TITLE: B-311275, B.R. Hardison--Designated Employee Agent, May 29, 2008
BNUMBER: B-311275
DATE: May 29, 2008
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B-311275, B.R. Hardison--Designated Employee Agent, May 29, 2008

   Decision

   Matter of: B.R. Hardison--Designated Employee Agent

   File: B-311275

   Date: May 29, 2008

   B.R. Hardison, Designated Employee Agent, the protester.

   Tammy L. Kennedy, Esq., Department of Veterans Affairs, for the agency.

   Sharon L. Larkin, Esq., and James A. Spangenberg, Esq., Office of the
   General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   1. Protest filed by Designated Employee Agent challenging agency's
   decision to contract for pharmacy services with the private sector without
   conducting a public-private competition under Office of Management and
   Budget (OMB) Circular A-76 is dismissed, where no federal employee jobs
   are affected and, thus, Designated Employee Agent is not an interested
   party to protest the agency's action.

   2. Public-private competition under OMB Circular A-76 is not required
   where the activity or function at issue involves fewer than 10 federal
   employees.

   DECISION

   B.R. Hardison--Designated Employee Agent,[1] President of the American
   Federation of Government Employees (AFGE) Local 2400, protests the alleged
   "direct conversion" by the Department of Veterans Affairs (VA) of pharmacy
   services performed by VA pharmacy staff at the Tennessee Community-Based
   Outpatient Clinic (TCBOC)[2] to the private sector without conducting a
   public-private competition under Office of Management and Budget (OMB)
   Circular A-76.

   We dismiss the protest.

   The TCBOC is composed of four personnel (two pharmacists and two
   technicians) who provide outpatient pharmacy services for VA members by
   "window-filling" prescriptions. In mid-2006, the wait time for receiving
   prescriptions began to rise and, as of November 2007, the wait time was
   "over 45 minutes." At the same time, patient satisfaction with the
   pharmacy services decreased.[3] Declaration of Tennessee Valley Healthcare
   System Chief of Pharmacy para. 2.

   In order to reduce wait times and increase patient satisfaction, the VA
   decided to decrease the "window-fill" workload by using "mail-out"
   procedures to fill controlled substance prescriptions. Since TCBOC was
   solely a "window-fill" operation and had never performed "mail-out"
   services, the VA decided to use an existing "Veteran Integrated Service
   Network (VISN) 9" contract with Medical Matrix, LLP, to fill acute/urgent
   prescriptions by mail, and an existing VA "Consolidated Mail Out Program"
   to fill the remaining controlled substance prescriptions by mail. Id.
   para. 3. The four TCBOC employees would remain in their current positions
   with "no change in job descriptions, grade or performance standards," and
   the TCBOC budget would remain unchanged. Id. para. 5; Agency Reply to
   Protester's Comments (Apr. 18, 2008) at 2.

   Mr. Hardison contends that the agency's decision to remove the above
   workload from the TCBOC requires the agency to conduct a public-private
   competition. We find that Mr. Hardison is not an interested party eligible
   to challenge this decision.

   With regard to A-76 contests, section 326 of the National Defense
   Authorization Act for Fiscal Year 2008, amended the definition of
   interested party applicable to our bid protest function as set forth in
   31 U.S.C. sect. 3551(2), as follows:

     (2) The term "interested party"--

                                    * * * *

     (B) with respect to a public-private competition conducted under Office
     of Management and Budget Circular A-76 with respect to the performance
     of an activity or function of a Federal agency, or a decision to convert
     a function performed by Federal employees to private sector performance
     without a competition under Office of Management and Budget Circular
     A-76, includes--

                                    * * * *

     (ii) any one individual who, for the purpose of representing the Federal
     employees engaged in the performance of the activity or function for
     which the public-private competition is conducted in a protest under
     this subchapter that relates to such public-private competition, has
     been designated as the agent of the Federal employees by a majority of
     such employees.

   31 U.S.C. sect. 3551(2). Mr. Hardison is not an interested party under
   this statutory provision to protest the agency's decision to "convert" a
   function performed by federal employees to private sector performance
   without competition, because no federal employee jobs are at risk and
   therefore there is no prejudice, which is an essential element of every
   protest. See Mark Whetsone--Designated Employee Agent, B-311284, May 9,
   2008, 2008 CPD para. __ at 5-6. As stated above, the TCBOC has only four
   employees and none of these employees' jobs have been eliminated or
   changed in any way, and the record reflects that the agency is merely
   seeking to use a contractor to perform tasks, not currently performed by
   TCBOC, relating to the dispensing of drugs.

