American Federation of Government Employees, Afl-Cio, American Federation of Government Employees, Local 1482, William J. Gately and Michelle Jo Evans v. United States
Docket: 00-5090
Court: Court of Appeals for the Federal Circuit; July 23, 2001; Federal Appellate Court
The American Federation of Government Employees, AFL-CIO, along with other plaintiffs, appealed a decision from the United States Court of Federal Claims that dismissed their complaint due to lack of standing to challenge a cost comparison analysis by the Defense Logistics Agency (DLA). The court found that the plaintiffs did not fall within the zone of interests protected by the Federal Activities Inventory Reform Act (FAIR) or 10 U.S.C. 2462. The FAIR mandates that executive agencies identify non-inherently governmental activities and conduct a competitive cost analysis when considering contracting out such activities. The FAIR allows certain parties, including affected employees and their labor organizations, to challenge the inclusion or exclusion of specific activities on the FAIR list. Additionally, OMB Circular No. A-76 governs the performance of commercial activities, emphasizing that the government should avoid competing with commercial sources unless it can provide services more economically. It requires agencies to perform cost comparisons between private bids and government-provided services and allows for administrative reviews of these decisions by affected federal employees and their representatives. The appellate court affirmed the dismissal on different grounds, confirming the plaintiffs' lack of standing under 28 U.S.C. 1491(b)(1).
On April 30, 1999, the Defense Logistics Agency (DLA) solicited bids for defense material distribution services at the Defense Distribution Depot in Barstow, California, as part of a cost comparison study under OMB A-76 to assess whether these services would be cheaper if performed by a private contractor or the DLA's Most Efficient Organization (MEO). EG&G Logistics, Inc. won the private sector bid, submitting the lowest-priced, technically acceptable proposal. While the DLA was evaluating EG&G's bid against the MEO's, Congress enacted the FAIR, prompting the DLA to include the depot services on its FAIR list.
On January 5, 2000, the DLA found EG&G's bid to be approximately $2.5 million lower than that of the MEO, leading to a tentative decision to contract with EG&G. Federal employees William J. Gately and Michelle Jo Evans, represented by their union, claimed they would be displaced if the contract was awarded to EG&G. Both they and EG&G appealed the cost comparison decision to the DLA Appeal Authority, which recalculated the costs but upheld the initial finding that EG&G's bid was still about $2.2 million lower than the MEO's.
Subsequently, Appellants filed a lawsuit in the Court of Federal Claims, challenging the Appeal Authority's decision on the grounds that the DLA had not conducted a proper price comparison per OMB A-76, the FAIR, and 10 U.S.C. 2462(b). The government moved to dismiss, asserting that Appellants lacked standing to contest the cost comparison. The court evaluated whether Appellants qualified as "interested parties" under 28 U.S.C. 1491(b)(1), which pertains to bid protests. The court analyzed legislative history to clarify Congress's definition of "interested party," noting that historically, only disappointed bidders had standing in the Court of Federal Claims, while federal district courts handled post-award protests based on the Administrative Procedure Act.
Standing under the Administrative Procedure Act (APA) is defined by 5 U.S.C. § 702, which allows individuals adversely affected by agency actions to seek relief. To establish standing, claimants must show: 1) they have suffered an "injury-in-fact"; 2) the injury is "fairly traceable" to the agency's action and likely to be redressed by a favorable ruling; and 3) their interests fall within the "zone of interests" protected by the relevant statute.
The court identified that the intent of 28 U.S.C. § 1491(b)(1) was to provide concurrent jurisdiction to both the Court of Federal Claims and district courts over bid protests, allowing any party with standing under either jurisdiction to qualify as an "interested party." Although the Appellants lacked standing under § 1491(a), the court suggested they could have standing under § 1491(b)(1) if they qualified under the APA.
Upon applying the APA's standing criteria to the Appellants, the court did not resolve the injury-in-fact or traceability issues but concluded that the Appellants did not fall within the protective zone of either the Federal Acquisition Regulation (FAIR) or 10 U.S.C. § 2462. Consequently, the court determined the Appellants could not establish standing under the APA and thus were not "interested parties" under § 1491(b)(1). The government’s motion to dismiss the complaint for lack of standing was granted.
