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In American Federation of Government Employees v. United States, 2001 WL 262897 (W.D.Tex. March 7, 2001), the district court recently rejected an argument that AFGE members who challenge an agency's out-sourcing decision are within the "zone of interests" of a second portion of the National Defense Authorization Act, namely 10 U.S.C. § 2467, which is cited in the Plaintiffs' Complaint.
Summary of this case from American Federation of Government Employees v. BabbittOpinion
CIVIL ACTION NO. SA-00-CA-1508 HG.
March 7, 2001
ORDER ON STANDING
A. Introduction
The matters before me are two motions to dismiss filed by Intervenor Lackland 21st Century Services Consolidated ("L21stCSC") and by the defendants, United States of America, the United States Department of the Air Force and F. Whitten Peters, Secretary of the United States Department of the Air Force (referred collectively hereinafter as "USAF" and/or "agency"). Docket entries 25 32, respectively. The dismissal motions are premised on the arguments that plaintiff, American Federation of Government Employees, ALF-CIO, Local 1367 ("AFGE 1367"), a union representing unnamed federal employees, lacks Article III and prudential standing to bring this action in federal court.
The plaintiff has filed the instant lawsuit, seeking declaratory and injunctive relief for what it contends was the agency's failure to comply with its own regulations and instructions in outsourcing the base operations support services at the Lackland Air Force Base ("Lackland AFB"), an Air Force training facility, located in San Antonio, Texas. The case was originally referred to me for the limited purpose of conducting an evidentiary hearing and preparing a Memorandum and Recommendation on plaintiffs request for a preliminary injunction. At the status conference, however, all parties agreed that the threshold issue of standing must be addressed by the court before discussing the merits of plaintiffs request for injunctive relief. The parties then consented to my jurisdiction for the sole purpose of addressing whether the plaintiff has standing to proceed. After having reviewed plaintiffs original complaint, the arguments made in favor of dismissal and plaintiffs opposition thereto, and all applicable case and statutory authority, it is my opinion that jurisdiction of this court is lacking because plaintiff has not established prudential standing, namely, that it and the federal employees it represents are within "the zone of interests" under the relevant procurement statutes.
Original Complaint, filed December 20, 2000.
This Order is entered on the very limited legal issue of whether plaintiff can proceed in this forum. The federal employees who may be adversely impacted by the agency's decision to outsource the work at issue had an opportunity to participate in the procurement progress as allowed by the administrative and statutory procedures set by Congress. They did so. Nevertheless, while I recognize that maintaining federal employment and related benefit packages are a genuine personal concern for the individuals represented by plaintiff union, I am bound to follow clear legal precedent on the narrow issue presented in this case.
B. Factual and Procedural Background
The Office of Management and Budget ("OMB") Circular A-76, establishes federal policy regarding the performance of commercial activities. The A-76 Supplemental Handbook, last amended in 1999, sets forth mandatory procedures for agencies to follow in determining whether to perform the commercial activities in-house or with commercial vendors. Importantly, OMB Circular A-76 cites the Budget and Accounting Act of 1921 and the Office of Federal Procurement Policy Act of 1979 ("OFPPAA") as the authority for its policies and procedures. A brief overview of these complex procedures within the context of this military procurement case is essential in understanding the relevant facts to this dispute.
See Office of Management and Budget Circular A-76 (Aug. 4, 1983, as amended in 1987, 1988, and 1999) ("OMB Circular A-76" or "A-76"); Office of Management and Budget Circular A-76, Revised Supplemental Handbook, Performance of Commercial Activities (Mar. 1996, as amended in 1999) ("Supplement to OMB Circular A-76).
31 U.S.C. § 101 et seq . (1983 Supp. 2000).
41 U.S.C. § 401-24 (1994 Supp. 2000).
See OMB Circular A-76, supra at note 2.
Under OMB Circular A-76, proposals are solicited from contractors for performance of the commercial functions being reviewed. The proposal which represents "the best value for the American taxpayer" in terms of technical quality and price is selected from among those submitted. The government simultaneously prepares a "Most Efficient Organization" or "MEO," which sets forth the government's internal plan for the most efficient in-house plan for performance of the functions under review in terms of cost, technical quality and staffing. Once "the best value" contractor proposal is selected, that proposal is then compared against the MEO. If the "best value contractor" is found to be superior and more economical to implement than the MEO, the award is made to the contractor.
The MEO in an OMB Circular A-76 procurement refers not to a group of people, but to the government agency's internal plan for performance of the services in question. It is not the existing in-house organization, but "the organization the agency would establish if it were competing for the work. In other words, the existing organization is allowed to make itself more efficient in order to compete" See American Federation of Government Emoloyees, AFL-CIO, Local 1482 v. The United States ("AFGE"), 46 Fed. Cl. 586, 588, fn. 1 (2000) (citing Supplement to OMB Circular A-76, art I, ch. 3, § E).
1. Initial Cost-Comparison Study and Tentative Award
In the instant case, the USAF, on January 26, 1999, announced that the base operations support ("BOS") and airfield functions at Lackland AFB, would be the subject of a cost study under OMB Circular A-76. After determining that it was appropriate to consider outsourcing these functions (i.e., they were not "inherently governmental activities"), the Air Education and Training Command ("AETC"), headquartered at the Randolph Air Force Base, in San Antonio, Texas, issued Request for Proposals No. F41689-99-R-0031("RFP") and associated performance requirements for the BOS and airfield functions, in order to seek responsive bids from private offerors. Seven private sector offerors submitted RFPs for the work at issue in this case, including L21stCSC and Phoenix Management, Inc.("Phoenix").
