or official with such
direction as it may deem proper and just. The Court of
Federal Claims shall have jurisdiction to render judgment
upon any claim by or against, or dispute with, a contractor
53a
arising under section 10(a)(1) of the Contract Disputes Act of
1978, including a dispute concerning termination of a
contract, rights in tangible or intangible property, compliance
with cost accounting standards, and other nonmonetary
disputes on which a decision of the contracting officer has
been issued under section 6 of that Act.
(3) To afford complete relief on any contract claim
brought before the contract is awarded, the court shall have
exclusive jurisdiction to grant declaratory judgments and such
equitable and extraordinary relief as it deems proper,
including but not limited to injunctive relief. In exercising
this jurisdiction, the court shall give due regard to the
interests of national defense and national security.
(b) Nothing herein shall be construed to give the United
States Court of Federal Claims jurisdiction of any civil action
within the exclusive jurisdiction of the Court of International
Trade, or of any action against, or founded on conduct of, the
Tennessee Valley Authority, or to amend or modify the
provisions of the Tennessee Valley Authority Act of 1933
with respect to actions by or against the Authority.
CREDIT(S)
1994 Main Volume
(June 25, 1948, c. 646, 62 Stat. 940; July 28, 1953, c. 253,
§ 7, 67 Stat. 226; Sept. 3, 1954, c. 1263, § 44(a), (b), 68 Stat.
1241; July 23, 1970, Pub.L. 91-350, § 1(b), 84 Stat. 449;
Aug. 29, 1972, Pub.L. 92-415, § 1, 86 Stat. 652; Nov. 1,
1978, Pub.L. 95-563, § 14(i), 92 Stat. 2391; Oct. 10, 1980,
Pub.L. 96-417, Title V, § 509, 94 Stat. 1743; Apr. 2, 1982,
Pub.L. 97-164, Title I, § 133(a), 96 Stat. 39; Oct. 29, 1992,
Pub.L. 102- 572, Title IX, §§ 902(a), 907(b)(1), 106 Stat.
4516, 4519.)
28 U.S.C.A. § 1491
28 USCA § 1491
54a
APPENDIX F
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON. D.C. 20503
CIRCULAR NO. A-76 (REVISED 1999)
August 4, 1983
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND
ESTABLISHMENTS
SUBJECT: Performance of Commercial Activities
1. Purpose. This Circular establishes Federal policy
regarding the performance of commercial activities and
implements the statutory requirements of the Federal Activities
Inventory Reform Act of 1998, Public Law 105-270. The
Supplement to this Circular sets forth the procedures for
determining whether commercial activities should be performed
under contract with commercial sources or in-house using
Government facilities and personnel.
2. Rescission. OMB Circular No. A-76 (Revised), dated
March 29, 1979; and Transmittal Memoranda | through 14 and
16 through 18.
3. Authority. The Budget and Accounting Act of 1921 (31
U.S.C. | et seq.), The Office of Federal Procurement Policy Act
Amendments of 1979. (41 U.S.C. 401 et seq.), and The Federal
Activities Inventory Reform Act of 1998. (P. L. 105-270).
4. Background.
a. Inthe process of governing, the Government should
not compete with its citizens. The competitive enterprise
system, characterized by individual freedom and initiative, is the
primary source of national economic strength. In recognition of
this principle, it has been and continues to be the general policy
of the Government to rely on commercial sources to supply the
products and services the Government needs.
55a
b. This national policy was promulgated through
Bureau of the Budget Bulletins issued in 1955, 1957 and 1960.
OMB Circular No. A-76 was issued in 1966. The Circular was
previously revised in 1967, 1979, and 1983. The Supplement
(Revised Supplemental Handbook) was previously revised in
March 1996 (Transmittal Memorandum 15).
5. Policy. It is the policy of the United States Government
to:
a. Achieve Economy and Enhance Productivity.
Competition enhances quality, economy, and productivity.
