“in- or out-:” the jurisdictional confusion over...

“In- or Out-:”: The Jurisdictional Confusion Over Challenges to Agency Decisions to In-Source Contracted Work

By Gabriel D. Soll and Tara L. Ward*

Table of Contents

I. MEANS V. ENDS: THE RECENT LEGAL HISTORY OF IN-SOURCING............5

A. FY2006 & FY2008 National Defense Authorization Acts.......7

B. 2009..................................................................................................................1415

C. 2010 & 2011.................................................................................................2829

II. DO I CONTRADICT MYSELF? - FEDERAL DISTRICT COURT AND APPELLATE CIRCUIT COURT CASES..................................................................3941A. Legal Background.....................................................................................4042

B. Federal Courts Finding Jurisdiction.......................................4749

C. Federal Courts Denying Jurisdiction.......................................5256

III. TRIALS TOWARD PROGRESS? - COURT OF FEDERAL CLAIMS CASES. . .6266

A. Santa Barbara v. United States...................................................6468

B. Hallmark-Phoenix 3, LLC v. United States...........................7176

IV. TRUTHS FROM ERROR RATHER THAN CONFUSION - SIMILAR ISSUES CHALLENGES...............................................................................................................8287A. GAO Protests...............................................................................................8388

* Gabriel D. Soll is an Attorney-Adviser in the Office of General Counsel, Procurement and Financial Assistance, U.S. Department of Energy. He thanks Julia Bogolin and Frank Soll[for their patience and encouragement. He is particularly thankful to Ms. Wardbrief author stillis piece as writing with her has been as fun as it has been insightful. Tara L. Ward is an Associate in the government contracts group at Wiley Rein, LLP. She thanks Mr. Soll for his immeasurable enthusiasm, wisdom, and wit, as well as Jason O'Brien for his unwavering support. The authors also wish to thank Heather Kilgore Weiner for her invaluable suggestions. The views expressed in this article are solely those of the authors and do not necessarily reflect the opinions of the Department of Energy, the Federal Government, or Wiley Rein. approval.[Placeholder for brief author bios, still under review for approval.]

1

Author, 01/03/-1,

Authors: Our style guide states that colons appear after closing quotation marks. Relevant rule (from Style Guide): Correct order: comma/period, quotation mark(s), semicolon, footnote call, colon, hyphen. The PCLJ rule is derived from Chicago Manual of Style Rules 6.09 and 6.10. Rule 6.10 specifically discusses the relationship between closing quotation marks and colons. KMJ

Author, 01/03/-1,

Note to Shauna: I checked the table of contents to make sure as content / sections were added everything made its way into the TOC. KMJ.

Author, 01/03/-1,

Authors: If its okay with you, I’d like to italicize the case names in the TOC. We italicize case names “in text” (but not in the footnotes) per BB R. 2.2. In the past, we’ve applied this rule to the Table of Contents as well. See, e.g. John S. Pachter, The Incredible Shrinking Contracting Officer, 39 Pub. Cont. L.J. 705 (2010); Paige Spratt, Strict Compliance With Construction Contract Notice Provisions: Detrimental To Contractors And Taxpayers, 40 Pub. Cont. L.J. 911 (2011).

Author, 01/03/-1,

Note: Mr. Soll’s position is Attorney-Adviser (with an “e”). I made this change below, but the DoE will not approve the bio unless “adviser” is spelled with an “e” not an “o.” Wanted to pass this along to make sure it didn’t get changed later (Do we need to pass this along to Wendy?). KMJ.

Author, 01/03/-1,

Authors: In the bios I used tracked changes to delete language I thought was a hold-over from previous drafts. If you would like / need further revisions to the bios, please let us know! KMJ

B. A-76 Challenges.......................................................................................9196

V. UNDERSTANDING THE CONFUSION – CONCLUSIONS.................................101108

“In-sourcing,” or the practice of moving functions performed

by contractors back to federal employees,1 is a controversial yet

critical topic as the Ffederal Ggovernment looks to spend

efficiently while achieving required outcomes. The issue of when

and to what extent agencies should bring previously contracted

out work back in-house began to intensify in 2006,2 and was

brought to the fore in 20093 with the promulgation of legislative

1 KATE M. MANUEL AND JACK MASKELL, CONG. RESEARCH SERV., REPORT NO. R41810, INSOURCING FUNCTIONS PERFORMED BY FEDERAL CONTRACTORS: AN OVERVIEW OF THE LEGAL ISSUES, INTRODUCTION (June 8, 2011) [hereinafter INSOURCING FUNCTIONS PERFORMED BY FEDERAL CONTRACTORS ].

2 See National Defense Authorization Act for Fiscal Year 2006, Pub. L. No. 109-163, 119 Stat. 3136 (Jan. 6, 2006). Section 343 required the Department of Defense (“DoD”) to issue guidelines and procedures to ensure consideration was given to government personnel for work performed under contracts. DoD subsequently issued guidance authorizing conversion of contracted activities up to three percent of a component’s spending and requiring independent review and authorization if that threshold were to be exceeded, but the guidance was later cancelled by National Defense Authorization Act for Fiscal Year 2008, § 324, Pub. L. No. 110-181, § 324(c), 122 Stat. 3, 61 (Jan. 28, 2008).

3 See Presidential Memorandum on Government Contracting, 74 Fed. Reg. 9755 (Mar. 6, 2009); see also Omnibus Appropriations Act of 2009, Pub. L. No. 111-8, Division D, Title VII, § 736, 123 Stat. 524, 689-90 (Mar. 11, 2009) (requiring federal agencies, with the exception of the Department of Defense, to develop and implement guidelines to govern in-sourcing decisions); Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 § 321, Pub. L. No. 110-417, § 321, 122 Stat. 4356, 4411 (Oct. 14, 2008) (requiring the Office of Management and Budget to “review the definition of the term ‘inherently governmental function’...

2

Author, 01/03/-1,

Capitalized per PCLJ Style Guide

and policy documents that pushed agencies to consider in-sourcing

activities as a cost-saving measure. These initiatives

represented a sea change to 50fifty years of contracting policy

favoring procurement of commercial products and services.4

Regardless of the extent to which the Government continues to

pursue in-sourcing as a cost-saving measure in the future, the

courts’ most recent treatment of in-sourcing decision suggests

the law is far from settled on how to keep the Government

accountable for its procurement activities.

The entire in-sourcing process warrants review, as it

involves not only complex legal issues, but complex business-like

decisions by the Government as federal This change has already

decreased the amount of work available to the government

[and] develop a single consistent definition”).

4 Kate M. Manuel and Jack Maskell, Cong. Research Serv., R41810, INSOURCING FUNCTIONS PERFORMED BY FEDERAL CONTRACTORS, supra note Error: Reference source not found, at: An Overview of the Legal Issues, 1-2 n. 6 (2011) (comparing Bureau of the Budget Bulletin No. 55-4 (Jan. 15, 1995) (“[The] Federal Government will not start or carry on any commercial activity to provide a service or product for its own use if such product or service can be procured from private enterprise through ordinary business channels.”), with Bureau of the Budget Circular A-76 (Mar. 3, 1966) (“The guidelines in this Circular are in furtherance of the Government’s general policy of relying on the private enterprise system to supply its needs.”), and Office of Management and Budget Circular No. A-76 (Revised), May 29, 2003, at D-2 [hereinafter “Circular A-76”] (“The longstanding policy of the federal government has been to reply on the private sector for needed commercial services. To ensure that the American people receive maximum value for their tax dollars, commercial activities should be subject to the forces of competition.”).

3

Author, 01/03/-1,

Redlined language added in most recent draft by authors. KMJ. (More recent draft = 1.26.12 author draft or author redlined draft).

Author, 01/03/-1,

Note to Authors: Both the AE and I read “decision” as plural (i.e. referring to multiple decisions). Would you like us to add an “s”?

Author, 01/03/-1,

Note to Authors: We’ve adopted the numerals guidance from Bryan Garner’s The Redbook. To conform with what most of our authors seem to prefer. I’m recommending that “fifty” be changed to “50” to be consistent with the current PCLJ style guide and also to be consistent with “50 years” on p. 108 “(Broadly, for over 50 years, the Federal Government has worked to ensure that federal departments and agencies do not compete with the private sector.”).

Author, 01/03/-1,

The edition of “ed” is an author edit per “Updates for AE (Redlines) 1.26.12.” Please do not change. KMJ

Author, 01/03/-1,

No citation needed at end of sentence due to the internal citations regarding 2009 policy statement. Concur. KMJ.

contracting community and will continue to affect future

contracting efforts. The effects are not, however, limited to

the private sector. Federal agencies also face many challenges

in determining which efforts should be in-sourced. In

particular, Aagencies must not only devise methods of making in-

sourcing decisions, but also manage the “multi-sector workforces”

— which includes supporting functions such as human capital,

finance, and acquisition support.5 Once the initial decisions are

made to bring positions back to federal employees, agencies will

also have to account for hiring timelines, navigate training and

security clearance needs for new hires, and manage ancillary

needs such as facilities or equipment.6 On top of all of that,

these actions must be taken in an environment where the basic

rules are still being defined.7

5 U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-10-58R, CIVILIAN AGENCIES’ DEVELOPMENT AND IMPLEMENTATION OF INSOURCING GUIDELINES 7 (2009) [hereinafter CIVILIAN IMPLEMENTATION OF INSOURCING GUIDELINES ].U.S. Gov’t Accountability Office, GAO-10-58R, Insourcing Guidelines, at 7 (2009).

6 U.S. Gov’t Accountability Office, GAO-10-58R, Insourcing Guidelines, at 7 (2009)Id.; see also, Maj. Kevin P. Stiens & Susan L. Turley, Uncontracting: The Move Back to Performing In-House, 65 A.F.L. REV. 145, 174 n.225 (2009)Kevin P. Stiens and Lt. Col. (Ret.) Susan L. Turley, Uncontracting: The Move Back to Performing In-House, 65 Air Force L. Rev. 145 (2009).

7 As discussed herein, uncertainty surrounding central terms such as “inherently governmental” and “special consideration” have hindered agencies from developing specific policies and procedures.

4

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

This FN is more of an aside that foreshadows what is to follow and is supported in the rest of the article. A citation does not seem necessary.

Author, 01/03/-1,

I believe the proper citation is a “See” cite to page 174, fn 225. This provides direct support for the author’s statement. KMJ.

Author, 01/03/-1,

We could probably cut the citation to the A.F.L. article as it really does not talk about the Government responsibilities in conducting Insourcing in any great detail. It could be left though, as it does generally discuss insourcing v. outsourcing. PJS

Author, 01/03/-1,

Cannot find direct support for this sentence in the AF Law Rev. article. RPC Rule 15.1: remove professional designation from author name.

Author, 01/03/-1,

Per 1.26.12 author draft. KMJ.

Author, 01/03/-1,

Redlined language added in most recent draft by authors. KMJ.

Author, 01/03/-1,

Given the rest of the article and the introductory nature of the previous three sentences I do not think citations are necessary here. PJS Concur. KMJ.

Amid this changing landscape, government contractors that

are losing work to federal employees are searchinghave searched

for ways to challenge the decision to in-source, or at least to

ensure the choice was made according to stated guidelines and

regulations. This Aarticle explores the justiciability of in-

sourcing determinations and highlights the tensions that exist in

potential forums for resolving such disputes. Part One of this

Aarticle provides background information on recent statutory,

regulatory, and policy guidelines that frame the discussion.

Part Two reviews challenges to in-sourcing decisions before the

U.S. dDistrict cCourts, and discusses the jurisdictional tension

between the Administrative Procedure Act (“APA”) and the

Administrative Dispute Resolution Act’s (“ADRA”) modification of

the Tucker Act. Part Three turns to recent, divergent decisions

from the Court of Federal Claims that address the constitutional

law considerations of jurisdiction in the context of in-sourcing

decisions. Part Four considers similar challenges in the realm

of government contracting, aiming to draw useful arguments for

potential in-sourcing protests.

Finally, this Aarticle observes that though challenges to in-

sourcing decisions appear to be non-justiciable, the law is far

from settled on that point. To that end, this Aarticle

recommends that decisions to in-source be reviewable and

recognizes that the courts’ jurisdiction will become clearer as

5

Author, 01/03/-1,

Current PCLJ stylistic convention (in style guide) Authors: Earlier this year, our Wendy Smith, the ABA Editor asked us to consider dispensing with the practice of putting quotation marks around acronyms (apparently several authors objected to this practice). Dropping the quotation marks didn’t seem to contradict any major style guides so we adopted Wendy’s suggestion. I applied the rule throughout the Article.

Author, 01/03/-1,

Current PCLJ stylistic convention. Note to Authors: The previous SAE advised me that we always capitalize “Article” (when an article refers to itself; same thing for notes). I’ve noticed in older PCLJ issues that “article” is not capitalized so this may have changed since Tara was EIC. I’m not sure when or why the rule was changed, but I’ve capitalized “Article” throughout to be consistent with the other articles we’ve published recently. KMJ

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

This is really introductory and again probably does not need a citation. PJS

Author, 01/03/-1,

Per 1.26.12 author draft.

agency-specific guidelines are created. Ultimately, this

Aarticle suggests a possible strategy for challenging such

decisions and recommends other changes that would establish a

fair and regulated system for making these important

determinations.

I. MEANS V. ENDS: THE RECENT LEGAL HISTORY OF IN-SOURCING

“Perfection of means and confusion of ends seem to characterize

our age.” – Albert Einstein8

Regardless of the term used or the method applied, for the

last 50fifty-plus years the balance between paying contractors

and paying gGovernment employees to do the Government’s work has

been debated, changed, and then changed again. “Out-sourcing” is

the general practice of hiring private contractors to perform

functions which could be performed by gGovernment workers.9 “In-

sourcing,” by contrast, is the process of bringing work back to 8 Albert Einstein, Out of My Later Years 113 (Philisophical Library 1950).9 Kevin P. Stiens & Susan L. Turley, Uncontracting: The Move Back to Performing In-House, 65 A.F.L. REV. 145, 146 (2009). Some practitioners define “out-sourcing” narrowly, referring only to those contracts made outside of the Circular A-76 process. See Maj. Kevin P. Stiens and Lt. Col. (Ret.) Susan L. Turley, Uncontracting: The Move Back to Performing In-House, 65 Air Force L. Rev. 145,u. at 149 n. 20 (2009) (citing USLegal, Inc., Outsourcing Law & Legal Definition, http://definitions.uslegal.com/o/outsourcing/ (last visited Sept. 20, 2011), and Bernard D. Rostker, A Call to Revitalize the Engines of Government 3 n.5 (2008)). This Aarticle uses the broader definition of out-sourcing.

6

Author, 01/03/-1,

Probably should be short-cited. I do not recommend pulling first use of source. I’m not sure if I agree with adding a citation at the beginning of the FN. Authors’ citation supports both the ATL and BTL propositions. I think putting the source at the beginning of the FN makes it clear that that the source is substantiating the ATL statement, but the pincite should be to 149 n. 20 (so same pincites not matter if we site once or twice in the FN). I do not think p. 146 substantiates the statement. (Reema if you want to take a look this is source 8 on the portal). NB: I did not make these edits BTL because I believe this is a subjective decision that falls under Reema’s purview. (Reema – I tried to make these comments clear, but if you don’t understand what I’m saying call me (847-922-9177). KmJ.

Author, 01/03/-1,

I added the Stiens article because it supports the general definition of outsourcing and is a source that the authors have used before. I did not short cite it because I have suggested pulling the first reference to this source. PJS

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

This seems introductory, so no citation should be necessary. PJS

Author, 01/03/-1,

Per PCLJ Style Guide, “government” is not capitalized when used as an adjective, except in the phrase “Federal Government.”

Author, 01/03/-1,

Same comment regarding numbers as above. Comment re-pasted for your convenience. Note to Authors: We’ve adopted the numerals guidance from Bryan Garner’s The Redbook. To conform with what most of our authors seem to prefer. I’m recommending that “fifty” be changed to “50” to be consistent with the current PCLJ style guide and also to be consistent with “50 years” on p. 108 (“Broadly, for over 50 years, the Federal Government has worked to ensure that federal departments and agencies do not compete with the private sector.”).

gGovernment employees after it has been performed by a

contractor.10 This section reviews recent changes in law,

regulation, and policy pronouncements that collectively move

gGovernment policy and preferences away from out-sourcing and

toward in-sourcing.

In-sourcing as a policy preference was re-introduced to the

legislative landscape with the enactment of the National Defense

Authorization Act for Fiscal Year 1991.11 Section 1483(b)(2),

enacted as 10 U.S.C. § 129a, established a policy for the

Department of Defense (DoD) to use the “least costly” personnel

in carrying out its missions. Specifically, the statute

provided:

The Secretary of Defense shall use the least costly form of personnel consistent with military requirements and other needs of the Department. In developing the annual personnel authorization requests to Congress and in carrying out personnel policies, the Secretary shall—

(1) consider particularly the advantages of converting from one form of personnel (military, civilian, or private contract) to another for the performance of a specified job; and

(2) include in each manpower requirements report submitted under section

10 See id. at 148 (citing Memorandum from Deputy Secretary of Defense, to Secretaries of the Military Departments et al., subject: Insourcing Contracted Services-Implementation Guidance, Attach. 1, at 2 (May 28, 2009)).11 See generally National Defense Authorization Act for Fiscal Year 1991, Pub. L. No. 101-510, 104 Stat. 1389 (Nov. 5 1990).

7

Author, 01/03/-1,

I think this is Reema’s call. KMJ

Author, 01/03/-1,

Has internal citation, so no FN is needed. PJS

Author, 01/03/-1,

Concur with PJS statement about why no FN necessary. KMJ

Author, 01/03/-1,

Simply stating what is going to be covered and no citation is needed. PJS

Author, 01/03/-1,

Concur with added source. Concur with substantiation. I also verified substantiation of citing sources. KMJ.

Author, 01/03/-1,

Need a source supporting this definition of in-sourcing. Can likely be found in the same materials in FN 9, particularly the legal dictionary.

115a of this title a complete justification for converting from one form of personnel to another.12

From this point forward, the in-sourcing debate wavered between

determining how to effectively out-source gGovernment work and

how to reduce costs by bringing this work back in-house.

A. FY2006 & FY2008 National Defense Authorization Acts

In the early 2000s, the George W. Bush Administration

identified “competitive sourcing” (later referred to as

“commercial services management”) as a priority,13 prompting some

concern that the balance had shifted too far in favor of the

private sector performing work that government employees should

do.14 In response, Congress passed legislation directing the 12 10 U.S.C. § 129a (2006).

13 U.S. Office of Management and Budget, Performance of Commercial Activities, 67 Fed. Reg. 69769, 69,772 (proposed Nov. 19, 2002) (identifying competitive sourcing, or “the process of opening the government’s commercial activities to the discipline of competition” as one of President Bush’s five main initiatives for improving the performance of Government).

14 INSOURCING FUNCTIONS PERFORMED BY FEDERAL CONTRACTORS , supra note Error: Reference source not found, at Kate M. Manuel and Jack Maskell, Cong. Research Serv., R41810, Insourcing Functions Performed by Federal Contractors: An Overview of the Legal Issues 2 (2011) (citing U.S. Officer of Management and Budget, Performance of Commercial Activities, 67 Fed. Reg. 69772 (Nov. 19, 2002)); see also generally Memorandum from Peter R. Orszag, Dir., Office of Mgmt. and Budget, to Heads of Executive Dep'ts & Agencies, Managing the Multi-Sector Workforce 1 (July 29, 2009)[hereinafter Orszag Memorandum], available at http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy2009/m-09-26.pdf.Peter R. Orzag, Director, U.S. Office of Management and Budget, Managing the Multi-sector Workforce, July

8

Secretary of Defense to “prescribe guidelines and procedures for

ensuring that consideration is given to using Federal Government

employees for work that is currently performed or would otherwise

be performed under Department of Defense contracts.”15

Specifically, section 343 of the National Defense Authorization

Act for Fiscal Year 2006,16 codified at 10 U.S.C. § 2461,

29, 2009, available at http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy2009/m-09-26.pdf .

15 National Defense Authorization Act for Fiscal Year 2006, Pub. L. No. 109-163, § 343(a)(1), 119 Stat. 3136, 3200 (Jan. 6, 2006).

16 National Defense Authorization Act for Fiscal Year 2006, Pub. L. No. 109-163 § 343 (Jan. 6, 2006) [hereinafter, FY2006 NDAA].Id. Leading up to the passage of the National Defense Authorization Act for Fiscal Year 2006 (FY2006 NDAA), however, were many years of work and research. Notably, section 832 of the Floyd D. Spence National Defense Authorization Act of 2001, Pub. L. No. 106-398 (Oct. 30, 2000), mandated the Comptroller General to convene an expert panel to study “the policies and procedures governing the transfer of commercial activities for the Federal Government from Government personnel to a Federal Contractor.” Floyd D. Spence National Defense Authorization Act of 2001, Pub. L. No. 106-398, § 832(a), 114 Stat. 1654A-221 (2000). The study was to include the procedure governing which functions should be considered, the economic analyses, DoD implementation of the Federal Activities Inventory Reform Act of 1998 [hereinafter the “FAIR Act”)], and comparisons to the Circular A-76 procedures. Id. Pub. L. No. 106-398 § 832(a) (Oct. 30, 2000). The “Commercial Activities Panel,” as came to be known, released its report on April 30, 2002. The report concluded with ten “principle” recommendations, as well as suggesting changes to the Circular A-76 process and an implementation strategy. The ten “principles” recommended were as follows:

1) Support agency mission, goals, and objectives (i.e. link the need for the goods or services to the mission of an agency).

9

Author, 01/03/-1,

Federal Government employees: capitalized “Federal Government” here because it is a quote. Later in the Article, it is lower case. KMJ.

required DoD guidelines to give “special consideration” to using

gGovernment personnel for functions that: (1) had been performed

by gGovernment employees since late 1980; (2) were closely

associated with the performance of “inherently governmental

functions”; (3) were not contracts that were awarded on a

competitive basis; and (4) received poor performance evaluations

due to excessive costs or inferior quality.17

2) Utilize consistent human capital practices to attract and retain a federal workforce.

3) Recognize “inherently governmental functions” should be performed by federal personnel.

4) Develop practices to foster efficient and effective Government organizations.

5) Make sourcing decisions based on a “clear, transparent, and consistently applied process.”

6) Avoid arbitrary or numerically-driven goals.7) Establish processes to ensure that when work could be

performed by either sector consistent competition practices are applied.

8) Make such competitions as fair, efficient, and effective as possible.

9) Ensure such competition consider quality and cost factors.

10) Ensure accountability in connections with sourcing decisions.

U.S. GENERAL G OV’T ACCOUNTABILITY ING OFFICE, GAO-02-866T , : COMMERCIAL ACTIVITIES PANEL: IMPROVING THE SOURCING DECISIONS OF THE FEDERAL GOVERNMENT, GAO-02-866T, 46-5620-23 (Apr. 30, 2002)ereinafter GAO-COMMERCIAL ACTIVITIES PANEL ] (available at www.gao.gov/new.items/d02866t.pdf).

17 National Defense Authorization Act for Fiscal Year 2006, Pub. L. No. 109-163, § 343(a)(2)(A)-(D), 119 Stat. 3136, 3200 (Jan. 6, 2006). In Section 343(c), the FY06 NDAA linked the definition of “inherently governmental function” to the Federal Activities Inventory Reform Act of 1998 (Pub. L. No. 105-270; codified at 31 U.S.C. § 501), which stated that “‘inherently governmental function’ means a function that is so intimately related to the public interest as to require performance by Federal Government Employees.” 31 U.S.C § 501 (note2006)).

10

In response, the Under Secretary of Defense for Acquisition,

Technology, and Logistics issued a policy memorandum implementing

Section 343 of the FY2006 NDAA.18 The policy authorized the use

of federal employees when an economic analysis indicates that

their use would be less costly for eligible contract functions.19

The memorandum required agencies to report any activities

returned to gGovernment performance as a result of the analysis

authorized.20 Additionally, the memorandum permitted DoD

components to convert contracted activities (i.e., to in-source

them) for up to three percent of their “commercial reviewable”

activity, as defined by each component’s approved Inherently

Governmental/Commercial Activities Inventory21 from the previous

18 Memorandum from the Under Secretary of Defense for Acquisition, Technology and Logistics to the Secretaries of the Military Departments, et al., Implementation of Section 343 of the 2006 National Defense Authorization Act, (July 27, 2007)[hereinafter Implementation of Section 343 of the 2006 National Defense Authorization Act] (available at www.dodig.mil/audit/reports/fy08/08-111.pdf 19-20).

19 Id.Memorandum from the Under Secretary of Defense for Acquisition, Technology and Logistics to the Secretaries of the Military Departments, et al., Implementation of Section 343 of the 2006 National Defense Authorization Act, July 27, 2007 (available at www.dodig.mil/audit/reports/fy08/08-111.pdf 19-20).

20 Id.21 Under the FAIR Act, Federal agencies are required to create an inventory of activities and not whether their function is “inherently governmental,” “commercial exempt from private performance,” or commercial. The inventories include results of all public-private competitions under Circular A-76. See 10 U.S.C. § 2462(b) (2006).

11

Author, 01/03/-1,

Done.

Author, 01/03/-1,

Need citation to the memorandum cited in FN 18. PJS

Author, 01/03/-1,

Reema: FNs 19, 20, and 22 don’t have pincites. I believe members / AE did not include because the actual source itself is not numbered. I’m not sure what you have been doing in this situation, but if you want to add pincites, the pincites are all clearly marked on source 26 on the portal. KMJ

fiscal year.22 Finally, the policy reserved the right of the

DoD’s Competitive Sourcing Official to intervene and stop an in-

sourcing action pursuant to FY2006 NDAA section 343.23

These policies were short-lived, however, as the National

Defense Authorization Act for Fiscal Year 200824 included

additional in-sourcing provisions that superseded the FY2006

policies. In particular, section 324 of that law required the

Under Secretary of Defense for Personnel and Readiness to develop

guidelines and procedures for in-sourcing decisions.25 The

FY2008 NDAA expanded the previous law by requiring DoD not only

to give consideration “on a regular basis” to previously

contracted work, but also to consider new functions as candidates

for in-sourcing.26 The FY2008 NDAA also required that “special 22 Implementation of Section 343 of the 2006 National Defense Authorization Act, supra note .Memorandum from the Under Secretary of Defense for Acquisition, Technology Error: Referencesource not foundError: Reference source not foundand Logistics to the Secretaries of the Military Departments, et al., Implementation of Section 343 of the 2006 National Defense Authorization Act, July 27, 2007 (available at www.dodig.mil/audit/reports/fy08/08-111.pdf. 19-20).

23 Id.24 National Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181, 122 Stat. 3 (Jan. 28, 2008) [hereinafter FY2008 NDAA].

25 National Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181Id. at § 324 (Jan. 28, 2008) (codified at 10 U.S.C. § 2463).

26 National Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181Id. at § 324(a) (Jan. 28, 2008); see also INSOURCING FUNCTIONS PERFORMED BY FEDERAL CONTRACTORS , supra note Error: Referencesource not found, at 2Kate M. Manuel and Jack Maskell, Cong.

12

Author, 01/03/-1,

Need citation to the memorandum cited in FN 18. PJS

consideration” be given to using federal employees for work

falling under the four considerations developed in the FY2006

NDAA, stated above.27 Additionally, the FY2008 NDAA added

language prohibiting the use of public-private competition under

Circular A-76 for certain contracted functions unless additional

Research Serv., R41810, Insourcing Functions Performed by Federal Contractors: An Overview of the Legal Issues 2 (2011).

27 National Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181, § 324(ab), 122 Stat. 3, 60-61 (Jan. 28, 2008). Specifically, section 324(ab)(1) provided as follows:

(b) Special Consideration for Certain Functions.— The guidelines and procedures required under subsection (a) shall provide for special consideration to be given to using Department of Defense civilian employees to perform any function that—(1) is performed by a contractor and—(A) has been performed by Department of Defense civilian employees at any time during the previous 10 years;(B) is a function closely associated with the performance of an inherently governmental function;(C) has been performed pursuant to a contract awarded on a non-competitive basis; or(D) has been performed poorly, as determined by a contracting officer during the 5-year period preceding the date of such determination, because of excessive costs or inferior quality; or(2) is a new requirement, with particular emphasis given to a new requirement that is similar to a function previously performed by Department of Defense civilian employees or is a function closely associated with the performance of an inherently governmental function.)