Docket entry 37, at 2. The BOS in this case included: Maintenance and Operations, Environmental Management, Energy Management and Utilities, Community Services, Publications and Forms Management, Marketing and Publicity, Site Maintenance, Space Management, Emergency Management, Engineering Services such as Design and Construction, Custodial, Transportation, Human Resources Management, Housing, Communications and Information Technology, Supply Services, and Resource Management for the entire base. Id . at fn.1. See also docket entry 49, at 8, and docket entry 53, at 4, fn.2 (both citing to Air Force Solicitation No. F41689-99-R-0031). According to defendant, the airfield support function was separated and set aside for small business competition. Docket entry 37, at 2 fn.1.
According to the Federal Activities Inventory Reform Act of 1998 ("FAIR"), Pub.L. No. 105-270, § 2(e), 112 Stat. 2382-83 (codified at 31 U.S.C. § 501 (Supp IV 1998)), which governs the process for contracting out to private sources, agencies are required to identify those activities that are not "inherently governmental" and thus, appropriate for contracting out to private sources. Id . The agency is then required to list those activities that are not inherently governmental with the OMB. Id . The statute further provides than when determining whether to contract with a private source for an activity on the list on the basis of a cost comparison with an MEO, "the head of the executive agency shall ensure that all costs . . . are considered and that the costs considered ate realistic and fair." Id . § 2(e). It should be noted that the cost comparison language contained in FAIR, § 2(e), is virtually identical to the language of the cost comparison provision contained in the National Defense Authorization Act, 10 U.S.C. § 2462(b) (2000), which governs the Department of Defense ("DoD") procurement decisions. Both statutes apply to the instant case.
L21stCSC is a conglomerate of companies, including small, minority-owned firms from San Antonio, as well as larger firms from Texas and elsewhere. Docket entry 41, at 3.
Phoenix is an Austin-based company which specializes in providing military airfield support services. Id .
The AETC Source Selection Team, on May 17-19, 2000, selected L21stCSC as the "best value" for the BOS, and Phoenix Management, Inc. ("Phoenix"), as the "best value" proposal for the airfield functions. Once these two private contractors were selected, their submitted cost estimates were combined and compared against the MEO's cost estimate. The comparison showed that the selected private contractors could perform the BOS and airfield functions for approximately $2.4 million less than the adjusted cost of MEO performance. Based upon this result, the AETC, on August 17, 2000, made a tentative determination to award the work to L21stCSC and Phoenix. Pursuant to OMB Circular A-76 and 48 C.F.R. § 52.207-2(c)(1), the award remained tentative until the completion of a public review period and resolution of any administrative appeals by various parties, including potentially displaced federal employees and their unions, as well as the competing private contractors. OMB Circular A-76 further provides that it does not "establish and shall not be construed to create any substantive or procedural basis for anyone to challenge any agency action or inaction on the basis that such action or inaction was not in accordance with this Circular," except for administrative appeals under the Supplement or as provided by the Federal Activity Inventory Reform Act of 1998 (FAIR). The Supplement to OMB Circular A-76 contains an almost identical statement.
Docket entry 37, at 3 and Original Complaint, at ¶ 14.
Original Complaint, at ¶ 4.
See Supplement to OMB Circular A-76, part I, ch. 3, § K.
OMB Circular A-76, supra note 2, at 7(c)(8).
The Circular and this Supplement are not intended and should not be construed to create any right or benefit, substantive or procedural, enforceable at law by a party against the United States, its agencies, its officers or any person. It should not be construed to create any substantive or procedural basis on which to challenge any agency action or inaction, except as set forth in Part I, Chapter 3, Paragraph K, of this Supplement.
Supplement to OMB Circular A-76, part I, ch. 3, ¶ K.7; and Preamble to USAF Instruction 38-203.
2. Administrative Appeal Process
The Administrative Appeals Process is discussed in the DoD regulations, 32 C.F.R. § 169a.18 and USAF Instruction 38-203, ch. 18.
On September 15, 2000, nine Lackland AFB employees, who took part in the government's MEO, submitted an A-76 administrative appeal to the AETC Administrative Appeal Authority ("Appeal Authority"). It is undisputed that the plaintiff union in this case did not commence the administrative appeal process. The representation in its federal complaint that it later joined the administrative appeal filed by the civilian employees (referred to in the administrative appeal decision as "the MEO") is contested by Phoenix, an Intervenor in this case, on the basis that the alleged joinder is not reflected in the Appeal Authority's decision.
Original Complaint, at ¶ 16; docket entry 41, at 4 docket entry 37, at 3.
Docket entry 41, at 4.
The Appeal Authority sustained a number of appeal issues asserted by the nine federal employees and calculated the total effect of these issues on the cost comparison. This calculation resulted in a maximum potential decrease of $657,346 (or 0.2% less) in the MEO's proposed price. Consequently, the Appeal Authority, on October 24, 2000, reversed the agency's tentative cost comparison decision to convert the work to contractor performance. According to the administrative appeal guidelines and procedures, no subsequent or sequential administrative appeals are permitted by any directly affected party, even when there is a reversal of the tentative cost comparison decision, as occurred in this case.
