[Federal Register Volume 69, Number 243 (Monday, December 20, 2004)]
[Proposed Rules]
[Pages 75878-75880]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-27615]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 69, No. 243 / Monday, December 20, 2004 / 
Proposed Rules  

[[Page 75878]]



GOVERNMENT ACCOUNTABILITY OFFICE

4 CFR Part 21


Government Accountability Office, Administrative Practice and 
Procedure, Bid Protest Regulations, Government Contracts

AGENCY: Government Accountability Office.\1\

ACTION: Proposed rule.

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SUMMARY: The Government Accountability Office (GAO) is proposing to 
amend its Bid Protest Regulations, promulgated in accordance with the 
Competition in Contracting Act of 1984 (CICA), 31 U.S.C. 3551-3556, to 
implement the requirements in the Ronald W. Reagan National Defense 
Authorization Act for Fiscal Year 2005, Pub. L. 108-375, 118 Stat. 
1811, enacted on October 28, 2004. The proposed amendments to GAO's Bid 
Protest Regulations implement the legislation's provisions related to 
the bid protest process, where a public-private competition has been 
conducted under Office of Management and Budget (OMB) Circular A-76, as 
revised on May 29, 2003, regarding an activity or function of a Federal 
agency performed by more than 65 full-time equivalent employees of the 
Federal agency. In this regard, the legislating grants designated 
representatives of an in-house competitor the status of an ``interested 
party'' to file a protest at GAO or the status of an ``intervenor'' to 
participate in a protest filed at GAO. In addition, consistent with the 
legislation, GAO is proposing to add a provision to its Bid Protest 
Regulations stating that GAO will not review the decision of an agency 
tender official to file a protest (or not to file a protest) in 
connection with a public-private competition. At this time, GAO 
believes that these proposed revisions are the only regulatory changes 
necessary to implement the statutory requirements expanding the 
definitions of an interested party and an intervenor in protests 
involving public-private competitions. GAO welcomes comments on these 
proposed revisions, as well as suggestions for changes to other areas 
of GAO's Bid Protest Regulations or the bid protest process at GAO 
relating to protests of public-private competitions conducted under OMB 
Circular A-76.
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    \1\ Effective July 7, 2004, the agency's legal name became the 
Government Accountability Office pursuant to Pub. L. 108-271, 118 
Stat. 811. GAO will amend title 4, chapter I of the CFR to reflect 
the name change.

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

ADDRESSES: Comments may be submitted by e-mail at [email protected], 
or by facsimile at (202) 512-9749. Due to delivery delays, submission 
by regular mail is discouraged. Comments may be sent by Federal Express 
or United Parcel Service addressed to: Michael R. Golden, Assistant 
General Counsel, Government Accountability Office, 441 G Street, NW., 
Washington, DC 20548. GAO intends to make all comments filed available 
to the public, including names and other identifying information. 
Information in a submission that the sender does not believe should be 
released should be clearly marked.

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

SUPPLEMENTARY INFORMATION: On June 13, 2003, GAO published a notice in 
the Federal Register, 68 FR 35411, which sought comments on a number of 
issued concerning the effect of OMB's revisions to Circular A-76 
(revised Circular), which governs how Federal agencies determine 
whether to transfer performance of commercial activities from the 
public to the private sector, or vice versa. Performance of Commercial 
Activities, 68 FR 32134 (May 29, 2003). These revisions make 
competitions involving in-house competitors more similar to private-
private competitions conducted under the Federal Acquisition Regulation 
(FAR) than has previously been the case with the competitive sourcing 
process. GAO specifically solicited comments regarding two key legal 
questions, namely, whether the revisions made to the Circular affect 
the standing of an in-house competitor to file a protest at GAO and, if 
so, who should have the representational capacity to file such a 
protest. The notice also solicited comments on other procedural issues 
raised by the Circular's revisions.
    In response to this notice, GAO received a total of 71 sets of 
comments: 1 letter from three members of Congress; 9 letters from 
agencies; 5 letters from unions; 7 letters from associations; 47 
letters from individuals (including Federal employees); and 2 letters 
from private lawyers. Some of those submitting comments argued that no 
one has standing to protest on behalf of an in-house competitor without 
an amendment to CICA, which provides the statutory framework for GAO's 
bide protest function; others contended that the 2003 revisions to the 
Circular justified GAO finding that individual Federal employees and 
their unions now had standing to file protests without the need to 
amend CICA. GAO also received comments concerning a number of other 
procedural issues including, for example, the requirement to exhaust 
the administrative appeal process before filing a protest a GAO, the 
authority for GAO to review streamlined competitions involving 65 or 
fewer full-time equivalent employees, and the applicability of GAO's 
protective order procedures.
    GAO carefully considered the comments received and ultimately 
addressed the in-house competitor standing issue in Dan Duefrene; 
Kelley Dull; Brenda Neuerburg; Gabrielle Martin, B-293590.2 et al., 
April 19, 2004, CPD ] 82. In that decision, GAO concluded that, 
notwithstanding the May 29, 2003 revisions to OMB Circular A-76, the 
in-house competitor in a public-private competition conducted under the 
Circular was not an offeror and, therefore, under the current language 
of CICA, no representative of an in-house competitor was an interested 
party eligible to maintain a protest before GAO.
    On the same day that the decision Dan Deufrene, et al. was issued, 
the Comptroller General sent a letter to the cognizant congressional 
committees, explaining that, based on GAO's legal analysis of its 
statutory authority to decide bid protests under CICA, because an in-
house competitor did not meet the current CICA definition of an 
interested party, GAO was required to dismiss any