Id.

13

Author, 01/03/-1,

Just for clarification. The section in the NDAA 2008 is 324(a). However this section lays out a new section of 10 U.S.C. 2463 where (b)(1) contains the special consideration provisions. Thus, the proper citation to the NDAA is 324(a). PJS

steps were taken in advance of the competition.28 The

prohibition applied to three categories of work: (1) for new

functions, the DoD was required to assign performance to civilian

personnel; (2) for functions that received the “special

consideration” described above, the DoD was required to convert

to performance by civilian employees; and, (3) for those

functions currently being performed by civilian employees, the

DoD was required to expand the scope of the function.29 This

initial moratorium was precipitated, in part, by a series of

contracting/competition issues brought to the public’s attention

through a series of articles discussing conditions at Walter Reed

Army Medical Center.30

Accordingly, the Under Secretary of Defense for Personnel

and Readiness issued a policy memorandum on April 4, 2008, to

help guide decisions based on 10 U.S.C. § 2463.31 The policy

28 National Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181 (Jan. 28, 2008)Id. at § 1676 (codified at 10 U.S.C. § 2463(c)).

29 National Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181 (Jan. 28, 2008) § 1676 (codified at 10 U.S.C. § 2463(c))Id.

30 VALERIA BAILEY GRASSO, CONG. RESEARCH SERV., REPORT NO. R40854, OFFICE OF MANAGEMENT AND BUDGET CIRCULAR A-76 AND THE PROPOSED MORATORIUM ON FUTURE DOD COMPETITIONS: BACKGROUND AND ISSUES FOR CONGRESS, 2. (Nov. 28, 20112009), (citing , Dana Priest and Ann Hull, “Soldiers Face Neglect, Frustration at Army’s Top Medical Facility,” WASH. INGTON POST, Feb. 18, 2007 at A1)..

31 Memorandum from the Under Secretary of Defense for Personnel and Readiness to the Secretaries of the Military Departments, et

14

Author, 01/03/-1,

Source properly substantiates. No text should be deleted. Recommend making citation a See cite and including a citing reference to 10 USC 2461. The source (FY2008NDAA) cites that section of the U.S. Code and the two sources must be read in conjunction to substantiate author statement. If we add a cite to the U.S. Code we need to cite to the code in force when the FY2008 NDAA was enacted. This is Reema’s call though so I did not make these changes. KMJ For Reema / Shauna, I’m pasting the section I’m talking about below. If you want to look at the source it is number 3 on the portal. The page number in the PDF is 484. SEC. 1676. MORATORIUM ON CONVERSION TO CONTRACTOR PERFORMANCE OF DEPARTMENT OF DEFENSE FUNCTIONS AT MILITARY MEDICAL FACILITIES. (a) MORATORIUM.—No study or competition may be begun or announced pursuant to section 2461 of title 10, United States Code, or otherwise pursuant to Office of Management and Budget circular A-76, relating to the possible conversion to performance by a contractor of any Department of Defense function carried

Author, 01/03/-1,

This is not supported by the text of 2008 NDAA and should be cut. PJS

noted that Department of Defense components must comply with

other laws and regulations,32 but also outlined the

considerations to undertake when deciding to in-source.

Department of Defense components were to deliberate whether the

functions should be eliminated if they were no longer required;

if new or expanded mission requirements were exempt from private

sector performance; if using civilian employees would be less

costly than contractor performance, and if the required personnel

could be available or hired without hindering the mission

requirements.33 As required by the FY2008 NDAA,34 the Inspector

al., Implementation of Section 324 of the National Defense Authorization Act for Fiscal Year 2008 – Guidelines and Procedures on In-sourcing New and Contracted Out Functions, Apr. 4, 2008 [hereinafter Implementation of Section 324 of the National Defense Authorization Act for Fiscal Year 2008] (available at http://prhome.defense.gov/RSI/REQUIREMENTS/docs/OSD%20In-sourcing%20Guidance%2004184-08.pdf).

32 Specifically, 10 U.S.C. § 129a was implemented by Department of Defense Instruction 1100.22, “Guidance for Determining Workforce Mix.” 10 U.S.C. § 129a is discussed later in this article, but generally requires the Department of Defense to use the “least costly” means of staffing.

33 Memorandum from the Under Secretary of Defense for Personnel and Readiness to the Secretaries of the Military Departments, et al., ImImplementation of Section 324 of the National Defense Authorization Act for Fiscal Year 2008plementation of Section 324 of the National Defense Authorization Act for Fiscal Year 2008 – Guidelines and Procedures on In-sourcing New and Contracted Out Functions, Attach. 2 at 2, Apr. 4, 2008 (available at supra note Error: Reference source not found, Error: Reference source not found at Attach. 2 at 2 (specifying that the economic analyses must include elements to create a like comparison appropriate to the circumstances).

34 National Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181, § 324(b), 122 Stat. 3, 61 (Jan. 28, 2008)

15

Author, 01/03/-1,

Authors: I generally strictly apply the rule that once a term has been defined the abbreviation is used (unless the term was not used recently and is not one the PCLJ readership is familiar with). If using the initialism (DoD) here bothers you, I’m happy to revert to “Department of Defense.” KMJ Do not abbreviate “Department of Defense.” Authors rejected edit in 1.26.12 draft. Please retain the full name, not the initialism. Thanks!

General for the Department of Defense issued a report on the

implementation of the requirement, which confirmed that the Army,

Navy, and Air Force had implemented and applied the methodologies

to in-source several requirements.35

B. 2009

At the same time, perhaps because in-sourcing policy was

still developing, legislators attempted to clarify the parameters

of the policy. In particular, several segments of the executive

and legislative branches worked to define the limits to in-

sourcing as well as to provide guidance on effective decision

making. First, the Government endeavored to define the nature

and extent of “inherently governmental functions,” historically

immune from out-sourcing. Indeed, by 2009, the definition of

“inherently governmental” had become “blurred.”36

(codified at 10 U.S.C. § 2463 (b)) (requiring a report from the Department of Defense Inspector General within 180 days after enactment).

35 DoD IG Report to Congress on Section 324 of the National Defense Authorization Act for Fiscal Year 2008 – Review of DoD Guidelines on Considering Civilians for New and Contracted Functions, Report No. D-2008-111 at 7, (July 23, 2008) (available at www.doedig.mil/audit/reports/fy08/08-111.pdf).

36 See Presidential Memorandum on Government Contracting, 74 Fed. Reg. 9755, 9755-56 (Mar. 6, 2009); see also OFFICE OF MGMT. & BUDGET, OMB CIRCULAR NO. A-76, PERFORMANCE OF COMMERCIAL ACTIVITIES, at attach. D (2003) (defining “inherently governmental” as an “activity that is so intimately related to the public interest as to mandate performance by government personnel”) [hereinafter OMB Circular A-76] available at http://www.dni.gov/electronic_reading_room/OMB_Circular_A_76.pdfO

16

Author, 01/03/-1,

Good thought. Thanks! Let’s defer to the authors here though because these authors have put a lot of thought into their footnotes and citations. Also, the sentence is arguably introductory / setting up the next section. KMJ

Author, 01/03/-1,

I think this who paragraph is pretty introductory and does not require citations. However this last sentence could potentially use one, the best being a citation to the Presidential Memorandum mentioned below in FN 36. PJS

Highlighting the importance of clarifying the scope of

“inherently governmental,” on March 6, 2009, President Obama

issued a Presidential Memorandum to the Head of Executive

Departments and Agencies regarding government contracting.37 The

memorandum addressed the issue as one of growing concern as the

Administration determined that executive agencies were relying

too heavily on sole-source and cost-reimbursable contracting.38

To accomplish the twin policy goals of effective governance and

getting the best tax dollar value, the President stated that the

“line between inherently governmental . . . and commercial

activities . . . has been blurred and inadequately defined.”39

MB Circular A-76, 2003 Revision, Attachment D (defining “inherently governmental” as an “activity that is so intimately related to the public interest as to mandate performance by government personnel” ); Federal Activities Inventory Reform Act of 1998, Pub. L. No. 105-2780, 112 Stat. 2382 (codified at 31 U.S.C. § 501 note) (adopting the Circular A-76 definition); FAR Subpart 2.1 (characterizing the term as a “policy determination” rather than a legal distinction, and noting that “inherently governmental function[s] include[] activities that require either the exercise of discretion in applying Government authority, or the making of value judgments in making decisions for the Government. Governmental functions normally fall into two categories: the act of governing, i.e., the discretionary exercise of Government authority, and monetary transactions and entitlements”).

37 Presidential Memorandum on Government Contracting, 74 Fed. Reg. at 9755 (Mar. 6, 2009).

38 Presidential Memorandum on Government Contracting, 74 Fed. Reg. 9755 (Mar. 6, 2009)Id. at 9755.

39 Presidential Memorandum on Government Contracting, 74 Fed. Reg. 9755,Id. at 9755-56 9756 (Mar. 6, 2009).

17

Author, 01/03/-1,

Note to Shauna: Our style guide says NOT capitalize “Administration” but uses “Clinton administration as an example.” The style guide notes that the PCLJ rules derives from BB rule 8. I do not read BB rule 8 as prohibiting capitalization of “Administration.” B.G. The Redbook R.27 (p. 57) says you can capitalize. I think the Style Guide is wrong here and am leaving “Administration” capitalized.

Perhaps recognizing the confusion caused by imprecise

terminology and the importance of clarifying the term, Congress

included a provision in the Duncan Hunter National Defense

Authorization Act for Fiscal Year 2009 that required the Office

of Management and Budget (“OMB”) to develop a single definition

of “inherently governmental.”40 The law required the revised

definition to (1) address any deficiencies in the existing

definitions; (2) apply to all Federal departments and agencies;

and (3) ensure that each agency is equipped to identify each

position within it that much be treated as “inherently

governmental.”41

Similarly, the Omnibus Appropriations Act of 2009 sought to

clarify the term, but to no real avail. Specifically, the law

defined “inherently governmental” as having the meaning

prescribed to it under Federal Acquisition Regulation (“FAR”)

Subpart 7.5.42 However, while FAR 7.5 prohibits contracts for

inherently governmental functions, it does not provide a 40 Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, Pub. L. No. 110-417 § 321, 122 Stat. 4356, 4411 (Oct. 14, 2008) [hereinafter FY2009 NDAA].

41 Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, Pub. L. No. 110-417Id. at § 321(a)(2)(A)-(C) (Oct. 14, 2008).

42 Omnibus Appropriations Act of 2009, Pub. L. No. 111-8, Division D, Title VII § 736 (b)(5)(A), 123 Stat. 524, 690 (Mar. 9, 2009). But see supra note 27. FAR Subpart 7.5 points to a definition of “inherently governmental” that is intended to assist in policy creation rather than legal distinction.

18

Author, 01/03/-1,

Concur. KMJ

Author, 01/03/-1,

This is introductory to the rest of the paragraph and should not require a citation. PJS

Author, 01/03/-1,

Authors: At other points in the Article, you use colons to introduce lists. Would you like one here also? KMJ.

definition of “inherently governmental,” but rather offers a list

of examples of inherently governmental functions, thus leaving

it to the agencies to determine the meaning of “inherently

governmental.”.43

Though agencies did not endeavor to define the term, at

least one agency added nuance to the phrase in a memorandum

outlining a framework for sourcing decisions. According to an

OMB memorandum issued in July of 2009, discussed in more detail

infra, when an agency determines that a given function is

“inherently governmental,” related positions can be filled only

by federal employees.44 If, however, the function is “critical,

but not inherently governmental,” an agency should staff the

positions with federal employees “to the extent required by the

agency to maintain control of its mission and operations (or if

required by law, executive order, or internal agreement),” but

could contract for the function if the agency has “sufficient 43 FAR 7.503(c)(1)-(20). The functions listed relate primarily to investigation and prosecution of individuals, control of military and foreign policy, determination of agency policy or the direction of federal employees, Freedom of Information Act determinations, and financial functions such as control of treasury accounts or administration of public trusts. The regulation goes on to list examples of functions that are generally not considered inherently governmental, but border on the definition. Such borderline functions include further reaching activities such as acquisition planning, analyses and/or conduct of studies to assist in policy determinations, contractor evaluations, provision of surveillance, and other functions specifically left to the agencies to determine. FAR 7.503(d).

44 Orszag Memorandum, supra note 1Error: Reference source not found at 2.

19

internal capability to control its mission and operations.”45

Finally, if a function is “essential, but not inherently

governmental” the policy direction permits the performance by

either federal or private sector personnel.46 Thus, regardless

of how ill-defined the term may be, the classification of an

activity as “inherently governmental” or merely “critical”

affects the Government’s ability to make a reasoned in-sourcing

decision.

In addition to attempting to clarify “inherently

governmental” functions, in 2009, the Government also undertook

several efforts to outline and/or clarify the in-sourcing

decision making process. Significantly, the Omnibus

Appropriations Act extended the moratorium on Circular A-76

competitions and extended its reach to include the entire Federal

Ggovernment.47 To clarify the process with regard to civilian

agencies, the Omnibus Appropriations Act of 2009 required non-DoD

agencies subject to the FAIR Act to develop guidelines to aid

45 Id. 46 Id Peter R. Orzag, Director, U.S. Office of Management and Budget, Managing the Multi-Sector Workforce, Attachment 1, July 29, 2009, available at http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy2009/m-09-26.pdf.

47 Omnibus Appropriations Act of 2009, Pub. L. No. 111-8, Division D, Title VII § 737, 123 Stat. 524, 691 (Mar. 9, 2009) (effectively prohibiting any funds from being used to begin or announce an A-76 competition).

20

Author, 01/03/-1,

Capitalized per PCLJ style guide. KMJ.

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

This sentence merely sets up the following discussion of the various efforts taken and does not need a FN. PJS

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

This is the author's summary of what the above guidance means and does not need a ciation. PJS

with in-sourcing decisions.48 The guidelines mirrored those

required of the DoD included in the FY 2008 NDAA, discussed

above, including guidelines for the “special consideration” of

certain functions.49 The law gave civilian agencies 120 days to

develop the guidelines, and similarly required the Government

Accountability Office to issue a report on the implementation of

the law 90 days later.50

Concurrently, DoD was developing additional guidelines to

help its components make the determination whether to in-source a

given activity. In late May of 2009, the Deputy Secretary of

Defense for Personnel and Readiness issued implementation

guidance regarding “in-sourcing contracted services”51 in

response to a realignment of resources that decreased funding for

contracted services and increased funding for new civilian

hires.52 The guidance was intended to help DoD components 48 Omnibus Appropriations Act of 2009, Pub. L. No. 111-8, Division D, Title VIIId. at § 736 (Mar. 9, 2009).

49 Id.50 Omnibus Appropriations Act of 2009, Pub. L. No. 111-8, Division D, Title VIIId. at § 736 (b)(4) (Mar. 9, 2009).

51 Memorandum from the Deputy Secretary of Defense for Personnel and Readiness to the Secretaries of the Military Departments, et al., In-sourcing Contracted Services - Implementation Guidance, (May 28, 2009) [hereinafter In-sourcing Contracted Services - Implementation Guidance] (available at http://prhome.defense.gov/RSI/REQUIREMENTS/docs/DepSecDef%20Memo%20In-sourcing%20Contracted%20Services-Implementation%20Guidance%20(28%20May%2009)%20(OSD%2005339-09).pdf).

52 Memorandum from the Deputy Secretary of Defense for Personnel and Readiness to the Secretaries of the Military Departments, et

21

Author, 01/03/-1,

Introducing the topic of the next paragraph, no FN needed. PJS

Author, 01/03/-1,

To the authors: We will retain the edits made in the 1.26.12 draft you sent to Patrick (the AE). Therefore, the only places “the” appears before DoD or another initialism in the current draft are places where “the” appeared in the 1.26.12 draft. Just as an FYI, in the previous draft we had edited occurring to the following rule (from the PCLJ Style Guide). I’m sorry a more thorough explain was not sent to you initially. We will defer to you though! The PCLJ rule is based o the Chicago Manual of Style Rule 10.9 and explained online here: http://www.jwatsonassociates.com/newsletter/jwa_126.htm I’ve pasted the entry from the current Style Guide below: Initialisms and Acronyms should be introduced with a definite article only where appropriate. The word acronym refers to terms based on the initial letters of their various elements and read as single words (AIDS, laser, NASA, scuba); initialism refers to terms read as a series of letters (NBA, DoD). Acronyms are never introduced with a definite article, whereas initalisms are introduced with a definite article if you would use a definite article when using the full name. For example: NO definite article before: NASA, AIDS, NARA (acronyms). Definite article before: the DoD, the DoJ, the NBA (initialisms where you would use the definite article when using the full name). NO definite article before: GW (initialism where you would not use the definite article when using the full name) Exception: “FAR” is an acronym, but people typically say “the FAR.” PCLJ follows this common usage. Likewise when referring to a specific section of the FAR, such as FAR 2.101, there is no need to introduce the specific FAR provision with a definite article.

Author, 01/03/-1,

[From authors] We appreciate the edits but prefer the agencies stand alone. (In our common parlance, we talk about “GAO/OMB/DOD” doing this or that, not “the GAO” or “the DoD.”

identify which contracted services should be in-sourced,

especially in light of the fact that 10 U.S.C. § 2463 precludes

these components from “setting limits on what may be in-

sourced.”53

The Deputy Secretary’s guidance detailed a plan of action

for Departmental components and a graphic “decision tree” for the

prioritization of services to be in-sourced.54 Using 10 U.S.C.

§§ 2330a and 2463 as starting points, the memorandum required

evaluation of current contracts and concluded by identifying five

al., In-sourcing Contracted Services - Implementation Guidance, May 28, 2009 (available at http://prhome.defense.gov/RSI/REQUIREMENTS/docs/DepSecDef%20Memo%20In-sourcing%20Contracted%20Services-Implementation%20Guidance%20(28%20May%2009)%20(OSD%2005339-09).pdf). Id. The realignment was announced by Secretary Gates on April 6, 2009 and formally noted in Resource Management Decision (“RMD”) 802, signed on April 8, 2009. Id. RMD 802 included a realignment plan for FY2010-2014 which included increased funding for civilian manpower and overall decrease in funding for contracted support. Id.

53 Memorandum from the Deputy Secretary of Defense for Personnel and Readiness to the Secretaries of the Military Departments, et al., In-sourcing Contracted Services - Implementation Guidance, May 28, 2009 (available at http://prhome.defense.gov/RSI/REQUIREMENTS/docs/DepSecDef%20Memo%20In-sourcing%20Contracted%20Services-Implementation%20Guidance%20(28%20May%2009)%20(OSD%2005339-09).pdf) (citing 10 U.S.C. § 2463).Id. at 1 (citing 10 U.S.C. § 2463).

54 Memorandum from the Deputy Secretary of Defense for Personnel and Readiness to the Secretaries of the Military Departments, et al., In-sourcing Contracted Services - Implementation Guidance, May 28, 2009, Attachment 1 at 4 (available at http://prhome.defense.gov/RSI/REQUIREMENTS/docs/DepSecDef%20Memo%20In-sourcing%20Contracted%20Services-Id. at Atachment 1 at 4.Implementation%20Guidance%20(28%20May%2009)%20(OSD%2005339-09).pdf).

22

categories of contracts which should be in-sourced. Those

categories were:

(1) contracts for functions which are inherently

governmental;

(2) contracts for functions which are exempted from

private sector performance by Department of Defense FAR

Supplement (“DFARS”) Subsection 207.503;

(3) contracts for unauthorized personal services;

(4) contracts for functions in which there are not

“sufficiently trained and experienced officials” to

oversee them; and

(5) those contracts where it would be more cost-effective

to in-source, giving special consideration to those

contracts which either were performed by civilian

employees in the previous ten years, are closely

associated with inherently governmental functions, were

awarded on a non-competitive basis, or were performed

poorly.55

55 Memorandum from the Deputy Secretary of Defense for Personnel and Readiness to the Secretaries of the Military Departments, et al., In-sourcing Contracted Services - Implementation Guidance, May 28, 2009,Id. at Attachment 1 at 7-86-8 (noting that if a function were to become “inherently governmental” by virtue of a change in law, regulation, or policy after the time of award, the function should be in-sourced expeditiously; further citing 10 U.S.C. § 2383(a)(2) and FAR 37.102(h)).)) (available at http://prhome.defense.gov/RSI/REQUIREMENTS/docs/DepSecDef%20Memo%20In-sourcing%20Contracted%20Services-Implementation%20Guidance%20(28%20May%2009)%20(OSD%2005339-09).pdf)

23

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

Given the internal citation and the listing of the five criteria immediately following this sentence, which has a citation to the memorandum, I think a citation here is unnecessary. PJS

In addition to these sector-specific efforts, the

Presidential Memorandum on Government Contracting discussed above

also directed the Director of OMB to create a process usable by

all Government agencies to identify existing contracts that are

not efficient or performed well, as well as “corrective actions”

which can be taken once identified.56 In particular, the

memorandum required OMB to clarify when out-sourcing (and

conversely in-sourcing) is and is not appropriate by federal

agencies.57

Responding to the President’s direction, on July 29, 2009,

the Director of OMB released a memorandum entitled “Managing the

Multi-Sector Workforce.”58 The memorandum articulated the risks

to the Government – beyond mere excessive costs – in relying too

heavily on contracted personnel. Director Orzag described the

risk as an “erosion of the in-house capacity that is essential to

effective Government performance.”59 The memorandum opined that

56 Presidential Memorandum on Government Contracting, 74 Fed. Reg. 9755,at 9756 (Mar. 6, 2009) (these guidelines were directed to be issued by July 1, 2009).

57 Presidential Memorandum on Government Contracting, 74 Fed. Reg. 9755, 9756 (Mar. 6, 2009) (this guidance was to be issued by September 30, 2009)Id.

58 Peter R. Orzag, Director, U.S. Office of Management and Budget, Managing the Multi-Sector Workforce, July 29, 2009, available at Orszag Memorandum, supra note 14, at 1.

59 Peter R. Orzag, Director, U.S. Office of Management and Budget, Managing the Multi-Sector Workforce, July 29, 2009, available at http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy2009/m-09-26.pdfId.

24

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

This is introductory, as the following sentences lay out what risks the memorandum highlighted. PJS

“[t]oo often agencies neglect the investments in human capital

planning, recruitment, hiring, and training that are necessary

for building strong internal capacity – and then are forced to

rely excessively on contractors.”60

Recognizing the importance of both federal and contractor

personnel (the “multi-sector workforce”) and to combat the

overreliance problem, OMB directed the executive agencies to take

three immediate steps: (1) adopt a framework to manage the

workforce balance;61 (2) conduct a test analysis on one program

where there may be concerns about overreliance on contractors;62

60 Peter R. Orzag, Director, U.S. Office of Management and Budget, Managing the Multi-Sector Workforce, July 29, 2009, available at http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy2009/m-09-26.pdfId.

61 Peter R. Orzag, Director, U.S. Office of Management and Budget, Managing the Mutli-Sector Workforce, Attachment 1, July 29, 2009, available at http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy2009/m-09-26.pdfId. at 2. The framework begins from the premise that agencies should not base their decisions on a desired outcome (to in-source or out-source), but rather on mission and full programmatic considerations. Id. at Attachment 1 at 1. As such, the framework considers workforce planning, whether a function can be contracted out, cost analysis, required management, and organizational cohesion. Id. The guidelines suggest, but do not specify, that the process should be “reasonable and impartial.” Id. at Attachment 1 at 2.

62 Peter R. Orzag, Director, U.S. Office of Management and Budget, Managing the Multi-Sector Workforce, Attachment 2, July 29, 2009, available at http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy2009/m-09-26.pdfId. at Attachment 1 at 2. The program to be analyzed was to be identified to the Office of Management and Budget by October 1, 2009, with a full report on the analysis to be submitted by April 30, 2010. Id. at 3 (attach. 2).

25

Author, 01/03/-1,

Edit from 1.4.12 SAE global read and retained in 1.26.12 author read. Please retain this edit as it seems to be the authors’ preference. KMJ.

and (3) follow specific guidelines when considering in-

sourcing.63 The guidelines also provided separated the criteria

to be considered in making an in-sourcing determination into

three major groups: (1) general management responsibilities; (2)

general consideration for federal employee performance; and (3)

special consideration of federal employee performance.”64

In discussing “general management” considerations, the

memorandum stressed the larger practical concerns that face

agencies looking at in-sourcing possibilities. First, the

memorandum instructed agencies to act collaboratively because in-

sourcing decisions are a shared responsibility. Specifically,

the memorandum urged cooperation between the requiring activity,

the human capital office, the budget and finance office, and the

acquisition office,65 particularly for programs at risk of

63 Id. at 2.Peter R. Orzag, Director, U.S. Office of Management and Budget, Managing the Multi-Sector Workforce, Attachment 3, July 29, 2009, available at http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy2009/m-09-26.pdf.

64 Orszag Memorandum, supra note Error: Reference source not found, at 1-3 (attach. 3).Peter R. Orzag, Director, U.S. Office of Management and Budget, Managing the Multi-Sector Workforce, Attachment 3, July 29, 2009, available at http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy2009/m-09-26.pdf.

65 Id. at 1 (attach. 3).Peter R. Orzag, Director, U.S. Office of Management and Budget, Managing the Multi-Sector Workforce, Attachment 3, July 29, 2009, available at http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy2009/m-09-26.pdf

26

Author, 01/03/-1,

I’m going to concur with Patrick and recommend deferring to the authors here. If we need a cite, Patrick recommends. Orszag Memorandum, supra note 14, at 1 (attach. 3).

Author, 01/03/-1,

This again seems introductory. If a citation is needed it would be to the source used in FN 64. PJS

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

This is a topic sentence and no FN is needed. PJS

Author, 01/03/-1,

OK. No quotes. I’m assuming at some point in the drafting process the authors put quotes around each item in the three-item series, but then decided against it and the little orphan quote was left inadvertently. The choice of whether to include quotes here is a judgment call and that deference to the authors is appropriate here. KMJ (Also this edit was made in 1.4.12 SAE global read and unchanged by authority in 1.26.12 author read).

Author, 01/03/-1,

When substantiating please check whether this should be a quotation and where it should begin KMJ

Author, 01/03/-1,

Should not be a quotation; author is listing sections of an attachment.

Author, 01/03/-1,

ATL track change edits = author acceptance of my suggested revisions. Member verified substantiation. KMJ. (This is all clear from the “Updates for AE (redlined) 1.26.12” draft. Comment bubbles were deleted before being passed up to me. KMJ.

Author, 01/03/-1,

I believe this should read: “The guidelines also separated the criteria to be considered when making an in-sourcing determination into three major groups.” To whoever is substantiating this – do you agree?

overreliance on contractors.66 Second, the memorandum

recommended “accelerated” monitoring of in-sourced functions that

are either inherently governmental or involve unauthorized

personal services.67 Finally, the memorandum urged agencies to

dedicate sufficient human capital resources to support the

management of contractors and recruitment of federal employees.68

The second category of decision-making criteria – “general

consideration of federal employee performance” – centered around

the statutory requirement that agencies consider the use of

federal employees “on a regular basis.”69 The memorandum first

66 Id..Peter R. Orzag, Director, U.S. Office of Management and Budget, Managing the Multi-Sector Workforce, Attachment 3, July 29, 2009, available at http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy2009/m-09-26.pdf.

67 Peter R. Orzag, Director, U.S. Office of Management and Budget, Managing the Multi-Sector Workforce, Attachment 3, July 29, 2009, available at http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy2009/m-09-26.pdfId. at 1 (attach. 3). A “personal services contract” is defined by the Federal Acquisition Regulation as one characterized by an employer-employee relationship between the Government and contractor personnel. FAR 37.101 They are generally prohibited under FAR 37.104(b), except when specifically authorized by 5 U.S.C. § 3109 -- generally for temporary expert or consultant services.

