American Feder. of Government Employees v. U.S.

CourtUnited States District Courts. United States District Court (Columbia)
Citation104 F.Supp.2d 58
Docket NumberNo. CIV.A.2000-936 RMU.,CIV.A.2000-936 RMU.
Decision Date30 June 2000

Anne Wagner, American Federation of Government Employees, AFL-CIO, Washington, D.C., for plaintiffs, the AFL-CIO's American Federation of Government Employees, AFGE Local 2263 of Albuquerque, New Mexico, AFGE Local 153 of Tampa, Florida, Ms. Rose Reed, Ms. Inez Marquez and Mr. Romero.

Daniel Van Horn, Assistant United States Attorney, Washington, D.C., for defendants, the United States and the Secretary of the United States Air Force.

Harvey A. Levin, Birch, Horton, Bittner and Cherot, P.C., Washington, D.C., for intervenor-defendants, Chugach Management Services and Chugach Management Services Joint Venture.


Denying the Plaintiffs' Application for a Preliminary Injunction; Dismissing the Complaint as to MacDill AFB for Lack of Standing

URBINA, District Judge.


This matter comes before the court on a complaint and application for a temporary restraining order ("TRO") filed by the American Federation of Government Employees of the AFL-CIO ("AFGE"), AFGE Local 2263 of Albuquerque, New Mexico and Local 153 of Tampa, Florida ("the Locals"), Ms. Rose Reed, Ms. Inez Marquez and Mr. Daniel Romero (collectively "the plaintiffs"). The instant controversy concerns contracts for civil-engineering and maintenance work at the Kirtland U.S. Air Force Base in Albuquerque, New Mexico ("Kirtland") and the MacDill U.S. Air Force Base in Tampa, Florida ("MacDill").

The defendants are the United States and U.S. Air Force Secretary F. Whitten Peters (collectively "the Air Force") and two corporations owned by Native Americans, Chugach Management Joint Venture and Chugach Management Services, Inc. (collectively "Chugach"). The Air Force plans to award the Kirtland contract to Chugach on the basis of a federal statute which grants preferential treatment to firms owned by Native Americans. Similarly, in June 1999 the Air Force used the statutory preference to award the MacDill contract to Chugach, and it plans to renew that contract this year.

The plaintiffs seek to enjoin the Air Force from using the preference in favor of Native-American firms to award the Kirtland contract or renew the MacDill contract, on the ground that the preference violates their Fifth Amendment rights to Equal Protection of the law. The challenged preference is section 8014(3) of the Fiscal Year 2000 Defense Appropriations Act. Pub.L. No. 106-76 enacted October 25, 1999, 113 Stat. 1212, 1234 ("Section 8014"). The court heard oral argument on June 22, 2000.

For the reasons which follow, the court will deny the plaintiffs' application for a preliminary injunction as to both Kirtland and MacDill Air Force Bases. In addition, the court will dismiss the complaint as to MacDill for lack of standing. The complaint survives to the extent that it challenges the contemplated use of the section 8014 preference at Kirtland.


The Plaintiffs. The individual plaintiffs are civilian Department of Defense ("DOD") employees assigned to the 377th Civil Engineer Group (CEG) at Kirtland AFB. The 377th CEG performs functions at Kirtland ranging from electrical work, electronics, carpentry, heating and air conditioning, heavy-equipment maintenance, landscaping and grounds maintenance, fleet, metal shop and construction, refuse pick-up and disposal, custodial services, septic-tank service and street-sweeping. See Affidavit of Rose Reed ("Rose Aff.") ¶¶ 1, 17; Air Force's Opposition to the Plaintiffs' Application for a Preliminary Injunction ("AF's Opp. to PI"), Ex. 2, ¶ 3 (Decl. of Col. Polly A. Peyer dated May 15, 2000).

Kirtland Contract. The parties agree that absent section 8014, the Air Force's decision whether to contract out work customarily would be based on a cost/efficiency analysis and a competitive bidding process. Indeed, in December 1998 the Air Force announced that the 377th CEG at Kirtland AFB would undergo a study to determine whether it would be efficient and cost-effective to contract out the base-maintenance work currently performed by DOD employees. See Mot. for PI, Ex. 3 at 3. (The parties refer to contracting out as "direct conversion.") The analysis was to be conducted according to, inter alia, the requirements of 10 U.S.C. § 2461 and Office of Management and Budget Circular A-76 ("Circular A-76").

