Competitive sourcing

Does competitive sourcing ever have an "off" year? The rules of competitive sourcing remain in constant flux because of the high stakes in jobs and dollars, and the broad initiative for practitioners in this field. The process of conducting public-private cost-comparison studies under Office of Management and Budget (OMB) Circular A-76 (1) and the Revised Supplemental Handbook (RSH) (2) is certainly as much a political issue as a legal issue. Competitive sourcing continues to be a topic of important concern to many contract attorneys.

The Never-Ending Tale of Jones-Hill Joint Venture

Some cost-comparison studies never seem to end; instead, they go on like bad daytime soaps, providing an unending stream of drama and suspense, but no finality. One such example is Jones/Hill Joint Venture. At the time of writing of last year's Year in Review, (3) the GAO had decided the issue of Jones/ Hill's entitlement to protest costs, including attorneys' fees, for an earlier protest in which the agency took corrective action. (4) The Navy then reviewed its original determination that it would be more economical to perform its own base operations, real property maintenance, and operations services for the Naval Air Station, Lemoore (NASL), California, using government employees rather than contracting with Jones/Hill for these services. (5) When the agency's review ended with the same cost-comparison determination, the Jones/Hill Joint Venture protest returned with a vengeance. (6)

Jones/Hill's protest raised several allegations, including some that it had raised in its original protest action. (7) The critical and novel issue, however, was Jones/Hill's contention that the agency's use of both a private-sector consultant and a Navy employee to prepare the solicitation s performance work statement (PWS) and to draft the in-house proposal constituted an impermissible conflict of interest. This occupied the bulk of the GAO's decision.

As one of the first steps in the NASL cost-comparison study process, the Navy organized a commercial activities (CA) team to plan the study. (8) Included among the CA team's functions was the development of the PWS, which represented the agency performance requirements that it required both the private sector and in-house proposals to meet. Several CA team members--including the CA team leader and employees of the consultant contractor--subsequently became members of the most efficient organization (MEO) team responsible for developing the in-house management plan. In its protest, Jones/Hill argued that the Navy employee and private-sector consultants who served in these multiple roles had a conflict of interest which violated applicable standards of conduct and gave the MEO team an unfair competitive advantage. (9) The GAO agreed. (10)

In setting out the standards of conduct that apply to government business, the GAO noted that the Federal Acquisition Regulation (FAR) requires agencies to conduct such business in a manner above reproach. (11) While the FAR does not provide specific guidance regarding situations where job positions or relationships with particular government organizations create conflicts of interest for government employees, the GAO noted that FAR subpart 9.5 addressed analogous situations involving contractor organizations. (12) Here, the FAR broadly categorizes organizational conflicts of interest into three groups: "unequal access to information" cases, (13) "biased ground rules" cases, (14) and "impaired objectivity" cases. (15) The GAO found that, "given the use of the competitive system in Circular A-76 studies and the MEO team's status as essentially a competitor in the study," the FAR provisions at subpart 9.5 served as useful guidance in determining the presence of conflicts of interest. (16)

Because the facts were not in dispute, the GAO also determined that the record was "consistent with the circumstances attendant to both 'unequal access to information' and 'biased ground rules' conflicts of interest." (17) Finding no reason to treat government employee conflicts of interest differently than contractor-employee conflicts of interest, the GAO concluded that "the appearance of impropriety resulting from the conflicts of interest here has tainted the integrity of the process," (18) and sustained this part of Jones/Hill's protest. Regarding the resulting remedy, the GAO recommended that the agency essentially start over--that it should issue a new PWS, drafted by individuals who would not subsequently draft the in-house management plan; prepare a new in-house management plan; solicit new proposals for private-sector offerors; and conduct a new cost comparison. (19)

Jones/Hill Joint Venture--One More Time?