68 Orszag Memorandum, supra note Error: Reference source not found, at 2 (attach. 3).Peter R. Orzag, Director, U.S. Office of Management and Budget, Managing the Multi-Sector Workforce, Attachment 3, July 29, 2009, available at http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy2009/m-09-26.pdf.

69 Peter R. Orzag, Director, U.S. Office of Management and Budget, Managing the Multi-Sector Workforce, Attachment 3, July 29, 2009, available at

27

recommended that agencies “augment” those management reviews

designed to identify opportunities for use of federal

employees.70 When appropriate, these augmented evaluations would

involve a cost analysis.71 However, the memorandum recognized

that agencies need not conduct a cost analysis if the identified

programs face future performance risk if not performed by federal

employees.72 To identify such programs, the memorandum

instructed agencies to develop additional guidelines to determine

when a program needs “to establish or build internal capacity to

maintain control of its missions or operations,” where the

functions are closely associated with inherently governmental

functions, or when operation in the private sector would threaten

non-compliance with an agency or Administration policy.73

Finally, the memorandum discussed the requirement that

special consideration be given to using federal employees in

http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy2009/m-09-26.pdf.Id. at 2 (attach. 3).

70 Id. Peter R. Orzag, Director, U.S. Office of Management and Budget, Managing the Multi-Sector Workforce, Attachment 3, July 29, 2009, available at http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy2009/m-09-26.pdf.

71 Id.72 Id.

73 Peter R. Orzag, Director, U.S. Office of Management and Budget, Managing the Multi-Sector Workforce, Attachment 3, July 29, 2009, available at http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy2009/m-09-26.pdf.http://www (attach. 3).

28

Author, 01/03/-1,

Need a citation to the memorandum. PJS

Author, 01/03/-1,

To the authors: I left all instances of the word “however” as they were in the 1.26.12 version you sent to Patrick (meaning that: (1) where you rejected edits to sentences with however, I respected those edits and (2) where my edits were retained, I left those edits in place). If you would like something different, please let me know. As way of background on the current PCLJ policy . . . . Earlier this year, I noticed that some ABA editors followed Strunk & White’s “however” rule (which is the same rule cited in the two links above). To keep articles and notes within PCLJ consistent, we began applying this rule to articles and notes even when the ABA editors do not make these edits. As I said, we’ve deferred to your preferences, so this may be a moot point, but we certainly never meant to suggest that a sentence can never start with “however.” Thanks! KMJ.

Author, 01/03/-1,

Again, we appreciate the edits, but neither my co-author believe in the idea (myth?) that “however” cannot start a sentence. See, for example, articles here: http://grammarmadeclear.blogspot.com/2010/03/can-you-start-sentence-with-however.html and here: http://grammar.quickanddirtytips.com/can-you-start-a-sentence-with-however.aspx . Thanks!

Author, 01/03/-1,

Need a citation to the memorandum. PJS

certain circumstances.74 In particular, the memorandum laid out

an initial two-step process for the “special consideration”:

1. Does the fact that the work is performed by contractors cause the agency to lack sufficient internal expertise to maintain control of its mission and operations?75

2. Does preliminary analysis suggest that public sector performance is more cost effective and that it is feasible to hire federal employees to perform the function?76

74 Orszag Memorandum, supra note Error: Reference source not found, at 3 (attach. 3) (noting that Omnibus Appropriations Act of 2009, Pub. L. No. 111-8, Division D, Title VII § 736 (Mar. 9, 2009). Special consideration was to be given provides special consideration for functions that: (1) had been performed by Government employees since late 1980; (2) were closely associated with the performance of inherently governmental functions; (3) were not contracts that were awarded on a competitive basis; and (4) have received poor performance evaluations due to excessive costs or inferior quality). The distinction drawn between these functions to be given this “special consideration” and the general consideration noted above is that agencies are required to give the consideration prior to “pursuit or non-pursuit of a contract action.” Id. supra no, at ach. 3Error: Reference sourcenot foundPeter R. Orzag, Director, U.S. Office of Management and Budget, Managing the Multi-Sector Workforce, Attachment 3, July 29, 2009, available at, http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy2009/m-09-26.pdf. 75 Id. If the answer to this question was “yes,” the agency was directed to “develop and execute hiring and/or development plans and secure the necessary funding to support the needed in-house capacity.” If “no,” the agency was to proceed to question two. Id.

76 Id. at 4 (attach. 3). If the answer to this question was “yes,” the agency was instructed to commence more detailed analysis of in-sourcing options that reflects the complexity and importance of the identified function to the agency’s mission. If “no,” the agency could not consider in-sourcing options unless

29

Author, 01/03/-1,

Need citation to the memorandum. PJS

Author, 01/03/-1,

Need citation to the memorandum. PJS

The Government Accountability Office (“GAO”) analyzed the

actions taken by OMB and “selected” civilian agencies in

developing and implementing in-sourcing guidelines, and, as

required by section 736 of the Omnibus Appropriations Act of

2009, provided a report to Congress.77 GAO’s report concluded

that OMB had generally addressed the requirements of the law by

providing a framework that the agencies could use to generate

their own in-sourcing guidelines.78 The report further discussed

the status of agency-specific guidelines at nine civilian

agencies, and found that none had been finalized, and only four

had even begun to draft those guides.79

performance risks outweighed the cost considerations. Id.

77 CIVILIAN IMPLEMENTATION OF INSOURCING GUIDELINES U.S. Gov’t Accountability Office, GAO-10-58R, Insourcing Guidelines, Introduction (2009).supra note Error: Reference source not found, at 1.

78 U.S. Gov’t Accountability Office, GAO-10-58R, Insourcing Guidelines, at 4 (2009).Id. at 4.

79 U.S. Gov’t Accountability Office, GAO-10-58R, Insourcing Guidelines, at 6 (2009)Id. at 6. The civilian agencies chosen for review were the Department of State, General Services Administration, Department of Health and Human Services, Department of Homeland Security, Department of Justice, NASA, Department of Energy, Department of Transportation, and the Department of Veterans Affairs, as they accounted for more than 80% of civilian spending. Id. at 1. According to the report the agencies offered the following excuses for the delay: waiting to ensure compliance with the July Office of Management and Budget memorandum; awaiting additional guidance regarding the definition of “inherently governmental;” awaiting the results of pilot program studies and intending to use those results to better-inform the decision making process; and stressing that these are

30

Author, 01/03/-1,

Concur with PJS. KMJ.

Author, 01/03/-1,

I have to disagree with Ryan and think the authors are correct here. Looking at the table on page 6 two agencies were drafting and two had only issued preliminary guidelines, meaning four agencies had yet to finalize their guidelines and had in fact only begun the process. PJS

Author, 01/03/-1,

See top of p.6: looks like Dept of State already issued preliminary guidelines and two others have drafted them. RPC.

The report noted several challenges identified by the

civilian agencies in approaching the development of in-sourcing

guidelines. Agency officials stated that there had to be better

definitions for “inherently governmental,” “mission-critical,”

and “core competency” in order to frame the agency-specific

guides.80 In addition, agency officials noted that they needed

clarification of the difference between “consideration” and

“special consideration” before they could develop the agency-

specific guidelines.81 The agencies reported confusion regarding

not only when cost analyses are required, but also the specific

make-up of such analyses (e.g., what constitutes the “full” cost

of performance).82 The difficulty in gathering and reviewing

information about service contracts was noted as a concern

because it was unclear if that data was even needed to perform

the cost-analysis required.83 Finally, all nine of the agencies

difficult guidelines and decisions and that to do them properly takes time. Id. at 6-7.

80 Id. at 7.81 U.S. Gov’t Accountability Office, GAO-10-58R, Insourcing Guidelines, at 7 (2009).Id.

82 U.S. Gov’t Accountability Office, GAO-10-58R, Insourcing Guidelines, at 7 (2009).Id. According to the report, agencies disagreed as to whether there should be a standard cost-analysis technique as at least one agency preferred flexibility in determining how such reviews should be performed. Id.

83 U.S. Gov’t Accountability Office, GAO-10-58R, Insourcing Guidelines,CIVILIAN IMPLEMENTATION OF INSOURCING GUIDELINES , supra note Error: Reference source not found, . at 7-8 (2009).

31

Author, 01/03/-1,

Need citation to the GAO report. PJS

Author, 01/03/-1,

Authors: Member or AE suggested adding “be.” KMJ.

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,


pointed to limited budget and resources as constraining the

development of in-sourcing efforts and policies.84

C. 2010 & 2011

While the last two years have been relatively quiet in terms

of the quantity of changes to the in-sourcing legal landscape,

the political landscape has changed dramatically. In the

beginning of 2010, it was business as usual: agencies proceeded

with in-sourcing initiatives as DoD worked to comply with

reporting requirements outlined in the FY2010 NDAAthe effects of

the changes that did occur will be long-felt. However, budget

cuts soon put a damper on agency hiring, which in turn

drastically changed the direction of in-sourcing policy

Government-wide effects of the changes that did occur will be

long-felt. The moratorium on competitions through the Circular

A-76 process was extended for an additional three years to permit

a study of the process.85 Specifically, the DoD was instructed

to report to Congress on how it conducts public-private

competitions, with focus on five particular areas. To comply

with the statute, DoD has to report on: (1) the status of how it

complied with a revision to 10 U.S.C. § 2461(a); (2) what actions 84 U.S. Gov’t Accountability Office, GAO-10-58R, Insourcing Guidelines,Id. at 8. (2009).

85 FY2010 NDAANational Defense Authorization Act for Fiscal Year 2010, Pub. L. No, 111-84, § 325, 123 Stat. 2190, 2253 (2009).

32

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

This sentence is merely setting up the following sentence which specifically lays out the five reporting areas with a citation, so no FN should be needed. PJS

Author, 01/03/-1,

Close-call. I’m going to defer to the authors here though. KMJ.

Author, 01/03/-1,


Author, 01/03/-1,

This note applies to the entire 2010 and 2011 section. The authors made significant changes to this section in the “Updates for AE (Redlined) 1.26.12” draft. The revisions in the 2010 and 2011 section are the authors’, unless specifically noted! KMJ.

Author, 01/03/-1,

Authors: The member and AE suggest deleting “all nine of” for substantiation reasons. I also read the original source and believe the source is ambiguous as to how many agencies pointed to limited budget and resources. Please let us know if it is okay to delete “all nine of.”

Author, 01/03/-1,

See Ryan’s comment for why I deleted “all nine of”

Author, 01/03/-1,

I cannot find where all nine agents affirmatively stated this was an issue. Rather, it was listed in the report as an issue faced by the agencies generally. RPC.

had been taken to address concerns over its A-76 procedures; (3)

how well its systems provide reliable information in conducting

A-76 competitions; (4) the appropriateness of cost differential

and overhead rate usage in public-private competitions; and (5)

the adequacy of DoD policies to ensure the prohibition on public-

private competitions.86 On June 28, 2011, DoD submitted its

report to GAO as a step in attempting to have the prohibition

lifted.87 GAO found the report complied with the statutory

requirements, but no action to lift the moratorium has been taken

as of the time of this writing.88

In early 2010, however, agencies proceeded to tackle the

long-standing, unresolved issues surrounding in-sourcing policy.

In March 2010, for example, the Office of Management and Budget’s

Office of Federal Procurement Policy (“OFPP”) issued a draft

Policy Letter which set out a proposed definition of “inherently

governmental” and addressed other concerns raised in section 321

of the FY2009 NDAA.89 After reviewing more than 30,000 comment

letters and refining the policy, OFPP issued Policy Letter 11-01

86 FY2010 NDAA, Pub. L. No, 111-84Id. at § 325(b) (2009).

87 U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-11-923R , DOD PUBLIC-PRIVATE COMPETITIONS 5, 7 (Sept. 26, 2011)[hereinafter DOD PUBLIC-PRIVATE COMPETITIONS ] .88 GAO-11-923R; DOD Public-Private Competitions 11, Sept. 26, 2011.Id. at 11.

89 Work Reserved for Performance by Federal Government Employees, 75 Fed. Reg. 16,188, 16188-97 (proposed Mar. 31, 2010).

33

concerning the “Performance of Inherently Governmental and

Critical Functions.”90 The Policy Letter more clearly defined

the functions that can only be performed by federal employees and

explained the agencies’ responsibilities regarding work that is

“closely associated with inherently governmental functions,” and

required agencies to ensure appropriate implementation of the

policy.91

The central piece of this policy is was the definition of

“inherently governmental.” OFPP opted to adopt the definition

given in the FAIR Act, which defined stated that an “inherently

governmental function” ias “a function that is so intimately

related to the public interest as to require performance by

Federal Government employees.”92 The Policy Letter further

stated that the term includes functions that require “discretion

in applying Federal Government authority” or “value judgments in

making decision for the Federal Government.”93 By way of 90 Publication of the Office of Federal Procurement Policy (OFPP) Policy Letter 11-01, Performance of Inherently Governmental and Critical Functions, 76 Fed. Reg. 56,227-42 (Sept. 12, 2011).

91 Publication of the Office of Federal Procurement Policy (OFPP) Policy Letter 11-01, Performance of Inherently Governmental and Critical Functions, 76 Fed. Reg. Id. at 56,227-28 (Sept. 12, 2011).

92 Publication of the Office of Federal Procurement Policy (OFPP) Policy Letter 11-01, Performance of Inherently Governmental and Critical Functions, 76 Fed. Reg. 56,227,Id. at 56,236 (Sept. 12, 2011)..

93 According to the Policy Letter, these function include: (1) the binding of the Federal Government through contract, policy,

34

differentiation, the Policy Letter also provided two broad

categories of functions “not normally” included in the term

“inherently governmental”: functions that gather information in

support of or present advice or ideas to Federal Government

officials, and functions considered which are “internal and

ministerialministerial and internal” in nature.94

The letter then restated the Executive Branch policy that federal

agencies are to “ensure that contractors do not perform

inherently governmental functions.”95 The Policy Letter

discussed the management of functions that are “closely

associated with inherently governmental functions,” and instructs

regulation, authorization, order, or otherwise to take or not to take a particular action; (2) undertaking military, diplomatic, civil or criminal judicial proceedings, managing contracts or otherwise taking actions which determine, protect or advance the interests of the United States; (3) functions which interpret or execute laws which “significantly” affect life, liberty, or property of private persons; ( 4) commissioning, appointing, hiring or directing employees of the United States; and (5) exercising “ultimate control” over United States property by acquisition, use, or disposal thereof, include the appropriation or disbursement of funds in support of such activities. Publication of the Office of Federal Procurement Policy (OFPP) Policy Letter 11-01, Performance of Inherently Governmental and Critical Functions, 76 Fed. Reg.Id. 56,227, at 56,236 (Sept. 12, 2011) (supplemented by Appendix A, 76 Fed. Reg. 56,240-41). This list expands, in number and detail, the list in FAR Subpart 7.503(c).

94 Publication of the Office of Federal Procurement Policy (OFPP) Policy Letter 11-01, Id. Performance of Inherently Governmental and Critical Functions, 76 Fed. Reg. 56,227, at 56,236 (Sept. 12, 2011) (giving examples such as building maintenance and security, cafeteria and mail operations, motor vehicle fleet management, etc.).

95 Id.

35

Author, 01/03/-1,

Not an author edit. Member changed for substantiation. KMJ.

agencies to give “special consideration” to the use of fFederal

employees and enhanced management if those functions are

performed by contracted personnel.96 Related, is the policy

requiring agencies to implement guidelines to ensure that

“critical functions” are to be performed or managed by fFederal

employees “to the extent necessary for the agency to operate

effectively and maintain control of its mission and

operations.”97 The letter offers additional guidance to assist

agencies in making the determination as to whether a function is

inherently governmental or critical. If a function either 96 Publication of the Office of Federal Procurement Policy (OFPP) Policy Letter 11-01, Performance of Inherently Governmental and Critical Functions, 76 Fed. Reg. 56,227, at 56,236 (Sept. 12, 2011) (supplemented by Appendix B, 76 Fed. Reg. 56,241). Appendix B provides examples of functions which are “generally not considered to be inherently government but are closely associated” to such functions. Id. A note indicates that this list does not include specific positions, but rather that a particular description may encompass multiple activities. Id. The listed functional areas largely consist of supporting activities but also encompass certain services including some areas requiring differentiation from inherently governmental functions (i.e., “non-law-enforcement security activities that do not directly involve criminal investigations”). Id.

97 Publication of the Office of Federal Procurement Policy (OFPP) Policy Letter 11-01, Performance of Inherently Governmental and Critical Functions, 76 Fed. Reg.Id. 56,227, at 56,236 (Sept. 12, 2011). “Critical functions” are defined by the Policy Letter as a function “that is necessary to the agency being able to effectively perform and maintain control of its mission and operations. Typically, critical functions are recurring and long-term in duration.” Id. at 56,236. To assist in the identification of “critical functions,” the Policy Letter outlines the considerations an agency should take into account and notes that each agency will need to exercise informed judgment to make these determinations. 76 Fed. RegId. at 56,238.

36

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

This is a transition sentence that merely sets up the following one, which discusses the additionaly guidance in detail and has a citation. No FN should be needed here. PJS

Author, 01/03/-1,

When I received the document some of the “Fs” in “federal employees” had been edited to lowercase and some hadn’t. I ran a search for “federal employees” in PCLJ on Westlaw and in the past we’ve used a little F.

exercises the sovereign powers of the United States by its very

nature, or requires the exercise of discretion not limited by law

or regulation and thereby commits the United States to a

particular course of action, it is inherently governmental.

If a function either, by nature exercises td the f sovereign

powers of the United Statesture, or requires the exercise of

discretion on and thereby which commits the United States to a

course of action when the decision is not limited by other law,

regulation, or other orders, it is inherently governmental.98

At the same time, in the beginning of 2010, DoD was working

to comply with the FY2010 NDAA, which extended the moratorium on

Circular A-76 competitions for an additional three years to

permit a study of the process.99 Specifically, the FY2010 NDAA 98 Publication of the Office of Federal Procurement Policy (OFPP) Policy Letter 11-01, Performance of Inherently Governmental and Critical Functions, 76 Fed. Reg.Id. 56,227 at 56,237-38 (Sept. 12, 2011).

99 National Defense Authorization Act for Fiscal Year 2010, Pub. L. No, 111-84 § 325 (2009). In January of 2010, DoD issued highly detailed, practical advice on how to compare public and private labor costs when making an in-sourcing decision, indicating its intent to press forward with in-sourcing as a potential cost-saving measure. Specifically, Directive-Type Memorandum (DTM) 09-007, “Estimating and Comparing the Full Costs of Civilian and Military Manpower and Contract Support” outlined “business rules,” cost elements, and methodologies for use in analyzing the costs of military, civilian, and private contractor labor. U.S. Department of Defense, DTM 09-007, “Estimating and Comparing the Full Costs of Civilian and Military Manpower and Contract Support” (Jan. 29, 2010). The Memorandum outlined cost elements, data sources, and accounting mechanisms associated with DoD labor, including direct and indirect costs, such as General and Administrative (“G&A”) and Overhead. Id. at Attach. 2 at 6-10, 12-15, Attach. 4. The Memorandum also addressed cost

37

Author, 01/03/-1,

Authors revised in 1.26.12 draft. Edits didn’t cleanly transfer in tracked changes, so I just pasted the edit directly above. Edit is also pasted below. This is what authors wrote: If a function either exercises the sovereign powers of the United States by its very nature, or requires the exercise of discretion not limited by law or regulation and thereby commits the United States to a particular course of action, it is inherently governmental.

Author, 01/03/-1,

I think this sentence could flow better. To whoever is substantiating, please use a comment bubble to suggest a revision. KMJ

instructed DoD to report to Congress on how it conducts public-

private competitions, focusing on five particular areas: (1) the

status of how it complied with a revision to 10 U.S.C. § 2461(a);

(2) what actions had been taken to address concerns over its A-76

procedures; (3) how well its systems provide reliable information

in conducting A-76 competitions; (4) the appropriateness of cost

differential and overhead rate usage in public-private

competitions; and (5) the adequacy of DoD policies to ensure the

prohibition on public-private competitions.100 On June 28, 2011,

DoD submitted its report, detailing DoD’s belief that its revised

policies and procedures were sufficient to resume conducting

public-private competitions.101 GAO found the report complied

with the statutory requirements, but no action to lift the

moratorium has been taken as of the time of this writing.102

Paradoxically, however, around the same time DoD was

preparing its report, the actual value of in-sourcing was called

into question. In May of 2011, the Center for Strategic &

International Studies (“CSIS”) issued a report that called into

elements and methodologies for analyzing service contract costs. Id. at Attach. 2 at 11-15. 100 National Defense Authorization Act for Fiscal Year 2010 , Pub. L. N009).101 DOD PUBLIC-PRIVATE COMPETITIONS , supra note Error: Reference sourcenot found,DOD Public-Pr26, 2011.

102 DOD Public-Pr, 2011.Id. For more informatiotorium, see generally Valerie B. Grasso, Circular A-76 and the Moratorium on DOD Competitions: Background and Issues for Congress, supra note 26.

38

question the extent to which DoD in-sourcing actually produced

cost savings.103 The report noted the importance of accurately

projecting costs, whether making an in-sourcing decision on the

basis of anticipated cost-savings, or for policy reasons.104

However, the report highlighted differences in public and private

accounting systems, which may render it “impossible for even the

most expert and objective observer to compare in-house and

contractor costs with any useful degree of accuracy.”105

As 2010 wore on, the Government faced mounting budget

concerns, which inspired caps on Government hiring and put a

damper on in-sourcing initiatives. .In both 2010 and 2011,

Congress struggled to pass full appropriations bills, instead

relying on a number of continuing resolutions to fund gGovernment

agencies in the interim. As a result, several gGovernment

agencies investigated freezing, or at least slowing, hiring. In

August of 2011, the Army detailed a plan to cut more than 8,700

103 DAVID BERTEAU ET AL.,DOD WORKFORCE COST REALISM ASSESSMENT” AT 8 , (May 2011), available at http://www.nationaldefensemagazine.org/blog/Documents/110517_Berteau_DoDWorkforceCost_Web.pdf.. 104 Id. at 9-10 (May 2011), available at http://www.nationaldefensemagazine.org/bl110517_BerteaeCost_Web.pdf105 Id. at 8at 8 (May 2011), available at http://www.nationaldefensemagazine.or110517_Berteau_Dot_Web.pdf. Tirely on anticipated short-term cost savings. Id. at 8.

39

civilian positions by September 2012.106 Days later, the Air

Force announced a civilian hiring freeze for 90 days.107

These budgetary concerns ultimately led the Secretary of

Defense to all but abandon in-sourcing. On August 9, 2010,

Defense Secretary Robert Gates held a press briefing during which

he stated that DoD would cut funding for contractors and reduce

in-sourcing.108 He acknowledged that the Government had not seen

the expected savings, and stated more bluntly that he was “not

satisfied with the progress made to reduce our overreliance on

contractors.”109 As a result, Gates represented that “no more

full-time positions . . . will be created after this fiscal year

to replace contractors.”110

The outlook does not look to be improving. The Budget

Control Act, passed in August of 2011, not only cut DoD spending

by approximately $450 billion, but also tasked a 12-member Joint

Select Committee on Deficit Reduction (also known as the “Super

Committee”) with identifying $1.2 trillion across all agencies 106 See Charles S. Clark, Army Sets Stage to Slash 8,700 Civilian Jobs,”GOV ’ EREXECUTIVE , (Aug. 52011), availabe at http://www.govexec.com/story_page.cfm?filepath=/dailyfed/0811/080511cc1.htm&oref=searchbegan.107 See Charles S. Clark, Air Force Announces Civilian Hiring Freeze,,NAT ’ IONOURNAL , (Aug. , 2011), availale at http://www.nationaljournal.com/nationalsecurity/air-force-announces-civilian-hiring-freeze-20110816.108 See Robert Brodsky, Pentagon Abandons Insourcing Effort,,GOV ’ T EXECUTIVE , Govg. 10, 2010), availabe at http://ww.govexec.com/dailyfed/0810/081010rb1.htm; 109 See id.

110 Id.

40

over the period of fiscal years 2012 to 2021 in order to reduce

the federal deficit.111 Though the specifics of the budget plan

are beyond the scope of this Aarticle, the overarching budget

concerns bear mentioning, as all gGovernment agencies stand to

lose even more personnel in the coming years. Indeed, Secretary

of Defense Leon Panetta advised Congress that if the super

committee did not act and/or the deficit reduction was to be

achieved through across-the-board cuts,112 DoD’s workforce could

be reduced by approximately 20 %percent over the next decade.113 111 Pub. L. No.112-25, § 401(a)-(b), 125 Stat. 243, 259-639 4011); see Kate Brannen, “Panetta Describs Consequences of More DoD Cuts,” NAVYTIMES, (Nov 14, 2011), aailable at htt://www.navytimes.com/news/2011/11/defense-panetta-letter-to-mccain-sequestration-111411w/; see David J. Berteau & Ryan Crotty, CSIS, “Super Committout and the Implications for Defense, CSIS,” (Dec. 2, 2011), availableathttp://csis.og/publication/super-committee-fallout-and-implications-defense.112 The Budget Control Act provided that: “Loss of Privilege. The provisions of this section shall cease to apply to the joint committee bill if—

(1) the joint committee fails to vote on the report or proposed legislative language required under section 401(b)(3)(B)(i) not later than November 23, 2011; or (2) the joint committee bill does not pass both Houses not late

Pub. L. No. 112-25 § 401(g). 113

? Letter from Leon Panetta to Senators McCain and Graham (Nov. 14, 2011),available at http://mccain.senate.gov/public/index.cfm?FuseAction=PressOffice.PressReleases&ContentRecord_id=a4074315-fd3e-2e65-2330-62b95da3b0e9; see Kaailable at http://www.navytimes.com/news/2011/11/defense-panetta-letter-to-mccain-sequestrat Sean Reilly,ederaltimes.com/article/20111204/BENEFITS01/112040307/. On November 21, 2011, the super committee issued a tatement that,

41

Author, 01/03/-1,

Per current PCLJ Style Guide. Guidance based on B. Garner, The Red Book an The Chicago Manual of Style. Numbers Spell out numbers one through ten and use numerals for 11 and above. Use the percentage symbol (%) when numerals are used and the word “percent” when spelling out numbers. Exceptions: Always spell out numbers at the beginning of a sentence. Numbers in a series must match. If one item in a series should be in numerals, use numerals for all the items. Numbers in near proximity should match. Generally numerals are preferred, except when the result would be absurd. If two numbers that are not of the same kind appear next to each other, one (usually the first) should be spelled out to avoid confusion. Numerals may be used for material that repeatedly discusses percentages or dollar amounts.

Though budget cuts requiring substantial personnel cuts have

undoubtedly reduced the viability of in-sourcing as a cost-

savings measure, in-sourcing remains an option for procuring

agencies. As such, the significance of the 2010 Policy Letter,

which outlined the “inherently governmental” inquiry as discussed

supra, should not be overlooked in discussing jurisdiction over

challenges to in-sourcing decisions. Though the Policy Letter

specifically noted that it was intended only as policy guidance

to agencies, expressly denying that it created any substantive or

procedural rights that could be enforced,114 its construct remains

“After months of hardwork antense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee’s deadline.” Statement from Co-Chairs of the Joint Select Committee on Deficit Reduction (Nov. 21, 2011)., available at http://www.deficitreduction.gov/public/index.cfm/2011/11/statement-from-co-chairs-of-the-joint-select-committee-on-deficit-reduction.

114 Publication of the Office of Federal Procurement Policy (OFPP) Policy Letter 11-01, Performance of Inherently Governmental and Critical Functions, 76 Fed. Reg. 56,227, 56,240 (Sept. 12, 2011); see Chrysler Corp.ora Brown, 441 U.S. 281, 295-302 (1979) (citing Morton v. Ruiz, 415 U.S. 199, 235-36 (1974) (noting that for a policy directive to be enforceable by law it must have been issued pursuant to Congressional grant of authority and contain substantive or “legislative type” rights which may be enforced as evidenced by meaningful standards which would be susceptible to judicial review)). Cf. U.S. Dep’tartment of and Human Serv.ices v. FLRA, 844d 1087 (4th Cir. 1988) (determining that OMB Circular A-76 did not have the effect of law because it was directed by the President, not Congress, and was a “managerial’ document).