Docket entry 37, at 3 and docket entry 41, at 5.
Original Complaint, at ¶ 17.
See USAF Instruction 38-203, § 18.4.17 Figure 18.1 (Overview of Administrative Appeal Process).
Plaintiffs original complaint alleges that after the Appeal Authority's October 24, 2000 decision reversing the agency's tentative cost comparison decision in favor of the MEO, the agency, "for some unknown reason and without providing prior notice" unlawfully overturned that decision, ordering instead that the work be awarded to the private contractors. The agency's reversal of the Appeal Authority's October 24, 2000 decision, which plaintiff argues, was "final" and "unappealable" pursuant to DoD regulations and USAF Instructions, is the crux of plaintiffs complaint.
Original Complaint, at ¶ ¶ 21 22.
Plaintiffs complaint, however, fails to mention that the agency's reversal and correction of its cost comparison analysis occurred as part of its own review of the procurement record as it is required to undertake once a private contractor submits a bid protest to the General Accounting Office ("GAO").
3. The Private Contractors' GAO Protests The USAF's Corrected Final Action
Despite plaintiffs silence regarding the GAO proceedings that took place in this case, the record before me indicates that both private contractors submitted bid protests to the General Accounting Office ("GAO"). The protests alleged six errors in the Appeal Authority's October 24, 2000 cost comparison decision, and argued that correction of those six challenges would result in a determination to perform the work by contract. According to the record, L21stCSC filed a bid protest with the GAG on November 6, 2000. A couple of days later, Phoenix submitted its own bid protest to the GAG, and L21stCSC filed a supplemental protest with two new allegations on November 13, 2000.
31 U.S.C. § 3551 et seq . (2000).
Docket entry 41, at 5; and docket entry 37, at 3 fn.2.
Docket entry 37, at 3 fn.2.
Significantly, a bid protest of an A-76 decision submitted by a private contractor to the GAO is outside the agency's administrative appeal process. In that regard, USAF Instruction 38-203 states: "GAG protests are not part of the AAP. The decision to award a contract in the event of a GAO protest is the responsibility of the [agency's] contracting officer." The agency's decision to exclude GAO bid protests from its administrative appeal process is consistent with 32 C.F.R. § 169a.18(a)(3), which provides that the ruling of the Appeal Authority's decision "shall be final, unless the DoD component procedures provide for further discretionary review within the DoD Component."
See USAF Instruction 38-203, § 18.2.4.
32 C.F.R. § 169a.18(a)(3) (Emphasis added).
The GAO has authority under the Competition in Contracting Act overbid protests brought by "interested parties," such as the two private contractors/intervenors in this case. An "interested party" under the GAO is defined as "an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract." Federal employees and/or their unions are not included in the GAO's definition of "interested party."
31 U.S.C. § 3553 (1994).
31 U.S.C. § 3551.
Id . The GAO will not sustain any protests pertaining to OMB Circular A-76 cost comparisons filed by unions or affected federal employees, regardless of whether a solicitation has issued, because unions and federal employees are not "interested parties" eligible to file bid protests with the GAO under The Competition in Contracting Act of 1984 ("CICA"). See The Honorable Jim Sasser, United States Senate, Comp. Gen. B-223558, 1986 WL 63952, at *1 (C.G. Sept. 2, 1986).
According to one of its published opinions, the GAO will not, as a general rule, review an agency's decision concerning whether work should be performed in-house or by a contractor because "that is a matter of executive branch policy." However, where an agency uses the procurement system to aid its determination of whether it should award the work to a contractor performance or keep it in-house, the GAO will consider a protest alleging that the agency has improperly rejected a bid or proposal. The GAO does so "because a faulty or unfair comparison would be detrimental to the procurement system."
Matter of: Alltech, Inc., , B-237980, 1990 U.S. Comp. Gen. LEXIS 344, at *6 (Mar. 27, 1990).
Id .
In reviewing an A-76 cost comparison, the GAO's decision turns on whether the agency complied with the applicable procedures in selecting in-house performance over contracting out the work. "To succeed in its protest, a protester must demonstrate not only that the agency failed to follow established procedures, but also that its failure could have materially affected the outcome of the cost comparison."
Id . at *6-7 (internal citation omitted).
According to the federal regulations that apply to the bid protest process, the GAO expects the agency's contracting officer to "[t]ake any action that could have been recommended by the [GAO or Comptroller General]," once he or she determines that a proposed award, or award does not comply with the procurement process requirements. In fact, the GAO's bid protest regulations encourage agencies to take prompt action to correct apparent defects in competitive procurements.
See Federal Acquisition Regulation, 48 C.F.R. § 33.102(b)(1) (West 2001). More specifically, the USAF's dismissal brief cites to the Air Force Federal Acquisition Regulations ("AFFAR"), which directs that:
Air Force personnel should seek to resolve all protests at the lowest possible level regardless of the level at which the protest is initially lodged, when notified of a protest, the contracting officer shall immediately contact the protester to make sure the basis of the protest is fully understood, thoroughly consider its merits, and rake appropriate action.
Docket entry 37, at 14 (and AFFAR citation).
See Matter of: J.A. Jones Management Services, Inc ., B-284909.4, 200 U.S. Comp. Gen. LEXIS 111, at *5 (July 31, 2000) (citing to Matter of: Wall Colmonoy Corp., Entitlement to Costs , B-257183.3 (Nov. 16, 1994)); and 4 C.F.R. § 21.8(e) (2000).