[[Page 75879]]

protest filed by an in-house competitor. In the letter, the Comptroller 
General recognized that policy considerations, including the principles 
unanimously agreed to by the congressionally-chartered Commercial 
Activities Panel, weighed in favor of allowing certain protests by in-
house competitors with respect to A-76 competitions and, as a result, 
Congress might want to consider amending CICA to allow GAO to decide 
such protests. Consistent with that letter, the National Defense 
Authorization Act for Fiscal Year 2005 amended GAO's statutory 
authority under CICA to decide protests filed by in-house competitors.
    The proposed revisions to GAO's Bid Protest Regulations to 
implement the National Defense Authorization Act for Fiscal Year 2005 
are set forth below:

Interested Party

    In accordance with sec. 326(a) of the National Defense 
Authorization Act for Fiscal Year 2005, GAO proposes to add a new 
paragraph to paragraph (a) of 4 CFR 21.0 to expand the definition of an 
interested party to include the official responsible for submitting the 
Federal agency tender in a public-private competition conducted under 
OMB Circular A-76 regarding an activity or function of a Federal agency 
performed by more than 65 full-time equivalent employees of the Federal 
agency.

Intervenor

    In accordance with sec. 326(c) of the National Defense 
Authorization Act for Fiscal Year 2005, GAO proposes to add a new 
paragraph to paragraph (b) of 4 CFR 21.0 to expand the definition of an 
intervenor to include a person representing a majority of the employees 
of the Federal agency who are engaged in the performance of the 
activity or function subject to the public-private competition 
conducted under OMB Circular A-76 regarding an activity or function of 
a Federal agency performed by more than 65 full-time equivalent 
employees of the Federal agency. In addition, based on the proposed 
expansion of the definition of an interested party, GAO proposes to 
revise paragraph (b) of 4 CFR 21.0 to expand the definition of an 
intervenor to include the official responsible for submitting the 
Federal agency tender.

Issues Not for GAO Review

    In accordance with sec. 326(b) of the National Defense 
Authorization Act for Fiscal Year 2005, GAO is proposing to add a new 
paragraph to 4 CFR 21.5 to reflect that GAO will not review the 
decision of an agency tender official to file a protest (or not to file 
a protest) in connection with a public-private competition.
    These proposed revisions reflect the only language in sec. 326 of 
the National Defense Authorization Act for Fiscal Year 2005 that 
directly amends GAO's bid protest authority under CICA. GAO does not 
believe that any other regulatory revisions are required at this time. 
GAO solicits comments on these proposed revisions, as well as 
suggestions for changes to other areas of GAO's Bid Protest Regulations 
or GAO's bid protest relating to A-76 protests under the revised 
Circular, including, for example, the applicability of GAO's protective 
order procedures. Prior to issuing final regulations, GAO will 
determine, based on the comments received in response to this notice of 
proposed rulemaking, whether additional revisions to GAO's Bid Protest 
Regulations are warranted. GAO also will consider whether any changes 
to the bid protest process in the context of GAO's considerations of A-
76 protests under the revised Circular are required and, if so, the 
most appropriate means of publicizing these changes, for example, by 
revising GAO's Bid Protest Descriptive Guide.