   Moreover, even if Mr. Hardison were an interested party to protest the
   agency's failure to conduct a public-private competition, on the facts
   here, no such competition was required. In this regard, the Office of
   Federal Procurement Policy Act, 41 U.S.C. sect. 403 et seq., as amended by
   the National Defense Authorization Act for Fiscal Year 2008, requires a
   public-private competition prior to converting public sector jobs to
   contractor performance whenever the conversion involves "a function of an
   executive agency performed by 10 or more agency civilian employees."[4]
   National Defense Authorization Act for Fiscal Year 2008, Pub. L.
   No. 110-181, sect. 327, 122 Stat. 3 (2008). Similarly, Division D of the
   Consolidated Appropriations Act of Fiscal Year 2008, Pub. L. No. 110-161,
   sect. 739(a), 121 Stat. 1844 (2007), provides, in relevant part:

     (1) Notwithstanding any other provision of law, none of the funds
     appropriated by this or any other Act shall be available to convert to
     contractor performance an activity or function of an executive agency
     that, on or after the date of enactment of this Act, is performed by
     more than 10 Federal employees unless--

     (A) the conversion is based on the result of a public-private
     competition that includes a most efficient and cost effective
     organization plan developed by such activity or function;

   These laws make clear that a public-private competition is required when
   10 or more federal employees perform the "activity or function" that is
   being converted to private sector performance. These laws do not require a
   public-private competition when fewer than 10 federal employees perform
   the "activity or function" at issue. Lisa Hartman--Designated Employee
   Agent, B-311247, May 6, 2008, 2008 CPD para. __ at 4.

   As noted above, the TCBOC has only four federal employees; thus, only four
   employees perform the function that allegedly has been converted to
   private sector performance. Although the protester argues that the
   "activity or function" in question actually consists of the totality of
   the full time equivalent (FTE) employees performing VA pharmacy services
   that are listed in the VA's FAIR Act inventory[5] (260 FTEs in Tennessee
   and 8,900 FTEs nationwide), we do not regard this as a reasonable meaning
   of "activity or function" for purposes of the statutes requiring a
   public-private competition. Rather, we think that a reasonable reading of
   those statutes, under the circumstances presented here, would be that the
   "activity or function" protested is limited to the work performed by the
   TCBOC, which consists of only four federal employees. Thus, we believe
   that a public-private competition would not be required here, even if any
   of the federal employees' jobs were at risk.

   We dismiss the protest.

   Gary L. Kepplinger
   General Counsel

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

   [1] As discussed more fully below, recently enacted changes to our bid
   protest statute grant interested party status to any one individual who
   has been designated as the agent of federal employees for purposes of
   representing them in a public-private competition, or for purposes of
   arguing that a public-private competition is required under the
   circumstances presented. See National Defense Authorization Act for Fiscal
   Year 2008, Pub. L. No. 110-181, sect. 326, 122 Stat. 3, 62-63 (2008).
   Hence, we have adopted the term "designated employee agent" to refer to
   both the protester and the person selected to represent federal employees
   in these challenges.

   [2] The TCBOC is an affiliate of the VA's Tennessee Valley Health Care
   System.

   [3] According to the agency, the national VA handbook requires
   prescription wait times to be less than 30 minutes. Declaration of
   Tennessee Valley Healthcare System Chief of Pharmacy para. 2.

   [4] In these cases, the statute requires agencies to conduct a
   public-private competition that, among other things:

     (A) formally compares the cost of performance of the function by agency
     civilian employees with the cost of performance by a contractor;

     (B) creates an agency tender, including a most efficient organization
     plan, in accordance with Office of Management and Budget Circular A-76,
     as implemented on May 29, 2003, or any successor circular;

     (C) includes the issuance of a solicitation . . .

   National Defense Authorization Act for Fiscal Year 2008, supra.

   [5] The "FAIR Act" refers to the Federal Activities Reform Act of 1998, 31
   U.S.C. sect. 501 note (1998).