In the instant case, once the USAF received notice of the bid protests, it had thirty days to compile a complete a report (including all relevant documents) on the protested procurement for submission to the GAO. The USAF maintains that it was during this review of the protests' allegations and procurement documentation that it discovered that at least two of the issues in the protests had merit. By letter dated December 13, 2000, counsel for the USAF advised the GAO of its findings and that it intended to take prompt corrective action in response to the protests. Specifically, the USAF proposed to revise the cost comparison decision in accordance with its findings and proceed with contractor performance. On the basis of its intended corrective action, the USAF requested that the GAO dismiss the protests filed by L21stCSC and Phoenix as they had become moot. The USAF's decision to correct its October 24, 2000 cost comparison decision furthered the GAO's goal of promoting responsible conduct on the part of federal agencies when faced with bid protests.
According to its review of the protests, the USAF concluded that contract awards to L21stCSC and Phoenix were most advantageous to the government by approximately $8.6 million. Original Complaint, at ¶ 21 docket entry 37, at 4.
Docket entry 37, at 4.
Phoenix states in its response to plaintiffs motion for preliminary injunction that although a protective order limited public access to documents filed with the GAO, redacted versions of the procurement documents submitted to the GAO would have been available to plaintiff upon request, pursuant to 21 C.F.R. § 21.1(g). Docket entry 41, at 6.
See 4 C.F.R. § 21.8(e) and case authority cited by USAF, in docket entry 37, at 15. To that end, according to a GAO opinion, the GAO's general rule is that as long as an agency takes corrective action in response to a protest by the due date of its protest report, the GAO regards such action as prompt and would decline to consider a request to recommend reimbursement of protest costs. See Matter of: J.A. Jones Management Services, Inc ., B-284909.4, 200 U.S. Comp. Gen. LEXIS 111, at *7 fn.2. It appears that the agency's corrective action in this case was timely and that no abuse of discretion was involved.
4. Proceedings Before This Court
On December 20, 2000, following the USAF corrected final decision, plaintiff filed this lawsuit. Shortly thereafter, plaintiff also filed an application for a temporary restraining order ("TRO") and a motion for a preliminary injunction, seeking to enjoin implementation of the contract awards. The District Court granted the TRO on the same day it was filed. By its own terms, the TRO lapsed on January 6, 2001. Simultaneous with the granting of the TRO, the Deputy Secretary of Defense directed the DoD Office of the Inspector General ("OIG") to review the procurement awards made the bases of this suit. The government has represented to the court that the agency would temporarily postpone implementation of the contract awards, pending completion of the OIG review study. As of this date, the government has not notified me whether the OIG has reached a final determination on its review study.
It should be noted that plaintiff does not dispute the legitimacy of USAF's corrected final cost comparison decision leading to the agency's award in favor of contractor performance. According to the USAF's corrected final cost comparison decision, contractor performance would result in substantial savings to the American taxpayers. The plaintiffs only complaint in this suit is that the USAF supposedly violated its own regulations and instructions, in particular 32 C.F.R. § 169a.18(a)(3) (c) and USAF Instruction 38-203, when it reversed its October 24, 2000 decision to keep the work in-house. In other words, what plaintiff is seeking is a pronouncement from the court that the USAF must abide by its Appeal Authority's decision to reverse its tentative cost comparison decision and keep the work in-house, even though the USAF has determined, and plaintiff has not disputed, that contractor performance is the most cost-efficient alternative.
C. Jurisdiction
Plaintiff invokes jurisdiction of this court pursuant to the Administrative Dispute Resolution Act ("ADRA"), 28 U.S.C. § 1491(b), the Administrative Procedure Act ("APA"), 5 U.S.C. § 702, the Fifth Amendment of the United States Constitution, the Declaratory Judgment Act, 28 U.S.C. § 2201, and 28 U.S.C. § 1331 (original jurisdiction based on federal question) and 1346 (original jurisdiction based on United States as defendant). As discussed more fully below, because plaintiff has failed to establish that it has prudential standing to pursue this action under the relevant statutes that govern the implementation of OMB Circular A-76, this court lacks subject-matter jurisdiction to address the merits of its complaint.
Original Complaint, at ¶ 1.
D. Issue Presented
Whether plaintiff has established prudential standing to bring this action in federal court?
E. Analysis
1. Dismissal Standard
Both, the defendant USAF and Intervenor LS21stCSC, have moved for dismissal of the instant suit under FED. R. CIV. P.12(b)(1) Rule 12(b)(1) authorizes the dismissal of a case for lack of subject-matter jurisdiction when the district court lacks the statutory and constitutional power to adjudicate the case. In deciding a motion to dismiss, the court will construe the facts alleged in the complaint in the light most favorable to the plaintiff. A district court may dismiss a case for lack of subject-matter jurisdiction on any one of three different bases: (1) the complaint alone; (2) the complaint supplemented by undisputed facts in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.
Docket entries 25 29 (L21stCSC's motion and supporting brief) and docket entries 32 37 (USAF's motion and supporting brief).
See Home Builders Association of Mississippi, Inc., v. City of Madison , 143 F.3d 1006, 1010 (5th Cir. 1998).
See Scheuer v. Rhode , 416 U.S. 232, 236 (1974).