Other Procedural Matters

    With reference to the responses GAO received to its notice of June 
13, 2003, GAO believes that it is appropriate here to address two 
issues raised in that notice--whether GAO would continue to apply the 
requirement that the protester first exhaust the administrative appeal 
process before filing its protest at GAO and whether GAO would hear 
protests of streamlined competitions authorized by the revisions to OMB 
Circular A-76. GAO notes that there was virtual unanimity from 
commenters concerning the resolution of these two issues.
    GAO had a longstanding rule that it would generally not hear a 
protest regarding an A-76 cost comparison until the unique A-76 
administrative appeal process provided by the agency was exhausted. 
GAO's position was based on considerations of comity and efficiency, 
and GAO recognized that there was no statutory or regulatory 
requirement that an offeror exhaust available agency-level remedies 
before protesting to GAO. The revised Circular abolished the unique A-
76 administrative appeal process, instead providing that a directly 
interested party could contest at the agency various aspects of a 
standard competition and that the resolution of such contest by the 
agency would be governed by the procedures in FAR Subpart 33.103, which 
describe the agency-level bid protest process.
    Under GAO's Bid Protest Regulations with the exception of the 
exhaustion rule GAO imposed for A-76 protests, a protester has never 
been required to file an agency-level protest before filing a protest 
at GAO. In light of the fact that the revised Circular abolishes the 
unique A-76 administrative appeal process and in accordance with the 
consensus view of the commenters, GAO has decided that it will not 
apply the exhaustion requirement to protests filed at GAO challenging 
A-76 competitions conducted under the revised Circular. In other words, 
protests concerning A-76 competitions under the revised Circular will 
be treated just like any other protest filed at GAO. Accordingly, as 
with non-A-76 protests, while a prostester challenging an A-76 
competition may elect to seek resolution of its protest at the agency 
in the first instance, GAO will not require the protester to file an 
agency-level protest as a prerequisite to filing a protest at GAO.
    Regarding streamlined competitions, i.e., competitions under the 
process reserved by the revised Circular for functions involving 65 or 
fewer full-time equivalent employees, the revised Circular states that 
no party may contest any aspect of the competition. In Vallie Bray, B-
293840, B-293840.2, Mar. 30, 2004, 2004 CPD ] 52, GAO addressed the 
protest of a streamlined competition conducted under the revised 
Circular. GAO concluded that, where a streamlined competition is 
conducted without using the procurement system--that is, without a 
solicitation being issued--GAO lacks jurisdiction under CICA to 
consider a protest. If, however, an agency issues a solicitation as 
part of a streamlined A-76 competition, thereby using the procurement 
system to determine whether to contract out or to perform work in-
house, GAO would consider a protest by an interested party alleging 
that the agency had not complied with the applicable procedures in the 
selection process or that the agency had conducted an evaluation that 
was inconsistent with the solicitation's evaluation criteria or 
applicable statutes and regulations. GAO intends to follow the Vallie 
Bray precedent with respect to protests of streamlined competitions 
conducted under the revised Circular.

List of Subjects in CFR Part 21

    Administrative practice and procedure, Bid protest regulations, 
Government contracts.
    For the reasons set out in the preamble, title 34, chapter I, 
subchapter

[[Page 75880]]

B, part 21 of the Code of Federal Regulations is proposed to be revised 
to read as follows:

PART 21--BID PROTEST REGULATIONS

    1. The authority citation for part 21 continues to read as follows:

    Authority: 31 U.S.C. 3551-3556.

    2. Amend Sec.  21.0 by redesignating paragraph (a) as paragraph 
(a)(1) and adding new paragraph (a)(2), and by redesignating paragraph 
(b) as paragraph (b)(1) and adding new paragraph (b)(2) to read as 
follows:


Sec.  21.0  Definitions.

    (a)(1) * * *
    (a)(2) In a public-private competition conducted under Office of 
Management and Budget Circular A-76 regarding an activity or function 
of a Federal agency performed by more than 65 full-time equivalent 
employees of the Federal agency, the official responsible for 
submitting the Federal agency tender is also an interested party.
    (b)(1) * * *
    (b)(2) If an interested party files a protest in connection with a 
public-private competition conducted under Office of Management and 
Budget Circular A-76 regarding an activity or function of a Federal 
agency performed by more than 65 full-time equivalent employees of the 
Federal agency, a person representing a majority of the employees of 
the Federal agency who are engaged in the performance of the activity 
or function subject to the public-private competition and the official 
responsible for submitting the Federal agency tender as described in 
paragraph (a)(2) of this section may also be intervenors.
* * * * *
    3. Amend Sec.  21.5 by adding paragraph (k) to read as follows:


Sec.  21.5  Protest issues not for consideration.

    (k) Decision whether or not to file a protest on behalf of Federal 
employees. GAO will not review the decision of an agency tender 
official to file a protest or not to file a protest in connection with 
a public-private competition.

Anthony H. Gamboa,
General Counsel, United States Government Accountability Office.
[FR Doc. 04-27615 Filed 12-16-04; 10:03 am]
BILLING CODE 1610-02-M