Dellew Corp. v. United States
| Decision Date | 20 December 2012 |
| Docket Number | No. 12-627C,12-627C |
| Parties | DELLEW CORPORATION, Plaintiff, v. THE UNITED STATES, Defendant. |
| Court | U.S. Claims Court |
Protest of agency in-sourcing
decision; 28 U.S.C. § 1491(b)(1)
(2006); Department of Defense
in-sourcing under 10 U.S.C.
2011); standing; mootness;
timing of in-sourcing decision;
James F. Nagle, Seattle, WA, for plaintiff. Jonathan A. DeMella and Kate H. Kennedy, Oles Morrison Rinker & Baker LLP, of counsel.
William P. Rayel, Washington, DC, with whom was Acting Assistant Attorney General Stuart F. Delery, for defendant.
This post-award bid protest is before the court after argument on cross-motions for judgment on the administrative record and defendant's motion to dismiss, involving a decision to in-source under the Department-of-Defense-wide statutory mandate to use civilian contractors in lieu of private-sector contractors. Dellew Corporation ("Dellew" or "plaintiff") challenges the Department of the Air Force's (the "Air Force") decision to in-source awards and personnel-management support services previously performed by Dellew at nine Air Force bases. Plaintiff asserts that the Air Force's in-sourcing decision contravened the applicable statutes, 10 U.S.C. §§ 129a, 2463(e) (Supp. V 2011), and regulations. Even absent this defect in the procurement process, plaintiff faults the in-sourcing decision as based on a flawed cost analysis and therefore lacking a rational basis. Defendant responds that the current versions of sections 129a and 2463(e) are inapplicable because the in-sourcing decision occurred in 2010—before the statutes becameeffective—but more fundamentally contends that the applicable statute is budgetary and contemplates no private right of action so that prudential standing is lacking.
The National Defense Authorization Act ("NDAA") for Fiscal Year 1991 enacted 10 U.S.C. § 129a, which was entitled "General personnel policy" and provided:
NDAA for Fiscal Year 1991, Pub. L. 101-510, 104 Stat. 1485, § 1481 (1990); see also 10 U.S.C. § 129a (2006).
On January 28, 2008, Congress amended 10 U.S.C. § 2463 to require the U.S. Department of Defense ("DoD") to "devise and implement guidelines and procedures to ensure that consideration is given to using, on a regular basis, [DoD] civilian employees to perform new functions and functions that are performed by contractors and could be performed by [DoD] civilian employees." NDAA for Fiscal Year 2008, Pub. L. 110-181, 122 Stat. 3, § 324; see AR 1231.
DoD issued the guidelines and procedures required by the 2008 amendment on April 4, 2008. See AR 1231-41. The "Guidelines and Procedures for Implementation of 10 U.S.C. § 2463" set forth several considerations and procedures governing 10 U.S.C. § 2463 actions. Id. at 1237-38. Although the guidelines allowed some DoD functions to be eliminated or converted to government performance without a supporting economic analysis, they required, in part:
[F]or all other functions that are performed under contract but that could be performed by DoD civilian employees, DoD Components shall perform an economic analysis to determine whether DoD civilians or private sector contractors 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, supplies, 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. at 1237. In addition to an economic analysis, the guidelines also required DoD to follow standard manpower management procedures:
When a DoD Component . . . is considering whether to convert from contractor to government performance, manpower managers shall follow standard manpower management procedures to determine and validate manpower requirements. This shall include verifying the mission, functions, and tasks to be performed, required level of performance, and (consistent with title [sic] 10 U.S.C. § 129) workload necessary for mission success.
On April 8, 2009, DoD issued Resource Management Decision ("RMD") 802, which realigned resources for DoD for fiscal years 2010-141 by decreasing funding for contract support and increasing funding for civilian manpower authorizations. See id. at 1242. To assist DoD with developing and executing plans to meet the requirements of RMD 802, the Deputy Secretary of Defense issued an "In-Sourcing Implementation Guidance" on May 28, 2009. Id. at 1242-59. Paragraph 4.3 of the Guidance provided that, "[i]f possible, contracted services that have option-years that will be exercised during FY 2010 should be identified for in-sourcing in FY 2010." Id. at 1250. The guidance also noted in ¶ 5.2.1.2.:
If DoD civilian employees cannot be obtained within the required timeframe,2 but are determined to be the most cost effective provider, asaddressed in paragraph 5.2.2 below,3 the requiring official shall obtain contract support on a temporary basis (not to exceed 12 months at a time), and work with the HRO [Human Resources Office] Director to formulate a plan for transitioning to DoD civilian employee performance as quickly as practical.
Id. at 1251 (underscoring in original).
On January 29, 2010, DoD published DTM 09-007, which established business rules for use across DoD in estimating and comparing the full costs of DoD manpower (military and civilian) and contract support. Id. at 1260-62. Shortly thereafter, the Air Force Manpower Agency (the "AFMA") incorporated the procedures outlined in DTM 09-0007 into a database tool, "DTM-COMPARE," for conducting cost analyses of in-sourcing decisions. Id. at 1287. Throughout 2010 the Air Force issued various in-sourcing guidance documents, including the "In-sourcing Procedures Guide," Id. at 1289-1349, which provided checklists and procedures for utilizing DTM-COMPARE. An additional guidance document, the "PACAF In-sourcing Guide," dated August 4, 2010, described a "certification process" for in-sourcing determinations and stated that an in-sourcing analysis showing cost savings should be forwarded to "A12 [the Deputy Director of Manpower, Personnel and Services] for approval" and to AFMA for validation/approval." Id. at 1350; see also id. at 1510-12.
In 2011 Congress enacted two statutes amending 10 U.S.C. § 2463: the Ike Skelton National Defense Authorization Act for Fiscal Year 2011 ("Ike Skelton NDAA") and the NDAA for Fiscal Year 2012. The Ike Skelton NDAA was effective January 7, 2011, and provided, as follows:
In deciding which functions should be converted to performance by Department of Defense civilian employees pursuant to section 2463 of title 10, United States Code, the Secretary of Defense shall use the costing methodology outlined in the Directive-Type Memorandum 09-007 (Estimating and Comparing the Full Costs of Civilian and Military Manpower and Contractor Support) or any successor guidance for the determination of costs when costs are the sole basis for the decision. The Secretary of amilitary department may issue supplemental guidance to assist in such decisions affecting functions of the military department.
Ike Skelton NDAA, Pub. L. 111-383, 124 Stat. 4137, 4184. The NDAA for Fiscal Year 2012, effective December 31, 2011, amended 10 U.S.C. § 2463 to include the following provisions:
NDAA for Fiscal Year 2012, Pub L. 112-81, 125 Stat. 1298, 1547 (2011) (emphasis added).
The NDAA for Fiscal Year 2012 also...
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