See Clark v. Tarrant County , 798 F.2d 736, 741 (5th Cir. 1986) (citations omitted). See also Lovelace v. Software Spectrum. Inc ., 78 F.3d 1015, 1017 (5th Cir. 1996) (In ruling on a motion to dismiss, a court should consider only those facts stated on the face of the complaint or incorporated into the complaint by reference, and matters of which judicial notice may be taken); and McNamara v. Bre-X Minerals Ltd ., 57 F. Supp.2d 396, 417 n. 12 (E.D. Tex. 1999).
Whether a court possesses subject matter jurisdiction over a claim depends upon the "court's general power to adjudicate in specific areas of substantive law." Ultimately, the burden of establishing the court's subject-matter jurisdiction by a preponderance of the evidence is on the plaintiff. The court should not grant a motion to dismiss, "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of its claim which would entitle it to relief." Conclusory allegations or legal conclusions masquerading as factual allegations will not withstand a motion to dismiss."
See Palmer v. United States , 168 F.3d 1310, 1313 (Fed. Cir. 1999).
See Cedars-Sinai Medical Center v. Watkins , 11 F.3d 1573, 1583 (Fed. Cir. 1993), cert. denied , 512 U.S. 1235 (1994).
Conley v. Gibson , 355 U.S. 41, 45-46 (1957). See also Kaiser v. Aluminum Chem Sales, Inc. v. Avondale Shipyard, Inc ., 677 F.2d 1045, 1050 (5th Cir. 1982), cert. denied , 459 U.S. 1105 (1983); and Adolph v. Federal Emergency Management Agency , 854 F.2d 732, 735 (5th Cir. 1988).
See Fernandez-Montes v. Allied Pilots Assoc ., 987 F.2d 278 (5th Cir. 1993).
2. Standing
Article III's constitutional requirement that the dispute present a "case or controversy" translates into a three-part requirement for standing: (1) a legally cognizable injury ("injury in fact"); (2) an injury that is "fairly traceable" to the challenged action; and (3) an injury that is "likely to be redressed by a favorable decision. In addition to these constitutional requirements, a plaintiff must meet prudential standing requirements set forth by the judiciary. Prudential considerations require that the interests sought to be protected are "arguably within the zone of interests to be protected or regulated by the statute . . . in question." The United States Supreme Court has explained the zone of interests test in terms of whether "the plaintiffs interests are so marginally related to or inconsistent with the purposes implicit in the [relevant] statute that it cannot reasonably be assumed that Congress intended to permit the suit."
See U.S. CONST. art. III, § 2, cl.1; Lujan v. Defenders of Wildlife , 504 U.S. 555, 560 (1992); Valley Forge Christian College v. Americans United for Separation of Church and State, Inc ., 454 U.S. 464, 472 (1982).
See Lujan , 504 U.S. at 560 ("Though some of [standing requirement] elements express merely prudential considerations that are part of judicial self-government, the core component of standing is an essential and unchanging part of the case-or-controversy requirement of Article III."). National Federation of Federal Emoloyees v. Cheney , 883 F.2d 1038, 1043 (D.C. Cir. 1989), cert. denied , 496 U.S. 936 (1990).
Valley Forge Christian College , 454 U.S. at 474-75 (quoting Association of Data Processing Service Organizations v. Camp , 397 U.S. 150, 153 (1970). See also Bennett v. Spear , 520 U.S. 154 (1997).
Clarke v. Securities Industry Association , 479 U.S. 388, 399 (1987) (Emphasis added).
Closely tracking the prudential "zone of interests" standing requirement, the Administrative Procedure Act ("APA") provides federal courts with jurisdiction to review agency action when a claim is brought by "a person . . . adversely affected or aggrieved by agency action within the meaning of a relevant statute." Constitutional, prudential, and APA standing are, thus, practically indistinguishable and result in a single determination of "whether [plaintiffs'] interests bring them within that class of aggrieved persons . . . entitled to judicial review of agency action by the relevant statutes under which the agency acted, thereby conferring upon [plaintiffs] standing to sue" Further, with respect to plaintiffs jurisdictional claim under the newly-enacted ADRA, a court held as recently as last year that the "zone of interests" analysis under that Act is identical to that under the APA.
5 U.S.C. § 702 (1994) (Emphasis added). See also Cheney , 883 F.2d at 1042 (stating that "section 702 and the prudential zone of interests test are intimately related — the former provides a statutory grant from Congress to an aggrieved party to contest agency action and the latter provides a judicial limitation necessary to ensure that the proper party is asserting the claim against the agency.").
Cheney , 883 F.2d at 1042 (citations omitted).
See AFGE , 46 Fed. Cl. at 595.
Plaintiff makes the following arguments in opposing dismissal: (1) that it has standing to enforce the "finality" of the Appeal Authority's October 24, 2000 decision in favor of keeping the work in-house, by virtue of 32 C.F.R. § 169a.18 and USAF Instruction 38-203, chapter 18. (In that regard, plaintiff maintains that as a "directly affected party" under those regulations and instructions, it is entitled to judicial review or "enforcement" under the ADRA, 28 U.S.C. § 1491(b)(1)); (2) that it has standing to proceed under the National Defense Authorization Act, 10 U.S.C. § § 2467 2470; (3) that its position is analogous to that of a "de facto" bidder or an "interested party" with the right to enforce "the MEO house bid" as the final bid; and that (4) because it represents individuals who have a property interest in their federal employment, it is entitled to proceed under the Fifth Amendment of the United States Constitution. For the reasons set fort below, none of these arguments have any merit.