The impact of the Jones/Hill decision, including the GAO's recommendation for an appropriate remedy, stood to affect not only the Navy's cost-comparison study at NASL, but as many as 160 ongoing agency competitive sourcing studies. The Navy, therefore, requested reconsideration of the GAO's decision to the extent that it concluded that a conflict of interest existed. (20) The GAO affirmed its decision, but it modified the recommended corrective action to apply the conflict of interest portion of the decision prospectively only. (21)

Without disputing the underlying facts--that a government employee and consultant-contractor employees developed both the PWS and the in-house management plan--the agency set forth several arguments challenging the GAO's conclusion. The Navy first challenged the GAO's characterization of the MEO team as "essentially a competitor." (22) The GAO found that, notwithstanding the fact that the MEO team was not legally an offeror, the MEO team members functioned, and viewed themselves, as competitors. (23) The Navy also argued that in-house teams were still factually distinguishable from private-sector competitors, leaving an adequate basis "to exempt MEO teams from application of the conflict of interest rules generally applicable to private-sector competitors." (24) The GAO did not dispute the Navy's factual observations, but it rejected the agency's conclusion that the nature and status of the MEO team justified exempting that team from the conflict of interest limitations generally applied to private-sector competitors. (25)

The Navy also challenged the GAO's application of FAR subpart 9.5 to the OMB Circular A-76 process. In response, the GAO stated that in complying with the obligatory conflict of interest requirements of FAR subpart 3.1, "it is not reasonable for an agency to ignore the instruction and guidance provided by FAR subpart 9.5." (26) The GAO also rejected the Navy's argument that Jones/Hill had failed to demonstrate any prejudice, holding that "where a protest establishes facts that constitute a conflict of interest or apparent conflict of interest, [the GAO] will presume prejudice unless the record affirmatively demonstrates its absence." (27)

Lastly, the GAO examined the agency's request that the GAO modify the recommended corrective action. The GAO analyzed which parties its original corrective action would help or harm, and concluded,

   [W]e believe that the integrity of the decision-making process in
   A-76 cost studies should be above reproach. Nonetheless, just as
   our decision reflected the reality that A-76 studies are
   essentially public/private competitions, we believe it important to
   recognize the practical realities supporting the agencies' request
   for prospective application of the conflict of interest portion of
   our decision. The fact is that disruption or cancellation of large
   numbers of studies will not serve the private-sector firms who
   would presumably be disadvantaged by the conflicts, nor the
   agencies endeavoring to conduct the studies, nor the viability of
   the A-76 process overall. (28)

Accordingly, the GAO modified its recommended corrective action so that it applied prospectively only. (29) It will not be necessary, therefore, for the Navy or any other federal agency to unravel all ongoing cost-comparison studies when the same employees prepared both the PWS and the in-house proposal. (30)

A New Twist in A-76 Cost Comparisons

In Sodexho Management Inc., (31) the GAO confronted another novel issue for the competitive sourcing process--the reliance on nonappropriated fund instrumentality (NAFI) employees as part of an MEO's proposed staffing solution. (32)

The Navy began a commercial activity study for the performance of various community support services at the Pensacola Naval Regional Complex in Pensacola, Florida. (33) The agency received proposals from two private sector offerors, and determined that Sodexho's proposal represented the best value to the government. As part of the commercial activity study, a cost-analysis team (MEO team) of Navy personnel and contractor personnel developed the government's in-house management plan and MEO. In the subsequent cost comparison, the agency determined that Sodexho's adjusted price for performing the required services was $82,641,457, while the adjusted in-house plan's cost would be $56,460,369, a difference of more than $26 million. (34) This resulted in a tentative decision to perform the requirements in-house. Sodexho protested to the GAO, arguing that the Navy's decision process was flawed and unfair because the cost comparison was based on an MEO that proposed to perform the PWS requirements using NAFI employees for eighty-two percent of its in-house workforce. (35)

Contrary to the protester's arguments, the GAO first determined that neither federal law nor the RSH necessarily barred the use of NAFI employees in an MEO. (36) The GAO thus did not find that the inclusion of NAFI employees in the MEO violated the procedures of OMB Circular A-76. (37) The GAO concluded, however, that the wholesale use of NAFI employees in the circumstances of this case resulted in an unfair competition. "In conducting an A-76 competition, as in any competition for a federal contract, an agency must provide private offerors with sufficient information to allow an intelligent competition off an equal basis." (38)

Here, neither the A-76 guidance nor the solicitation permitted Sodexho to reasonably anticipate the extensive use of NAFI employees. Accordingly, the GAO sustained the protest, holding that "fundamental fairness" dictated that the Navy should have provided commercial offerors adequate notice of the intended heavy reliance on the use of NAFI employees. Because the GAO did not find it unlawful for the Navy to rely so heavily on NAFI employees, and because Sodexho indicated that it would not have competed if the Navy had given it notice in this regard, the GAO had no basis to conclude that Sodexho would participate in a recompetition. As a result, the GAO recommended the Navy merely reimburse Sodexho for its bid proposal and protest costs. (39)

Government Employees and Judicial Standing--Again

In last year's Year in Review, the authors questioned whether the CAFC had finally ended the debate on whether government employees have standing to challenge OMB Circular A-76 decisions. (40) As events of the past year have shown, this is an issue that will not go away.

