[Federal Register Volume 70, Number 71 (Thursday, April 14, 2005)]
[Rules and Regulations]
[Pages 19679-19681]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-7489]



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  Federal Register / Vol. 70, No. 71 / Thursday, April 14, 2005 / Rules 
and Regulations  

[[Page 19679]]



GOVERNMENT ACCOUNTABILITY OFFICE

4 CFR Part 21


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

AGENCY: Government Accountability Office.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This document amends Government Accountability Office (GAO) 
Bid Protest Regulations by revising the definition of an interested 
party to permit a protest to be filed by an agency tender official 
(ATO) in certain public-private competitions under Office of Management 
and Budget (OMB) Circular A-76. This document also revises the 
definition of an intervenor to permit an ATO and an employee 
representative to intervene in certain protests involving public-
private competitions under OMB Circular A-76. This action implements 
the provisions of the Ronald W. Reagan National Defense Authorization 
Act for Fiscal Year 2005 related to the bid protest process, where a 
public-private competition has been conducted under OMB Circular A-76 
regarding an activity or function of a Federal agency performed by more 
than 65 full-time equivalent (FTE) employees of the Federal agency.

DATES: Effective April 14, 2005.

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

SUPPLEMENTARY INFORMATION:

Effective Dates

    Section 326(d) of the Ronald W. Reagan National Defense 
Authorization Act for Fiscal Year 2005, Pub. L. 108-375, 118 Stat. 
1811, 1848, states that the provisions apply to protests ``that relate 
to studies initiated under Office of Management and Budget Circular A-
76 on or after the end of the 90-day period beginning on the date of 
the enactment of this Act.'' The date of enactment was October 28, 2004 
and, therefore, the end of the 90-day period was January 26, 2005.
    Protests filed after the effective date of this final rule that 
relate to studies initiated under OMB Circular A-76 on or after January 
26, 2005, will be considered under this final rule. Protests filed at 
GAO after the effective date of this final rule that relate to studies 
initiated under OMB Circular A-76 before January 26, 2005, will be 
considered under GAO's regulations as they were prior to the issuance 
of this final rule. The same is true for (1) protests filed on or after 
the effective date of this rule that supplement or amend a protest 
filed at GAO before the effective date of this rule and (2) claims and 
requests for reconsideration filed on or after the effective date of 
this rule that concern a protest that was not subject to this rule.

Background

    On December 20, 2004, GAO published a proposed rule (69 FR 75878) 
and a correction on December 23, 2004 (69 FR 76979) in which it 
proposed to amend its Bid Protest Regulations. The supplementary 
information included with the proposed rule explained that the proposed 
revisions to GAO's regulations, promulgated in accordance with the 
Competition in Contracting Act of 1984 (CICA), 31 U.S.C. 3551-3556, 
were to implement the requirements in the National Defense 
Authorization Act for Fiscal Year 2005 regarding standing to protest to 
GAO by an in-house competitor in a public-private competition.
    GAO addressed the in-house competitor standing issue in Dan 
Duefrene; Kelley Dull; Brenda Neuerburg; Gabrielle Martin, B-293590.2 
et al., Apr. 19, 2004, 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 then-current 
language of CICA, a representative of an in-house competitor was not an 
interested party eligible to maintain a protest before GAO.
    On the same day that the Dan Duefrene decision was issued, the 
Comptroller General sent a letter to the cognizant congressional 
committees, explaining that, because an in-house competitor did not 
meet the then-current CICA definition of an interested party, GAO was 
required to dismiss any protest that an in-house competitor filed. 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 CICA to permit certain protests by in-house competitors. 
The revisions to GAO's Bid Protest Regulations in this final rule 
implement the statutory provisions.

