American Federation of Government Employees v. United States

46 Fed. Cl. 586, 2000 U.S. Claims LEXIS 87, 2000 WL 567563
CourtUnited States Court of Federal Claims
DecidedMay 10, 2000
DocketNo. 00-130C
StatusPublished
Cited by21 cases

This text of 46 Fed. Cl. 586 (American Federation of Government Employees v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Federation of Government Employees v. United States, 46 Fed. Cl. 586, 2000 U.S. Claims LEXIS 87, 2000 WL 567563 (uscfc 2000).

Opinion

OPINION

FIRESTONE, Judge.

This case arises from a solicitation issued by the Defense Logistics Agency (“DLA”) for a contract to operate three DLA material [588]*588distribution depots. The solicitation was part of a two-step process aimed at determining whether the services described in the solicitation could be performed more economically by a private contractor when compared to the costs of the DLA’s in-house personnel (“MEO”)1 performing the same work. In this action brought pursuant to 28 U.S.C. § 1491(b)(1) (1994 & Supp. IV 1998), plaintiffs, two federal employees and their unions,2 challenge the DLA’s final cost comparison which led the DLA to contract out the work.

Plaintiffs contend that the DLA’s cost comparison contains mistakes in violation of the relevant sections of Office of Management and Budget Circular No. A-76 (Revised 1999) [hereinafter OMB Circular A-76] and its Supplemental Handbook, as well as the Federal Activities Inventory Reform Act of 1998, Pub.L. No. 105-270, § 2(e), 112 Stat. 2382, 2383 (codified at 31 U.S.C. § 501 note (Supp. IV 1998)) (“FAIR”) and the Defense Authorization Act, 10 U.S.C. § 2462(b) (1994).3 The government argues that plaintiffs do not have standing under the cited statutes to challenge the cost comparison, and therefore, this action should be dismissed. Based on the arguments presented by the parties and discussed below, this court concludes that plaintiffs lack standing and thus, this court dismisses the action.

FACTS

A. The DLA Decision

The facts are set forth in the Administrative Record filed with this court on March 22, 2000, and may be summarized as follows. On April 30, 1999, the DLA issued Solicitation No. SPO-770-99-R-7002 (“solicitation”) seeking proposals for the performance of defense material distribution services at the Defense Distribution Depot Barstow, California (“Barstow Depot”) under a hybrid fixed-price (indefinite delivery time/indefinite quantity) contract for a three-year term, with an option for an additional two years. The performance requirements for the contract were set forth in a Performance Work Statement (“PWS”) accompanying the solicitation.

The DLA issued the solicitation in support of a cost comparison study conducted under OMB Circular A-76. OMB Circular A-76 states that it is the general policy of the federal government to rely upon commercial sources to provide the products and services the government needs. See OMB Circular A-76 ¶¶ 4-5. OMB Circular A-76 also provides that in-house performance of a commercial activity is authorized if a “cost comparison” demonstrates that the federal agency is operating or can operate the activity at a lower estimated cost than a qualified commercial source. See id.

The DLA designed the subject cost comparison study to determine whether the services at the Barstow Depot as described in the PWS could be performed more economically by the DLA’s MEO or by a private commercial source. The DLA conducted the cost comparison in two stages, as outlined in [589]*589part II of the Supplemental Handbook and in the solicitation. First, the DLA conducted a competition among commercial sources to find the lowest-priced, technically-acceptable proposal. Second, the DLA evaluated the selected commercial source’s proposal against the MEO’s proposal.

In accordance with this process, the DLA received seven proposals from interested private commercial sources. The DLA established the competitive range and held discussions with the various private offerors within the range, including EG & G Logistics, Inc. (“EG & G”), the final contract awardee in this case. EG & G had initially submitted a proposal to perform the work for a fixed price of $14.6 million dollars, which it then reduced to $11.9 million dollars in response to amendment 0011 to the solicitation, which was issued following discussions between the DLA and offerors in the competitive range.4

On November 29, 1999, the DLA selected EG & G as the best value offeror for comparison with the MEO. On that same date, the DLA opened the MEO’s sealed cost estimate of $17 million, which was based on a workforce of 65 employees.5 Before conducting the final cost comparison, which requires entry of both the private and the MEO cost proposals on a specified form, the DLA sought to confirm that both proposals were based on the same scope of work and levels of performance. Following that evaluation, the DLA issued solicitation amendment 0013 to allow EG & G to revise its bid to reflect the same workload estimate used by the MEO. On December 17, 1999, EG & G submitted its final proposed price of $11,852,150, based on a workforce of 62 employees.

While the cost comparison process was pending, Congress enacted the FAIR Act, which now governs the process for contracting out to private sources services the government currently provides for itself. Under FAIR, agencies are required to identify those activities that are “not inherently governmental” and thus, appropriate for contracting out to private sources. See FAIR § 2, 83 Stat. at 2382-83. The agency is then required to list those activities that are not inherently governmental with the OMB. Id. The statute further provides that 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 are realistic and fair.” Id. § 2(e), 83 Stat. at 2383.® The distribution services for the Barstow Depot at issue in this case were put on the FAIR list on December 30, 1999.

On January 5, 2000, in accordance with OMB Circular A-76, FAIR § 2(e), and 10 U.S.C. § 2462(b), the DLA conducted a formal cost comparison. First, the DLA entered the MEO’s cost estimate of $17,032,459. Then, the DLA entered EG & G’s unadjusted cost estimate of $11,852,150. When the cost comparison was completed, taking into account a minimum conversion differential of $1,263,433,6 7 the total in-house cost of performance of $17,032,459 was found to be approximately $2.5 million more than the adjusted cost of EG & G’s performance of $14,521,719. [590]*590Based upon these results, the DLA made a tentative determination to contract out the Barstow Depot operations to EG & G.

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. OMB Circular A-76 allows for administrative appeals by various parties, including potentially displaced federal workers and their unions. See Supplemental Handbook, part I, ch. 3, § K.

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Cite This Page — Counsel Stack

Bluebook (online)
46 Fed. Cl. 586, 2000 U.S. Claims LEXIS 87, 2000 WL 567563, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-federation-of-government-employees-v-united-states-uscfc-2000.