Docket entry 47, at 4-7.
Id . at 13-14.
Id . at 3-4, 14-15.
Id . at 10 12.
Id . at 18.
a. Relevant Statutory Authority
Plaintiff s reliance on federal regulation, 32 C.F.R. § 169a.18, and agency instructions USAF 38-203 which set forth the administrative appeal process applicable to OMB Circular A-76, or even OMB Circular A-76 itself, to establish standing, is misplaced because standing is only conferred by statute. In other words, only Congress has the authority to create a "zone of interests" for standing purposes and therefore, OMB Circular A-76 cannot create enforceable rights in third parties "[because the] executive branch, including OMB, simply has no power to make the law; the power rests exclusively with Congress." In fact, in a case cited and relied upon by plaintiff, the court specifically stated that "OMB Circular A-76 is not a statute and cannot form the basis for standing." Accordingly, plaintiff must establish standing under the relevant statutes authorizing the enactment of OMB Circular A-76. This plaintiff cannot do.
See Cheney , 883 F.2d at 1043 ("It is clear then that appellants must be within the zone of interests of the statutes authorizing OMB Circular A-76, not OMB Circular A-76, itself."). Id .
United States Department of Health and Human Services v. FLRA , 844 F.2d 1087, 1095 (4th Cir. 1988).
National Air Traffic Controllers Association v. Pena , 78 F.3d 585 (6th Cir. 1996) (unpublished opinion).
It is undisputed that the Budget and Accounting Act and the OFPPAA are the statutes that authorize the implementation of OMB Circular A-76. The courts that have addressed the issue of standing of federal employees and their unions under relevant budget and procurement statutory authority have uniformly held that these groups are not within the zone of interests intended to be protected by these acts. These courts have consistently held that the interests of federal employees in maintaining their federal employment is marginally related to or inconsistent with the purpose of these statutes, i.e., obtaining the best and most efficient possible value for the government. The decision rendered by the United States Court of Appeals in the District of Columbia Circuit in National Federation of Federal Employees v. Cheney , 883 F.2d 1038 (D.C. Cir. 1989), cert. denied , 496 U.S. 936 (1990), relied upon by USAF and L21stCSC, and which plaintiff has failed to distinguish, directly disposes of the instant case. Accordingly, an extended discussion of the Cheney case is in order.
See Docket entry 47, at 3.
See Cheney , 883 F.2d at 1039; American Federation of Government Employees, Local 2017 v. Brown , 680 F.2d 722, 723 (11th Cir. 1982); Local 2855, American Federation of Government Employees v. United States , 602 F.2d 574 (3d Cir. 1979); American Federation of Government Employees, Local 1841 v. United States Department of Defense , 682 F. Supp. 479 (D. Nev. 1988); American Federation of Government Employees, AFL-CIO v. Stetson , 640 F.2d 642 (5th Cir. 1981) (federal employees held outside the zone of interests protected by the Service Contract Act); American Federation of Government Employees v. Hoffmann , 427 F. Supp. 1048 (N.D. Ala. 1976); American Federation of Government Employees, Local 1668 v. Dunn , 561 F.2d 1310, 1313 (9th Cir. 1977) (federal employees lack standing to contest a contracting out of an Air Force food service facility).
Clarke , 479 U.S. at 399.
In Cheney , federal employee unions contested the Army's decision to contract out services formerly provided by federal employees at the Directorate of Logistics at Fort Sill, Oklahoma. As in this case, plaintiffs claimed the decision to contract out was in violation of OMB Circular A-76 and a defense procurement statute. The court, however, dismissed the action finding that plaintiffs did not have standing to proceed. In doing so, the court in Cheney noted that the APA standing requirement is identical to the prudential "zone of interests" analysis, in that both require the court to determine whether the federal employees and their union are within the class of persons protected by the statutes under which the agency acted. Significantly, the court stated that OMB Circular A-76 cannot provide the basis for employee standing because it is not a "relevant statute" within the meaning of the APA. The court then proceeded to discuss the "relevant statutes," namely, the Budget and Accounting Act and the OFPPAA. In addition, the court also discussed plaintiffs' argument that it had standing to bring this action, pursuant to § 1223(b) of the 1987 National Defense Authorization Act, which requires the Secretary of Defense to ensure that all costs considered in a cost comparison are "realistic and fair."
Cheney , 883 F.2d at 1039.
Id .
Id . at 1042.
Id . at 1043.
Id . at 1050. Section 1223(b) is now codified in 10 U.S.C. § 2462(b).
With respect to the Budget and Accounting Act, the Cheney court reviewed the legislative history of that Act and found that the disappointed federal employees' sole interest in keeping their jobs, was "in fact inconsistent with the guiding purpose of the [Act]," which sought efficiency as its primary goal and contemplated no recourse for displaced federal employees. In support of its findings, the Cheney court pointedly stated:
Cheney , 883 F.2d at 1047-48.