Summary of Comments

    Interested persons were invited to submit comments on GAO's 
proposed rule by February 18, 2005. GAO received written comments from 
two federal agencies, five organizations representing contractors, 
seven unions, and three individuals. In adopting this final rule, GAO 
has carefully considered all comments received.
    A summary of the more significant specific comments concerning 
GAO's proposed rule, and GAO's responses to these comments, are set 
forth below. As a general matter, and perhaps reflecting the fact that 
the proposed rule closely followed the statute, the agencies, one 
individual commenter, and five of the organizations representing 
contractors agreed that the proposed regulations correctly implemented 
the statutory language. On the other hand, while not directly 
addressing whether the proposed regulations correctly implemented the 
statute, the seven unions and one individual commenter

[[Page 19680]]

questioned whether the law, as well as the proposed regulations, 
provided effective protest rights for the employees whose jobs were 
placed at risk by these A-76 competitions.

Section 21.0--Definitions

Interested Party
    A number of commenters were concerned that the proposed revision to 
the definition of an ``interested party'' would preclude an ATO from 
protesting a competition involving a function with 65 or fewer FTEs. 
That is, because it is defined as an interested party only for 
competitions related to functions performed by more than 65 FTEs, the 
ATO cannot file a protest at GAO where an agency conducts a competition 
(whether standard or streamlined) involving a function performed by 65 
or fewer FTEs. While two commenters agreed with this aspect of the 
proposed rule, five commenters urged GAO to extend the revised 
definitions of an interested party in sec. 21.0(a)(2) and of an 
intervenor in sec. 21.0(b)(2) to include all public-private 
competitions conducted under OMB Circular A-76, regardless of the 
number of FTEs involved, where the federal agency uses the procurement 
system to conduct the competition. Two additional commenters recognized 
that such an extension would be inconsistent with the language of the 
National Defense Authorization Act for Fiscal Year 2005, but expressed 
disagreement with the statute. One commenter urged GAO to impose parity 
by refusing to consider a protest from a private-sector entity in such 
cases if the public-sector competitor could not file a protest.
    GAO recognizes a lack of parity may arise in certain situations: 
unlike an ATO, a private-sector competitor could have standing to file 
a protest of a standard A-76 competition involving fewer than 65 FTEs, 
and of a streamlined A-76 competition, if the agency had issued a 
solicitation and thereby used the procurement system to determine 
whether to contract out or to perform work in-house. GAO concludes, 
however, that the rule appropriately follows the statutory language, 
which grants interested party and intervenor status to designated 
parties only in the case of an A-76 competition regarding an activity 
or function of a Federal agency performed by more than 65 FTEs. In 
GAO's view, it is for Congress to determine the circumstances under 
which an in-house entity has standing to protest the conduct of an A-76 
competition, and the 2004 statutory changes limited public-sector 
standing to competitions involving an activity or function of a Federal 
agency performed by more than 65 FTEs of the Federal agency. Moreover, 
GAO believes that it would not be consistent with CICA for GAO, in an 
attempt to achieve parity in a competition related to functions with 
fewer than 65 FTEs, to refuse to consider a private-sector offeror's 
protest that is otherwise within GAO's bid protest jurisdiction.
    Finally, one commenter objected on the basis that an ATO who files 
a protest is acting unconstitutionally. Determining the 
constitutionality of the statutory provisions authorizing ATO protests 
is beyond the scope of this rulemaking and, indeed, beyond GAO's bid 
protest function. See Urban Group, Inc.; McSwain & Assocs., Inc., B-
281352, B-281353, Jan. 28, 1999, 99-1 CPD ] 25 at 8.
Intervenor
    One commenter asked that notices of protests be provided to the ATO 
to allow timely intervention. GAO believes that the requirement in the 
existing rule for notice to potential intervenors applies and that the 
existing rule is sufficient to require an agency to provide appropriate 
notice to the ATO.
    Another commenter asked that GAO allow an ATO to intervene only if 
an employee representative failed to intervene. Two commenters asked 
GAO to provide standards that a putative employee representative 
intervenor would have to satisfy in order to be allowed to participate 
as an intervenor. Two commenters stated that the Federal agency should 