Last year, in American Federation of Government Employees, Local 1482 v. United States, (41) the Federal Circuit affirmed the COFC decision that federal employees are not interested parties and do not have standing to challenge cost-comparison studies or the contract award decisions that resulting from them. (42) The employees and unions, having nothing to lose but their jobs, filed a petition for writ of certiorari with the Supreme Court. On 22 January 2002, the Supreme Court denied the petition without comment. (43)

While the Supreme Court decision closes the door on unions' and federal employees' attempts to challenge cost-comparison studies in court, other events of the past year indicate that legislation may result in same changes these parties sought in court. One congressman's attempt to sue personally on behalf of federal employees adversely affected by a cost-comparison study may be admirable (as well as the ultimate example of constituent services), but it did not prove successful. In Kucinich v. Defense Finance & Accounting Service, (44) Rep. Dennis J. Kucinich (D--Ohio) sued to challenge a Defense Finance & Accounting Service (DFAS) cost-comparison decision under OMB Circular A-76. Kucinich alleged that DFAS's cost comparison violated OMB Circular A-76 and the Federal Activities Inventory Reform (FAIR) Act, (45) as well as the constitutional rights of due process, equal protection, and free speech of the affected federal employees, who unlike private sector offerors, were prohibited from seeking judicial review of the cost-comparison decision. (46)

Applying the Supreme Court precedent in Raines v. Byrd, (47) the district court determined that Kucinich was bringing the suit not to remedy the deprivation of a personal entitlement, but as a representative of his constituents (i.e., to vindicate an institutional injury). (48) As such, the court determined that Kucinich had "no more standing to sue than does any other taxpayer in the affected region," and his only remedy was "the one he possesses by virtue of his position as an elected official, that is, to convince his colleagues to amend the statutes regulating government contracts and forbidding federal court challenges by affected employees and unions" (49) Having concluded that Kucinich lacked standing, the court dismissed the case sua sponte for lack of jurisdiction. (50)

Sometimes You Can't Please Anyone

In a number of cost-comparison studies, in response to the myriad of issues raised, the agencies decided that the best thing to do was to cancel the solicitations. While "throwing in the towel" and starting over may have been prudent, such actions did not necessarily make everyone happy, and often resulted in protests.

In IT Corp., (51) the GAO faced a protest objecting to the cancellation of a solicitation after the agency announced that it intended to award to the protester. The Navy had issued the solicitation as part of a cost-comparison study, under OMB Circular A-76, for base operation support services at the Marine Corps Base, Camp Pendleton, California. After selecting IT as the best value private-sector offeror, and determining that its proposal represented a significant cost savings in comparison to the government's in-house management plan for an MEO, the Navy awarded to IT. This decision resulted in the protest by another private-sector offeror, Del-Jen, Inc., which objected to the agency evaluation of proposals. In response to Del-Jen's protest, the Navy took corrective action and cancelled the solicitation. IT then protested the solicitation cancellation to GAO. (52)

The GAO held that in a negotiated procurement, an agency has broad authority to decide whether to cancel a solicitation; there need only be a reasonable basis for the cancellation. This authority extends to the cancellation of solicitations used to conduct A-76 cost comparisons. So long as an agency has a reasonable basis to exercise this authority, it may cancel a solicitation regardless of when the information precipitating the cancellation surfaces. (53) Here, the GAO agreed with the Navy that the solicitation was deficient because it did not adequately identify all of the required work and contained incomplete and misleading historical workload information. These defects resulted in an unfair competition and even caused at least one potential offeror not to submit a proposal. The GAO thus concluded that the Navy's decision to cancel the solicitation and resolicit proposals was reasonable. (54)