42

critical to the understanding of the policies and regulations

which mustthat flow from that point. Primarily, this the Policy

Letter’s definition sets the tone and will allow executive

agencies to develop agency-specific policies and guidelines for

making the initial decisions on work that could, or should, be

in-sourced. In addition, the Policy Letter’s assignment of

management responsibilities to agencies both pre- and post-

contract award provides fodder for litigation where agencies have

not fulfilled their responsibilities.115 Further, the Policy

Letter’s guidance as to the relative prioritization of work to be

in-sourced, with special consideration of small business concerns

constitutes another important aspect of in-sourcing policy ripe

for review.116

115 Publication of the Office of Federal Procurement Policy (OFPP) Policy Letter 11-01, Performance of Inherently Governmental and Critical Functions, 76 Fed. Reg. 56,227 at 56,238-39 (Sept. 12, 2011).

116 Publication of the Office of Federal Procurement Policy (OFPP) Policy Letter 11-01, Performance of Inherently Governmental and Critical Functions, 76 Fed. Reg.Id. 56,227 at 56,239-40 (Sept. 12, 2011) (stating that work which has been performed by small businesses that is not inherently governmental and does not threaten a loss of agency control or operations should take lower priority in the review of in-sourcing considerations). If at least one segment of work is to remain available for contracting after the activity is identified for in-sourcing, the Policy Letter instructs that Far Subpart 19.5 should govern any decision to set aside the work for small businesses. Id.

43

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

This and the previous sentences are the author's assessment of the importance of the policies and thus do not need a FN. PJS

That said, the Policy Letter specifically noted that it was

intended only as policy guidance to agencies.117 In particular,

the letter expressly denied that it creates any substantive or

procedural rights that could be enforced.118 As the policies

andGiven the complex decisions and possible effects of in-

sourcing on the government made pursuant to this guidance

decrease the availability of federal contracting community, there

will have toshould be a means for analyzing and adjudicating

those decisions. These considerations, and certainly many

others, will likely be debated among the contracting community as

this aspect of federal policy is worked through and better

understood.

II. DO I CONTRADICT MYSELF? - FEDERAL DISTRICT COURT AND APPELLATE CIRCUIT COURT CASES

117 Publication of the Office of Federal Procurement Policy (OFPP) Policy Letter 11-01, Performance of Inherently Governmental and Critical Functions, 76 Fed. Reg. 56,227 at 56,240 (Sept. 12, 2011).

118 . See Chrysler Corporation v. Brown, 441 U.S. 281, 295-302 (1979) (citing Morton v. Ruiz, 415 U.S. 199, 235-36 (1974) (noting that for a policy directive to be enforceable by law it must have been issued pursuant to Congressional grant of authority and contain substantive or “legislative type” rights which may be enforced as evidenced by meaningful standards which would be susceptible to judicial review)). Cf. U.S. Department of Health and Human Services v. FLRA, 844 F.2d 1087 (4th Cir. 1988) (determining that OMB Circular A-76 did not have the effect of law because it was directed by the President, not Congress, and was a “managerial’ document).

44

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

This and previous sentence are the author's evaluation of the current state of the federal policy and do not require a FN. PJS

Author, 01/03/-1,

Looks like this is irrelevant as the material has been deleted (Per 1.26.12 author draft). KMJ.

Author, 01/03/-1,

I did not put a pincite on the cf citation because this is a summary of the case, and even the “managerial” quote is something that is used repeatedly throughout the case.

“Do I contradict myself? Very well then, I contradict myself. I

am large; I contain multitudes.”

— Walt Whitman119

It should not be surprising that businesses have attempted

to challenge in-sourcing decisions that affect the contracts they

are or had been performing. Among the policy debates swirling

around in-sourcing policy and procedure, legal battles have

naturally popped up. The legal questions, at their core, address

whether federal agencies can be constrained in their in-sourcing

activities through judicial or administrative review of such

actions.

One of the central questions addressed by these early in-

sourcing cases is which court has subject matter jurisdiction to

decide such cases. As discussed below, there is no consensus

among the fFederal district courts or the aAppellate cCircuits

regarding whether district courts may hear such matters.

A. Legal Background

U.S. dDistricts cCourts enjoy general jurisdiction over

questions of federal law, including matters brought under the

APA.120 The APA permits challenges to federal agencies’ actions 119 WALT WHITMAN , Song of Myself in LEAVES OF GRASS 104 (Penn. State Univ. 2007) (1855). 120 28 U.S.C. § 1331.

45

Author, 01/03/-1,

No! “U.S.” is correct per style guide . (Also, I checked CMS R.10.33, which is the source of the style guide rule. It does not say there is an exception for when U.S. appears at the beginning of a sentence). KMJ.

Author, 01/03/-1,

The United States District Courts?

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

These are introductory paragraphs which set up the following sections, no FN should be needed. PJS

Author, 01/03/-1,

I believe federal is only capitalized in “Federal Government” as it is functioning as a proper-noun phrase not as an adjective. When used as an adjective, I believe it is lower case. I reviewed both Bryan Garner’s The Redbook and the Chicago Manual of Style – neither clearly addressed this question. But I ran a search on Westlaw in both the “pubconlj” database and the “jrl” database. Articles consistently used all lower-case letters for the phrase “federal district courts.” I also could not locate an exact rule for “appellate circuits.”

and defines the standards by which they are judged.121 The APA

states that reviewing courts will hold agency actions which are

“arbitrary, capricious, an abuse of discretion, or otherwise not

in accordance with law” as unlawful and will set them aside.122

Additionally, the APA gives courts authority to review agency

actions which are unconstitutional,123 in excess of statutory

authority,124 unsupported by substantial evidence with regards to

rule-making or adjudications,125 or do not comport with the facts

to the extent that those facts are reviewable by the court.126

Finally, the APA requires a reviewing court to overturn an agency

action that is “without observance of procedure required by

law.”127

As they have developed, in-sourcing decisions have been

based on internal guidelines rather than traditional regulatory

processes such that the availability of APA review is unclear.

Some courts have determined that agencies are still bound to

121 See generally 5 U.S.C. § 706.

122 5 U.S.C.Id. at § 706(2)(A).

123 Id. at 5 U.S.C. § 706(2)(B).

124 Id. at 5 U.S.C. § 706(2)(C).

125 Id. at 5 U.S.C. § 706(2)(E).

126 Id. at 5 U.S.C. § 706(2)(F).

127 5 U.S.C. § 706(2)(D).

46

comply with their internal guidelines in certain circumstances.

A 1966 Fifth Circuit decision noted that under the APA:

[w]hen an administrative agency promulgates rules to govern its proceedings, these rules must be scrupulously observed. This is so even when the defined procedures are “. . . generous beyond the requirements that bind such agency . . . .” For once an agency exercises its discretion and cerates the procedural rules under which it desires to have its actions judged, it denies itself the right to violate these rules.”128

However, oOther, more recent cases, however, distinguish

between a substantive rule (i.e., one that must be published in

the Federal Register as a regulation) and an interpretive rule

(e.g. guidance, statements, and other internal procedures).129

The major difference the courts identify, beyond mere procedural

differences, is whether the statements create rights in the

individuals affected by the application of the rules and whether

the statements were intended to bind the agency.130 The Court of

Appeals for the Ninth Circuit formulated a two-step test to

determine if whether regulations carry the force and effect of

law: (1) did the regulation prescribe a substantive rule (as

128 Pacific Pac. Molasses Co. v. Fed. Trade Comm’n., 356 F.2d 386, 389-90 (5th Cir. 1966).

129 See Nat’l Org. of Veterans’ Advocates, Inc. v. Sec’y of Veterans Affairs, 260 F.3d 1365, 1374-75 (Fed. Cir. 2001).

130 See generally Farrell v. Dep’t of the Interior, 314 F.3d 584, 590-91 (Fed. Cir. 2002).

47

Author, 01/03/-1,

Where did this edit come from ? This was not in the 1.26.12 author draft. Authors – After investigating, I believe a member suggested this edit. I reviewed the Chicago Manual of Style direction on if v. whether (R. 5.220 p. 284). I believe whether is technically correct, but am happy to defer to your judgment. KMJ

Author, 01/03/-1,

Used see instead of see generally because not presenting background material to the proposition- Rule 1.2. If do use see generally, should probably include a parenthetical.

Author, 01/03/-1,

This is a topic sentence, no FN needed.

Author, 01/03/-1,

In the original draft the citation call appeared inside the parenthesis. In the 1.26.12 draft Tara indicated that she is fine with moving it outside the parenthesis. I think its okay there or at the end of the sentence. KMJ. 2.3.12.

Author, 01/03/-1,

The citation is citing the entire sentence, not the part in parenthesis. Therefore, I think we should recommend that the end of the sentence.

Author, 01/03/-1,

I think I’m going to suggest to the author that we move the citation call to after the parenthesis. BB 1.1(a) provides guidance on the positioning of FN calls and discusses other forms of punctuation, but not parenthesis. To whoever is substantiating this, please review the rule, make a recommendation, and explain your reasoning. Also, please use a comment bubble to explain exactly which part of the sentence the case is substantiating. KMJ 1.4.12.

Author, 01/03/-1,

This is an edit that I made that was in the draft sent to the authors in late January. The authors did not comment or object, so I’m assuming it is okay. KmJ 2.3.12.

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

Previous two sentences are merely setting up the discussion that is to come regarding how courts have addressed in-sourcing decisios. No FN should be needed. PJS

opposed to interpretive rule, policy statements, or rules of

agency organization, procedure or practice); and (2) did the

regulation conform to certain procedural requirements.131

The first step in this analysis is to decide if the

promulgation is a “substantive rule.” Building on long-standing

precedent, the Ninth Circuit determined that substantive rules

are “legislative in nature, affecting individual rights and

obligations.”132 In so holding, the Ninth Circuit validated

longstanding legal precedent analyzing whether a given internal

rule or policy is intended to be binding upon the agency. In a

seminal federal employment discharge case, the Supreme Court held

that an unpublished Department of State manual bound the agency

because it “purported to set forth definitively the procedures

and standards to be followed.”133 Because of their ability to

determine the rights of individuals, manuals delineating

entitlement to government benefits134 and procedures for grant-

131 United States v. Alameda Gateway, Ltd., 213 F.3d 1161, 1168 (9th Cir. 2000) (citing United States v. Fifty-Three Eclectus Parrots, 685 F.2d 1131, 1136 (9th Cir. 1982)); accord Davis Mountain Trans-Pecos Heritage Ass’n v. Federal Fed. Aviation Adm’nAdmin., 116 Fed. Appx. 3, 9-10 (2d Cir. 2004).

132 James v. United States Parole Comm’n, 159 F.3d 1200, 12056 (9th Cir. 1998) (quoting Fifty-Three Eclectus Parrots, 685 F.2d at 1136)..

133 Service v. Dulles, et al., 354 U.S. 363, 376 (1957); see also Vitarelli v. Seaton, 359 U.S. 535, 539 (1959).

134 See Morton v. Ruiz, 415 U.S. 199, 235 (1974).

48

Author, 01/03/-1,

Okay. I concur with Patrick on the substantiation.

Author, 01/03/-1,

No this was from Amanda Gilmore. I think the see also citation is fine, as the Seaton case also discusses how agencies are bound by the procedural guidelines they set forth. PJS

Author, 01/03/-1,

Patrick – is this comment from you?

Author, 01/03/-1,

I highlighted the portion of Vitarelli I thought the author was citing from, but I don’t think it really supports this sentence or adds anything in terms of support.

Author, 01/03/-1,

This is a topic sentence, no FN needed. PJS

funding135 have been held as binding on the agency which used

them.

By contrast, when individuals’ rights are not directly

implicated, the enforcement of such internal statements turns on

whether the agency announced its intent to be bound. To that

end, internal policy manuals generally are not enforceable as

they tend to interpret rather than create rights.136 This

principle derives from case law governing challenges to decisions

allegedly not in compliance with published manuals.137 135 See Massachusetts Fair Share v. Law Enforcement Assistance Admin., 758 F.2d 708, 711-12 (D.C. Cir. 1985).

136 United States v. Alameda Gateway, Ltd., 213 F.3d 1161,at 1168 (9th Cir. 2000) (citing James v. United States Parole Comm’n, 159 F.3d 1200,at 1206; (9th Cir. 1998) and Western W. Radio Service Serv. CompanyCo., Inc. v. Espy, 79 F.3d 89986, 901 (9th Cir. 1996)).

137 For example, the Ninth Circuit found that a U.S. Army Corps of Engineers “Engineering Regulation” regarding the exercise of “federal authorities” to remove private property was non-binding as a regulation because it merely provided guidance, essentially “memorializing the agency’s general policy.” United States v. Alameda Gateway, Ltd., 213 F.3d 1161, at 1168 (9th Cir. 2000) (citing James v. United States Parole Comm’n, 159 F.3d 1200,at 1206 (9th Cir. 1998); Western W. Radio Service Co.. v. Espy., 79 F.3d 986,at 901 (9th Cir. 1996)). Similarly, the Court of Appeals for the District of Columbia Circuit found that a National Transportation Safety Board pronouncement regarding its investigative process was not binding on the agency because there was no intent to be bound nor a creation of private rights. Chiron Corp. and& Perceptive Biosystems, Inc. v. Nat’l Trans. Safety Bd.oard, , et al., 198 F.3d 935, 943-44 (D.C. Cir. 1999) (discussing the Board’s “Information for the Guidance of Parties to Safety Board Investigations of Accident” and considering whether petitioners suffered an “informational injury” by virtue of not being given information as a part of the Board’s investigation). Finally, federal courts routinely find that sentencing guidelines, penalty matrices, and other such tables

49

Author, 01/03/-1,

The second Farrell footnote was citing to a case that quoted another case. According to Rule 10.6.2, only one level of recursion is required, thus only one level of “quoting” or “citing” parentheticals is necessary. I changed the cite from the case the citation is citing to the case that the citation is actually quoting.

Author, 01/03/-1,

Didn’t use a short citation here because the citation was not used in one of the preceding five footnotes (Rule 10.9(a)).

Author, 01/03/-1,

I’m not sure whether to use “and” or a semicolon between the two cases in the citing parenthetical. In this footnote the author uses “and” but in the next footnote he uses a semicolon to separate the two, so I changed both to semicolons.

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

This is a topic sentence, no FN needed. PJS

The APA is significant as it is one of few statutes that

expressly waives the Government’s sovereign immunity from

lawsuits.138 The waiver, however, is limited, and does not apply

if “any other statute that grants consent to suit expressly or

impliedly forbids the relief which is sought.”139 With regard to

are not usually binding as law because they often demonstrate guidance for a range of offenses and still require judgment on the part of the agency official. See Farrell v. Dep’tt. of the Interior, 314 F.3d 584, 5910-92 (Fed. Cir. 2002) (ruling that a National Park Service manual entitled “Discipline and Adverse Actions” which included a table of penalties as an appendix was not binding because it explicitly stated it was a “general framework” and was not comprehensive). In that case, the Federal Circuit further differentiated that a “binding norm” is one which “so fills out the statutory scheme that upon application one need only determine whether a given case is within the rule’s criteria.” Farrell v. Dept. of the Interior, 314 F.3d 584, 590-92Id. at 592 (Fed. Cir. 2002) (quoting Ryder Truck Lines, Inc. v. United States, 716 F.2d 1369, 1377 (11th Cir. 1983);(quoting Prof’ls & Patients for Customized Care v. Shalala; 56 F.3d 592, 597 (5th Cir. 1995) see also Rapp v. U.S. Dep’tpt. of Treasury Office of Thrift Supervision, 52 F.3d 1510, 1522 (10th Cir. 1995) (finding that the agency could vary from a penalty matrix that was published in the Federal Register to impose a more severe sentence when the publication noted that it was intended for guidance and not a “substitution for sound supervisory judgment”).

138 5 U.S.C. § 702; see United States v. Dalm, 494 U.S. 596, 608 , 608 548 (1990) (the doctrine of federal sovereign immunity is often debated as a jurisprudential question, but “is in no danger of falling out of official favor” in the law); ; Gregory C. Sisk, The Continuing Drift of Federal Sovereign Immunity Jurisprudence, 50 WM. & MARY L. REV. 517, 528 (20089) (the doctrine of federal sovereign immunity is often debated as a jurisprudential question, but “is in no danger of falling out of official favor” in the law) (citing quoting LAURENCE H. TRIBE, AMERICAN CONSTITUTIONAL LAW § 3-25 at 520 (3d ed. 2000)).

139 5 U.S.C. § 702; see also Ruckelshaus v. Sierra Club, 463 U.S. 680, 685 (1983) (holding that s“[s]uch a waiver of sovereign immunity must be strictly construed in favor of the sovereign and

50

government procurements and contracts, the Tucker Act,140 as

amended by ADRA,141 waives immunity from suits, but reserves

jurisdiction in certain cases to the U.S. Court of Federal

Claims. Effective January 1, 2001, the Court of Federal Claims

has exclusive trial-level jurisdiction over “action[s] by an

interested party objecting to a solicitation by a Federal agency

for bids or proposals for a proposed contract or to a proposed

award or the award of a contract or any alleged violation of

statute or regulation in connection with a procurement or a

proposed procurement.”142 Previously, the U.S. district courts

shared this jurisdiction (often referred to as “Scanwell”

jurisdiction, in reference to Scanwell LaboritoriesLaboratories,

Inc. v. Shafer, 424 F.2d 859 (D.C. Cir. 1969)). The ADRA

may not be extended beyond the explicit language of the statute”).

140 Originally, the Tucker Act of 1887 (24 Stat. 505) was enacted to alleviate some of the burden on Congress to hear claims arising from the Civil War (and beyond) by creating jurisdiction in the Court of Claims (later renamed the Court of Federal Claims) for all claim against the Federal Government. See Floyd D. Shimomura, The History of Claims Against the United States: The Evolution from Legislative Torward a Judicial Model of Payment, 45 La. L. Rev. 625, 664 (1985)See http://www.fjc.gov/history/home.nsf/page/courts_special_coc.html. The Tucker Act was codified at 28 U.S.C. § 1346 and § 1491.

141 Administrative Dispute Resolution Act of 1996, Pub. L. No. 104-320, § 12, 110 Stat. 3870, 3874 (codified at 28 U.S.C. § 1491(b)(1)). (1996).

142 Id. 28 U.S.C. § 1491(b)(1).

51

Author, 01/03/-1,

Move to footnote?

amendment, however, officially removed this jurisdictional

arrangement.143

The question of how to classify in-sourcing decisions is

plaguing the federal courts as more decisions are questioned.144

As discussed below, the U.S. district courts are reaching

143 See Labat-Anderson, Inc. v. United States, 346 F. Supp. 2d 145, 153 (D.D.C. 2004). The seemingly expansive jurisdictional grant of the amended Tucker Act has, at times, created open questions before the Court of Federal Claims. Prior to the amendment, the Tucker Act only provided the cCourt bid protest jurisdiction based on an “implied-in-fact” theory. Info.rmation Sciencesence Corp.poration v. United States, 85 Fed. Cl. 195, 204 (2008) (citing Southfork Sys.tems, Inc. v. United States, 141 F.3d 1124, 1132 (Fed. Cir. 1998). Prior to amendment, the Tucker Act’s grant of jurisdiction in this regard extended only to an alleged breach of “an implied contract to have the involved bids fairly and honestly considered” during the procurement process. See Heyer Prods.ucts Co. v. United States, 140 F. Supp. 409 (1956) (stating that the Public Contracts Act served to protect the Federal Government and provided no standing to aggrieved bidders wishing to protest). ADRA sought to “unify bid protest law under one standard.” Emery Worldwide Airlines, Inc. v. United States, 264 F.3d 1071, 1079 (Fed. Cir. 2001) (noting that a purpose of ADRA was to prevent “forum shopping and to promote uniformity in government procurement award law”). However, the Court of Federal Claims has continued to wrestle with the question of whether or not the implied-in-fact jurisdiction survived ADRA. See L-3 Communications Integrates Systems, L.P. v United States, 84 Fed. Cl. 768, 775-7692 Fed. Cl. 232, 249-50 (200810) (recognizing jurisdiction over a bid protest matter invoking both types of jurisdiction rather than implying repeal). Following the passage of ADRA, the APA’s “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” standard governs. Castle-Rose, Inc. v. United States; -- Fed. Cl. -- , 2011 WL 2550871 (June 23, 2011). Prior to that, if a matter was heard under pre-ADRA Tucker Act jurisdiction, such protest would be decided under a “fairly and honestly” standard announced in the statute. Heyer Products Co. v. United States, 140 F. Supp. 409, 412 (1956).

144 See Robert Brodsky, Tell it To The Judge, GOV’ ERNMEN T EXECUTIVE, Nov. 1, 2010 (available at http://www/govexec.com/features/1110-

52

opposite opinions on this central jurisdictional question. On

one side, there are courts finding that they may exercise

jurisdiction under the APA. On the other, the courts are

persuaded that the amended Tucker Act strips the U.S. district

courts of trial-level jurisdiction, instead reserving such

jurisdiction for the Court of Federal Claims.

B. Federal Courts Finding Jurisdiction

In K-Mar Industries, Inc. v. U.S. Department of Defense, the

U.S. District Court for the Western District of Oklahoma held

that it had jurisdiction over a challenged in-sourcing decision

under the APA.145 K-Mar Industries, Inc. (“K-Mar”) alleged that

the Army violated in-sourcing policies when it decided to in-

source operation of a Multi-media/Visual Information Service

Center and Training Support Center services, which K-Mar had been

performing.146 K-Mar alleged that the Army did not comply with

in-sourcing procedures.147

In denying the Government’s motion to dismiss for lack of

jurisdiction, the court traced its jurisdiction over federal

matters (including review of agency actions under the APA) to 28

01/1110-01na2.mth).

145 K-Mar Industries v. U.S. Department of Defense, et al., 752 F. Supp. 2d 1207 (W.D. Okla. Nov. 4, 2010).

146 Id. at 1209. 147 Id.

53

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

Paragraph is setting up the following sections which validate the claims made. No FN should be needed here. PJS

U.S.C. § 1331, a statute conferring jurisdiction over questions

of federal law to the federal courts.148 The court reasoned that

the APA demonstrated the consent to suit, waiving the United

States’ sovereign immunity.149

Noting the APA’s jurisdictional bar where another statute

“expressly or impliedly forbids the relief,”150 the court then

directed its attention to the strain between the Tucker Act (as

amended by ADRA) and the APA. The analysis focused on two key

terms which would grant exclusive jurisdiction to the Court of

Federal Claims. The K-Mar cCourt examined whether the action

before it was one by an “interested party,” a criterion which, if

satisfied, would require jurisdiction to lie exclusively in the

Court of Federal Claims. Relying on the definition of

“interested party” articulated in ADRA151 and a Federal Circuit

decision, the court stated that an interested party is an “actual

or prospective bidder or offeror whose direct economic interests

148 K-Mar Industries v. U.S. Department of Defense, et al., 752 F. Supp. 2d 1207, 1210 (W.D.Okla. Nov. 4, 2010).Id. at 1210.

149 K-Mar Industries v. U.S. Department of Defense, et al., 752 F. Supp. 2d 1207, 1210 (W.D. Okla. Nov. 4, 2010) (citing Normandy Apartments Ltd., v. U.S. Department of Housing & Urban Development, 554 F.3d 1290, 1295 (10th Cir. 2009) and 5 U.S.C. § 702)Id.

150 5 U.S.C. § 702.

151 ADRA borrows its definition of “interested party” from the Competition in Contracting Act (“CICA”) at 31 U.S.C. §3551(2)(2006).

54

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

This sentence merely sets up the rest of the paragraph which discusses the key terms. No FN needed. PJS

would be affected by the award of the contract or by failure to

award the contract.”152 The court concluded that for the

“interested party” requirement to even be analyzed, it must find

that a “contract or prospective contract” is at issue – which it

could not in this instance.153 In support of this conclusion, the

court explained that the ADRA definition, by the terms of the

statute where it is found, applied only to contract disputes.154

Instead, the district court ruled that K-Mar had “allege[d] an

objection to a decision to in-source, a decision which implicitly

includes a decision not to procure and therefore not to solicit,

award, contract or propose a contract.”155

The court then turned its attention to parsing the second

aspect of the ADRA jurisdiction over matters alleging a

“violation of statute or regulation in connection with a

152 K-Mar Industries v. U.S. Department of Defense, et al., 752 F. Supp. 2d 1207,at 1211 (W.D. Okla. Nov. 4, 2010) (quoting 31 U.S.C. § 3551(2)American Federation of Government Employees, AFL-CIO v. United States, 258 F.3d 1294, 1302 (Fed. Cir. 2001) (emphasis in original)).

153 K-Mar Industries v. U.S. Department of Defense, et al., 752 F. Supp. 2d 1207, 1211 (W.D. Okla. Nov. 4, 2010)Id.

154 K-Mar Industries v. U.S. Department of Defense, et al., 752 F. Supp. 2d 1207, 1211 (W.D. Okla. Nov. 4, 2010)Id. (citing American Federation of Government Employees, AFL-CIO (“AFGE”) v. United States, 258 F.3d 1294, 1302 (Fed. Cir. 2001))American Federation of Government Employees, AFL-CIO v. United States, 258 F.3d 1294, 1302 (Fed. Cir. 2001)).

155 K-Mar Industries v. U.S. Department of Defense, et al., 752 F. Supp. 2d 1207, 1211 (W.D. Okla. Nov. 4, 2010) (emphasis added)Id.

55

Author, 01/03/-1,

The case does cite to AFGE but there the court was quoting CICA. Further, K-Mar sets up this quote by noting that CICA states. PJS

procurement or proposed procurement,” focusing on the definition

of “procurement” as a determinant of subject matter

jurisdiction.156 Again, quoting the Federal Circuit, the court

interpreted ADRA’s definition of “procurement” from the Office of

Federal Procurement Policy Act as, “[a]ll stages of the process

of acquiring property or services, beginning with the process for

determining a need for property or services and ending with

contract completion and closeout.”157

The court did not accept the Government’s position that this

definition included the decision “whether there is a need” for

the property and services, thus implicating the Tucker Act’s

exclusive jurisdiction in the Court of Federal Claims.158

Specifically, the court found that the matter was limited in

scope to the procedural questions and did not involve a contract

dispute.159 As there was no implication of a bar to jurisdiction

156 K-Mar Industries v. U.S. Department of Defense, et al., 752 F. Supp. 2d 1207, 1211 (W.D. Okla. Nov. 4, 2010)Id. (citing 28 U.S.C. § 1491(b)(1)) (emphasis added).

157 K-Mar Industries v. U.S. Department of Defense, et al., 752 F. Supp. 2d 1207,Id. at 1212 (W.D. Okla. Nov. 4, 2010) (quoting Distributed Solutions, Inc. v. United States, 539 F.32d 1340, 1345 (Fed. Cir. 2008)).

158 K-Mar Industries v. U.S. Department of Defense, et al., 752 F. Supp. 2d 1207,at 1212 (W.D. Okla. Nov. 4, 2010).

159 K-Mar Industries v. U.S. Department of Defense, et al., 752 F. Supp. 2d 1207,Id. at 1214 (W.D. Okla. Nov. 4, 2010);.

56

that would prevent the court from undertaking an APA review, the

court denied the Motion to Dismiss on that ground.160

The K-Mar cCourt drew much of its reasoning from an earlier

Tenth Circuit case discussing the scope of judicial review over

regulatory violations in the context of a Federal procurement.