[T]he legislative history of the Budget and Accounting Act of 1921, as amended, leads us to conclude that Congress did not contemplate in-house federal employees and federal employee labor unions as plaintiffs. Congress carefully crafted a two-pronged checks and balances budgeting process to coordinate the United States budgeting process, eliminate duplication of services, and promote efficiency. Congress knew that some federal employees would be adversely affected, and instead of giving these employees some recourse, intentionally removed the director of the Bureau and Budget from as much external pressure as possible so that he could make the `hard' decision to reduce the employee force where necessary. At most, federal employees' interests are marginally related to this centralized annual budgeting process balanced between the Executive and Legislative branches. [. . .]. It is more logical to conclude that federal employees'' interests are `inconsistent.' Appellants alleged particular interest in the instant case is protection of the federal jobs of their members, not governmental efficiency, as asserted by them.
Id . at 1048 (Emphasis added).
Id . at 1048 (Emphasis added).
Likewise, in analyzing the purpose of OFPPAA, the Cheney court considered the statute's emphasis on "economy and efficiency in governmental operations." In that regard, the court stated:
Id . at 1049.
Since the legislative history of the OFPPAA endorses the Executive branch policy of reliance on the private sector and the Circular finds authority in the OFPPAA, it is difficult to conclude anything but that the interests of federal employees are inconsistent with the purposes of OFPPAA. As previously discussed, appellants' real interest in this case is the protection of the federal jobs of its members, not efficiency in governmental operations. If appellants' real interest in this case was governmental efficiency, they might very well be within the zone of interest of the purposes of the OFPPAA. But again in the assertion of that interest of efficiency, they have no greater claim to standing than any taxpayers. [. . .] Their real interest of job protection flies in the face of a policy that federal departments and agencies, through OMB Circular A-76, should rely on the private sector. Thus appellants' interests are inconsistent with the purposes of the OFPPAA and not within the zone of interest of that Act.
Id . at 1049-50 (Emphasis added).
Id . at 1049-50 (Emphasis added).
In addressing the next statute cited by the Cheney plaintiffs/appellants, section 1223(b) of the National Defense Authorization Act, the court further stated that the "realistic and fair" requirement was added for the benefit of private contractors in order to protect them from a government "bias" toward in-house performance. Accordingly, the Cheney court dismissed the action, holding that federal employees and their unions were not within the zone of interests of the relevant statutes, because their interests were inconsistent with, or marginally related to, the statutes' purpose of achieving governmental efficiency.
Id . at 1050.
Id . at 1043 ("The assumption that if respondents have no standing to sue, no one would have standing, is not a reason to find standing."). Id . at 1051 (quotation omitted). See also American Federation of Government Employees v. Cohen , 171 F.3d 460 (7th Cir 1999) (following Cheney and holding that displaced federal workers and their unions lacked standing to challenge the government's compliance with 10 U.S.C. § 2462(b)).
As in Cheney , the plaintiffs only asserted interest in this case is maintaining federal employment for its members. That interest is fundamentally inconsistent with the purposes of the Budget and Accounting Act, as well as the OFPPAA, the statutes that authorize implementation of OMB Circular A-76. Indeed, plaintiff does not dispute that OMB Circular A-76 is promulgated under these statutes.
See also Stetson , 640 F.2d at 646 (where the Fifth Circuit found that the plaintiff did not have standing because they were not only outside the zone of interest to be protected by the statute under which they sought standing, but that plaintiffs' interests ( i.e ., maintain their federal employment) were "antithetical" to the purpose of the statute).
Docket entry 47, at 3.
Instead, plaintiff in its opposition to dismissal, has argued that two other sections of the National Defense Authorization Act confer prudential standing to proceed in this suit. The sections cited ate: 10 U.S.C. § § 2467 2470. A review of these statutory sections reveal their inapplicability to the case at hand.
Section 2467(b)(1)(A) requires that, in determining whether to contract out under A-76, the DoD:
shall, at least monthly during the development and preparation of the performance work statement and the management efficiency study used in making that determination, consult with civilian employees who will be affected by that determination and consider the views of such employees on the development and preparation of that statement and that study . . .
10 U.S.C. § 2467(b)(1)(A) (2000).
10 U.S.C. § 2467(b)(1)(A) (2000).
As the quoted language indicates, this section provides for specific rights of input, and consideration of input, for employees and their representatives at the very early stages of the A-76 process, and particularly, during the preparation of the performance work statement and the management efficiency study. The specific right of input under this section occurs before the agency issues a solicitation requesting private contractors to submit proposals to be compared to the MEO.
Supplement to OMB Circular A-76, Part I, ch. 3, § A.3.
Even assuming, arguendo, that plaintiff has standing to complain about a failure of the USAF to engage in the early consultation described in the statute, there is no basis upon which that statute can provide plaintiff standing to bring the allegations made in its complaint. Rather, plaintiffs claim is that, long after these preliminary stages in the A-76 process, the agency in responding to a GAO protest, overturned its October 24, 2000 administrative decision without consulting plaintiff or its members. It is clear from the plain language of the statute, however, that § 2467 only requires consultation during the performance work statement and the management efficiency plan development. Plaintiff makes no factual assertion that it is also complaining of the agency's failure to consult as mandated by § 2467. Section 2467 does not control the agency's decision to not consult employees on litigation strategy before the GAO after the cost comparison had been performed. Therefore, while plaintiff may be within the zone of interests of this statute, a has not alleged that the agency has violated any of its requirements.