As described by Circular A-76, the competitive bidding analysis would consist of six steps: (1) the development of a performance work statement; (2) the performance of a management study to determine the government's "Most Efficient Organization"; (3) the development of an estimate of an in-house cost estimate (what it would cost for the government employees to do the job); (4) issuance of a Request for Proposals or Invitation for Bid; (5) comparison of the in-house bid against a private contractors' bid; and (6) an administrative appeals process. See Mot. for PI, Ex. 2. (Circular No. A-76 Rev. Supp. Handbook, Part I, Ch. 3, Supplement). A private contractor, such as Chugach, would have to beat the in-house bid by at least 10% in order to win the contract away from the government employees. Id. In response to the announcement about the A-76 study, a team of civilian employees began to develop the government's "Most Efficient Organization" plan in January 1999. See Reed Aff. ¶ 5.

Before the Kirtland employees made much progress on their proposal, however, the Air Force suspended the A-76 process. The Air Force declared its intention to forgo the customary process and instead award the civil-engineering contracts to private firms owned by Native Americans. The Air Force solicited capability statements from three Native-American-owned firms and ultimately selected Chugach Alaska Corporation ("Chugach").1 See Mot. for PI, Ex. 3 at 9. On September 20, 1999, Air Force headquarters approved Kirtland's request for the direct conversion of the civil-engineering contract. See Mot. for PI, Ex. 4.

MacDill Contract. The Air Force also effected direct conversion of contracts for work at MacDill AFB. The Air Force had initially performed an A-76 analysis on MacDill's civil-engineering functions, and twenty-four interested contractors responded. For their part, the MacDill employees submitted their bid in an attempt to keep the work "in house." At that juncture, the Air Force discontinued the A-76 bidding process. On June 15, 1999, the Air Force awarded the MacDill contract to the intervenor-defendant, Chugach Management Services Inc., a Native-American-owned company which is a subsidiary of Chugach Alaska Corporation. The contract will have a ten-year renewal option valued at approximately $500 million. See Plaintiffs' Mem. in Support of Application for a Prelim. Injunction ("Mot. for PI") at 4 n. 3.

The plaintiffs allege that the direct conversions in favor of Chugach will cause the plaintiffs to be removed, downgraded or forced to retire from their government positions. See Reed Aff. ¶ 18-19; Marquez Aff. ¶ 8 (Pl.'s Ex. 5); Romero Aff. ¶ 7 (Pl.'s Ex. 6).

Section 8014. As authority for this course of action the Air Force cites section 8014(3) of the Fiscal Year 2000 Defense Appropriations Act, Pub.L. No. 106-76, enacted October 25, 1999, 113 Stat. 1212, 1234 ("the section 8014 preference"). Section 8014 generally prohibits the armed forces from contracting out work to a private contractor without first preparing an analysis showing that to be the "most-efficient and cost-effective" means of getting the work done. Section 8014 provides, in pertinent part,

[N]one of the funds appropriated by this Act shall be available to convert to contractor performance an activity or function of the Department of Defense that ... is performed by more than 10 Department of Defense civilian employees until a most efficient and cost-effective organization analysis is completed on such activity or function ....

Pub.L. No. 106-79, § 8014. Section 8014 makes an exception, however, which allows the armed forces to bypass the usual efficiency/cost analysis in favor of contracting firms which are majority-owned by Native Americans. Section 8014 provides:

[T]his section ... shall not apply to a commercial or industrial type function of the Department of Defense that ... (3) is planned to be converted to performance by a qualified firm under 51 percent Native American ownership.2

Id. The court will refer to this latter provision as "the section 8014 preference."

The Controversy. The plaintiffs contend that the section 8014 preference constitutes a racial preference which is subject to strict scrutiny under the Equal Protection guarantee of the Fifth Amendment. Alternately, the plaintiffs contend that the preference violates their fundamental property right, as federal employees, not to be terminated without just cause. They point out, correctly, that government measures which burden fundamental rights are subject to strict scrutiny for Equal Protection, just as racial classifications are. The plaintiffs further contend, of course, that the preference cannot withstand that strict scrutiny and thus must be stricken as unconstitutional. Specifically, the plaintiffs contend that the preference does not serve the state interest in redressing discrimination against Native Americans, because there is no evidence that Congress enacted the preference in response to evidence of specific, identifiable discrimination against Native Americans in federal contracting. The plaintiffs further contend that the preference is not "narrowly tailored" to serve that interest, as classifications subject to strict scrutiny must be.

The Air Force responds that the Section 8014 preference is a political classification, not a racial classification. Consequently, the Air Force argues, the preference should be subject only...

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