In Normandy Apartments, the Tenth Circuit was asked to decide

whether a district court erred in dismissing a dispute between a

low-income housing provider and the Department of Housing and

Urban Development (“HUD”).161 There, Normandy Apartments sought 160 K-Mar Industries v. U.S. Department of Defense, et al., 752 F. Supp. 2d 1207, 1214 (W.D Okla. Nov. 4, 2010)Id. While not germane to the subject of this article, the K-Mar decision also denied two other theories of the Motion to Dismiss, the first relating to the applicability of the Contract Disputes Act (“CDA”), and the second relating to a Freedom of Information Act (“FOIA”) claim raised in the complaint. In denying the former, the cCourt found that there was no action relating to a government contract which would invoke the CDA, 41 U.S.C. §7105(a). Id. In addition, the Sixth Circuit had previously held that when a claim is “essentially contractual in nature,” the CDA confers exclusive jurisdiction to the Court of Federal Claims. Id. (citing B&B Trucking Inc. v. U.S. Postal Service, 406 F.3d 766, 768 (6th Cir. 2005)). The K-Mar cCourt ruled that the classification of whether or not an action is “essentially contractual” rests “on both the source of the rights upon which the plaintiff bases its claim, and upon the type of relief sought or appropriate,” not on how the issue is characterized by the plaintiff. Id. The court found that the rights asserted by the plaintiff were not grounded in contract, nor was the requested relief contractual in nature. Id. With these conclusions, the court denied the Government’s motion because the action was not within the scope of the CDA. Id. at 1215. In denying the latter theory of the motion relating to the FOIA request, the cCourt held that K-Mar had pursued its request diligently enough so as to consider the administrative remedies to have been exhausted. Id.

161 Normandy Apartments, Ltd. v. U.S. Department of Housing and Urban Development, et al., 554 F.3d 1290, 1293 (10th Cir. 2009).

57

Author, 01/03/-1,

Great attention to detail. Concur with PJS that no citation is needed (for reasons he cites and others).

Author, 01/03/-1,

This is borderline. You could argue a FN is needed to an instance where the K-Mar Court cited the Normandy case, but it really is a topic sentence, which moves the article to a discussion of Normandy. Further, K-Mar's reliance on this case is substantiated in the next paragraphy, meaning a FN probably isn't really needed. PJS

Author, 01/03/-1,

Note to authors: Capitalization? On p. 57 “motion to dismiss” is lowercase (“In denying the Government’s motion to dismiss for lack of jurisdiction, the court traced its jurisdiction over federal matters . . . .”). Would you like them to appear lowercase in both instances?

declaratory and injunctive relief to prevent HUD’s attempt to

abate certain payments, alleging that HUD had violated

regulations and breached its contract by attempting abatement.162

The district court dismissed both the regulatory and contractual

claims.163

On appeal, the Circuit determined that the district court

did not have jurisdiction over the breach of contract claim.164

Central to the court’s reasoning in K-Mar, the Tenth Circuit

proceeded to analyze the regulation-based claim to find

jurisdiction based on “the source of the right upon which the

plaintiff bases its claims, and upon the relief sought.”165

Specifically, the Normandy Apartments court found that the

regulatory violations . . . implicate its contractual relationship . . . [b]ut this does not convert a claim asserting rights based on federal regulations into which is, “at its essence,” a contract claim. When the

162 Normandy Apartments, Ltd. v. U.S. Department of Housing and Urban Development, et al., 554 F.3d 1290, 1297-98 (10th Cir. 2009)Id.

163 Normandy Apartments, Ltd. v. U.S. Department of Housing and Urban Development, et al., No. CIV-07-1161-R, 2007 WL 3232610 (W.D.Okla., Nov. 1, 2007)Id.

164 Normandy Apartments, Ltd. v. U.S. Department of Housing and Urban Development, et al., 554 F.3d 1290, 1300-01 (10th Cir. 2009)Id.

165 Normandy Apartments, Ltd. v. U.S. Department of Housing and Urban Development, et al., 554 F.3d 1290, 1299 (10th Cir. 2009)Id. at 1299 (quoting Megapulse, Inc. v. Lewis, 672 F.2d 959, 968 (D.C.Cir.1982)).

58

Author, 01/03/-1,

Authors? Did you want a colon to introduce the block quote? You used a colon earlier in the Article and this is our standard practice.

source of rights asserted is constitutional, statutory, or regulatory in nature, the fact that resolution of the claim requires some reference does not “magically transform [the] action . . . into one on the contract and deprive the court of jurisdiction it might otherwise have.”166

Rather the court noted, “

Rather, litigants may bring statutory and constitutional claims

in federal district court even when the claims depend on the

existence and terms of a contract with the government.”167

The K-Mar cCourt relied on this reasoning to find that it

had jurisdiction over a challenge to the Government’s compliance

with its own in-sourcing procedures.168 The lesson from K-Mar

appears to be that a narrowly tailored complaint – based on the

violation of regulation and not on contract-based claims – may

help establish jurisdiction over an in-sourcing decision.

C. Federal Courts Denying Jurisdiction

In stark contrast to the K-Mar decision, other U.S.

district courts have explicitly declined to exercise 166 Id. 1299-1300 (quoting Megapulse, 672 F.2d at 968).167 Normandy Apartments, Ltd. v. U.S. Department of Housing & Urban Development, et al., 554 F.3d 1290,at 1299-1300 (10th Cir. 2009) (quoting Megapulse, Inc. v. Lewis, 672 F.2d 959, 968 (D.C.Cir. 1982); Robbins v. U.S. Bureau of Land Management, 438 F.32d 1074, 1083-04 (10th Cir. 2006)).

168 K-Mar Industries v. U.S. Department of Defense, et al., 752 F. Supp. 2d 1207,at 1214 (W.D. Okla. Nov. 4, 2010).

59

Author, 01/03/-1,

Not sure where this underscore came from. I’m assuming this was inputed by mitake (it seems to have materialized during the member editing stage). I just deleted it. KMJ.

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

Author's analysis, no citation needed. PJS

Author, 01/03/-1,

Thanks!

Author, 01/03/-1,

To whoever is substantiating – There are unmatched quotations in this block quote. Please fix.

Author, 01/03/-1,

Need citation here. Id. 1299-1300 (quoting Megapulse, 672 F.2d at 968).

jurisdiction. In Vero Technical Support, Inc. v. U.S. Department

of Defense,169 and Rothe Development, Inc. v. U.S. Department of

Defense,170 courts were asked by incumbent contractors to review

in-sourcing decisions. These courts found that exclusive

jurisdiction to hear such matters rests in the Court of Federal

Claims and that the matters should be dismissed.

Vero Technical Support, Inc. (“Vero Tech.”) performed

“weather-related” services at various U.S. Army sites” under a

contract that was to be performed in one-month option periods.171

Within three months of award, the Government began converting the

performance in-house by hiring some of the plaintiff’s personnel

and modifying the contract to account for the in-sourced

personnel.172

Vero Tech. filed its suit seeking injunctive relief,

“carefully defin[ing] its cause of action” in an attempt to

169 Vero Technical Support, Inc. v. U.S. Dep’partment of Def.ense, 733 F. Supp. 2d 1336 (S.D. Fl. 2010), aff’d 437 F. App’x. 766 2011 WL 3501843 (11th Cir. Aug. 10, 2011).

170 Rothe DevelopmentDev., Inc. v. U.S. Dep’t of Def.U.S. Department of Defense, 2010 WL 4595824 (W.D. Tx. Nov. 3, 2010).

171 Vero Technical Support, 733 F. Supp. 2d at 1338-39.Vero Technical Support, Inc. v. U.S. Department of Defense, 733 F. Supp. 2d 1336, 1139 (S.D.Fl. Aug. 18, 2010).

172 733 F. Supp. 2dId. at 13Vero Technical Support, Inc. v. U.S. Department of Defense, 733 F. Supp. 2d 1336, 1339 (S.D.Fl. Aug. 18, 2010).

60

Author, 01/03/-1,

This entire phrase is a direct quote from page 1338 of the decision

Author, 01/03/-1,

No FN is needed here as the following paragraphs discuss the cases in detail. PJS

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

Topic sentence, no FN needed. PJS

invoke the general jurisdiction of the U.S. district court.173

The complaint was limited to alleging that the decision to in-

source the services was based on findings which were “arbitrary,

capricious, and an abuse of discretion or otherwise not in

accordance with law,” the famous standard for decisions under the

APA.174 Vero Tech. argued that the decision to in-source the

function was arbitrary and capricious because the cost analysis

that informed the decision was performed improperly.175 The

Government moved to dismiss the action under Fed. Civ. R. 12(b)

(1) arguing that there was a lack of subject matter jurisdiction

and contending that the Court of Federal Claims is the

appropriate and exclusive body to hear the complaint.176

The court agreed, focusing on the language granting

jurisdiction to the Court of Federal Claims, and the surrounding

interpretations thereof. In particular, the court quoted CICA,

41 U.S.C. § 1491, noting that the Court of Federal Claims must 173 733 F. Supp. 2dId. at 13Vero Technical Support, Inc. v. U.S. Department of Defense, 733 F. Supp. 2d 1336, 1340 (S.D.Fl. Aug. 18, 2010).

174 Vero Technical Support, Inc. v. U.S. Department of Defense, 733 F. Supp. 2d 1336, 1340 (S.D.Fl. Aug. 18, 2010).Id.

175 Vero Technical Support, Inc. v. U.S. Department of Defense, 733 F. Supp. 2d 1336, 1340 (S.D. Fl. 2010)Id. (alleging that the Government failed to account for the costs of benefits to personnel, the costs for using government vehicles in the performance of the work, that it “misclassified” the personnel needed, and finally, that the estimated cost of contractor performance was grossly disparate from actual costs).

176 Id.

61

hear cases of “alleged violation of statute or regulation in

connection with a procurement or proposed procurement.”177

Turning first to the definition of “procurement,” the court

explained that the term includes “all stages of the process of

acquiring property or services, beginning with the process

determining a need for property or services and ending with

contract completion and closeout.”178 The court determined that

this jurisdictional grant was “broad enough to include the

decision of whether or not to procure, either as a matter of

determining the need for procurement or deciding whether to

continue a procurement arrangement.”179

The court went on to analyze whether Vero Tech. was an

“interested party” under the Tucker Act. Vero Tech. argued it

could not be an “interested party” as that would imply the

existence of a solicitation to which it could be an “actual or

prospective bidder[] or offeror[].”180 Agreeing with the

177 733 F. Supp. 2d Vero Tec733 F. Supp. 2d atId. at 1340-41.

178 Id. at Vero Technical Support, Inc. v. U.S. Department of Defense, 733 F. Supp. 2d 1336, 1342 (S.D. Fl. 2010) (citing Resource Conservation Group, LLC v. United States, 597 F.3d 1238, 1244 (Fed. Cir. 2010) (challenge to a Government decision to lease land that it already owned ruled to be “not procurement related”)).

179 Vero Technical Support, Inc. v. U.S. Department of Defense, 733 F. Supp. 2d 1336, 134Id0 (S.D. Fl. Aug. 18, 2010).

180Vero Technical Support, Inc. v. U.S. Department of Defense, 733 F. Supp. 2d Id. at 1336, 1342-433 (S.D. Fl. Aug. 18, 2010).

62

Author, 01/03/-1,

Concur.

Author, 01/03/-1,


Government, the court ruled that Vero Tech. was an interested

party in that it currently held a contract to perform the

services in question; therefore it had “a direct economic

interest in maintain[ing] that contract, which presumably is the

ultimate goal of its challenge to the in-sourcing decision.”181

Based on this analysis the district court declined to

exercise general jurisdiction and dismissed the case. The court

determined that the Court of Federal Claims was the proper forum

to hear the dispute.182 Interestingly, the decision recognized

two remaining jurisdictional tensions. First, the court

recognized Vero Tech.’s fear that after filing at the Court of

Federal Claims the Government would shift its argument to attack

that court’s jurisdiction.183 Without resolving the question, the

court allayed that fear by noting the Government had taken an

official position for that cCourt’s jurisdiction which could be

used against it, if such an argument were presented.184 Second,

the court indicated a tension regarding the proper form of

action. Specifically, would a challenge to an in-sourcing 181 Vero Technical Support, Inc. v. U.S. Department of Defense, 733 F. Supp. 2d 1336,. at 1343 (S.D. Fl. 2010) (citing Roxco, Ltd. v. United States, 1999 WL 160608, *29 (Fed. Cir. 1999), for the proposition that a plaintiff can be an “interested party” when there is a possibility of a later solicitation for the same work).

182 , 733 F. Supp. 2d at 1343Id. 183 Vero Technical Support, 733 F. Supp. 2d at 1343.Id. 184 Vero Technical Support, Inc. v. U.S. Department of Defense, 733 F. Supp. 2d 1336, 1343 (S.D. Fl. Aug. 18, 2010).

63

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

This sentence merely sets up the following, properly citated sentence, so no FN should be needed. PJS

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,


decision be best made as a bid protest, invoking the Tucker Act

and ADRA; or would it be better made as a contract-related action

under the CDA.185 Again, the district court did not resolve these

questions.186

In Rothe Development, Inc. v. U.S. Department of Defense,

the plaintiff (“RDI”) sought an injunction from the U.S. District

Court for the Western District of Texas against a U.S. Air Force

decision to in-source “base network control center” and other

information technology work that it had been performing under

185 Vero Technical Support, Inc. v. U.S. Department of Defense, 733 F. Supp. 2dId. at 1336, 1343-44 (S.D. Fl. Aug. 18, 2010).

186 Following this decision, Vero Tech. appealed to the Eleventh Circuit Court of Appeals. In Vero Technical Support, Inc. v. U.S. Department of Defense, 437 F. App’x. 766No. 10-14889, 2011 WL 3501843 (11th Cir. Aug. 10, 2011) (unpublished decision), the Eleventh Circuit affirmed the district court’s rulings. Vero Tech argued that jurisdiction should not fall within the Tucker Act because the claim did not involve a violation of statute or regulation, was not “in connection with a procurement,” and Vero Tech was not an “interested party” as required by the law. Id. at 6. The appellate court disagreed with all three points. First, the court found that the allegations that the Agency violated its internal in-sourcing procedures amounted to a violation of law or regulation. Id. at 6-7. Relying on the precedent set in Distributed Solutions, Inc. v. United States, 539 F.3d 1340 (Fed. Cir. 2008), the court found that matter did involve a “procurement” because it dealt with the determination of a need for property or services. Id. at 7-9. Finally, relying on Vero Tech.’s own characterization that it would be “injured under its contract by not having an option extended due to the in-sourcing decision,” the Court of Appeals was able to rule that Vero Tech. was an “interested party” for the purpose of the jurisdictional analysis. Id. at 9-10. The Eleventh Circuit also declined to analyze whether or not an in-sourcing decisions should fall under the CDA’s jurisdictional grant to the Court of Federal Claims. Id. at 11.

64

contract at the Minneapolis-St. Paul Air Reserve Station since

1987.187 The complaint alleged that the decision to in-source the

work violated 10 U.S.C. § 2463188 and the internal regulations and

in-sourcing procedures.189 Specifically, RDI alleged that under

the APA the decision to in-source the work it had been performing

was improper because the Air Force “(1) unlawfully bundled RDI’s

current scope of work with scopes of work from other contracts,

(2) did not make ‘like comparisons’ of cost or account for the

‘full cost of manning,’ and (3) therefore did not select the true

‘low cost provider.’”190 The Government moved for dismissal under

Rule 12(b)(1) arguing that proper jurisdiction rested with the

Court of Federal Claims under the Tucker Act (as amended by

ADRA), or alternatively under the Contract Disputes Act.191

187 Rothe Development, Inc. v. U.S. Department of Defense, 2010 WL 4595824 at *1 (W.D. Tx. Nov. 3, 2010).

188 See, infra Sec. I.a. At the time, 10 U.S.C. § 2463 required the Department of Defense to develop in-sourcing policy guidelines and to give “special consideration” to certain functions as a potential requirement to in-source.

189 Rothe Development, Inc. v. U.S. Department of Defense, 2010 WL 4595824, at *1 (W.D. Tx. Nov. 3, 2010).

190 Rothe Development, Inc. v. U.S. Department of Defense, 2010 WL 4595824, at *1 (W.D. Tx. Nov. 3, 2010)Id. RDI also alleged that the Air Force unlawfully withheld materials requested through the Freedom of Information Act (“FOIA”). Id. This article will not discuss the FOIA request as it is not directly pertinent to the jurisdictional topic.

191 Rothe Development, Inc. v. U.S. Department of Defense, 2010 WL 4595824, at *1 (W.D. Tx. Nov. 3, 2010)Id.

65

Author, 01/03/-1,

Rothe Development, Inc. v. United States Department of Defense, No. SA-10-CV-743-XR, order at 2 (W.D. Tx. Nov. 3, 2010).

Author, 01/03/-1,


Author, 01/03/-1,

Authors – Did you want to add a colon here? You’ve used it previously in the Article to set up lists and that is our general practice.

Author, 01/03/-1,


Author, 01/03/-1,

I think this is Reema’s call. KMJ. Also – Reema, note that if you want to cite to the docket, the member include the correct citations and pincites in comment bubbles. (Wish I knew who this member was, they didn’t include their initials – nice attention to detail). KMJ

Author, 01/03/-1,

I Understand that thought behind citing to the docket but anyone who wants to look this up is going to use the Westlaw cite so I think we should stick with the author’s approach

Author, 01/03/-1,

In all citations to the Rothe 2010 decision, I think that the footnotes should cite the opinion from the docket, as that is the original source. I don’t want to disrupt the foot notes in case I am wrong on this point, so I will put what I believe to be the proper citations as comments, just in case. Rothe Development, Inc. v. United States Department of Defense, No. SA-10-CV-743-XR, order at 1-2 (W.D. Tx. Nov. 3, 2010).

In dismissing the matter, the Rothe cCourt picked up the

same line of reason as the Vero Tech. cCourt, but deepened its

analysis regarding the Court of Federal Claims’ jurisdiction

under the Tucker Act. In deciding that an in-sourcing decision

was “in connection with a procurement,” the court built from the

Resource Conservation decision.192 Quoting from Distributed

Solutions and the earlier RAMCOR Services Group, Inc. v. United

States to show how broadly the phrase is construed, the court

found the amended Tucker Act conferred jurisdiction over

questions “where a statute clearly affects the award and

performance of a contract.”193 The court then looked to policy

guidelines that RDI asserted were violated to see if they shed

light on whether the in-sourcing decision was related to a

procurement. Quoting the April 4, 2008 Memorandum from the Under

Secretary of Defense for Personnel and Readiness,194 the court 192 Rothe Development, Inc. v. U.S. Department of Defense, 2010 WL 4595824,Id. at *3 (W.D. Tx. Nov. 3, 2010) (citing Resource Conservation Group, LLC v. United States, 597 F.3d 1238, 1244 (Fed. Cir. 2010)).

193 Rothe Development, Inc. v. U.S. Department of Defense, 2010 WL 4595824,Id. at *43 (W.D. Tx. Nov. 3, 2010) (citing Distributed Solutions, Inc. v. United States, 539 F.3d 1340 (Fed. Cir. 2008) and RAMCOR Services Group, Inc. v. United States, 185 F.3d 1286, 1289 (Fed. Cir. 1999)).

194 Implementation of Section 324 of the National Defense Authorization Act for Fiscal Year 2008, supra note Error: Reference source not found, at Attach. 2 at 2Supra note Error: Reference source not found20. The Memorandum stated:

DoD Components shall perform an economic analysis to determine whether DoD civilians or private sector

66

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

Transition sentence, no FN needed. PJS

Author, 01/03/-1,

Rothe Development, Inc. v. United States Department of Defense, No. SA-10-CV-743-XR, order at 6-7 (W.D. Tx. Nov. 3, 2010).

Author, 01/03/-1,

Rothe Development, Inc. v. United States Department of Defense, No. SA-10-CV-743-XR, order at 6, 8 (W.D. Tx. Nov. 3, 2010). (pg.8 is where the court concludes that an in sourcing decision is in connection with a procurement, page 6 is where they cite to Resource Conservation)

Author, 01/03/-1,

Concur.. KMJ.

Author, 01/03/-1,


held that the question answered by an in-sourcing analysis is

whether an agency “should engage in a procurement process in

order to acquire the necessary services.”195 The court thus

determined that an in-sourcing analysis is “not an evaluation of

an ‘abstract need’ or a ‘speculative’ future procurement

process . . . but rather a specific and detailed process for

evaluating the costs and benefits in relation to a previously

identified, specific and concrete need.”196

The court rejected RDI’s argument that it was not an

“interested party.” RDI had attempted to assert that the in-

sourcing decision did not concern an action for which RDI could

have been an actual or prospective bidder.197 The court

determined that RDI’s own claim undermined this theory, as RDI

represented that it was seeking “to keep its scope of work in the

contactors are the low cost provider and should perform the work. Qualified cost analysts/experts shall perform the analyses using cost factors/models that account for the full costs of manpower, as appropriate, and make “like comparisons” of all relevant costs. Decisions on which costs to include (e.g., overhead, facilities, equipment, suppliedsupplies, health and retirement benefits) shall depend on what is needed to achieve “like comparisons” and whether the costs are of sufficient magnitude to influence the final decision.

Id.

195 Rothe Development, Inc. v. U.S. Department of Defense, 2010 WL 4595824, at *4 (W.D. Tx. Nov. 3, 2010).

196 Rothe Development, Inc. v. U.S. Department of Defense, 2010 WL 4595824, at *4 (W.D. Tx. Nov. 3, 2010)Id.

197 , No. SA-10-CV-743-XR, order at 9 (W.D. Tx. Nov. 3, 2010)Id.

67

Author, 01/03/-1,

Note – this is still the member saying what the cite would be if we want to add a cite to the docket. Kmj.

Author, 01/03/-1,

Id.

Author, 01/03/-1,


competitive realm in order to re-compete for the work” therefore

creating a situation where it could be injured by a decision not

to award a contract.198 In so reasoning, the court undertook a

“zone of injuryinterest” analysis to show that under the APA, the

only reasons RDI would have standing were the same reasons that

would place the matter squarely under the jurisdiction of the

Court of Federal Claims.199

The district court dismissed the action finding that it

lacked jurisdiction.200 RDI moved the court to alter or amend its

judgment in light of the recently available K-Mar decision.201

The court denied this motion, noting that the mere fact that two

courts came to opposite conclusions does not automatically create

198 Rothe Development, Inc. v. U.S. Department of Defense, 2010 WL 4595824, at *5 (W.D. Tx. Nov. 3, 2010) Id. (emphasis added).

199 Rothe Development, Inc. v. U.S. Department of Defense, 2010 WL 4595824, at *5 (W.D. Tx. Nov. 3, 2010)Id. (recognizing that the “zone of interest” analysis notes that to have standing to bring an action under the APA a plaintiff must have been cause an injury in fact by the agency which is within the “zone of interest” sought to be protected or regulated. See (citing 5 U.S.C. § 702; see also Lujan v. National Wildlife Federation, 497 U.S. 781, 883 (1990))). The Rothe cCourt notes that the only zone of interest is whether or not the Department of Defense’s guidelines seek to ensure in-sourcing decisions are made only when cost-effective, and that to be injured by this decision a party would have to be a potential bidder or offeror in order to suffer injury by this decision.) Id.)

200 Rothe Development, Inc., 2011 WL 196926, at *9, No. SA-10-CV-743-XR, order at 16 (W.D. Tx. Nov. 3, 2010).201 Rothe Development, Inc. v. U.S. Department of Defense, 2011 WL 196926, at *2 (W.D. Tx. Jan. 19, 2011).

68

Author, 01/03/-1,

Rothe Development, Inc. v. United States Department of Defense, No. SA-10-CV-743-XR, order at 2-3 (W.D. Tx. Jan. 19, 2011).

Author, 01/03/-1,

Need FN with pincite to the case. PJS

Author, 01/03/-1,

Rothe Development, Inc. v. United States Department of Defense, No. SA-10-CV-743-XR, order at 10 (W.D. Tx. Nov. 3, 2010). Cite to Lujan is properly done, however, should it be changed to: 110 S.Ct. 3177, 3186 (1990) because it reflects the pagination of the West Reporter Image original PDF doc.?

Author, 01/03/-1,

Authors – Member or AE changed “injury to interest” based on the language in the case (which I double-checked). Are you okay with this edit? KMJ.

Author, 01/03/-1,

Id.

a “manifest error,” but indicates a lack of controlling case

law.202

RDI also appealed the dismissal to the Fifth Circuit Court

of Appeals, which reviewed the case de novo as the underlying

case involved the interpretation of statute.203 In affirming the

district court, the Fifth Circuit was succinct in finding that

the challenge to the in-sourcing decision was “an action by an

interested party alleging a violation of a statute or regulation

in connection with a procurement” which implicates the exclusive

jurisdiction of the Court of Federal Claims.204 In discussing

RDI’s “interested party” argument, the Circuit added to the

district court’s finding that RDI was an interested party, noting

that “if [RDI] had no such interest, it is difficult to imagine

how it could demonstrate particularized injury for Article III

standing.”205 Echoing the logic of the district court and the

Vero Tech. appeal before the Eleventh Circuit, the appeals court

found that RDI was clearly challenging a decision encompassed

under the definition of “procurement.”206 While these two 202 Rothe Development, Inc. v. U.S. Department of Defense, 2011 WL 196926,Id. at *2-3 (W.D. Tx. Jan. 19, 2011).

203 Rothe Development, Inc. v. U.S. Department of Defense, No. 11-50101, slip op. (5th Cir. Dec. 29, 2011).204 Id. at 5 (5th Cir. Dec. 29, 2011).205 Id. at 3 (5th Cir. Dec. 29, 2011) (citing K.P. v. LeBlanc, 627 F.3d 115, 1225th Cr

206 No. 11-50101,Id. at 4-5 (5th Cir. Dec. 29, 2011) (citical Support, Inc. v. U.Sparte. App’x. 766, 76970-7701 (11th Cir. Aug. 10, 2011) (unpublished decision)). See discussion supra note

69

Author, 01/03/-1,

Rothe Development, Inc. v. United States Department of Defense, No. SA-10-CV-743-XR, order at 4-5 (W.D. Tx. Jan. 19, 2011).

Circuits seemingly agree that the Court of Federal Claims should

have the exclusive jurisdiction to hear challenges to in-sourcing

decisions, the K-Mar decision and the non-binding nature of the

Vero Tech. appeal leave the question far from settled in the

district courts.

III. TRIALS TOWARD PROGRESS? - COURT OF FEDERAL CLAIMS CASES

“History and experience tells us that moral progress comes notcannot come in comfortable and complacent times, but out of

trial and confusion.” – Pres. Gerald R. Ford207

The Court of Federal Claims has grappled with jurisdiction

over challenges to in-sourcing decisions, despite some district

courts’ determination that it should have exclusive jurisdiction

over the issue. In two recent cases, Santa Barbara v. United

States208 and Hallmark-Phoenix 3, LLC v. United States,209 the

court considered complex issues of standing and jurisdiction.

Indicative of the confusion surrounding in-sourcing decision

challenges, the court came to opposite conclusions.210 The cCourt

150.207 Gerald Ford, President of the United States, Address Before a Joint Session of the Congress Reporting on the State of the Union (Jan. 9, 1976) available at http://www.ford.utexas.edu/LIBRARY/SPEECHES/760019.htm.208 98 Fed. Cl. 536 (2011).

209 99 Fed. Cl. 65 (2011).

210 In the absence of Supreme Court or Federal Circuit precedent that would dictate an outcome, judges on the Court of Federal Claims may come to differing conclusions about identical questions of law. Here, for example, Judges Firestone and

70

Author, 01/03/-1,

Delete

Author, 01/03/-1,

Introductory sentence, no FN needed. PJS

Author, 01/03/-1,

Need source for this quote. PJS

Author, 01/03/-1,

Please add a FN for this source.

in Santa Barbara determined that a plaintiff that had lost a

contract due to an agency’s decision to in-source the activity

was an “interested party” under the Tucker Act, thereby

authorizing the cCourt to exercise jurisdiction over the

complaint.211 In so doing, the cCourt rejected the government’s

argument that the plaintiff’s lack of “prudential standing”

precluded the cCourt from exercising jurisdiction.212 The

Hallmark-Phoenix cCourt disagreed, noting that a plaintiff

challenging an in-sourcing decision could not be said to be a

“prospective bidder” and therefore is not an “interested party”

under the Tucker Act.213 Ultimately, the court based its

determination that it did not have jurisdiction over the

Allegra came to opposite conclusions as to whether the Court of Federal Claims has jurisdiction over in-sourcing decisions. See Ralph C. Nash, “Jurisdiction Over Protests of In-Sourcing Decisions: Judicial Disagreement,” 25 No. 12 Nash & Cibinic Rep. ¶ 60 (2011) (“We won’t know which judge is right until the Federal Circuit rules on this issue.”).