The second procurement statute that plaintiff has identified is 10 U.S.C. § 2470. This statute applies exclusively to "depot-level" maintenance activities, within the DoD: "A depot-level activity of the Department of Defense shall be eligible to compete for the performance of any depot-level maintenance and repair workload of a Federal agency for which competitive procedures are used to select the entity to perform the workload." The statute further defines the term "depot-level maintenance and repair" as "material maintenance or repair requiring the overhaul, upgrading, or rebuilding of parts, assemblies, or subassemblies, and the testing and reclamation of equipment as necessary. . . ." It is undisputed that the work at issue in this case is the BOS activity for the Lackland AFB, an Air Force training facility. There is no factual assertion in either plaintiffs complaint or responsive brief alleging that depot-level activities are part of the BOS at issue or that plaintiffs members are performing depot-level activities. Plaintiffs reliance on this statute lacks merit.
10 U.S.C. § 2470 (2000).
§ 2460(a).
A depot maintenance activity is defined as "An industrial-type facility designated by the Department of Defense to perform depot-level maintenance on weapon systems, equipment, and components." Docket entry 49, at 7 (citing DoD Directive 4151.18, Enclosure 2, Definitions ¶ 5 (August 12, 1992)and USAF Instruction 21-102 Attachment 1, Section C Terms ("A plant designated by the Department of Defense to perform depot-level maintenance on weapon systems, equipment and components."); and 10 U.S.C. § 2460(a). No such work is at issue on this case.
See section titled "Factual and Procedural Background," supra at 4 fn.7.
To the extent that plaintiff is asserting a status equal to that of a "de facto bidder" to attain standing, according to the analysis in Cheney , that argument fails as well. As an argument of last resort, the employees and the union in Cheney argued that they held a position as a competitor in the solicitation and should gain standing under the disappointed bidder doctrine, which gives private contractors access to challenge procurement decisions in federal district court under the APA. The Cheney court, however, in rejecting the argument found that the purpose of the doctrine is to ensure "the most advantageous contract" to the government, and since neither the union nor its members bid, they "never placed themselves in the special relationship by which the government can bind them . . ." That same analysis applies here. Further, based on the express language of OMB Circular A-76, the MEO cannot appropriately be considered a "house bid," as plaintiff refers to it, since the MEO never participated in the solicitation process. The MEO "is based upon the Performance Work Statement" and serves as "the basis for all Government costs entered on the Cost Comparison form." The MEO is neither an offeror nor a bidder and is not eligible for a performance award. Rather, if the in-house cost is lower than that of the private sector offeror, the solicitation is cancelled, no contract is awarded and the workload is kept in-house to be performed using the new organizational structure described in the MEO.
883 F.2d at 1051 (citing Scanwell Labs, Inc, v. Shaffer , 424 F.2d 859 (D.C. Cir. 1970)). Similarly, in AFGE , the court held that the standing requirements for ADRA, 28 U.S.C. § 1491(b)(1), are identical to those applicable to the APA, and accordingly found that plaintiff unions did not have standing as "interested parties" under the ADRA, to challenge the statutes and regulations they claimed were violated in connection with the government's procurement decision. 46 Fed. Cl. at 592-93.
Id . at 1052-53.
Supplement to OMB Circular A-76, Appendix I, "Definition of Terms."
Docket entry 53, at 5 n. 3 (citing USAF Instruction 38-203).
Plaintiff, without even attempting to distinguish Cheney , cites two cases from the Sixth Circuit in support of standing: Diebold v. United States , and National Air Traffic Controllers Association v. Pena . The Diebold decision cannot support plaintiffs position on standing because the Sixth Circuit declined to address the question of standing, choosing instead to remand the case to the district court for an initial determination.
947 F.2d 787 (6th Cir. 1991).
78 F.3d 585, 1996 WL 102421 (6th Cir. 1996) (unpublished opinion).
In Pena , the court specifically rejected plaintiffs allegation that OMB Circular A-76 conferred standing, because "OMB Circular A-76 is not a statute, and cannot form the basis for standing." The court held that the plaintiffs had standing because their challenge that the agency was contracting out "inherently governmental functions" was based on a violation of a procurement statute. In that regard, the court stated that the statute cited by plaintiffs "seeks to preserve government functions which are so inherently governmental that they should not be privatized. This is the very interest asserted by plaintiffs in this case, and we hold that plaintiffs' interest is within the zone of interest of the [statute]." Unlike in Pena , the plaintiff in this case has not made any claim that the BOS or airfield service functions at issue are "inherently governmental," nor has the plaintiff alleged that the purported "finality" of the USAF October 24, 2000 decision that it wishes to enforce has any basis in a statute, as the plaintiffs did in Pena .
1996 WL 102421, at *3.
Id . at *6.
In the face of the substantial authority discussed above, plaintiff has cited no relevant statutory authority conferring standing under the factual circumstances presented in this case. Failure to plead a violation of a relevant statute is fatal to plaintiffs case. Because plaintiff has failed to establish prudential standing in this case, the court's subject-matter jurisdiction under the APA and ADRA is lacking.
Likewise, plaintiffs assertion of standing under the Fifth Amendment of the United States Constitution on the basis that its members have a property right to federal employment, is not persuasive for the reasons set forth by the Fifth Circuit in American Federation of Government Employees, AFL-CIO v. Stetson , 640 F.2d 642, 645 (5th Cir. 1981). See also docket entry 49, at 10 docket entry 37, at 15-16.