Whenever commercial sector performance of a Government
operated commercial activity is permissible, in accordance with
this Circular and its Supplement, comparison of the cost of
contracting and the cost of in-house performance shall be
performed to determine who will do the work. When conducting
cost comparisons, agencies must ensure that all costs are
considered and that these costs are realistic and fair.
b. Retain Governmental Functions In-House. Certain
functions are inherently Governmental in nature, being so
intimately related to the public interest as to mandate
performance only by Federal employees. These functions are
not in competition with the commercial sector. Therefore, these
functions shali be performed by Government employees.
c. Rely on the Commercial Sector. The Federal
Government shall rely on commercially available sources to
provide commercial products and services. In accordance with
the provisions of this Circular and its Supplement, the
Government shall not start or carry on any activity to provide a
commercial product or service if the product or service can be
procured more economically from a commercial source.
6. Definitions. For purposes of this Circular:
a. A commercial activity is one which is operated by a
Federal executive agency and which provides a product or
fone
56a
service that could be obtained from a commercial source.
Activities that meet the definition of an _ inherently
Governmental function provided below are not commercial
activities. A representative list of commercial activities is
provided in Attachment A. A commercial activity also may be
part of an organization or a type of work that is separable from
other functions or activities and is suitable for performance by
contract.
b. A conversion to contract is the changeover of an
activity from Government performance to performance under
contract by a commercial source.
c. A conversion to in-house is the changeover of an
activity from performance under contract to Government
performance.
d. A commercial source is a business or other non-
Federal activity located in the United States, its territories and
possessions, the District of Columbia or the Commonwealth of
Puerto Rico, which provides a commercial product or service.
e. An inherently Governmental function is a function
which is so intimately related to the public interest as to
mandate performance by Government employees. Consistent
with the definitions provided in the Federal Activities Inventory
Reform Act of 1998 and OFPP Policy Letter 92-1, these
functions include those activities which require either the
exercise of discretion in applying Government authority or the
use of value judgment in making decisions for the Government.
Services or products in support of inherently Governmental
functions, such as those listed in Attachment A, are commercial
activities and are normally subject to this Circular. Inherently
Governmental functions normally fall into two categories:
(1) The act of governing; i.e., the discretionary
exercise of Government authority. Examples include criminal
investigations, prosecutions and other judicial functions;
management of Government programs requiring value
57a
judgments, as in direction of the national defense; management
and direction of the Armed Services; activities performed
exclusively by military personnel who are subject to deployment
in a combat, combat support or combat service support role;
conduct of foreign relations; selection of program priorities;
direction of Federal employees; regulation of the use of space,
oceans, navigable rivers and other natural resources; direction of
intelligence and counter-intelligence operations; and regulation
of industry and commerce, including food and drugs.
(2) Monetary transactions and entitlements, such as
tax collection and revenue disbursements; control of the
Treasury accounts and money supply; and the administration of
public trusts.
f. A cost comparison is the process of developing an
estimate of the cost of Government performance of a
commercial activity and comparing it, in accordance with the
requirements of the Supplement, to the cost to the Government
for contract performance of the activity.
g. Directly affected parties are Federal employees and
their representative organizations and bidders or offerors on the
instant solicitation.
h. Interested parties for purposes of challenging the
contents of an agency’s Commercial Activities Inventory under
the Federal Activities Inventory Reform Act of 1998 are:
(1) A private sector source that (A) is an actual or
prospective offeror for any contract or other form of agreement
to perform the activity; and (B) has a direct economic interest in
performing the activity that would be adversely affected by a
determinatiou not to procure the performance of the activity
from a private sector source.
(2) A representative of any business or professional
association that includes within its membership private sector
sources referred to in (1) above.
58a
(3) An officer or employee of an organization within
an executive agency that is an actual or prospective offeror to
perform the activity.
(4) The head of any labor organization referred to in
section 7103(a) (4) of Title 5, United States Code that includes
within its membership officers or employees of an organization
referred to in (3) above.
7. Scope.
a. Unless otherwise provided by law, this Circular and
its Supplement shall apply to all executive agencies and shall
provide administrative direction to heads of agencies.
b. This Circular and its Supplement apply to printing
and binding only in those agencies or departments which are
exempted by law from the provisions of Title 44 of the U.S.