211 98 Fed. Cl. at 543. Under the Tucker Act, the court’s jurisdiction is limited to claims brought by “interested parties” as defined in CICA. 31 U.S.C. §§ 3551-3556; see also Am.erican Fed.eration of Government Gov. Employees, AFL-CIO (“AFGE”) v. United States, 258 F.3d 1294 (Fed. Cir. 2001). CICA, in turn, defines “interested parties” as “actual or prospective bidders and offerors whose direct economic interest would be affected by the award of the contract or the failure to award the contract.” AFGE, 258 F.3d at 1302.

212 98 Fed. Cl. at 544.213 99 Fed. Cl. at 68.

71

plaintiff’s challenge to the in-sourcing decision on its analysis

of prudential standing, not “interested party” standing.214

A. Santa Barbara v. United States

With the issuance of the Santa Barbara v. United States

decision on May 4, 2011, jurisdiction and standing seemed

certain. There, the cCourt held that Santa Barbara Applied

Research, Inc. (“SBAR”) was an interested party and therefore had

standing to challenge the Government’s decision to in-source

services SBAR had previously performed.215 SBAR held an

indefinite quantity contract for multi-wing logistics support

(“MWLS”)216 for nine locations within Air Force Space Command

(“AFSPC”).217 However, new DoD policies218 and budgetary concerns 214 Id. Hallmark initially appealed the Court of Federal Claims’ decision to the Federal Circuit, but later withdrew its appeal. It is also worth noting that at the time of this writing, a third challenge to an agency decision to in-source is pending before Judge Horn on the Court of Federal Claims. See Triad Logistics Servs. Corp. v. United States, No. 11-43C. In March of 2011, i.e., prior to issuance of the Santa Barbara and Hallmark decisions, the Government moved to dismiss the action for lack of jurisdiction. Following their publication, both parties briefed the cCourt on what, if any, impact these decisions should have on the pending motion.

215 98 Fed. Cl. at 543536 (2011).

216 MWLS services support the mission of a base or command and include fuels management, vehicle operation and maintenance, vehicle operation and maintenance, base transportation, surface freight operations, and ordering, storing, receiving, handling, issuing, and maintaining weapons. Id. at 537-38.

217 Id. 218 In-sourcing Contracted Services - Implementation Guidance, Memorandum from the Deputy Secretary of Defense for Personnel and Readiness to the Secretaries of the Military Departments, et al.,

72

Author, 01/03/-1,

Great attention to detail. I’m going to concur reasoning this is a topic sentence with citation following one sentence later. Thanks. KMJ.

Author, 01/03/-1,

This is an introductory sentence where no FN should be needed. However, one could argue a FN is needed to substantiate the date of the decesion. If so a simply general cite to the case would suffice. PJS

led AFSPC to start identifying contracts for in-sourcing in

2009.219 Ultimately, in June of 2010, the Air Force notified SBAR

that the Air Force was in-sourcing functions under the MWLS

contract.220

The lawsuit that ensued exposed the complex nature of the

in-sourcing jurisdictional debate. SBAR filed a complaint in the

Court of Federal Claims challenging the Air Force’s decision to

in-source portions of the plaintiff’s MWLS contract.221 The

supra note 5Error: Reference source not found at Atachment 1 at 6-7. In-sourcing Contracted Services - Implementation Guidance, May 28, 2009, Attach. 1 at 4 (available at http://prhome.defense.gov/RSI/REQUIREMENTS/docs/DepSecDef%20Memo%20In-sourcing%20Contracted%20Services-Implementation%20Guidance%20(28%20May%2009)%20(OSD%2005339-09).pdf). As noted above, this memorandum advised that when making a decision whether to in-source a particular activity, DoD components should consider whether: (1) the function is inherently governmental; the function is exempt from private sector performance; (3) the contract is for unauthorized personal services; (4) there were problems with contract administration on the contract; and/or (5) a cost analysis shows that in-house performance would be more cost effective than contractor performance. Id.

219 Though the AFSPC originally targeted only “inherently governmental activities,” due to budgetary concerns, the agency began to consider in-sourcing “contracts that were common across the AFSPC and contracts that posed the least risk to AFSPC’s mission.” 98 Fed. Cl. at 539. With regard to the MWLS contract, cost analyses performed on each of the locations showed a cost savings of more than $31 million contract-wide. Id. at 540.

220 Id. at 540. 221 SBAR challenged the Air Force’s decision to in-source work performed at four of eight Air Force bases covered by the contract. After SBAR filed its complaint, the Air Force voluntarily agreed to re-evaluate its decision, but after recalculating the costs of agency and government performance, concluded that DoD would save approximately $7.3 million – later corrected to $8.8 million – from 2011 through 2015 by in-sourcing

73

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,


Government swiftly moved to dismiss SBAR’s complaint on the

ground that SBAR did not have standing to challenge the Air

Force’s decision to in-source the services at issue.222 The

Government asserted that SBAR was not an “interested party”

within the meaning of 31 U.S.C. § 1491(b)(1) because the in-

sourcing decision at issue did not involve a formal public-

private competition.223 Consequently, the Government argued SBAR

could not claim it suffered the “competitive injury” necessary

for standing under § 1491(b)(1).224

The Government argued, in the alternative, that SBAR did not

have “prudential standing” to challenge the Air Force’s decision

under the test established by the Federal Circuit in Galen

Medical Associates, Inc. v. United States.225 Specifically, the

the non-fuels portion of the MWLS contract. Id. at 541. Thus, on April 5, 2011, the Air Force affirmed its decision to in-source the non-fuels portion of the MWLS contract. Id.

222 Id. at 541. The Government also argued that SBAR failed to state a claim for which relief can be granted because the decision to in-source is committed to agency discretion as a matter of law such that there were no standards applicable. Id. On that issue, the court held that the decision to in-source work was subject to judicial review. Id. at 544-45 With regard to the merits, the court also considered the parties’ cross-motions for judgment on the Administrative Record and held that the Air Force’s decision to compare cost data from contract locations affected by the decision to in-source was not arbitrary or capricious. Id. at 545-46.

223 Id. at 542.224 Id. 225 Santa Barbara Applied Research, Inc., 98 Fed. Cl. at 542. 369 F.3d 1324 (Fed. Cir. 2004) (requiring court held that a protestor to must show that it had been prejudiced by an error in the Government’s decision). 369 F.3d 1324, 1330-31 (Fed. Cir.

74

Author, 01/03/-1,

Need a citation to the Santa Barbara case, noting that the Government made this argument. PJS

Government noted that SBAR could not have been prejudiced – a

fundamental requirement in bid protests – by any errors in the

Government’s decision because SBAR was not the intended

beneficiary of the statutes directing the in-sourcing decision.226

The Government thus argued that Galen required a protester not

only to be an “interested party,” but also to meet a prudential

standing requirement to maintain an action under § 1491(b)(1).227

In determining that SBAR did have standing to challenge the

Air Force’s decision, the court analyzed both “interested party”

and “prudential standing.” According to the court, whether SBAR

had standing to challenge the in-sourcing decision turned first

on whether the Government’s in-sourcing decision was made “in

connection with a procurement” within the meaning of § 1491(b)

(1).228 The second jurisdictional element the court considered

was whether SBAR was an “interested party” within the meaning of

CICA. With regard to the first issue, the court held that the

in-sourcing decision was made for the purpose of determining the

need for contract services and thus was made ‘in connection with

a procurement decision.’”229

2004)..

226 Santa Barbara Applied Research, Inc., 98 Fed. Cl. at 542.227 Id.228 Id.229 98 Fed. Cl.Id. at 543. Neither party disputed that the in-sourcing decision constituted a decision “in connection with a procurement.” Id. at 542.

75

Author, 01/03/-1,

Concur, KMJ.

Author, 01/03/-1,

Transitional sentence, no FN needed.

Author, 01/03/-1,


Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,


Author, 01/03/-1,


Author, 01/03/-1,


In holding that SBAR was an “interested party,” the court

looked to the Federal Circuit’s interpretation of the standing

requirements of CICA in American Federation of Government

Employees, AFL-CIO (“AFGE”) v. United States.230 In AFGE, the

Federal Circuit determined that federal employees likely to lose

their jobs based on a decision to out-source did not have

standing to challenge an out-sourcing decision on the grounds

that they were not eligible to bid on Government work.231 The

Santa Barbara cCourt distinguished AFGE on the ground that AFGE

featured plaintiffs who could not compete for a Government

contract by virtue of being federal employees.232 By contrast,

SBAR already had a Government contract and could have competed

for a future contract.233 In line with this reasoning, the court

determined that SBAR “has a track record of winning contracts for

the work that the Air Force is nowt in-sourcing” such that “the

economic impact to SBAR cannot be denied.”234

The Santa Barbara cCourt did not accept the Government’s

argument that § 1491(b)(1) applies only where a party can link a

“non-trivial competitive injury” to a violation of a statute or

230 98 Fed. Cl.Id. at 542-433 (citing 258 F.3d 1294 (Fed. Cir. 2001), and noting that the definition of “interested party” found in CICA was “engrafted onto section 1491(b)(1)”).

231 , 258 F.3d 1294,at 1295, 1302 (Fed. Cir. 2001).232 98 Fed. Cl. at 543.233 Id.234 98 Fed. Cl. at 543Id.

76

Author, 01/03/-1,

Need FN with pincite to the Santa Barbara case. PJS

Author, 01/03/-1,


Author, 01/03/-1,

Need FN with pincite to the AFGE case. PJS

regulation intended to promote competition, a test established in

Weeks Marine.235 The court acknowledged that the relevant

statutes and regulations at issue, namely 10 U.S.C. § 129a and 10

U.S.C. § 2463, did not mandate any kind of formal public-private

competition.236 However, the court was persuaded that the Air

Force’s decision to in-source the non-fuel MWLS services was

based on a comparison between using the contractors and switching

to civilian Air Force employees.237 According to the court,

“[w]here a protestor stands to lose future work for which it

likely would have competed because of alleged errors in the cost

comparison mandated by Congress, the protestor should have

standing to challenge the decision to in-source.”238 Like

challenges to in-sourcing decisions under Circular A-76, “this

case also involves the loss of future contract work by a

protestor with a direct and real economic interest in the

government’s decision.”239

After explaining its rationale for exercising jurisdiction

under the “interested party” provisions of the Tucker Act, the

court went on to reject the Government’s prudential standing 235 Id.; Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1360-62 (Fed. Cir. 2009) (clarifying the harm necessary to demonstrate interested party status in the pre-award bid protest context).

236 98 Fed. Cl. at 543. 237 Id.238 98 Fed. Cl.Id. at 543.

239 98 Fed. Cl. atId. at 543-44.

77

Author, 01/03/-1,


Author, 01/03/-1,


argument. First, the court reasoned that the concept of

“prudential standing” does not apply to bid protests under

section 1491(b)(1).240 As noted by the Santa Barbara cCourt,

“‘[p]rudential standing’ is typically applied to challenges under

the Administrative Procedure Act (“APA”), 5 U.S.C. § 500 et seq.,

which features more liberal standing criteria than those set

forth in section 1491(b)(1).”241 However, the court found that

the Federal Circuit had rejected the “less stringent” standing

requirements imposed under the APA in favor of the “interested

party” test in AFGE.242 Under AFGE, the court reasoned, once a

party satisfies the more stringent “interested party” test, it

establishes standing.243 Thus, because SBAR satisfied the

“interested party” test, the court held that SBAR was not

required to establish “prudential standing.”244 In so holding,

the court clarified that it did not read Galen as requiring

something more to establish standing than did AFGE.245

The court also analyzed, in dicta, the result if “prudential

standing” were required. The court found that the Ike Skelton

National Defense Authorization Act of 2011246 was enacted “at 240 Id. at 544.241 Id.242 98 Fed. Cl. at 544, (citing AFGE, 258 F.3d at 1302).

243 Id. Federat258 F.3d 1294, 1302 (Fed. Cir. 2001).244 Id.245 Id.246 Pub. L. No. 111-383, 124 Stat. 4137 (2011) [hereinafter FY2011 NDAA].

78

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,


Author, 01/03/-1,


Author, 01/03/-1,


Author, 01/03/-1,

Need citation to the AFGE case. PJS

Author, 01/03/-1,

FN also need citation to the Santa Barbara case. PJS

Author, 01/03/-1,


Author, 01/03/-1,


Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,


least in part, for the benefit of the contracting community” such

that it offered contractors a means of challenging in-sourcing

decisions.247 According to the court, the modifications to 10

U.S.C. § 2463 “clearly prohibit the DoD from arbitrarily removing

work from contractors without a solid analysis.”248 Thus, the

court found that mandates in the FY2011 NDAA were “sufficient to

provide grounds for review when potential contractors challenge a

procurement-related in this context, and thus SBAR has satisfied

any prudential standing requirement.”249 This finding would soon

be disputed, however, as the same court came to the opposite

conclusion only weeks later in the Hallmark-Phoenix case.250

B. Hallmark-Phoenix 3, LLC v. United States

Only three weeks later, the publication of Hallmark-Phoenix

3, LLC v. United States251 on May 24, 2011, threw the court’s

jurisdiction over in-sourcing decisions back in question. In

that opinion, the court held that a contractor did not have

standing to challenge an in-sourcing decision.252 Hallmark-

Phoenix also involved an Air Force small-business set-aside 247 98 Fed. Cl. at 544.

248 98 Fed. Cl. at 544Id.

249 98 Fed. Cl. at 544Id.

250 See supra note 167 .99 Fed. Cl. 65, 68 (2011).251 99 Fed. Cl. 65 (2011)Id.

252 Id. at 8068.

79

Author, 01/03/-1,

Need FN with pincite to the Hallmark case. PJS

Author, 01/03/-1,

Authors: Member or AE added this word. KmJ.

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,


contract for vehicle operations and maintenance services at the

U.S. Air Force Space Command and 45th Space Wing at Patrick Air

Force Base and Cape Canaveral Air Force Station.253 A few weeks

into the second option year, the Contracting Officer (“CO”)

advised Hallmark in writing that the Air Force had decided not to

exercise the two remaining years and would instead direct

civilian personnel to complete the work.254 Consequently, the

contract ended on September 30, 2011.255

Like in Santa Barbara, the Air Force’s decision to in-source

those services led to full-blown litigation of jurisdiction and

standing issues following the filing of a bid protest complaint.

The Government moved to dismiss the complaint on the ground that

Hallmark was not an “interested party” within the meaning of the

Tucker Act.256 First, the court dispensed with “interested party”

status, opining that Hallmark could – but should not – qualify as

an “interested party” under the Tucker Act.257 The Hallmark

cCourt acknowledged that unlike the individual employees in AFGE,

Hallmark was eligible to bid on a solicitation for the work the

Air Force decided to in-source.258 Though the court recognized 253 Id. at 66.254 Id. at 66-67.255 Id. at 67.99 Fed. Cl. 65 (2011). 256 99 Fed. Cl. . 67. Unlike in Santa Barbara, the Government did not seem to have raised the argument regarding prudential standing in its motion to dismiss. Id. at 68, n.6.

257 Id. at 67-68.258 Id.

80

Author, 01/03/-1,


Author, 01/03/-1,


Author, 01/03/-1,


Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,


Author, 01/03/-1,


Author, 01/03/-1,


that “in such an instance, plaintiff would qualify as an

‘interested party’ under section 1491(b)(1),” it nevertheless

determined that Hallmark’s argument that it was a “prospective

bidder” and thus an “interested party” was based on a “pile of

assumptions.” 259 Accordingly, the court stated that it was

“debatable” whether Hallmark’s claim that it was a “prospective

bidder” within the meaning of an “interested party” met the legal

standard.260 Nevertheless, the court determined that it did not

need to decide whether Hallmark was an “interested party,”,

because Hallmark lacked standing on other grounds.261

Ultimately, the Hallmark cCourt declined to exercise

jurisdiction on the ground that the plaintiff did not satisfy the

requirements of “prudential standing.”262 This inquiry tests

259 99 Fed. Cl.Id. at 67-68 (citing Santa Barbara, 98 Fed. Cl. at 542-53; LABAT-Anderson, Inc. v. United States, 65 Fed. Cl. 570, 575-76 (2005), and Angelica Textile Servs., Inc. v. United States, 95 Fed. Cl. 208, 218 (2010)). The court distinguished this challenge from other in-sourcing challenges as on the ground that Hallmark was not challenging an existing solicitation and could not be guaranteed that there would be a solicitation for that work or that Hallmark would bid if there were. Id. at 68. Further, the court noted that even if the Air Force re-evaluated its decision to comply with the guidelines, it may reach the same conclusions. Id. Finally, the court distinguished this action from others based on the fact that it was a small business set-aside contract, and there would be no guarantee that any subsequent procurement would also be set aside for small businesses. 99 Fed. Cl.Id. at 68.

260 Id.261 Id.262 99 Fed. Cl. at 68. d Prudential standing is a “judicially self-imposed limit[] on the exercise of federal jurisdiction” borne out of “concern about the proper – and properly limited –

81

Author, 01/03/-1,


Author, 01/03/-1,

Where did this comma from? It is not in the 1.26.12 author draft? (but it is in the 1.4.12 draft) If we retain the comma it should go before the closing quotation mark. Authors -- which do you prefer?

Author, 01/03/-1,


“whether the constitutional or statutory provision on which the

claim rests properly can be understood as granting persons in the

plaintiff's position a right to judicial relief.”263 While not

intended to be “especially demanding,”264 prudential standing is

lacking where a plaintiff is merely an “incidental beneficiar[y]”

of the statutory or constitutional provision at issue.265 The

Hallmark cCourt emphasized that enforcement of the prudential

standing requirement is “particularly important” in “assur[ing]

that the federal courts will not intrude into areas committed to

the other branches of government.”266 Thus, the court focused on

role of the courts in a democratic society.” Hallmark, 99 Fed. Cl. at 68 (citing Bennett v. Spear, 520 U.S. 154, 162 (1997); Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 124 (2004); Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)). These requirements are distinct from the standing requirements dictated by Article III of the Constitution’s case or controversy requirement. 99 Fed. Hallmark, 99 Fed. Cl. at 68.

263 Hallmark, 99 Fed. Cl. at 68d. at 68-69 (citing oting Warth v. Seldin, 422 U.S. at 4 500 (1975)); see also Bennett v. Spear, 520 U.S. at 154,3 (“[A] plaintiff's grievance must arguably fall within the zone of interests protected or regulated by the statutory provision or constitutional guarantee invoked in the suit.”); Ass’n of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 152-53 (1970). The prudential standing doctrine “applies unless it is expressly negated” by an act of Congress. Bennett, 520 U.S. at 163.

264 Hallmark, 99 Fed. Cl. at 698 (quoting Clarke v. Sec. Indus. Ass’n, 479 U.S. 388, 399 (1987)).

265 Id. at 69 (quoting Nat’l Credit Union Admin. v. Nat’l Bank & Trust Co., 522 U.S. 479, 494 n.7 (1998).

266 Hallmark , 99 Fed. Cl.Id at 68. (citing oting Flast v. Cohen, 392 U.S. 83, 95 (1968)).

82

whether Hallmark was intended to be given the right to relief

under any of the statutes and guidelines cited in its

complaint.267

In determining that the prudential standing test was the

proper test to apply, the court reasoned that prudential standing

had not been negated by an act of Congress such that it was

proper to apply the test in Hallmark.268 The court turned to the

Bennett v. Spear, in which the Supreme Court stated that the

prudential standing doctrine “applies unless it is expressly

negated” by an act of Congress.269 In Bennett, the court held

that the Endangered Species Act (“ESA”), which contained a

citizen-suit provision, authorized “any person” to commence a

suit thereby negating the “zone of interests” test.270 Bennett 267 Id. at 68-69. Interestingly the cCourt noted that when the Court of Federal Claims and the U.S. district courts held concurrent jurisdiction over bid protest matters (prior to the sunset clause in the ADRA amendment to the Tucker Act), some district courts held the prudential standing requirement applied to bid protest cases. Hallmark, 99 Fed. Cl. at Id. at 68 (citing Am .Fed. of Gov’t. Emps., AFL-CIO v. United States, 2001 WL 262897, at *6-7 (W.D. Tex. Mar. 7, 2001); Am. Fed. Gov’t Empls., AFL-CIO v. Babbit, 143 F. Supp. 2d 927, 932-33 (S.D. Ohio 2001). The cCourt stated further that many cases which received appellate review found plaintiffs lacking prudential standard when challenging agency decisions to out-source functions to contractors. Hallmark, 99 Fed. Cl. at 68 at 71 (citing Courtney v. Smith, 297 F.3d 455, 460-61 (6th Cir. 2002)). The cCourt useds these prior cases to determine that the prudential standing requirement should apply to bid protest matters. 99 Fed. Cl

268 Id. at 70. at269 Id. (quoting Bennett, 520 U.S. at 163).

270 Bennett, 520 U.S. at 164.

83

Author, 01/03/-1,

Need citation to Bennet.

Author, 01/03/-1,

Zone of Interest – Shauna, FYI, I recognize this is inconsistent with “zone of interest” in the Rothe case above, BUT I checked both cases: Rothe = No “S”; Bennett = “s.” Black’s Law Dictionary uses “zone of interests” (pasted below). Not sure how to reconcile this. Authors: Do you have an opinion on this? FOR EDUCATIONAL USE ONLY Black's Law Dictionary (9th ed. 2009), zone of interests ZONE OF INTERESTS zone of interests. (1969) The class or type of interests or concerns that a statute or constitutional guarantee is intended to regulate or protect. • To have standing to challenge a ruling (esp. of an administrative agency), the plaintiff must show that the specific injury suffered comes within the zone of interests protected by the statute on which the ruling was based. [Cases: Action 13; Administrative Law and Procedure 666; Federal Civil Procedure 103.2.] © 2009 Thomson Reuters Bryan A. Garner, Editor in Chief END OF DOCUMENT

Author, 01/03/-1,


Author, 01/03/-1,

Concur with PJS.

Author, 01/03/-1,

I think this proposition is supported by the text of the Hallmark case if you look at the Worth quote from 68-69. This stresses that the Supreme Court test for standing is whether an individual has a right to judicial relief. PJS

Author, 01/03/-1,

I think the author is mkaing reference to seztion “B” on page 68 but the case doesn’t really say that. MC

contrasted the ESA’s broad language with “more restrictive”

statutes that restricted standing to any person having an

interest adversely affected by environmental action or

inaction.271

The Hallmark cCourt then established that unlike in Bennett,

Congress had not expressly negated prudential standing limits

with regard to Hallmark’s complaint. Specifically, the court

held that the Tucker Act, which authorizes an “interested party”

to bring a challenge before the Court of Federal Claims, is more

like the “more restrictive formulations” in which the prudential

standing doctrine remains applicable than the broadly phrased

“any person” language discussed in Bennett.272

The court determined that Hallmark did not have prudential

standing to challenge the in-sourcing decision or any of the

provisions it asserted had been violated by the Air Force’s

decision to in-source.273 The court held that 10 U.S.C. § 129a,

which requires the Government to use “the least costly form of

personnel” and to justify conversions from one type of personnel

to another in the DoD’s manpower requirements report, did not

create a cause of action for a plaintiff whose work had been in-

271 Bennett, 520 U.S.Id. at 164 (citing 42 U.S. § 9124(a) (Ocean Thermal Energy Conversion Act); 33 U.S.C. § 1365(g) (Clean Water Act)).272 See 99 Fed. Cl. at 70.273 Id. at 68.

84

Author, 01/03/-1,


Author, 01/03/-1,

Concur, although technically I think this is Reema’s call. KmJ.

Author, 01/03/-1,

I felt this needed to be a see citation because the court really was discussing how Bennett made this distinction rather than stressing it itself. It did follow that decision though so the contention is correct overall. PJS

Author, 01/03/-1,


Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,


sourced.274 In the court’s view, Congress would not bury a

section intended to allow contractors to challenge decisions made

by the Secretary among mere reporting requirements.”275

Similarly, the court ruled that the plaintiff did not meet

the prudential standing requirements to challenge 10 U.S.C. §

2463(a).276 Like § 129a, the court found § 2463(a) to be merely a

legislative reporting requirement, which required the Under

Secretary for Defense to implement guidelines to “ensure that

consideration is given to using, on a regular basis, Department

of Defense civilian employees to perform . . . functions that are

performed by contractors.”277 A 2011 amendment to this statute

required the Secretary of Defense to “submit to the congressional

defense committees a report on the decisions with respect to the

conversion of functions to performance by Department of Defense

civilian employees made during fiscal year 2010;”; though the

statute explicitly does not create a requirement for a cost

274 Id. at 72. As noted supra, that statute requires the Secretary of Defense to consider “the advantages of converting from one form of personnel (military, civilian, or private contract) to another for the performance of a specified job” and to include a justification for converting from one type of personnel to another, among other requirements. 10 U.S.C. § 129a.

275 99 Fed. Cl. at 72-73.

276 Id. at 73.277 99 Fed. Cl. at 73Id. (citing 10 U.S.C. § 2463).

85

Author, 01/03/-1,

Per PCLJ style guide Relevant rule (from Style Guide): Correct order: comma/period, quotation mark(s), semicolon, footnote call, colon, hyphen. The PCLJ rule is derived from Chicago Manual of Style Rules 6.09 and 6.10. Rule 6.10 specifically discusses the relationship between closing quotation marks and colons.

Author, 01/03/-1,


Author, 01/03/-1,


comparison.278 The Hallmark cCourt concluded that it was

“reasonable to assume that in not requiring agencies to conduct

formal competitions . . . . Congress intended to avoid the

protest litigation occasioned by such competitions.”279

The court concluded that the language of the statutes in

question clearly indicated that Congress intended that it alone

should be able to determine if DoD is properly in-sourcing tasks

278 99 Fed. Cl. at 74; Ike Skelton National Defense Authorization Act of 2011, Pub. L. No. 111–383, § 323(c), 124 Stat. 4137, 4184 (2011). In addition, the amendment required the Comptroller General to submit an “assessment of the report.” Pub. L. No. 111-383 § 323(c), 124 Stat. at 41844137 (2011). The amendment specifically stated that:

[n]othing in this section shall be construed . . . to require the Secretary of Defense to conduct a cost comparison before making a decision to convert any acquisition function or other critical function to performance by Department of Defense civilian employees, where factors other than cost serve as a basis for the Secretary's decision.

Id. § 323(d).

279 99 Fed. Cl. at 75 (emphasis added). The court further explained this point by noting the requirements under the Circular A-76 guidelines require formal comparisons which have lead to notable bid protest decisions. Id. (citing LABAT-Anderson, 65 Fed. Cl. at 574-75; Space Mark, Inc. v. United States, 45 Fed. Cl. 267, 272-73 (1999)LABAT-Anderson); see also Space Mark, Inc., 45 Fed Cl. 267, 272-73 (1999)). The court viewed the absence of such a requirement as clear indication of Congress’ intent not to create similar jurisdiction for review. Id. In light of this reasoning, the Hallmark decision notes that the Santa Barbara decision was “simply wrong in asserting that a protest under the sections at issue ‘presents an analogous challenge’ to those made under Circular A-76.” 99 Fed. Cl.Id. at 75 n.ote 16.