In Imaging Systems Technology (IST), (55) the GAO revisited a protest challenging an agency cost-comparison decision as violative of federal statute; this time, the GAO denied the protest. As last year's Year in Review reported, (56) the Air Force had originally issued a solicitation in 1999 to acquire logistics support services for the programmable indicator data processor (PIDP) air traffic control and landing system. IST protested after the Air Force cancelled the original RFP, after deciding to assign the PIDP support function work to government employees as "other duties as assigned" (57) The GAO found that because the Air Force had failed to comply with 10 U.S.C. [section] 2462, (58) the agency's decision to cancel the solicitation lacked a reasonable basis. (59) The Air Force then prepared a second solicitation in 2001 that reflected the agency's revised views regarding its requirements. When the Air Force again determined that the cost of in-house performance would be lower than contractor performance, IST again protested. (60)

IST asserted that unlike its proposal, the in-house proposal planned performance using only technicians and did not include engineers. The GAO determined, however, that there was nothing on the face of the revised solicitation expressly stating that engineer or engineering services were required, and the personnel skill level descriptions and other changes from an earlier solicitation suggested that the solicitation did not require engineering services. Having concluded that IST had misread the solicitation, and had thus proposed higher-cost staffing than was necessary to perform the work, the GAO found no basis to sustain the protest. (61)

The Commercial Activities Panel Report

Last year's Year in Review reported that Section 832 of the FY 2001 National Defense Authorization Act directed the Comptroller General to convene a panel of experts to study federal outsourcing policy and report to Congress by 1 May 2002, with recommendations for legislative and policy changes. (62) On 30 April 2002, the Commercial Activities Panel met its deadline and issued its lengthy and long-awaited report, Improving the Sourcing Decisions of the Government. (63)

After establishing its organizational framework, (64) the panel unanimously developed a set of ten principles that it believed should guide competitive sourcing policy. (65) Using these principles, the Panel then assessed the strengths and weaknesses of the current A-76 process and subsequently adopted specific recommendations for improvement. (66) The Panel found that the current A-76 process "may no longer be an effective tool for conducting competitions to identify the most efficient and effective service provider." (67) By contrast, the Panel observed that for private-private competitions, the government already had "an established mechanism that has been shown to work as a means to identify high-value service providers: the negotiated procurement process of the Federal Acquisition Regulation." (68)

Thus, instead of attempting to revise the current A-76 process dramatically, the panel recommended replacing A-76 with a FAR-based approach, modified as necessary to accommodate public-private competitions. Under such an "integrated competition process," (69) the public sector would have the same basic rights and responsibilities as the private sector, including equivalent evaluation criteria, accountability for performance, and the right to protest. The public sector would also be able to submit proposals in response to a broad range of government solicitations, including new work and work that agencies currently contract to the private sector. (70)

Because implementation and development of an integrated FAR-type process would require some time, and because current competitive sourcing studies are expected to continue, the panel also recommended that "some modifications to the existing [A-76] process can and should be made." (71) These changes would, among other things, strengthen conflict of interest rules, improve auditing and cost accounting, and provide for the establishment of "binding performance agreements" for successful MEOs. (72) Interestingly, the establishment of an MEO binding performance agreement, though not a contract, may constitute an "offer" in some cases, thereby giving its "offeror" legal standing under the CICA. Because the panel specifically found that federal employees should have standing to file pro tests against the conduct of public-private competitions, (73) the existence of binding performance agreements appears to be an expedient means--that is, one that does not require legislation--to achieve this end. Lieutenant Colonel Chiarella and Major Huyser.

(1.) U.S. OFFICE OF MGMT. & BUDGET, CIRCULAR NO. A-76, PERFORMANCE OF COMMERCIAL ACTIVITIES (1999) [hereinafter OMB A-76].

(2.) U.S. OFFICE OF MGMT. & BUDGET, CIRCULAR A-76, REVISED SUPPLEMENTAL HANDBOOK, PERFORMANCE OF COMMERCIAL ACTIVITIES (1996) [hereinafter RSH].

(3.) See Major John J. Siemietkowski et al., Contract and Fiscal Law Developments of 2001--The Year in Review, ARMY LAW., Jan./Feb. 2002, at 80 [hereinafter 2001 Year in Review].