Code.
c. This Circular and its Supplement shall not:
(1) Be applicable when contrary to law, Executive
Orders, or any treaty or international agreement;
(2) Apply to inherently Governmental functions as
defined in paragraph 6.e.;
(3) Apply to the Department of Defense in times of a
declared war or military mobilization;
(4) Provide authority to enter into contracts;
(5) Authorize contracts which establish an employer-
employee relationship between the Government and contractor
employees. An employer-employee relationship involves close,
continual supervision of individual contractor employees by
Government employees, as distinguished from general oversight
of contractor operations. However, limited and necessary
interaction between Government employees and contractor
employees, particularly during the transition period of
conversion to contract, does not establish an employer-employee
relationship.
59a
(6) Beused to justify conversion to contract solely to
avoid personnel ceilings or salary limitations;
(7) Apply to the conduct of research and
development. However, severable in-house commercial
activities in support of research and development, such as those
listed in Attachment A, are normally subject to this Circular and
its Supplement; or
(8) Establish and shall not be construed to create any
substantive or procedural basis for anyone to challenge any
agency action or inaction on the basis that such action or
inaction was not in accordance with this Circular, except as
specifically set forth in Part 1, Chapter 3, paragraph K of the
Supplement, “Appeals of Cost Comparison Decisions” and as
set forth in Appendix 2, Paragraph G, consistent with Section 3
of the Federal Activities Inventory Reform Act of 1998.
d. The requirements of the Federal Activities Inventory
Reform Act of 1998 apply to the following executive agencies:
(1) an executive department named in 5 USC 101,
(2) amilitary department named in 5 USC 102, and
(3) an independent establishment as defined in
5 USC 104.
e. The requirements of the Federal Activities Inventory
Reform Act of 1998 do not apply to the following entities or
activities:
(1) the General Accounting Office,
(2) a Government corporation or a Government
controlled corporation as defined in 5 USC 103,
(3) anon-appropriated funds instrumentality if all of
its employees are referred to in 5 USC 2105(c), or
(4) Depot-level maintenance and repair of the
Department of Defense as defined in 10 USC 2460.
60a
8. Government Performance of a Commercial Activity.
Government performance of a commercial activity is authorized
under any of the following conditions:
a. No Satisfactory Commercial Source Available.
Either no commercial source is capable of providing the needed
product or service, or use of such a source would cause
unacceptable delay or disruption of an essential program.
Findings shall be supported as follows:
(1) If the finding is that no commercial source is
capable of providing the needed product or service, the efforts
made to find commercial sources must be documented and made
available to the public upon request. These efforts shall include,
in addition to consideration of preferential procurement
programs (see Part I, Chapter 1, paragraph C of the Supplement)
at least three notices describing the requirement in the
Commerce Business Daily over a 90-day period or, in cases of
bona fide urgency, two notices over a 30-day period.
Specifications and requirements in the solicitation shall not be
unduly restrictive and shall not exceed those required of in-
house Government personnel or operations.
(2) Ifthe finding is that a commercial source would
cause unacceptable delay or disruption of an agency program, a
written explanation, approved by the assistant secretary or
designee in paragraph 9.a. of the Circular, must show the
specific impact on an agency mission in terms of cost and
performance. Urgency alone is not adequate reason to continue
in-house operation of a commercial activity. Temporary
disruption resulting from conversion to contract is not sufficient
support for such a finding, nor is the possibility of a strike by
contract employees. If the commercial activity has ever been
performed by contract, an explanation of how the instant
circumstances differ must be documented. These decisions must
be made available to the public upon request.
6la
(3) Activities may not be justified for in-house
performance solely on the basis that the activity involves or
supports a classified program or the activity is required to
perform an agency's basic mission.
b. National Defense.
(1) The Secretary of Defense shall establish criteria
for determining when Government performance of a
commercial activity is required for national defense reasons.
Such criteria shall be furnished to OMB, upon request.
(2) Only the Secretary of Defense or his designee has
the authority to exempt commercial activities for national
defense reasons.
c. Patient Care. Commercial activities performed at
hospitals operated by the Government shall be retained in-house
if the agency head, in consultation with the agency's chief
medical director, determines that in-house performance would
be in the best interests of direct patient care.
d. Lower cost. Government performance of a
commercial activity is authorized if a cost comparison prepared
in accordance with the Supplement demonstrates that the
Government is operating or can operate the activity on an
ongoing basis at an estimated lower cost than a qualified
commercial source.