be permitted to set standards for the putative employee representative 
intervenor. Three commenters requested that GAO treat a union as 
presumptively authorized to intervene where it represents affected 
employees.
    GAO believes that it is not possible to anticipate the variety of 
factual circumstances in which requests to intervene by either ATOs or 
employee representatives, or both, will occur and, therefore, it is not 
yet appropriate to set forth standards for how those situations will be 
resolved. At this time, therefore, GAO will implement the rule as 
proposed. GAO recognizes that the result may be that two presumably 
aligned parties (the ATO and the employee representative) may present 
somewhat different views to GAO. Notwithstanding any difficulty that 
this result could create, GAO believes that Congress intended that an 
employee representative could qualify as an intervenor whether or not 
the ATO is also a party (either as a protester or as an intervenor). In 
this connection, the conference report stated that ``[a] person 
representing a majority of the employees would not have standing to 
file a protest, but would have the right to intervene in a protest 
filed by an interested party, including the ATO.'' H.R. Rep. No. 108-
767, at 648 (2004), reprinted in 150 Cong. Rec. H9187, H9527 (daily ed. 
Oct. 8, 2004).
Protective Order Practice
    As noted in the background to the proposed rule, GAO did not 
propose to address protective order issues in the rule changes, but GAO 
solicited comments on how those issues should be handled where an ATO 
and/or employee representative is participating in a protest. Two 
commenters urged GAO to require counsel for an ATO to apply for 
admission to a protective order under standards tailored to the role of 
ATO counsel. One additional commenter opposed requiring application for 
protective order admission by ATO counsel, but urged GAO to ``admit'' 
ATO counsel to the protective order if the agency provided certain 
protections against disclosure of protected material. One other 
commenter asked GAO to specify the sanctions that would be imposed on 
an employee representative or ATO if there were an unauthorized 
disclosure of protected material.
    GAO believes that it is premature to provide definitive guidance 
regarding the access to protected information by the ATO, the employee 
representative, and their attorneys. Nonetheless, several points of 
guidance can be offered here. GAO believes that where counsel for the 
ATO or for the employee representative is not a government employee, 
that attorney will be required to apply for admission under existing 
standards established for admission to a protective order. As for the 
ATO and the employee representative, those individuals would presumably 
not be provided access to protected information under the protective 
order, just as non-attorneys in other protests cannot obtain such 
access. In cases where counsel for the ATO, or for the employee 
representative, is a government employee, GAO will proceed on a case-
by-case basis, with appropriate weight given to the agency's views and, 
in particular, to the access that the agency has given the attorney to 
proprietary or source selection sensitive documents before the protest 
was filed. As the practice develops, and experience is gained by all 
sides, GAO intends to develop, and publish, uniform procedures that can 
be incorporated into the bid protest process and, if warranted, into 
GAO's Bid Protest Regulations.

[[Page 19681]]

Issues Not for GAO Review
    One commenter requested that GAO specify that the prohibition 
against protests challenging the decision of an ATO to file (or not to 
file) a protest should explicitly reference its applicability to A-76 
competitions involving more than 65 FTEs. GAO believes that the 
additional language is unnecessary because the proposed rule already 
encompasses the requested limitation in sec. 21.0. GAO believes that 
sec. 21.5(k) comports with the statutory intent that the decision of an 
ATO regarding whether to file a protest is not subject to GAO review.

List of Subjects in 4 CFR Part 21

    Administrative practice and procedure, Bid protest regulations, 
Government contracts, Government procurement.


0
For the reasons set out in the preamble, title 4, chapter I, subchapter 
B, part 21 of the Code of Federal Regulations is amended to read as 
follows:

PART 21--BID PROTEST REGULATIONS

0
1. The authority citation for part 21 continues to read as follows:

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

0
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) * * *
    (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) * * *
    (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.
* * * * *
0
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. 05-7489 Filed 4-13-05; 8:45 am]
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