(4.) Jones/Hill Joint Venture--Costs, Comp. Gen. B-286194.3, Mar. 27, 2001, 2001 CPD [paragraph] 62. As part of its conclusion that Jones/Hill's initial protest was clearly meritorious, the GAO explained how agencies should conduct a competitive sourcing studies properly, at great length. id at 9-13.

(5.) Id. at 7. The agency had agreed that its corrective action would examine various strengths in Jones/Hill's proposal that had been identified but not considered, and that it would adjust its in-house plan as necessary to account for those strengths "that predict a higher quality performance (as opposed to 'strengths' such as a well-written proposal)." Id. at 7 (quoting the Agency's Post-ADR Comments, at 10). The agency also stated that it would adjust the in-house management plan as necessary and prepare a detailed written justification of its conclusion. Id.

(6.) Comp. Gen. B-286194.4, B-286194.5, B-286194.6, Dec. 5, 2001, 2001 CPD [paragraph] 194.

(7.) Id. at 6. Jones/Hill argued that: (1) the agency had unreasonably determined that the MEO could perform the work required with the number of personnel proposed in the in-house plan; (2) that the in-house management plan provided for the performance of certain tasks by individuals who were not part of the MEO; and (3) that the agency's determination that the MEO and Jones/Hill's proposal offered the same level of performance and performance quality was unreasonable. Id. The GAO decision sustained Jones/Hill's protest on these grounds. Id. at 18-19, 21.

(8.) Id. at 7. The CA team was comprised of Navy personnel assisted by a private consultant, E.L. Hamm, Inc. Id.

(9.) Id. at 8. The CA team leader, who participated in drafting and developing the PWS, became the MEO team leader. E.L. Hamm, considered a "co-producer" and "active coparticipant in the preparation of the PWS," became a "full participant" in the MEO team's development of the in-house proposal. Id.

(10.) Id. at 18-19.

(11.) More specifically, the FAR provides:

   Government business shall be conducted in a manner above reproach
   and, except as authorized by statute or regulation, with complete
   impartiality and with preferential treatment for none. Transactions
   relating to the expenditure of public funds require the highest
   degree of public trust and an impeccable standard of conduct. The
   general rule is to avoid strictly any conflict of interest or even
   the appearance of a conflict of interest in Government-contractor
   relationships.

GENERAL SERVS. ADMIN. ET AL., FEDERAL ACQUISITIONS REG. 3.101-1 (July 2002) [hereinafter FAR].

(12.) Jones/Hill Joint Venture--Costs, Comp. Gen. B-286194.3, Mar. 27, 2001, 2001 CPD [paragraph] 62, at 9 (citing DZS/Baker LLC; Morrison Knudsen Corp., Comp. Gen. B-281224, Jan. 12, 1999, 99-1 CPD [paragraph] 19, at 4; Battelle Memorial Inst., Comp. Gen. B-278673, Feb. 27, 1998, 98-1 CPD [paragraph] 107, at 6-7).

(13.) Id. at 10. Such cases include situations in which a firm has access to non-public information as part of its performance of a government contract, and where that information may provide the firm an unfair competitive advantage in a later competition for a government contract. Id. (citing FAR, supra note 11, at 9.505-4; Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., Comp. Gen. B-254397.15, July 27, 1995, 95-2 CPD [paragraph] 129, at 12).

(14.) Id. Such cases include situations in which a firm, as part of its performance of a government contract, has somehow set the ground rules for the competition for another government contract, for example, by writing the statement of work or the specifications. Id. (citing FAR, supra note 11, at 9.505-1, 2; Aetna Gov't Health Plans, 95-2 CPD [paragraph] 129, at 13).

(15.) Id. Such cases include situations where a firm's work under one government contract could require it to evaluate itself or a related entity, either through an assessment of performance under another contract or an evaluation of proposals. Id. (citing FAR, supra note 11, at 9.505-3; Aetna Gov't Health Plans, 95-2 CPD [paragraph] 129, at 13).

(16.) Id. at 11.

(17.) Id. at 10.

(18.) Id. at 14.

(19.) Id. at. at 21-22.

(20.) Department of the Navy--Reconsideration, Comp. Gen. B-286194.7, May 29, 2002, 2002 CPD [paragraph] 76. The Navy did not challenge the other bases upon which the GAO had sustained the protest. Id. at 4-5

(21.) Id. at 12.

