TITLE: B-295529.6, Alan D. King, February 21, 2006
BNUMBER: B-295529.6
DATE: February 21, 2006
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B-295529.6, Alan D. King, February 21, 2006

   Decision

   Matter of: Alan D. King

   File: B-295529.6

   Date: February 21, 2006

   William W. Thompson, Jr., Esq., Michael A. Branca, Esq., and Lori Ann
   Lange, Esq., Peckar, Abramson, Bastianelli & Kelley, for the protester.

   David R. Johnson, Esq., Amanda J. Dietrick, Esq., and Alexander O. Levine,
   Esq., Vinson & Elkins, for IAP World Services, Inc., an intervenor.

   Raymond M. Saunders, Esq., Department of the Army, for the agency.

   Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Protester challenging, on behalf of federal employees, the outcome of a
   cost comparison study held pursuant to Office of Management and Budget
   Circular A-76, is not an interested party with standing to pursue a
   protest at the Government Accountability Office (GAO) where the study at
   issue was not initiated on or after January 26, 2005, as required by the
   amendment to the Competition in Contracting Act of 1984, 31 U.S.C.
   sections 3551-56 (2000) set forth at section 326(a) of the Ronald W.
   Reagan National Defense Authorization Act for Fiscal Year 2005, Pub. L.
   No. 108-375, 118 Stat. 1811, 1848, which authorizes the official
   responsible for submitting the federal agency tender in a public-private
   competition conducted under the Circular to be an "interested party" for
   purposes of filing a bid protest at the GAO.

   DECISION

   Alan D. King, the Deputy Garrison Commander of the Department of the
   Army's Walter Reed Medical Center in Washington, D.C., protests the Army's
   decision to procure base operations support services at Walter Reed using
   a contract awarded to IAP World Services, Inc., under request for
   proposals No. DADA10-03-R-0001, rather than continue to have these
   services performed in-house using government employees. The Army's
   decision was made pursuant to procedures established by Office of
   Management and Budget (OMB) Circular A-76; however, the Army and Mr. King
   disagree about the version of the Circular that applies here.[1] Mr. King
   argues that the Army's authority to use the 1999 Circular expired, and
   contends that, by operation of law, the study here is governed by the 2003
   Circular, which Mr. King claims has been violated. Mr. King also argues
   that the Army violated the Anti-Deficiency Act, as well as other statutes,
   while conducting this cost comparison study.

   We conclude that Mr. King lacks standing to pursue this protest under
   either version of OMB Circular A-76. As a result, we dismiss this protest
   because Mr. King is not an interested party to pursue it.

   BACKGROUND

   In June 2000, the Army announced its intent to conduct an A-76 cost
   comparison study of base operations support services at Walter Reed. This
   announcement was followed by a solicitation issued to potential
   private-sector offerors on June 4, 2003. Johnson Controls World Servs.,
   Inc., B-295529.2, B-295529.3, June 27, 2005, 2005 CPD para. 124 at 2
   ("JCWS").[2]

   Since this cost comparison study began in 2000, prior to issuance of the
   2003 Circular (even though the solicitation was issued approximately 1
   week after the Circular was revised), the Department of Defense (DOD)
   sought permission from OMB to proceed under the 1999 Circular.
   Specifically, by letter dated October 24, 2003, DOD requested permission
   to proceed with 205 competitive sourcing initiatives already underway
   pursuant to the 1999 Circular, one of which was the Walter Reed study at
   issue here. Protest, attach. 2 (Letter from DOD to OMB, Oct. 24, 2003) at
   1. In response, by letter dated November 17, OMB advised as follows:

   DOD may consider this letter as authority to proceed under a deviation for
   the limited purposes of completing the initiatives identified in the
   transition plan to the extent and with the understandings set forth in the
   enclosure (and, of course, in compliance with any applicable laws). The
   DOD Competitive Sourcing Official is responsible for ensuring use of the
   previous Circular is limited to timely completion or cancellation of any
   initiative in the transition plan as provided by the enclosure.

   Id., attach. 3 (Letter from OMB to DOD, Nov. 17, 2003) at 1. The
   referenced enclosure to the letter provided additional direction to DOD
   from OMB, as follows:

   We understand that DOD has made a determination to convert at least 10 of
   the 107 in-progress cost comparisons to standard competitions under the
   revised Circular. DOD may use the previous Circular to determine a final
   decision for any of the other cost comparisons identified in the
   transition plan for which: (a) the Department had already invested a
   substantial amount of resources (manpower and dollars), as of May 29,
   2003, on critical steps in the cost comparison process (e.g., planning the
   public announcement, determining workload data and requirements for the
   performance work statement, and developing draft solicitations) and (b) a
   solicitation is issued by December 31, 2003.

                                   * * * * *

   OMB expects DOD to make final decisions for these cost comparisons no
   later than September 30, 2004, the completion date projected by the DOD
   Competitive Sourcing Official in his October 24, 2003 letter to OMB.

   Id., attach. 3, enclosure at 1.