9. Action Requirements. To ensure that the provisions of this
Circular and its Supplement are followed, each agency head
shall:
a. Designate an official at the assistant secretary or
equivalent level and officials at a comparable level in major
component organizations to have responsibility for implement-
tation of this Circular and its Supplement within the agency.
b. Establish one or more offices as central points of
contact to carry out implementation. These offices shall have
62a
access to all documents and data pertinent to actions taken under
the Circular and its Supplement and will respond in a timely
manner to all requests concerning inventories, schedules,
reviews, results of cost comparisons and cost comparison data.
c. Be guided by Federal Acquisition Regulation (FAR)
Subpart 24.2 (Freedom of Information Act) in considering
requests for information.
d. Implement this Circular and its Supplement with a
minimum of internal instructions. Cost comparisons shall not
be delayed pending issuance of such instructions.
e. Ensure the reviews of all existing in-house
commercial activities are completed within a reasonable time in
accordance with the Federal Activities Inventory Reform Act of
1998 and the Supplement.
10. Annual Reporting Requirement. As required by the
Federal Activities Inventory Reform Act of 1998 and Appendix
2 of the Supplement, no later than June 30 of each year,
agencies shall submit to OMB a Commercial Activities
Inventory and any supplemental information requested by OMB.
After review and consultation by OMB, agencies will transmit a
copy of the Commercial Activities Inventory to Congress and
make the contents of the Inventory available to the public.
Agencies will follow the process provided in the Supplement for
interested parties to challenge (and appeal) the contents of the
inventory.
11. OMB Responsibility and Contact Point. All questions or
inquiries should be submitted to the Office of Management and
Budget, Room 6002 NEOB, Washington, DC 20503. Telephone
number (202) 395-6104, FAX (202) 395-7230.
12. Effective Date. This Circular and the changes to its
Supplement are effective immediately.
63a
APPENDIX G
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE
Civil Action No.
C90-0001-L(A)
DARYL A. DIEBOLD, et al,.
Plaintiffs,
Vv.
UNITED STATES OF AMERICA, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
This action is submitted to the Court on the motions of the
defendants to dismiss, on motions to amend the complaint,
and on motions to intervene.' Before ruling, the Court will
briefly relate the procedural history of this case.
The mess halls at Kentucky’s Fort Knox were previously
staffed by civilian employees of the United States. In accord-
ance with statutory and regulatory directive, Fort Knox
conducted a cost comparison to determine whether it would
be more economical to contract with a private entity to,
perform the food service activities. In 1988, despite issues
having been raised as to certain figures, the United States
entered into a contract with the defendant Colbar, Inc. for
operating the Fort Knox mess halls,”
Plaintiffs were civilian employees working in the Fort
Knox food service operations. After Colbar took over the
' Defendants’ motion to stay proceedings is moot.
? A full recitation of the facts appears in Diebold v. United States, 947
F.2d 878 (6th Cir. 1991).
64a
operations, each plaintiff (and proposed intervenor) either lost
employment altogether or suffered a loss in income. Plaintiffs
filed this action in 1990 alleging that the Army miscalculated
the comparative cost of in-house versus outside operations of
the dining halls, thereby violating statutes and regulations
governing the agency’s decision to contract with a private
company.
This Court held in 1990 that it lacked subject matter
jurisdiction because the “contracting out” decision was
committed to agency discretion. Thus, because this Court
determined that the complaint failed to state a claim upon
which relief could be granted, we did not reach the question
of the standing of the plaintiffs to pursue the claim.
The United States Court of Appeals for the Sixth Circuit
reversed. Diebold v. United States, 947 F.2d 878 (6th Cir.
1991). As this Court had not reached the issue of standing,
the appellate court did not address that question, but
remanded for trial court consideration. The issue has now
been fully briefed and is squarely presented for decision.
Despite the argumen
This text is long and has been trimmed here. Open the source document for the complete record.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.