The Appellants have appealed the dismissal, and the jurisdiction of the court is affirmed under 28 U.S.C. § 1295(a)(3). The appeal raises the issue of whether federal employees or their union representatives possess standing to challenge an executive agency's cost comparison decision in the Court of Federal Claims, a matter of first impression. The court's analysis will focus on the statute governing the jurisdiction of the Court of Federal Claims, § 1491(b)(1), which allows actions by interested parties regarding federal agency procurement processes and establishes the courts' broad authority to grant various forms of relief while prioritizing national defense and security interests.
The statute grants standing to 'an interested party objecting to a solicitation by a Federal agency,' but does not define 'interested party.' Appellants claim they qualify as 'interested parties' under both a standard dictionary definition, arguing they risk job loss if services are contracted to EG&G, and under the Administrative Procedure Act (APA) criteria, asserting they fall within the protective zone of OMB A-76 and the FAIR. The government counters that 'interested party' should align with the Competition in Contracting Act (CICA), which defines it as a bidder or offeror whose economic interests are directly affected by contract awards or failures. Legislative history from the Administrative Disputes Resolution Act of 1996 (ADRA) reveals that the provision was intended to expand bid protest jurisdiction of the Court of Federal Claims, allowing both pre- and post-award protests, while also aiming to consolidate jurisdiction over such cases, ultimately granting exclusive authority to the Court of Federal Claims after a sunset provision would eliminate district court jurisdiction.
Congress intended to grant the Court of Federal Claims jurisdiction over post-award protests, which was previously limited to district courts under the Scanwell doctrine. The Administrative Dispute Resolution Act (ADRA) expanded the Court of Federal Claims' jurisdiction to include such protests, thereby incorporating "Scanwell jurisdiction." Prior to the ADRA, the Court's jurisdiction was restricted to pre-award protests and governed by a narrow standard of review. The ADRA also established the Administrative Procedure Act (APA) standard of review for all bid protest actions.
The appeal raises the question of whether Congress aimed to broaden the types of parties eligible to file bid protests in the Court of Federal Claims. Traditionally, the Scanwell doctrine, which allows disappointed bidders to challenge contract awards, has been interpreted narrowly, typically including only those who actively competed for the contract. However, since the Scanwell doctrine is rooted in the APA, Congress might have intended to allow any party with standing under the APA to bring a dispute, potentially including parties beyond disappointed bidders, such as incumbent contractors who could claim injury from contract awards not made through traditional bid processes.
Waivers of sovereign immunity, such as in 1491(b)(1), are to be interpreted narrowly, favoring the sovereign, as established in McMahon v. United States. Legislative history indicates that the term 'Scanwell jurisdiction' pertains to district court jurisdiction over bid protests under the APA by disappointed bidders, thus suggesting that standing under 1491(b)(1) is limited to such parties. Congress did not adopt the broad APA language for standing but specified 'interested party,' a term consistent with the Competition in Contracting Act (CICA), which defines it as an actual or prospective bidder or offeror whose economic interests would be affected by contract awards. This implies that standing under 1491(b)(1) aligns with CICA’s requirements. Consequently, since Appellants are neither actual nor prospective bidders or offerors, they lack standing to contest the DLA's contract award decision. The Court of Federal Claims' dismissal of Appellants' claim for lack of standing is thus affirmed, with each party responsible for its own costs.
10 U.S.C. 2462 mandates that the Department of Defense must procure supplies and services from the private sector if a cost analysis shows that a private source can deliver them more economically. The Court of Federal Claims evaluated the appellants’ standing concerning the FAIR, while the appellants concentrated on their standing under OMB A-76. The case of Impresa examined whether a bidder, excluded from consideration due to unacceptable technical proposals, had the standing to file a bid protest under 1491(b)(1). The court noted that it did not need to determine if the 1996 statute amendments had eased standing requirements since the bidder had a sufficient economic interest in the contract award to meet even the stricter CICA standard. Thus, Impresa did not resolve the standing issue currently at hand. Additionally, the statute states that an individual experiencing legal harm or adverse effects from agency actions is entitled to judicial review under 5 U.S.C. 702.