(22.) Id. at 4.

(23.) Id. at 4-5.

(24.) Id. at 6.

(25.) Id. at 6-7.

(26.) Id. at 9.

(27.) Id. at 12.

(28.) Id. at 13. The Office of the Under Secretary of Defense, the Army, and the Defense Logistics Agency also joined with the Navy in asserting that the GAO's recommended corrective action would have a serious negative impact on multiple ongoing A-76 studies. Id.

(29.) Id. at 14 n.18. The GAO established that the effective date for the prospective application of the Jones/Hill decision was the date the redacted version of the decision was released to the public--10 December 2001. Id.

(30.) Id. at 14-15. The GAO decision also provides agencies with detailed guidance for its implementation with regard to ongoing cost comparison studies. Id.

(31.) Comp. Gen. B-289605.2, July 5, 2002, 2002 CPD [paragraph] 111.

(32.) Id. at 7. "NAFIs are not federal agencies or government corporations, and they are not typical private or commercial enterprises, although they may operate on a for-profit basis. Instead, they are 'a special breed of federal instrumentality which cannot be fully analogized to the typical federal agency supported by federal funds.'" Id. (quoting Cosme Nieves v. Deshler, 786 F.2d 445, 448 (1st Cir. 1986)). See also GENERAL ACCT. OFF., PRINCIPLES OF APPROPRIATIONS LAW VOL. IV, GAO-01-179SP, ch. 17, pt. C (2001) (examining the history and legal status of NAFIs in detail). Employees of NAFIs receive lower wage rates and benefits levels than federal employees within the civil service. Sodexho Mgmt. Inc., 2002 CPD [paragraph] 111, at 11.

(33.) Sodexho Mgmt. Inc., 2002 CPD [paragraph] 111, at 2. The solicitation divided the required support services into separate "annexes," including Navy family housing, bachelor housing, morale, welfare, and recreation (MWR) activities, and public affairs functions. Id.

(34.) Id. at 5. An administrative appeal by Sodexho resulted in a revised cost comparison; the new comparison study found that the difference between contract performance and in-house performance was $24,653,748. Id.

(35.) Id. at 26-28. The GAO considered and rejected Sodexho's other protest issues--that the MEO failed to meet numerous PWS requirements, that the independent review official's certification of the MEO was inadequately documented, and that the agency improperly failed to adjust the in-house offer to a level of performance and performance quality equal to that offered by Sodexho. Id.

(36.) Id. at 15.

   [W]hile we agree that the RSH's procedures and standard cost
   factors were designed for civil service employees under the GS
   [general schedule] and FWS [federal wage system] wage systems, we
   cannot conclude that the RSH's specification of these two wage
   systems, and no others, must be read to prohibit the use of NAFI
   employees in an MEO.

Id.

(37.) Id. at 17. The GAO did note, however, that the reliance on NAFI employees "raises significant policy concerns, which are to be resolved, not by our Office's bid protest function, but by the executive branch, and by OMB, in particular, as the agency responsible for the [A-76] Circular." Id.

(38.) Id. at 18 (citing Ameriko Maint. Co., Comp. Gen. B-243728, Aug. 23, 1991, 91-2 CPD [paragraph] 191, at 3; Draeger Safety, Inc., Comp. Gen. B-285366, B-285366.2, Aug. 23, 2000, 2000 CPD [paragraph] 139, at 4).