   There is no dispute that the cost comparison study underway at Walter Reed
   met the two requirements identified by OMB for using the 1999
   Circular--i.e., DOD had announced the study in 2000, presumably investing
   substantial resources on critical steps in the process after that time,
   and DOD issued the solicitation prior to the December 31, 2003 deadline.
   Moreover, the protester concedes that the cost comparison study here was
   conducted using the procedures identified in the 1999 Circular. Protest at
   3 ("Because this procurement was conducted under the previous Circular,
   the responsible official of the MEO[[3]] is not formally designated as the
   Agency Tender Official[[4]], or ATO.").

   On September 29, 2004, the MEO was compared to the offer submitted by
   Johnson Controls, and the Army determined that in-house performance of
   these services would be more economical than having them performed by
   contract awarded to Johnson Controls. JCWS, supra, at 2. This
   determination has been subjected to numerous challenges.

   First, Johnson Controls filed an initial bid protest with our Office on
   December 10, 2004. This protest was dismissed as academic after the Army
   took corrective action in response to the protest. Johnson Controls World
   Servs., Inc., B-295529, Jan. 11, 2005. Next, Johnson Controls filed an
   administrative appeal with the Army. On March 30, Johnson Controls filed a
   second protest with our Office, which ultimately resulted in a hearing.
   JCWS, supra, at 3. After this hearing, the Army Audit Agency, which was
   serving as the agency's Independent Review Officer (IRO) under the
   procedures of the 1999 Circular, withdrew its certification of the MEO
   package.[5] Without a certified MEO to compare to the Johnson Controls
   proposal, the Army again requested dismissal of the protest as academic.
   On June 27, our Office agreed that the IRO's withdrawal of its
   certification of the MEO rendered the protest academic, and the protest
   was again dismissed.[6] JCWS, supra, at 3.

   Between the time that our Office dismissed as academic Johnson Controls'
   second protest (June 27, 2005), and January 17, 2006, the Army Audit
   Agency, continuing to act as IRO for the agency, required the MEO to make
   changes to its performance package that resulted in an increase in the
   cost of in-house performance. On January 17, 2006, the Army revised its
   September 29, 2004, conclusion, and announced that it would be more
   economical to perform base operations support services at Walter Reed
   using a contract awarded to IAP World Services, Inc., than to have these
   services continue to be performed in-house using government employees. Mr.
   King, an Army employee, filed this protest 10 days later. Shortly
   thereafter, the Army and IAP asked that the protest be dismissed on the
   ground that Mr. King is not an interested party to challenge the Walter
   Reed cost comparison study in this forum.

   DISCUSSION

   Mr. King explains that this protest is premised on the theory that the
   Army's authority to proceed under the 1999 Circular expired on September
   30, 2004, and that, by operation of law, this cost comparison study is now
   governed by the 2003 Circular. As a result of this theory, Mr. King posits
   that he is the "functional and legal equivalent" of an ATO, Protest at 3,
   and that he has standing to challenge the result of the cost comparison
   study.

   In our view, Mr. King's protest is actually premised on two assumptions,
   neither of which is supported by the facts, or the law. First, as just
   mentioned, Mr. King assumes that the Army's authority to proceed under the
   1999 Circular has expired. This assumption is necessary to his argument
   because the concept of an ATO simply did not exist in the 1999 Circular.
   Second, Mr. King assumes that the study here is one that falls within our
   statutorily-granted authority to hear bid protests filed by an ATO.

   We think Mr. King's arguments regarding which version of the OMB Circular
   governs this study cannot provide his protest with the firm footing he
   seeks. As explained more fully below, we found under both the 1999
   Circular and the 2003 Circular that the barrier to standing in our forum
   was not derived from the terms of the Circular, but from the language of
   our bid protest statute, the Competition in Contracting Act of 1984
   (CICA), 31 U.S.C. sections 3551-56 (2000).

   Prior to the 2003 revisions to the Circular, we held that the then-current
   language of CICA did not permit representatives of in-house government
   competitors to pursue a protest before our forum. American Fed'n of Gov't
   Employees et al., B-282904.2, June 7, 2000, 2000 CPD para. 87 at 3-4. As a
   result of the significant changes that were made in the 2003 Circular, we
   again considered whether an in-house entity might have standing to file a
   protest here regarding the conduct or outcome of a public/private
   competition under the 2003 Circular. Again we concluded that without a
   change to the language of our bid protest statute, representatives of
   in-house government competitors could not pursue a protest before our
   forum. Dan Duefrene; Kelley Dull; Brenda Neuerburg; Gabrielle Martin,
   B-293590.2 et al., Apr. 19, 2004, 2004 CPD para. 82 at 4-5.

   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 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 our Office to
   decide such protests.

   Consistent with that letter, Congress expanded the definition of an
   "interested party" that could file a bid protest. Specifically, CICA was
   amended to provide that the term "interested party"

   includes the official responsible for submitting the Federal agency tender
   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.

   Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005,
   Pub. L. No. 108-375, sect. 326(a), 118 Stat. 1811, 1848 (2004). In
   addition, Congress provided explicit direction about when this provision
   would become effective. Specifically, the provision explained as follows:

   The amendments made by this section shall apply to protests filed under
   subchapter V of chapter 35 of title 31, United States Code, 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.

   Id. at section 326(d). As explained in the Federal Register notice
   implementing the change to our statute, and the resulting change in our
   Bid Protest Regulations, the date of enactment was October 28, 2004, and
   therefore, the end of the 90-day period was January 26, 2005. 70 Fed. Reg.
   19,679 (Apr. 14, 2005).

   Given the statutory direction quoted above, we think that even if Mr. King
   is correct in his argument that the Army's authority to conduct this cost
   comparison study expired on September 30, 2004--and for the record, we do
   not think he is[7]--we see no basis in the facts here to support Mr.
   King's necessary assumption that the cost comparison study here can
   properly be viewed as one that was initiated on or after January 26, 2005.

   In this regard, we note that the cost comparison study here was begun in
   2000, the RFP was issued in 2003, the results of the study were announced
   on September 29, 2004, and those results have been the subject of
   near-constant litigation since. At no point was the cost comparison study
   cancelled, either expressly or by operation of law, and at no point has
   the Army abandoned its study and started over. In fact, between the
   vitally important dates--under Mr. King's theory of this case--of
   September 30, 2004, and January 26, 2005, the cost comparison study was
   the subject of a protest before our Office that was dismissed as academic
   when the Army took corrective action in response to the protest. That
   dispute was resolved, and was followed by an administrative challenge at
   the Army and subsequent protests here.

   Finally, we note that even when the Army again took corrective action
   during the summer of 2005, after a hearing before our Office, the agency
   took steps to remedy the problems highlighted during the hearing within
   the structure of the existing cost comparison study. The study was not
   abandoned and begun anew. Given that the facts here do not support, in any
   way, a conclusion that this cost comparison study was abandoned at some
   point and restarted after January 26, 2005--a necessary conclusion for Mr.
   King to have standing--we conclude that Mr. King is not an interested
   party to pursue this protest before our Office.

   The protest is dismissed.

   Anthony H. Gamboa

   General Counsel

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

   [1] This decision addresses two versions of OMB Circular A-76. The earlier
   version dates from 1999 ("the 1999 Circular"); the more recent version
   dates from May 29, 2003 ("the 2003 Circular"). There are significant
   differences between these two versions of the Circular, which will be
   discussed, as needed, below.

   [2] Johnson Controls became IAP World Services, Inc. as of March 30, 2005.
   Id. at 1 n.1. Since Johnson Controls filed its protest prior to the name
   change, and since the cost comparison materials addressed Johnson
   Controls, our prior decision referred to the company by its previous name,
   rather than its new one.

   [3] In the language of cost comparison studies conducted under both the
   1999 and 2003 versions of OMB Circular A-76, the in-house organization
   proferred for performance of the services under review is called the Most
   Efficient Organization, or MEO. 1999 Circular, Revised Supplemental
   Handbook at 36; 2003 Circular at B-2.

   [4] An "agency tender official" is the government official responsible for
   developing and tendering the competitive agency tender. 2003 Circular at
   B-2. The term appears only in the 2003 Circular; there is no agency tender
   official under the procedures in the 1999 Circular.

   [5] Under the 1999 Circular, the review of an IRO was required to ensure
   that the MEO's plan for performance would comply with the solicitation's
   work statement. When changes to an MEO were needed to meet the
   requirements of the performance work statement, those changes had to be
   made before the IRO could certify that the MEO "reasonably establish[es]
   the Government's ability to perform the [performance work statement]
   within the resources provided by the MEO." OMB Circular A-76 Revised
   Supplemental Handbook (Mar. 1996) at 12; see also JCWS, supra, at 2.

   [6] For the record, one day after our June 27 dismissal of Johnson
   Controls' protest as academic, the protester requested a recommendation
   that it be reimbursed the costs of filing and pursuing its protest. In our
   decision on that request, we concluded that the Army had failed to
   investigate the substantive grounds of the protest, failed to produce
   documents when required, and failed to take prompt corrective action in
   the face of a clearly meritorious protest. Johnson Controls World Servs.,
   Inc.--Costs, B-295529.4, Aug. 19, 2005, 2005 CPD para. 162 at 8. As a
   result, we recommended that the protester be reimbursed the costs of
   pursuing its protest.

   [7] With respect to Mr. King's arguments that the Army's authority to
   conduct this cost comparison study under the 1999 Circular expired, we
   note that the words of the OMB letter to DOD state only that "OMB expects
   DOD to make final decisions for these cost comparisons no later than
   September 30, 2004." Protest, attach. 3, enclosure at 1 (emphasis added).
   OMB did not state that the authority granted would expire; had it wanted
   to bar any action by DOD after September 30, 2004, it could have done so.