86

and also to require change to DoD policy if not.280 The court

opined that “[t]o infer otherwise would risks triggering a wave

of cases brought by hopeful contractors each believing that they

have the likely prospect of receiving a contract if a particular

function is outsourced.”281 The court decried the disruption such

litigation would cause, suggesting that DoD would be unable to

establish personnel needs in authorization requests to

Congress.282 Moreover, the court reasoned that because Congress

promotes in-sourcing, it is reasonable to assume that it would

not expose those decisions to protests.283

Finally, the court held that Hallmark did not have standing

to challenge the in-sourcing decision under DoD guidelines that

were instituted in response to budgetary concerns.284 The court 280 Hallmark, 99 Fed. Cl. at 78-79. The court concluded:

[T]he text, structure and legislative history of these provisions all reveal that these statutes were not designed to confer benefits on outside contractors. And it is that negative intent, rather than the absence of an affirmative intent to confer standing on outside contractors, that ultimately dictates the conclusion that plaintiff here lacks the prudential standing to challenge the Air Force's in-sourcing decision.

Id.

281 Hallmark, 99 Fed. ClId. at 78.

282 Id.283 Id.Hallmark, 99 Fed. Cl. at 78.

284 Id. 99 Fed. Cl. at 74 (stating that “p[P]laintiff would have this court enforce the guidelines issued by the Secretary of Defense under these provisions, ignoring the limited budgetary context in which those guidelines arise.”). In that regard, the

87

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explained that the guidelines did not confer a right to judicial

review nor was there any “nontextual” indication that Congress

intended to create a right of action through Department of

Defense guidelines.285 The court found persuasive the fact that

in passing FY2006 NDAA, the House of Representatives declined to

adopt provisions in an earlier version of the bill that would

have required the Secretary of Defense to conduct a formal

public-private competition before deciding to in-source a

requirement.286 The version that became law simply required that

the Secretary “prescribe guidelines and procedures to ensure that

consideration is given to using federal government employees for

work that would otherwise be performed under DoD Department of

court noted that the DoD guidelines are like FAR guidelines and other internal agency guidance that are unenforceable in the courts. Id. (citing Carolina Tobacco Co. v. United States, 402 F.3d 1345, 1349 (Fed. Cir. 2005)). The court also noted that the GAO has similarly refused to enforce decisions based on such policy guidance. Id. (citing Triad Logistics Serv. Corp., B-403726, 2010 CPD ¶ 279, at 2-3 (Comp. Gen. Nov. 24, 2010) (“[S]ince the cited guidance issued pursuant to section 2463 was only internal DoD policy, the assertion that the agency did not adhere to that policy guidance is not a basis for challenging the agency’s action.”); Aleut Facilities Support Servs.,B-401929, 2009 CPD ¶ 209 (Comp. Gen. Oct. 13, 2009)); see discussion infra Sec. IV.a.

285 99 Fed. Cl. at 754.286 Id. at 75. (referencingSee H.R. 1815, 109th Cong. (2005)). According to the Conference Committee Report, conferees expected guidelines “to provide for the assignment of work to federal government employees . . . in appropriate circumstances, without the requirement to perform public-private competition under Office of Management and Budget Circular A–76 or any other provision of law or regulation.” Id. (emphasis added).

88

Defense contracts, but could be performed by federal government

employees.”287

In holding that Hallmark did not have prudential standing to

challenge the agency’s decision to in-source, the court rebutted

the Santa Barbara cCourt’s determination that prudential standing

does not apply to bid protests brought under the Tucker Act.

According to the Hallmark cCourt, the Santa Barbara cCourt “was

swayed by the fact that ‘prudential standing is typically applied

to challenges under the [APA].’”288 In Santa Barbara, the court

interpreted the Federal Circuit’s decision in AFGE to mean that

that the “interested party” standard was a more stringent test

than prudential standing such that once it is met, standing is

established.289 The Hallmark cCourt flatly disagreed.290

On the contrary, the court held that Congress had not

specifically authorized the Court of Federal Claims to hear

challenges to in-sourcing decisions.291 By way of example, the 287 H.R. REP. NO. 109-360, at 672 (2005).H.R. Conf. Rep. 109-360 at 672 (2005).

288 9 Fed. Cl. at 69.289 98 Fed. Cl. at 544. 290 99 Fed. Cl. at 69. The Hallmark cCourt noted that in AFGE, the Federal Circuit did not address this prudential standing issue, but rather affirmed this court’s dismissal on alternate jurisdictional grounds. Id. at 71 (citing AFGE, 258 F.3d at 1304). Specifically, the Federal Circuit found that the plaintiffs were not “interested parties” under § 1491(b)(1) such that it had no reason to reach the question whether prudential standing considerations required the court to abstain from exercising jurisdiction. 9. at 72.

291 99 at 77.

89

Author, 01/03/-1,


Author, 01/03/-1,


Author, 01/03/-1,


Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

Topic Sentence, no FN needed. PJS

Author, 01/03/-1,

Note to authors: Member edited quote for substantiation purposes (I verified). If you would prefer to abbreviate DoD, I am happy to put brackets around it. [DoD contracts]

court observed that several circuit courts relied on the doctrine

of prudential standing in determining that Government employees

could not challenge agency decisions to out-source before

Congress Acted to specifically allow such actions.292 According

to Hallmark, “[t]here is no comparable provision authorizing the

suit by plaintiff here.”293

Though both decisions shed shone light on the complexities

of jurisdiction over in-sourcing challenges, the takeaway lessons

are unclear. Where Santa Barbara found that the plaintiff was an

interested party that had standing to challenge the agency’s in-

sourcing decision, the Hallmark cCourt concluded that too many

assumptions lay between the contractor and the coveted interested

party status. Where Santa Barbara determined that prudential

standing does not apply in the bid protest context, the Hallmark

cCourt based its entire decision on its analysis of whether any

of the statutes and provisions at issue provided a right of

action to challenge in-sourcing decisions. At bottom, one

contractor had standing, the other did not. Thus, whether the

Court of Federal Claims has jurisdiction over such challenges

remains an open – and complicated – issue.

292 Id. at 78 n.22.

293 Id.99 Fed. Cl. at 78 n.22.

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Concur. KMJ.

Author, 01/03/-1,

Paragraph summarizes the author's takeaways from the cases and no FN should be needed. PJS

Author, 01/03/-1,

Author accepted edit. (Per 1.26.12 draft) KMJ

Author, 01/03/-1,


IV. TRUTHS FROM ERROR RATHER THAN CONFUSION - SIMILAR ISSUES CHALLENGES

“Truth emerges more readily from error than from confusion.” –

Sir Francis Bacon294

In light of the apparent confusion regarding potential

challenges to in-sourcing decisions, this Aarticle now turns to

other attempts at challenging in-sourcing decisions, as well as

analogous challenges. The aim is to illuminate arguments which

may be successful when combined with other aspects of successful

challenges, while also highlighting the missteps to avoid in

future litigation.

A. GAO Protests

The Government Accountability Office (“GAO”) has published

opinions on two bid protests challenging in-sourcing decisions

which reflect the current debate. Although both protests were

dismissed, the arguments, precedents, and discussions shed some

light on the means by which industry is trying to attack these

decisions. Given the changing landscape regarding in-sourcing

decisions, it would not be surprising to see the GAO either

accepting jurisdiction over these matters or receiving direct

authority/instruction to do so from Congress.

294

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Concur. KMJ.

Author, 01/03/-1,

Introductory paragraph, no FN needed. PJS

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

Introductory paragraph, no FN needed. PJS

Author, 01/03/-1,

Need citation for quote. PJS

Author, 01/03/-1,

Please create a FN for this quote.

In the first decision, Aleut Facilities Support Services,

LLC,295 the protester (“Aleut”) challenged an Air Force decision

to cancel a solicitation for the supply of fuels and

transportation services at Tyndall Air Force Base in Florida

after receiving proposals but before they were opened or

evaluated.296 The Air Force cancelled the solicitation after

determining that it could save money by doing the work in-

house.297 Aleut argued that the decision was not reasonable

because the solicitation should not have been given “priority

consideration” under the statute, and the economic analysis was

improper because it did not adhere to agency policy surrounding

such analyses.298

The statute at issue was 10 U.S.C. § 2463, requiring

“special consideration” when deciding which functions to consider

for in-sourcing.299 Aleut contended that because the solicitation

did not fall under one of the enumerated aspects in the statute,

295 Aleut Facilities Support Services, LLC, B-4019259, 2009 CPD ¶ 202 (Comp. Gen. Oct. 13, 2009).

296 Aleut Facilities Support Services, LLC, B-401929, 2009 CPD ¶ 202, at *1 (Comp. Gen. Oct. 13, 2009)Id. at 1.

297 Aleut Facilities Support Services, LLC, B-401929, 2009 CPD ¶ 202, at *1 (Comp. Gen. Oct. 13, 2009)Id.

298 Aleut Facilities Support Services, LLC, B-401929, 2009 CPD ¶ 202, at *1-2 (Comp. Gen. Oct. 13, 2009)Id. at 2-3.

299 10 U.S.C. § 2463 (2006)See supra note 21.

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Author, 01/03/-1,

Not italicized b/c referring to party not case.

it should not have been given “priority consideration.”300 The

GAO dismissed the protest without considering the merits of the

contention that the cost analysis was improper, finding the

decision was an agency decision which the GAO will generally not

“review . . . when the work in question is to be performed in-

house because such decisions are generally a matter of executive

branch policy.”301 The GAO dismissed, finding the protester

failed to state a valid basis of protest because 10 U.S.C. § 2463

does not require a cost comparison.302 In stating this policy,

the GAO acknowledged several exceptions to this rule, referencing

earlier cases.303 Though GAO’s examples are readily

distinguishable from current in-sourcing challenges, the analysis

is instructive.

An early matter alleging an improper move to in-house

performance revealed an exception to the rule that GAO will not

review policy decisions. In Griffin Services, Inc.,304 the 300 Aleut,, 2009 CPD ¶ 202supra note 274,at 2-3.301 Aleut Facilities Support Services, LLC, B-401929, 2009 CPD ¶ 202, at *2 (Comp. Gen. Oct. 13, 2009)Id. at 3 (citing General Services. Administration Admin. – Reconsideration, B-237268.3, et al., 90-2 CPD ¶ 369, at 2 (Comp. Gen. Nov. 7, 1990)).

302 Aleut Facilities Support Services, LLC, B-401929, 2009 CPD ¶ 202, at *3 (Comp. Gen. Oct. 13, 2009)Id. As discussed below, such a requirement may have provided a basis for the GAO to consider the protest.

303 Id.304 Griffin Services, Inc., B-237272268,2, et al., 90-1 CPD ¶ 558 (Comp. Gen. June 14, 1990), reconsideration denied, General Services. AdministrationAdmin. — Reconsideration, B-237272237268.3, et al., 90-2 CPD ¶ 369 (Comp. Gen. Nov. 7, 1990).

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Author, 01/03/-1,


Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

Transition sentence, no FN needed. PJS

Author, 01/03/-1,

Need citation with pincite to GAO decision. PJS

Author, 01/03/-1,

While Aleut is unpublished (meaning that I could use supra in the FN), it is a “case” so I opted to use the short cite instead. Sonia Tabriz

Author, 01/03/-1,


protester challenged the cancellation of four General Services

Administration (“GSA”) solicitations for the operation and

maintenance of various systems at the Denver Federal Center.305

The solicitations provided that the GSA “would only award one

contract to any one contractor resulting from these four

solicitations.”306 After the four solicitations were cancelled,

Griffin Services asserted that the GSA made an improper

determination of non-responsibility by failing to submit the

matter to the Small Business Administration under the Certificate

of Competency program and by masking that improper action in a

decision to perform the work in-house.307 Carving out an

exception to the rule that the GAO will not review decisions to

perform work in-house because they are matters of executive

policy, GAO confirmed that it will examine the reasonableness of

an agency’s justification when a protest alleges that the

“agency’s actual motivation was to avoid awarding [the protester]

a contract.”308

305 Griffin Services, Inc., B-237272, et al., 90-1 CPD ¶ 558, at *1 (Comp. Gen. June 14, 1990)Id. at 1.

306 Id. at 2.307 Griffin Services, Inc., B-237272, et al., 90-1 CPD ¶ 558, at *1 (Comp. Gen. June 14, 1990)Id.

308 Griffin Services, Inc., B-237272, et al., 90-1 CPD ¶ 558, at *2 (Comp. Gen. June 14, 1990)Id. at 3 (citing H. David Feltoon, B-232418, 89-1 CPD ¶ 10 (Comp. Gen. Jan. 5, 1989); Judith White, B-233853.2, 89-1 CPD ¶ 544 (Comp. Gen. June 9, 1989)). GSA argued in its request for reconsideration of this ruling that these two cases should stand for the proposition that the pretext

94

Author, 01/03/-1,

The original case is saved as Source 82A. The reconsideration of that case is cited in this FN, and it is saved as Source 82B. Sonia Tabriz

Author, 01/03/-1,

Not italicized b/c party name.

Author, 01/03/-1,


Another line of cases created an exception to the non-review

rule where the agency is required to conduct a cost comparison.

The 1994 matter of Digicon, CorpInc.309 involved a Department of

the Treasury solicitation that was cancelled during negotiations

resulting in partial performance by the agency and partial

purchase of software from the Federal Supply Schedule. Digicon

protested the cancellation of the solicitation, arguing that the

Treasury failed to conduct an adequate cost comparison as

required by Circular A-76.310 GAO denied the protest, noting that

the solicitation was cancelled because it no longer reflected the

agency’s need.311 In addition, GAO declined to review the cost

comparison because it constituted an unreviewable exercise of

executive branch policy.312 However, GAO indicated that it would

to cancel needs to have been proven to be in bad faith in order for the GAO to sustain a protest. The GAO rejected this reading as too narrow and stated that bad faith need not be alleged in order to prompt a review when pretext is alleged for cancellation. General Services. AdministrationAdmin. — Reconsideration, B-237268272.3, et al., 90-2 CPD ¶ 369, at 2*1 (Comp. Gen. Nov. 7, 1990).

309 Digicon, Inc., B-256620, 94-2 CPD ¶ 12 (Comp. Gen. July 7, 1994).

310 Digicon, Inc., B-256620, 94-2 CPD ¶ 12, at *1 (Comp. Gen. July 7, 1994).Id. at 1--2

311 Id. at 3.

312 Digicon, Inc., B-256620, 94-2 CPD ¶ 12, at *2 (Comp. Gen. July 7, 1994)Id. at 2.

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Concur. KMJ.

Author, 01/03/-1,


have reviewed the action if there had been a provision in the

solicitation requiring a comparison of costs.313

Building on this decision, in Imaging Systems Technology,314

GAO considered an incumbent contractor’s protest of a cancelled

solicitation when the Government determined that it would be less

costly to perform the work in-house.315 The Air Force

solicitation was set aside for small businesses and sought

proposals to provide logistics and support services for an air

traffic control and landing system.316 Independent of the

solicitation, however, the Air Force concluded that the services

sought could be performed for less money by Air Force personnel

already engaged in similar activities and cancelled the

solicitation.317 Imaging Systems Technology (“IST”) protested

that decision, alleging that the cost comparison was not

realistic and violated the statutory requirement.318

313 Digicon, Inc., B-256620, 94-2 CPD ¶ 12, at *2 (Comp. Gen. July 7, 1994)Id. (specifically referring to cost comparisons mandated under Office of Management and Budget Circular A-76). Such determinations are discussed in greater detail below.

314 Imaging Systems Technology, B-283817.3, 2001 CPD ¶ 2 (Comp. Gen. Dec. 19, 2000).

315 Id. at 1. 316 Id. at 1.317 Imaging Systems Technology, B-283817.3, 2001 CPD ¶ 2 at *1 (Comp. Gen. Dec. 19, 2000).d. at 2.

318 Imaging Systems Technology, B-283817.3, 2001 CPD ¶ 2 at *2 (Comp. Gen. Dec. 19, 2000)Id. at 1. The statute at issue was 10 U.S.C. § 2462 (1994), which has since been superseded by legislative change. At the time, however, it required the Department of Defense components to procure items and services

96

Author, 01/03/-1,

For this FN I have also uploaded the 1994 statute (applied by the Comp Gen in Imaging Systems) and the current 2006 version of the statute referenced in the FN itself. Sonia Tabriz

Author, 01/03/-1,

Concur. Added (with tracked changes off). KMJ.

Author, 01/03/-1,

Should have a FN at the end of this sentence which would be Id. at 1. PJS

Author, 01/03/-1,

Suggest: Building on this decision, the GAO -- in Imaging Systems Technology – considered an incumbent contractor’s protest . . . KMJ

GAO determined that it had jurisdiction to hear the protest

under CICA.319 Ultimately, GAO sustained the protest on the

ground that the cost comparison conducted did not meet the

requirements of the statute.320 This case is often cited as

providing an exception to the general rule that GAO will not

review policy decisions –- potentially including decisions

whether to in-source an activity -- when those decisions are

from the private sector only when it was determined to be less costly to do so. Section (b) of the article detailed the methods for comparing costs as follows:

[T]he basis of a comparison of the costs of procuring supplies or services from such a source with the costs of providing the same supplies or services by the Department of Defense, the Secretary of Defense shall ensure that all costs considered (including the costs of quality assurance, technical monitoring of the performance of such function, liability insurance, employee retirement and disability benefits, and all other overhead costs) are realistic and fair.

This statute was amended by FY06 NDAA § 341(c)(i) to only require reports on public-private competitions, rather than to be a statute requiring procurements to be conducted in any particular manner. 10 U.S.C. § 2462 (2006). See also Aleut Facilities Support Services., LLC, B-4019259, 2009 CPD ¶ 202, at *3at 3 n.1 (Comp. Gen. Oct. 13, 2009).

319 Imaging Syst. Tech.ems Technology, B-283817.3, 2001 CPD ¶ 2, at *3 (Comp. Gen. Dec. 19, 2000)3-4.

320 Imaging Systems Technology, B-283817.3, 2001 CPD ¶ 2, at *4-8 (Comp. Gen. Dec. 19, 2000)Id. at 6-11 (discussing that the comparison did not consider a realistic cost of contractor performance, that the compared cost for in-house personnel did not consider factors such as leave and other benefits, did not accurately assess the number of labor hours need and therefore the comparison was not fair and in violation of the statute).

97

required by statute or regulation to have been subject to a cost

comparison.321

The most recent GAO protest regarding an in-sourcing

decision considered a challenge to an Air Force determination

that in-sourcing would provide a less costly means of receiving

the subject services.322 There, Triad Logistics Services

Corporation (“Triad”) protested the Agency’s decision to in-

source operation and maintenance services at Columbus Air Force

Base in Mississippi on the ground that the cost comparison

performed was “inconsistent” with Agency directives.323 Like

Aleut Facilities Support Services, LLC, this protest was also

dismissed for failure to state a valid basis of protest.324

The specific grounds for Triad’s protest differed from prior

cases and thus invoked different jurisdictional issues.

Specifically, the protester argued that that the cost analysis

was inconsistent with the guidance issued by the DoD.325 In 321 Aleut Facilities Support Services, LLC, B-401929, 2009 CPD ¶ 202, at *2 (Comp. Gen. Oct. 13, 2009).

322 Triad Logistics Servs. Corp., B-403726, 2010 CPD ¶ 279, at 2 (Comp. Gen. Nov. 24, 2010).Triad Logistics Services Corporation, B-403726, 2010 CPD ¶ 279 (Comp. Gen. Nov. 24, 2010).

323 Id.Triad Logistics Services Corporation, B-403726, 2010 CPD ¶ 279, at *2 (Comp. Gen. Nov. 24, 2010).

324 Id.Triad Logistics Services Corporation, B-403726, 2010 CPD ¶ 279, at *2 (Comp. Gen. Nov. 24, 2010).

325 Id. Triad Logistics Services Corporation, B-403726, 2010 CPD ¶ 279, at *2 (Comp. Gen. Nov. 24, 2010). Specifically, Triad attempted to argue that “Directive-Type Memorandum (“DTM”) 09-008

98

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Concur. KmJ.

Author, 01/03/-1,


Author, 01/03/-1,

While Aleut is unpublished (meaning that I could use supra in the FN), it is a “case” so I opted to use the short cite instead. Sonia Tabriz

addition, the protester asserted that 10 U.S.C. §129a required

the use of the “least costly form of personnel,” such that a cost

analysis that did not end with this result should be

reviewable.326 GAO rejected this argument finding that 10 U.S.C.

§ 129a is not a “procurement statute” because it does not govern

procurements or “bear directly on federal agency procurements.”327

Instead, the GAO reasoned that this was a statement of policy and

does not require a cost comparison.328 This built on the decision

in Aleut Facilities Support Services, LLC that 10 U.S.C. §

2463(b) also did not require a cost comparison that could be

reviewed.

The current state of GAO’s decisions on in-sourcing does not

present it as a likely forum for review of in-sourcing decisions.

However, despite the strong language of Aleut Facilities Support

Services, LLC and Triad Logistics Services Corporation, there may

still be a possibility that the GAO would exercise jurisdiction

issued on Jan. 29, 2010 regarding “Estimating and Comparing the Full Costs of Civilian and Military Manpower and Contract Support” required specific types of comparisons which were not followed. Id.

326 Id. at 3.Triad Logistics Services Corporation, B-403726, 2010 CPD ¶ 279, at *3 (Comp. Gen. Nov. 24, 2010).

327 Id. Triad Logistics Services Corporation, B-403726, 2010 CPD ¶ 279, at *3 (Comp. Gen. Nov. 24, 2010) (citing Veolia Water N.orth Am. Operating Servs.ices, LLC, B-291307.5, B-298017, 2006 CPD ¶ 86, at 18 (Comp. Gen. May 19, 2006)).

328 Triad Logistics Services. Corp.oration, 2010 CPD ¶ 279 B-403726, 2010 CPD ¶ 279, at *3 (Comp. Gen. Nov. 24, 2010).

99

over a protested in-sourcing decision. The cases clearly

establish that in-sourcing decisions may be reviewable when they

are made in an effort to avoid award of a contract, even without

an allegation of bad faith, and also when a statute requires a

cost comparison. As the impact of the agency-specific guidelines

on in-sourcing develops, as discussed in the district court and

Court of Federal Claims matters above, GAO may yet take

jurisdiction over these important decisions.

B. A-76 Challenges

The debate over the extent to which a decision to in- or

out-source may be challenged in a bid protest forum is not new.

Challenges to in-sourcing decisions — and associated challenges

to standing and jurisdiction — find their roots in challenges to

agency action under decades-old executive policy related to

federal-private competition. Broadly, for over 50 years, the

Federal Government has worked to ensure that federal departments

and agencies do not compete with the private sector. Since 1966,

this policy has been articulated in the Office of Management and

100

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

This is introductory and does not require FN. The only thing that could require a FN is the 50 years comment, but this is substantiated by the next sentence. PJS

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

This paragraph is the author's analysis of the current GAO decisions on in-sourcing and does not require FN. PJS

Budget’s (“OMB”) Circular A-76.329 The most recent version,

issued in 2003, stated:

The longstanding policy of the [F]federal [G]government has been to rely on the private sector for needed commercial services. To ensure that the American people receive maximum value for their tax dollars, commercial activities should be subject to the forces of competition.330

Accordingly, the Circular provided guidelines and procedures for

agencies to determine whether to contract out for certain

activities or whether to perform them in-house.

329 The Government first stated this policy in a 1955 Bureau of the Budget directive, a directive that was later amended in 1957 and 1960. Bureau of the Budget, Budget Bulletin 55-4 (Jan. 15, 1955) BOB Bulletin 55-4, Jan. 15, 1955. The Circular, in turn, was revised in 1967, 1979, 1983, 1991, 1999, and 2003. Authority for issuing the Circular can be found in the Budget and Accounting Act of 1921, 31 U.S.C. §§ 501, 50-2, the Office of Federal Procurement Policy (“OFPP”) Act, 41 U.S.C. § 405, and the Federal Activities Inventory Reform (“FAIR”) Act of 1998, Pub. L. No. 105-270, 31 U.S.C. § 501 note.

330 , OMB CIRCULAR NO. A-76,ER http://www.dni.gov/electronic_reading_room/OMB_Circular_A_Circular A-76 ¶ 4.

101

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

A footnote does not seem needed here, given the following paragraph which substantiates this point. PJS

Author, 01/03/-1,

Authors: Typically we apply our Style Guide’s capitalization rules consistently – even to quotations. Here, I used brackets to capitalize “Federal Government.” I recognize this is a rule that some follow and some don’t. Please let me know if you take issue with this. Thanks! KMJ.

Author, 01/03/-1,

In this footnote, I cited to the BOB Bulletin as in an older PCLJ article from Westlaw. The actual document came from an individual at an angency who forwarded a scanned orginial copy to the librarian. The Information in the footnote on the history of the BOB Bulletin and Circular A-76 come from a CRS report that I uploaded.

In relevant part,331 Circular A-76 required an agency to use

either a streamlined or standard competition to determine whether

a commercial activity should be performed in-house.332 These

public-private competitions were subject to several separate

guidelines and procedures. As a general matter, agencies were

331 OMB Circular A-76 also directed agencies to identify “all activities performed by government personnel as either commercial or inherently governmental” through an inventory process. See id. ¶ 4(a); Attach. A. Part of that process involved categorizing activities performed by Government personnel as “inherently governmental” or “commercial.” Id. ¶ 4(a). This ion was agin critical, as OMB Circular A-76 required agencies to perform “inherently governmental activities” using agency personnel. Id. ¶ 4(b). The 2003 OMB Circular offered several criteria for an inherently governmental activity. Such activities were “so intimately related to the public interest as to mandate performance by government personnel,” requiring the use of “substantial discretion” in applying government authority or making decisions. Id. at Attach. A at A-2. According to the Circular, “[i]nherently governmental activities normally fall into two categories: the exercise of sovereign government authority or the establishment or procedures and processes related to the oversight of monetary transactions or entitlements.” Id. For further information on the definition of “inherently governmental,” see OMB Circular A-76 at Attach.ment A ¶ B at A-2.Circular A-76 also directed agencies to identify “all activities performed by government personnel as either commercial or inherently governmental” through an inventory process. See Circular A-76 ¶ 4(a); Attach. A. Part of that process involved categorizing activities performed by Government personnel as “inherently governmental” or “commercial.” This distinction was again critical, as Circular A-76 required agencies to perform “inherently governmental activities” using agency personnel. Circular A-76 ¶ 4(b). The 2003 Circular offered several criteria for an inherently governmental activity. Such activities were “so intimately related to the public interest as to mandate performance by government personnel,” requiring the use of “substantial discretion” in applying government authority or making decisions. According to the Circular, “[i]nherently governmental activities normally fall into two categories: the exercise of sovereign government authority or the establishment or procedures and processes related to the oversight of monetary

102

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Concur. KmJ.

Author, 01/03/-1,

Sentence merely introduces the guidelines that are discussed immediately below, no FN needed. PJS

required to comply with procurement integrity, ethics, and

standards of conduct when conducting standard or streamlined

competition.333 The Circular emphasized transparency and

consistency in the competition process and recommended

transactions or entitlements.” For further information on the definition of “inherently governmental,” see Circular A-76; Attach. A ¶ B at A-2.

332 See generally OMB Circular A-76 at Attach. B (establishing steps an agency must complete prior to the public announcement of a streamlined or standard competition). Of note, a competition was not required for private sector performance of a new requirement, “a segregable expansion to an existing commercial activity” performed in-house, or continued performance of a commercial activity. Id. ¶ 5(d). However, competition was required before an agency may perform a new requirement, an expanded existing commercial activity, or any activity being performed by the private sector. Id.See generally Circular A-76; Attach. B (establishing steps an agency must complete prior to the public announcement of a streamlined or standard competition). Of note, a competition was not required for private sector performance of a new requirement, “a segregable expansion to an existing commercial activity” performed in-house, or continued performance of a commercial activity. Circular A-76 ¶ 5(d). However, competition was required before an agency may perform a new requirement, an expanded existing commercial activity, or any activity being performed by the private sector. Circular A-76 ¶ 5(d).