(39.) Id. at 29. One could argue that the GAO reached the wrong result in this protest. Sodexho clearly turns not on the use of NAFI employees per se--which the GAO did not find improper--but instead on the degree of reliance on NAFI employees without notifying commercial offerors of this first, which the GAO found unfair. What the GAO failed to take into account, however, was who was relying primarily upon NAFI employees and who had an obligation to provide offerors with sufficient information to allow an intelligent competition on an equal basis. Because the two were not the same entity here, the argument that the agency failed in its duty to provide Sodexho with adequate information is questionable. At the beginning of the decision, the GAO recognized that it was the MEO team that developed the in-house proposal and that it was the MEO's use of NAFI employees that Sodexho was challenging. Id. at 4, 6. The GAO blurred this critical distinction, however, when it found that it was the Navy's wholesale use of NAFI employees that was unfair, and that it was the Navy's intent to use NAFI employees for the great majority of the in-house work force. Id. at 18, 20-21. Because it was the MEO team that decided on the degree of reliance on NAFI employees for the in-house proposal, and because the GAO has determined that the MEO team is "essentially a competitor" in the competitive sourcing process, it is uncertain why the agency had any obligation to disclose this information to private sector offerors. Surprisingly, the Navy--the very agency affected by Jones/Hill and the decision that the MEO team was "essentially a competitor"--did not present this argument to the GAO. Because the GAO determined that the use of NAFI employees was not improper, the MEO team's decision to rely on such employees was essentially a fair competitive advantage of the in-house offeror. OMB Circular A-76 requires that the agency "provide a level playing field between public and private offerors to a competition." Id. at 18 (quoting RSH, supra note 2, at iii). Neither OMB Circular A-76 nor any other procurement statute or regulation requires or permits the agency to level the fair competitive advantages of the various offerors to a competition. See OMB A-76, supra note 1. The agency did not deprive Sodexho of the ability to make an intelligent business judgment about whether to compete; a fellow competitor, albeit a public one, deprived Sodexho the ability to make an error-proof business judgment about whether to compete. It is difficult to understand the legal and equitable rationales for sustaining this protest.

(40.) 2001 Year in Review, supra note 3, at 82.

(41.) 258 F.3d 1294 (Fed. Cir. 2001).

(42.) Id. at 1299-1302. Although it affirmed the COFC's decision, the CAFC did so on different grounds. Unlike the trial court, the federal circuit applied the Competition in Contracting Act (CICA) jurisdictional standard, and found that neither the union nor the federal employees were actual or prospective offerors or bidders. Id. Similarly, the GAO has applied the same CICA jurisdictional standard and also determined that federal employees and their unions lack standing to protest adverse cost comparison study determinations. Am. Fed'n of Gov't Employees, Comp. Gen. B-282904.2, June 7, 2000, 2000 CPD [paragraph] 87.

(43.) Am. Fed'n of Gov't Employees v. United States, 258 F.3d 1294 (Fed. Cir. 2001), cert. denied; 534 U.S. 1113 (2002).

(44). 183 E Supp. 2d 1005 (N.D. Ohio 2002).

(45.) 10 U.S.C. [section] 2464 (2000); 31 U.S.C. [section] 501 (2000).

(46.) Kucinich, 183 F. Supp. 2d at 1006-07.

(47.) 521 U.S. 811,819-20 (1997).

(48.) Kucinich, 183 F. Supp. 2d at 1011. The court succinctly noted the fundamental concern with representational capacity standing: "Kucinich, a member of Congress, asks this Court to invalidate the actions of an agency duly given the authority to take such actions by Kucinich's peers in Congress and to declare unconstitutional certain procedural provisions that forbid the employees or their union from bringing a suit like this themselves." Id.

(49.) Id. at 1011-12. While the court expressed sympathy for Kucinich's claim that federal employees had fewer available remedies than similarly situated private-sector offerors, the court stated that "unfortunately, it is not this Court whom Kucinich must persuade, but his peers in Congress. Congress and duly appointed administrative bodies have determined that aggrieved employees cannot bring their claims to this Court, and the Constitution does not allow Representative Kucinich to raise the claims for them." Id. at 1012.

(50.) Id. at 1012.

(51.) Comp. Gen. B-289517.3, July 10, 2002, 2002 CPD [paragraph] 123.

(52.) Id. at 2. Del-Jen cited the unusually low price of IT's proposal as evidence for its claim that the agency's technical and price evaluations were inadequate and unreasonable. The proposed corrective action included a review of the evaluations, as well as a review of the adequacy of the PWS included within the solicitation. The agency's corrective action rendered Del-Jen's protest academic. Id.

(53.) Id. at 3 (citing Rice Servs., Ltd., Comp. Gen. B-284997.5, Mar. 12, 2002, 2002 CPD [paragraph] 59, at 4; Lackland 21st Century Servs. Consol., Comp. Gen. B-285938.7, B-285938.8, Dec. 4, 2001, 2001 CPD [paragraph] 197, at 5).

(54.) Id. at 4.