333 Id. ¶ 4(e). Agencies were specifically required to comply with 18 U.S.C. § 208 – a basic Government ethics statute that prohibits executive branch employees from participating “personally and substantially” in a matter that will impact them, or close familiar relations, financially – when conducting a competition. Id.Agencies were specifically required to comply with 18 U.S.C. § 208 – a basic Government ethics statute that prohibits executive branch employees from participating “personally and substantially” in a matter that will impact them, or close familiar relations, financially – when conducting a competition.

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centralizing oversight responsibility and using lessons learned

and best practices to achieve that end.334

The Circular described the two types of competition

procedures at length in Circular Attachment B, paragraphs C and

D.335 Prior to issuing a public announcement of a competition,

an agency was required to determine the activities and full time

equivalent (“FTE”) positions necessary, then to conduct

preliminary research to determine the baseline costs as performed

by the incumbent.336 In a public-private competition, the Agency

Tender Official (“ATO”) would designate the most efficient

organization (“MEO”) team, which, along with the human resource

334 Id. ¶ 4(h).335 Id. at Attach. B at B-4, B-6. Whether the agency used a streamlined or a standard competition depended on the number of FTEs used or proposed by the agency. Specifically, if the agency previously performed, or planned to offer to perform, a commercial activity using 65 or more FTEs, the agency was required to use a standard competition. Id. at Attach. B at B-1. If the agency previously performed, or planned to offer to perform, a commercial activity with 65 or fewer FTEs, the agency could use either a streamlined or standard competition. Id. For more specifics on the criteria for both types of competitions, see OMB Circular A-76 at Attach. B at B-1.Whether the agency used a streamlined or a standard competition depended on the number of FTEs used or proposed by the agency. Specifically, if the agency previously performed, or planned to offer to perform, a commercial activity using 65 or more FTEs, the agency was required to use a standard competition. If the agency previously performed, or planned to offer to perform, a commercial activity with 65 or fewer FTEs, the agency could use either a streamlined or standard competition. For more specifics on the criteria for both types of competitions, see Circular at Attachment B at B-1.

336 Id. at Attach. B at B-1.Circular A-76 at Attach. B at B-1.

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advisor (“HRA”) would be primarily responsible for developing the

agency tender.337 This agency tender was then evaluated along

with proposals from the private sector.338

Briefly, in a streamlined competition, following public

announcement of the competition, the agency was required to

calculate, compare, and certify costs using the Streamlined

Competition Form (“SLCF”) to determine whether it would be more

cost-effective to contract out or perform the activity in-

house.339 The agency could base its own cost estimate on the

incumbent activity but “is encouraged to develop a more efficient

organization, which may be an MEO.”340 With regard to the

estimated price for private sector performance, the agency could 337 Id. at Attach. B at B-2, B-10. The agency would describe its staffing plan – the MEO – in its tender. According to the Circular, the MEO was “not usually a representation of the incumbent organization, but [was] the product of management analyses that include[d] . . . activity based costing, business case analysis, consolidation, functionality assessment, industrial engineering, market research, productivity assessment, reengineering, reinvention, utilization studies, and value engineering.” Id. at Attach. B at B-10.Circular A-76 at Attach. B at B-2, B-10. The agency would describe its staffing plan – the MEO – in its tender. According to the Circular, the MEO was “not usually a representation of the incumbent organization, but [was] the product of management analyses that include[d] . . . activity based costing, business case analysis, consolidation, functionality assessment, industrial engineering, market research, productivity assessment, reengineering, reinvention, utilization studies, and value engineering.” Circular A-76 at Attach. B at B-10.

338 OMB Circular A-76, atAttach. B at B-12.339 Id. at Attach. B at B-4.340 Circular A-76 at Attach. B at B-4Id..

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either use documented market research or solicit cost proposals

in accordance with the FAR.341 If the agency selected a private

sector provider, the CO awarded the contract in accordance with

the FAR.342 If the agency selected the agency’s tender, the CO

simply executed a letter of obligation.343

The standard competition process involved considerably more

steps, and could take up to 12 months from the date of public

announcement to obtain a performance decision.344 The CO was

required to state in the solicitation whether the acquisition

would use sealed bid or negotiated procedures.345 If using

negotiated procedures, the solicitation was required to identify

the source selection basis, e.g., lowest price technically

acceptable, tradeoff, etc.346 Similarly, as in traditional

procurements, the agency was required to clearly identify

evaluation factors in the solicitation.347 After the agency

evaluated offerors and made its decision, the agency was required

to make a formal public announcement via FedBizOpps of the 341 Id.Circular A-76 at Attach. B at B-4.

342 Id. Circular A-76 at Attach. B at B-5.

343 Id.Circular A-76 at Attach. B at B-5.

344 OMB Circular A-76, dCircular A-76 at Attach. B at B-6.

345 Id. Circular A-76 at Attach. B at B-8.



106

performance decision.348 The agency was also required to offer a

debriefing to all private sector offerors, the ATO, and “directly

affected government personnel.”349

Competitions conducted and decided pursuant to Circular A-76

have always been wrought with complicated jurisdictional issues.

First, when confronted with a protest of an A-76 decision, GAO

had to grapple with the executive nature of the Circular before

it could exercise jurisdiction. Broadly stated, a dispute over

an agency decision to perform work in-house appears to involve a

matter of executive branch policy that GAO does not review, and

indeed, GAO has declined to exercise jurisdiction over an in-

sourcing decision on that basis.350 However, where a contracting 348 Id. at Attach. B at B-17.349 Id. at Circular A-76 at Attach. B at B-18.

350 See Dynateria, Inc., B-222581.3, 87-1 CPD ¶ 30, at 2 (Comp. Gen. Jan. 8, 1987) (“[W]e recognize that the underlying determination involved in cost comparisons – whether work should be performed in-house by government personnel or performed by a contractor — is one which is a matter of executive branch policy and not within [GAO’s] protest function.”); see Gen. Tel. Co. of Cal., B-189430,78-2 CPD ¶ 9, at 4-5 (Comp. Gen. July 6, 1978) (“We have previously stated that we do not consider it our function, under our bid protest procedures, 4 C.F.R. Part 20 (1977), to review determinations made pursuant to OMB Circular A-76. On the contrary, we regard the directives contained in Circular A-76 as matters of Executive policy, rather than of statutory or regulatory requirements, which are not within the decision functions of [GAO].”) (citations omitted); see also Am. Fed’n of Gov’t Emps. Local No. 3347, AFL-CIO, B-183487, 75-2 CPD ¶ 12, at 2 (Comp. Gen. July 3, 1975);See Dynateria, Inc., B-222581, 87-1 CPD ¶ 30 (Comp. Gen. Jan. 8, 1987) (“[W]e recognize that the underlying determination involved in cost comparisons – whether work should be performed in-house by government personnel or performed by a contractor—is one which is a matter of executive branch policy and not within [GAO’s] protest

107

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Author, 01/03/-1,


Author, 01/03/-1,


agency utilized the procurement system to aid in its

determination of whether to perform the work in-house or whether

to contract out, Circular A-76 did not preclude protest.351 In

particular, where an agency endeavored to evaluate cost by

issuing a solicitation, developing a cost estimate, and basing

its decision on that evaluation, GAO would adjudicate a challenge

to those processes.352

As directed by statute, between May 2001 and March 2002, the

Comptroller General convened a special panel to study “the

policies and procedures governing the transfer of commercial

activities for the Federal Government from [g]Government

function.”); see Gen. Telephone Co. of Calif., B-189430,78-2 CPD ¶ 9 (Comp. Gen. July 6, 1978) (“We have previously stated that we do not consider it our function, under our bid protest procedures, 4 C.F.R. Part 20 (1977), to review determinations made pursuant to OMB Circular A-76. On the contrary, we regard the directives contained in Circular A-76 as matters of executive policy, rather than of statutory or regulatory requirements, which are not within the decision functions of [GAO].”) (internal citations omitted); see also Am. Fed. of Gov’t Employees Local No. 3347, AFL-CIO, B-183487,75-2 CPD ¶ 12 (Comp. Gen. July 3, 1975); Am. Telephone & Telegraph Co., B-179285, 74-1 CPD ¶ 72 (Comp. Gen. Feb. 14, 1974).

351 Dynateria, Inc., 87-1 CPD ¶ 30, at 2 (GAO will review a protest challenging the agency’s cost comparison “to determine if the agency conducted the cost comparison in accordance with applicable procedures.”).Dynateria, Inc., B-222581, 87-1 CPD ¶ 30 (Comp. Gen. Jan. 8, 1987) (GAO will review a protest challenging the agency’s cost comparison “to determine if the agency conducted the cost comparison in accordance with applicable procedures”).

352 See id. at 1-2

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personnel to a [f]Federal contractor.”353 This panel, later known

as the “Commercial Activities Panel,” presented a report to

Congress in April 2002 entitled “Improving the Sourcing Decisions

of the Federal Government.”354 The panel made ten specific

recommendations (see supra note 14), based on its reviews and

hearings concerning the Circular A-76 process.355 The report

discussed jurisdictional concerns in a section entitled,

“Standing to Challenge Public-Private Cost ComparisonsSourcing

Principles.”356 The Panel concluded that the current structure of

the laws and regulations was unbalanced and permitted challenges

by the private sector, without a similar right by the public

entities.357

353 Floyd D. Spence National Defense Authorization Act of 2001, § 832, Pub. L. No. 106-398, § 832, 114 Stat. 1654A-221 (2000); GAO-COMMERCIAL ACTIVITIES PANEL , supra note , atU.S. Gov’t AccountabiliError: Reference source not foundty Oties Panel: Improving the Sourcing De of the

354 COMMERCIAL ACTIVITIES PANEL, IMPROVING THE SOURCING DECISIONS OF THE GOVERNMENT (2002), available at http://comptrollerlegal2002.tpub.com/a03209/index.htm , supra note , at 6.Id.U.S. General AccoError: Reference source not foundunting Office: Commercial Activities Panel: Improving the Sourcing Decisions of the Governmentote ., GAO-02-866T (April 30, 2002) (available aError: Reference source not foundt www.gao.gov/new.items/d02866t.pdf).

355 Id at 6-9. 356 Id. at 86.U.S. General Accounting Office: Commercial Activities Panel: Improving the Sourcing Decisions of the Government, GAO-02-866T, Appendix C, at 86-89 (April 30, 2002) (available at www.gao.gov/new.items/d02866t.pdf).

357 Id. at 89. Dan Duefrene, et al., B-293590.2, et al., 2004 CPD ¶ 82 (Comp. Gen. Apr. 19, 2004) (holding that an in-house

109

Author, 01/03/-1,

Ok. KmJ.

Author, 01/03/-1,

Found full report in which this section is included in Appendix C. PJS

Author, 01/03/-1,

Patrick – Is this your comment?

Author, 01/03/-1,

This report does not contain such a section, or anything that really looks like that. This sentence may just need to be deleted.

Author, 01/03/-1,

Authors – AE comment suggesting moving supra to FN. AE’s comment conforms with our standard practice. Do you have a preference? KMJ.

Author, 01/03/-1,

Kick the supra down into the FN instead of having it in text. PJS

Author, 01/03/-1,

Again used brackets to alter capitalization in quotation to conform with PCLJ style guide.

Author, 01/03/-1,

I added the GAO report to substantiate the fact that the special panel met between May 2001 and March 2002. PJS

Congress responded by amending CICA to expand the definition

of an “interested party” to include an agency official that has

lost a competition to a private entity under an A-76 competition.

Specifically, the Ronald W. Reagan National Defense Authorization

Act for Fiscal Year 2005 (“FY2005 NDAA”)358 defined an “interested

party” to include “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.” 359

The statute limited the amendments’ applicability to competitions

conducted 90 days after enactment of the act.360

Following the enactment of FY2005 NDAA on October 28, 2004,

GAO amended its Bid Protest Regulations to conform to the Act on

competitor in an A-76 competition did not meet the statutory definition of an “interested party”).

358 Pub. L. No. 108-375 § 326(a)(2), 118 Stat. 1811, 1848 (2004), codified at 31 U.S.C. § 3551 (Supp. IV 2004).

359 Pub. L. No. 108-375, § 326(a)(2), 118 Stat. 1811, 1848 (2004), (codified at 31 U.S.C. § 3551 (Supp. IV 2004)).360 Pub. L. No. 108-375Id. at § 326(d). The conference report accompanying the FY2005 NDAA further restricted the amendments’ applicability by denying a person “representing a majority of the employees” standing to protest. H.R. CONF. REP. NO. 108-767, at 648 (Conf. Rep.), reprinted in 2004 U.S.C.C.A.N. 1961, 2003. Such individuals, however, were provided the right to intervene in a protest filed by an interested party. H.R. Conf. Rep. No. 108-767, at 648, reprinted in 2004 U.S.C.C.A.N. 1961, 2003Id.

110

Author, 01/03/-1,

Moved citation to the end of the sentence to show that it does not just substantiate the Act, but also the quotation of the act. PJS

Author, 01/03/-1,

See AE comment immediately following re: why FN deleted. KMJ.

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

Topic sentence, no FN needed. Particularly true since following sentence give the specifics of this new definition. PJS

April 14, 2005.361 GAO’s amended regulations added an ATO to the

definition of an interested party and set the effective date of

the amendments as January 26, 2005.362 Some recent cases from the

GAO and Court of Federal Claims, however, indicate that the

discussion of A-76 challenges may bear some resemblance to a

successful protest of an in-sourcing decision.

Even prior to the legislative change, GAO had extended the

rationale to exercise jurisdiction over protests of streamlined

competitions notwithstanding the Circular’s clear edict that

contests of those competitions are not allowed. In Vallie Bray,

GAO held that “while it is true that the revised Circular states

that no party may contest any aspect of a streamlined

competition, this language does not preclude a protest to our

Office because CICA, not the revised Circular, provides the basis

for our bid protest authority.”363 Thus, GAO reasoned that an

“interested party” as defined by CICA and GAO’s Bid Protest

Regulations, may protest a streamlined competition where “the

agency elects to use the procurement system and conducts a

competition by issuing a solicitation to determine whether a 361 Administrative Practice and Procedure, Bid Protest Regulations, Government Contracts, 70 Fed. Reg. 19679 (Apr. 14, 2005)(to be codified at C.F.R. pt. 21).362 70 Fed. Reg. 19679 (daily ed. Apr. 14, 2005)Id. (explaining that because the date of enactment was October 28, 2004, therefore the end of the 90-day period was January 26, 2005).

363 Vallie Bray, B-293840 et. al, 2004 CPD ¶ 52, at 2 (Comp. Gen. Mar. 30, 2004).

111

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,


Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

Introducing the following discussion, no FN needed here. PJS

Author, 01/03/-1,

Given the use of the date of the amended regulations a FN to the amended regulations is probably needed here. PJS

private-sector entity can perform the work more cost

effectively.”364

The question of who may protest a determination made under

the Circular A-76 process also reached the federal courts. Prior

to the FY 2005 NDAA, the Court of Federal Claims held that under

the Tucker Act, fFederal employees and their unions were not

“interested parties” with standing to challenge an A-76

determination.365 This decision was upheld by the Federal Circuit

on other grounds; the decision specifically found that the term

“interested party” was the same as that of CICA, and therefore

includes decisions made under Circular A-76 as part of an

“alleged violation of statute or regulation in connection with a

procurement.”366

This principle was later applied in a Court of Federal

Claims case in which a contractor sought to enjoin the Government

from performing services in-house without a public-private

competition.367 The plaintiff, LABAT-Anderson (“LABAT”), had 364 Vallie Bray, B-293840 et. al, 2004 CPD ¶ 52 (Comp. Gen. Mar. 30, 2004)Id. at 2-3 (finding that GAO did not have jurisdiction because the agency used streamlined procedures, but did not issue a solicitation to conduct a procurement to determine whether to perform the work in-house).

365 See Am.erican Fed.eration of Gov’vernment Employees, AFL-CIO v. United States, 46 Fed. Cl. 586, 600 (2000).

366 American Federation of Government Employees, AFL-CIO v. United States, 258 F.3d 1294, 1299, 1302 (Fed. Cir. 2001).

367 LABAT-Anderson, Inc. v. United States, 65 Fed. Cl. 570, 572 (2005).

112

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Concur. KMJ.

Author, 01/03/-1,


provided distribution services to the Defense Logistics Agency

and alleged that when its contract expired the agency improperly

decided to perform the work in-house.368 LABAT sought an

injunction to prohibit this and require a public-private

competition under Circular A-76 and other agency regulations.369

While the court ultimately dismissed the matter, it first found

that LABAT had standing to protest as failure to follow A-76

guidelines “deprive[d] the plaintiff of an opportunity to compete

for the work in a fair competition.”370

Though these similar issues have been litigated in the

context of GAO bid protests and Circular A-76 challenges, the

precedents set are neither direct nor controlling. As the law

continues to develop regarding challenges to in-sourcing

decisions, these earlier cases may yet prove instructive both to

practitioners and courts alike in providing a legal basis to

establish jurisdiction in one adjudicative body.

V. UNDERSTANDING THE CONFUSION – CONCLUSIONS

368 Id. at 572.369 Id. at 576..370 See id. at 575-76 LABAT-Anderson, Inc. v. United States, 65 Fed. Cl. 570, 575-76 (2005) (concluding that this reasoning is not inconsistent with AFGE or other precedent merely because there is no “recent or on-going solicitation”).

113

Author, 01/03/-1,

Concur. KMJ.

Author, 01/03/-1,

Author's summary, no FN needed. PJS

Author, 01/03/-1,

Need citation with pincite to the LABAT case. PJS

Author, 01/03/-1,

Need citation with pincite to the LABAT case. PJS

“Confusion is a word we have invented for an order which is not

yet understood.” – Henry Miller371

At the heart of the jurisdictional debate on in-sourcing are

questions of fairness: are contractors entitled to a review of

decisions that might strip them of contracts which support their

business? Should Government agencies be allowed to make these

decisions without the specter of judicial review to ensure that

processes are followed and politics kept at bay? While others

continue to debate whether in-sourcing could still be a money-

saving and efficient way for the Government to acquire the goods

and services it needs, especially in light of recent budget

concerns, what is clear is that in-sourcing remains relevant as

one of many of the Government’s procurement options. As agencies

develop and promulgate internal rules and processes pursuant to

the FY2009 NDAA and Omnibus Appropriations Act of 2009, it is

essential that there be a common understanding of whether

decisions made under those rules will be reviewed when

challenged. As this Aarticle notes, there is no neither clear

judicial consensus nor a clear legislative grant regarding

jurisdiction over such challenges.

Out of concern for fundamental fairness, these important

decisions should be subject to review. The unifying purpose

371

114

Author, 01/03/-1,

Author edit.

Author, 01/03/-1,

Need citation for this quote. PJS

Author, 01/03/-1,

Please add a citation.

behind ADRA implies that the Court of Federal Claims would be a

natural fit for exercising jurisdiction over challenges to in-

sourcing decisions. The court already possesses broad

jurisdiction over matters related to a federal government

contract. True, as noted by the Hallmark cCourt, none of the

statutes typically at issue in an in-sourcing challenge expressly

creates a cause of action. However, these statutes need not

establish a cause of action, as the Tucker Act already authorizes

challenges to “any alleged violation of statute or regulation in

connection with a procurement or a proposed procurement to be

brought by an interested party.”

The court’s broad jurisdiction over claims brought by an

“interested party” provides a perfect avenue for a challenge to

an in-sourcing decision. Most such challenges are brought by the

incumbent contractor, which likely could provide a competitive

solution to any request for proposal. Such an experienced

contractor could easily be considered an “actual or prospective

bidder[] . . . whose direct economic interest would be affected

by the award or failure to award the contract.”372 As noted by the

Santa Barbara cCourt, the economic impact to the contractor of

losing work to gGovernment employees “cannot be denied,” a

conclusion that would bring a plaintiff challenging an in-

372 28 U.S.C. 1491(b)(1)31 U.S.C. § 3551(2)(A) (emphasis added).

115

sourcing decision squarely within the court’s jurisdiction.373 The

Fifth Circuit agreed, noting that to find otherwise would be to

“betray[] the obvious meaning of ‘interested party.’”374

The court’s jurisprudence also supports the exercise of

jurisdiction over in-sourcing challenges. In Distributed

Solutions, the Court of Appeals for the Federal Circuit held that

the Court of Federal Claims had exercised jurisdiction over a

protest challenging an agency decision under a “request for

information,” focusing on the statutory language authorizing

challenges to actions “in connection with a procurement or

proposed procurement.” 375 Though some have suggested that the

decision to in-source, i.e., not to award to a private

contractor, cannot be related to procurement (as it is by

definition, a decision not to award a contract),376 the broad view

of the cCourt’s jurisdiction articulated in Distributed Solutions

373 98 Fed. Cl. at 543. 374 Rothe Development, Inc. v. U.S. Department of Defense, No. 11-50101, slip op. at 3 (5th Cir. Dec. 29, 2011); see supra Sec. II.c. The Fifth Circuit also recognized that without this interest, a challenger would likely lack standing before the U.S. district courts under Article III of the Constitution. Rothe Development, Inc., No. 11-50101, slip op. at 3. 375 Distributed Solutions, Inc. v. United States, 539 F.3d 1340, 1346 (Fed. Cir. 2008). The Federal Circuit held that “the phrase, ‘in connection with a procurement or proposed procurement,’ by definition involves a connection with any stage of the federal contracting acquisition process, including ‘the process for determining a need for property or services.’” Id. (emphasis added). 376 See LABAT-Anderson, Inc. v. United States, 65 Fed. Cl. 570, 575-76 (2005)supra note 273.

116

Author, 01/03/-1,

Author edit

Author, 01/03/-1,

Author edit.

Author, 01/03/-1,

Need citation with pincite to Santa Barbara case. PJS

suggests a different conclusion more in line with GAO’s analysis

of its jurisdiction over Circular A-76 challenges. Indeed, by

undertaking a cost analysis, an agency looking to in-source takes

advantage of the “federal contracting acquisition process” such

that the agency’s decision should be subject to review.377

Lastly, the Court of Federal Claims remains the sole

judicial forum that has comprehensive review over procurement

decisions. The court’s government contracts expertise,

particularly as compared to the experience of district courts, is

undeniable. Indeed, the court has been said to adjudicate

contract actions with an “eye towards the overall government

contracting process.”378 Indeed, Aas several scholars have noted,

the court is uniquely situated to handle intricate government

contract cases, such as challenges to in-sourcing decisions, with

expertise and efficiency.379

Another route to the Court of Federal Claims’ jurisdiction

may be through the CDA. It is, however, not without its own set 377 Distributed Solutions, Inc., 539 F.3d at 13465.378 BLR Group of Am., Inc. v. United States, 84 Fed. Cl. 634, 646 (2008). 379

See Robert S. Metzger & Daniel A. Lyons, A Critical Reassessment of the GAO Bid-Protest Mechanism, 2007 WIS is. L. Rev. 1225, 1237; Joshua I. Schwartz, Public Contracts Specialization as a Rationale for the Court of Federal Claims, 71 GEO. WASH. L. REV. 863, 870 (2003); see also Matthew Chow et al., Court of Federal Claims Task Order Bid Protest Jurisdiction and Expectation Damages: The 2009 McKenna Long & Aldridge “Gilbert A. Cuneo” Government Contracts Moot Court Competition, 38 PUB. CONT. L. J. 975, 10261025 (2009).

117

Author, 01/03/-1,

Concur with PJS. KmJ.

Author, 01/03/-1,

I would disagree with Shandanette here. The language is close with the uniquely situated but I still think this is a paraphrase and in general this sentence is a mash up of the various articles cited. As such, I would keep it as is. PJS

Author, 01/03/-1,

This is not in the author’s own words, as the Chow source states this same premise in nearly the exact same words nearly identically.allye Collective, whose members are trainednowing i at not allowing this to sh. (Shandanette Molnar) The premise stated in Chow is the “the court is uniquely situated to handle government contract cases.” To be on the safe side, this citation should probably be broken up into several citations. The statement from chow should be one cite. Michelle McCall “As several scholars have noted, the court is uniquely situated to handle intricate government contract cases.” Should be a cite to Robert Metzger’s article: See Robert S. Metzger & Daniel A. Lyons, A Critical Reassessment of the GAO Bid-Protest Mechanism, 2007 Wis. L. Rev. 1225, 1237; Joshua I. Schwartz, Public Contracts Specialization as a Rationale for the Court of Federal Claims, 71 Geo. Wash. L. Rev. 863, 870 (2003); Michelle McCall

Author, 01/03/-1,

Author edit

of potentially confusing issues. As noted by the Eleventh

Circuit in the Vero Tech. appeal, “the Tucker Act, in conjunction

with the CDA ‘purports to make the [Court of Federal Claims] the

exclusive trial court for hearing disputes over government

contract that fall under the CDA.’”380 A contractor requesting

that the Court of Federal Claims review a challenge to an in-

sourcing decision could add an alternative argument to its

complaint alleging that the in-sourcing agency somehow violated a

right guaranteed under a contract, thereby implicating the

cCourt’s CDA jurisdiction. That said, to be successful, the

contractor would not only have to be a discharged incumbent

contractor, but would also have to hold a contract under which a

related (and viable) right could be enforced. This theory is

untested before the Court of Federal Claims, but may muddy the

waters even further, as CDA jurisdiction would likely invoke the

Boards of Contract Appeals’ jurisdiction as well.

In addition to the Court of Federal Claims, GAO could also

be called to help decide the propriety of in-sourcing decisions

if Congress were to alter GAO’s mandate to expand its bid protest

jurisdiction. However, given the current political climate, in

which agencies are reducing their in-sourcing efforts,

380 Vero Technical Support, Inc. v. U.S. Department Dep’t of Defense, 437 Fed.Appx. 766, 771 No. 10-14889, 2011 WL 3501843 (11th Cir. Aug. 10, 2011) (quoting Tex. Health Choice, L.C. v. Office of Personnel Pers. Mgmt., 400 F.3d 895, 899 (Fed. Cir. 2005)) (internal citations omitted).

118

Congressional interest is likely too low to spark such an effort.

. Just as with GAO’s current bid protest jurisdiction,

jurisdiction over challenges to in-sourcing decisions would not

supplant the Court of Federal Claims’ review. Because the

decisions and analyses are similar to those made in a typical

procurement decision, it would make sense for the GAO to be

involved should in-sources practices ever regain prominence.

While the APA appears to provide some grounds for

jurisdiction in the U.S. dDistrict cCourts, they are the least

attractive forum for reviewing in-sourcing decisions. Allowing

the district courts to review in-sourcing decisions would likely

result in even more inconsistent decisions across several

circuits, whereas the current inconsistency in Court of Federal

Claims case law could be resolved by one appellate court – the

Federal Circuit. In addition, in-sourcing law and policy may be

unfamiliar to many federal judges who have not considered bid

protests since the end of district courts’ Scanwell jurisdiction.

Assuming no other forum is available, to convince a district

court to accept jurisdiction, a plaintiff would need to narrowly

tailor its complaint so as to implicate rights created by statute

or regulation, not rights imbued by the contract. This strategy,

which draws on the logic of K-Mar and Normandy Apartments, would

require the issuance of relevant agency-specific regulations to

provide a basis on which a contractor could make this argument.

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Author, 01/03/-1,

Per 1.26.12 author draft

However, given the growing disinterest in in-sourcing, the

Government is not likely to do so such that this is not likely a

promising alternative.

The lack of review of in-sourcing decisions -- regardless of

the popularity of in-sourcing -- renders the confusion of the

status quo fundamentally unfair, untenable, and unpalatable. The

sheer complexity of the decision making process, which includes

the need to determine whether the private or public sector would

provide the most cost efficient solution, begs for judicial

oversight. As discussed above, expansion of GAO and/or district

court jurisdiction is unlikely given the current political and

budgetary climate, but regardless, neither forum is as well-

equipped as the Court of Federal Claims to handle these issues.

Not only does the cCourt already have broad protest jurisdiction

under the Tucker Act, but its unique institutional knowledge of

procurement law makes it the most logical place for in-sourcing

decisions to be challenged. Ultimately, the confusion over in-

sourcing jurisdiction may remain unresolved unless and until in-

sourcing is returned to favor, Congress acts, or the courts come

together to achieve consistency in assessing jurisdiction.

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