(55.) Comp. Gen. B-289262, Feb. 1, 2002, 2002 CPD [paragraph] 26.

(56.) 2001 Year in Review, supra note 3, at 79.

(57.) Imaging Sys. Tech., Comp. Gen. B-283817.3, Dec. 19, 2000, 2001 CPD [paragraph] 2.

(58.) Id. at 6-7; see 10 U.S.C. [section] 2462 (2000). The statute requires that Department of Defense (DOD) agencies acquire goods or services from private sector offerors when doing so is cheaper than in-house government performance. In making such a cost comparison determination, the statute--similar to OMB Circular A-76--also requires agencies to ensure that all costs considered are realistic and fair. Id.

(59.) Imaging Sys. Tech., 2001 CPD [paragraph] 2, at 4-7.

(60.) Id. at 26. The revised RFP contemplated that "either the award of a contract to the lowest priced, technically acceptable offeror or, if the government cost estimate showed that the requirements could be performed in-house for a lower cost, cancellation of the solicitation." Id. at 2 (citing 10 U.S.C. [section] 2562).

(61.) Id. at 5.

(62.) 2001 Year in Review, supra note 3, at 84 (citing Pub. L. No. 106-398, [section] 832, 114 Stat. 1654, 1654A-221 (2000)). "Panel membership includes a wide spectrum of organizations affected by outsourcing policy, including representatives from federal employee labor unions, government contractors, the DOD and the OMB, as well as four at-large members." Id.

(63.) GEN. ACCT. OFF., COMMERCIAL ACTIVITIES PANEL, IMPROVING THE SOURCING DECISIONS OF THE GOVERNMENT (2002).

(64.) Id. at 32. At its organizational meeting, the panel

   adopted a mission statement that stressed the need to balance the
   diverse and frequently divergent interests of the various
   constituencies represented. The mission of the Panel was to devise
   a set of recommendations that would improve the current
   [competitive] sourcing framework and process so that they reflect
   a balance among taxpayer interests, government needs, employee
   rights, and contractor concerns.

Id.

(65.) The Panel's competitive sourcing principles were stated as follows:

1. Support agency missions, goals, and objectives.

2. Be consistent with human capital practices designed to attract, motivate, retain, and reward a high-performing federal work force.

3. Recognize that inherently governmental and certain other functions should be performed by federal workers.

4. Create incentives and processes to foster high-performing, efficient and effective organizations throughout the federal government.

5. Be based on a clear, transparent, and consistently applied process.

6. Avoid arbitrary full-time equivalent (FTE) or other arbitrary numerical goals.

7. Establish a process that, for activities that may be performed by either the public or the private sector, would permit public and private sources to participate in competitions for work currently performed in-house, work currently contracted to the private sector, and new work, consistent with these guiding principles.

8. Ensure that, when competitions are held, they are conducted as fairly, effectively, and efficiently as possible.

9. Ensure that competitions involve a process that considers both quality and cost factors.

10. Provide for accountability in connection with all sourcing decisions.

Id. at 33-36.

(66.) Id. at 5, 49. The panel adopted the recommendations by a two-thirds super-majority. Id.

(67.) Id. at 10. Noting that the original purpose of the A-76 process was to determine the "low-cost provider of a defined set of services," the panel observed that the federal procurement system has changed in the decades since the OMB first issued Circular A-76 and has recognized that a "cost-only focus does not necessarily deliver the best quality or performance for the government." Id. The panel further stated that the A-76 process "has not worked well as the basis for competitions that seek to identify the best provider in terms of quality, innovation, flexibility, and reliability," and has become "an anomaly in the federal procurement process" and inconsistent with the panel's recommended principles. Id.

(68.) Id.

(69.) Id. "The Panel believes that in order to promote a more level playing field on which to conduct public-private competitions, the government needs to shift, as rapidly as possible, to a FAR-type process under which all parties compete under the same set of rules." Id.

(70.) Id. at 11.

(71.) Id.

(72.) Id. at 11, 52.

(73.) Id. at 9. ("Fairness requires that competing parties, both public and private, or their representatives, receive comparable treatment throughout the competition regarding, for example, ... legal standing to challenge the way a competition has been conducted at all appropriate forums, including the General Accounting Office (GAO) and the United States Court of Federal Claims.").

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