National Federation of Federal Employees v. Cheney
| Decision Date | 25 August 1989 |
| Docket Number | No. 88-5271,88-5271 |
| Citation | 883 F.2d 1038 |
| Parties | , 58 USLW 2159, 35 Cont.Cas.Fed. (CCH) 75,711 NATIONAL FEDERATION OF FEDERAL EMPLOYEES, et al., Appellants, v. Richard B. CHENEY, Secretary of Defense, et al. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeal from the United States District Court for the District of columbia.
Joshua F. Bowers, Washington, D.C., with whom H. Stephan Gordon was on the brief, for appellants.
Nathan Dodell, Asst. U.S. Atty., with whom Jay B. Stephens, U.S. Atty., John D. Bates, and R. Craig Lawrence, Asst. U.S. Atty., Washington, D.C., were on the brief, for appellees.
Before MIKVA, SILBERMAN and SENTELLE, Circuit Judges.
Opinion for the Court filed by Circuit Judge SENTELLE.
Appellants, the National Federation of Federal Employees and Local 273 of the National Federation of Federal Employees (collectively "appellants" or "NFFE"), contest a United States Army decision to "contract out" to private contractors the services formerly provided by government employees of the Directorate of Logistics, Fort Sill, Oklahoma. The District Court held from the bench: (1) that NFFE, pursuant to section 702 of the Administrative Procedure Act ("APA"), 5 U.S.C. Sec. 702 (1982), lacked standing to sue under either Office of Management and Budget ("OMB") Circular A-76 (Revised) or section 1223(b) of the National Defense Authorization Act of 1987 ("1987 DoD Authorization Act") 1; and (2) that administrative decisions to contract out are not subject to judicial review under the APA, 5 U.S.C. Sec. 701(a). We affirm the District Court's holding that NFFE lacks standing to bring this action and therefore find it unnecessary to address the reviewability of contracting out decisions.
Under OMB guidelines, government agencies must determine "whether commercial activities should be performed under contract with commercial sources or in-house using Government facilities and personnel." OMB Circular A-76 (Revised) para. 1 (August 4, 1983) ("OMB Circular A-76"). 2 In 1980, the U.S. Army Training and Doctrine Command ("TRADOC"), pursuant to the Circular, directed the Fort Sill Directorate of Resource Management ("Fort Sill") to conduct a commercial activity review of the Fort Sill Directorate of Logistics. The Directorate of Logistics provides support, maintenance, transportation, and supply functions for Fort Sill and surrounding installations. It also operates and maintains a fleet of 500 government vehicles.
Over the next four years, Fort Sill conducted an extensive examination of the responsibilities of the Directorate of Logistics, separating "commercial" and "governmental" activities and formulating all the commercial activities into a Performance Work Standard ("PWS") for a projected five-year contract term. Fort Sill then determined the in-house Most Efficient Organization ("MEO") costs based upon the PWS. With this estimate as a baseline, and with other appropriate adjustments, 3 in November 1984, Fort Sill issued a solicitation for bids, referred to as a Request for Proposals ("RFP"), from private contractors to provide the services at that time provided by the Directorate of Logistics based on the same PWS used for the in-house estimate.
In response to the RFP, in May 1986, Fort Sill received eight contractor proposals, all of which were evaluated by an Army Source Selection Evaluation Board ("Evaluation Board"). As is typical in government contracting, the Evaluation Board met with officials from the eight contractors for "discussions" regarding improvements on their proposals. After these discussions, Fort Sill resolicited bids seeking the contractors' best and final offers ("bafos"). The bafo proposals were received in July 1986.
In August, the OMB revised its policy regarding calculation of retirement costs for in-house estimates. Likewise in February 1987, the method of determining costs of a contractors' social security and thrift plan contributions was revised. Based on these changes, TRADOC solicited a second round of bafo bids. All second round bafo proposals were audited by the Defense Contract Audit Agency.
In May of 1987, the Evaluation Board selected the proposal submitted by Northrup Worldwide Aircraft Services, Inc. ("Northrup"). In June, Fort Sill compared the selected Northrup proposal, estimated at $53.2 million over the five-year term, with the in-house MEO estimate of $61.4 million over the same period. After TRADOC approval of the selection, Fort Sill announced tentatively an award of the contract to Northrup, which necessarily would result in termination of in-house services.
Pursuant to federal and Army acquisition regulations and OMB Circular A-76, an administrative appeal period ran from June 10 to July 22. During the period NFFE directly and through its members 4 appealed the award, alleging several violations of the OMB Circular A-76 Cost Comparison Handbook, including, inter alia, inflated in-house employee performance costs, artificially high overhead and support costs, and improperly calculated private contractor conversion costs and profit provisions. 5 An Army Administrative Appeals Review Board ("Review Board") consolidated the allegations into eleven appeals and in a fifty-four page decision letter specifically addressed each of fifty-nine allegations, denying most, partially substantiating two, and fully substantiating two others. Administrative App.Rev.Bd., Solic. No. DABT39-85-R-0001, Report of Proceedings, para. 2.b. (August 7, 1987) (J.A. at 338, 339). The Review Board concluded that the "directed changes were not enough to alter the announced result of the cost comparison or to reverse the initial decision to contract out." Id. para. 4.b. (J.A. at 391).
The Government Accounting Office ("GAO"), pursuant to a congressional request, also reviewed the Fort Sill contracting out decision. Based on the conclusions of that review, on December 4, 1987, the Department of the Army directed TRADOC to negotiate a contract change with Northrup to correct a defect in the award fee provision. After completion of this correction, on March 15, 1988, Fort Sill received final approval to award the contract to Northrup, with performance scheduled to begin on October 1, 1988.
Appellants then filed this suit alleging, inter alia, that Fort Sill, in its contracting out decision, violated the cost comparison procedures set forth in OMB Circular A-76 and the requirements of section 1223(b) of the 1987 DoD Authorization Act. 6 Appellants sought injunctive and other relief as necessary and proper. 7
Appellees moved to dismiss. The District Court granted appellees' motion from the bench, holding that (1) under section 702 of the APA and the "zone of interest test" appellants lacked standing to sue; and (2) under 5 U.S.C. Sec. 701(a) the contracting out decision was not subject to judicial review under either the Circular or the 1987 DoD Authorization Act, as the former commits the decision to nonreviewable agency discretion and the latter fails to provide any law or ascertainable standards to apply. Transcript of Hearing, National Fed'n of Fed. Employees v. Carlucci at 2-3 (D.D.C. Aug. 10, 1988), J.A. at 8-9. On appeal, appellants seek reversal of the District Court's decision on standing and remand for adjudication on the merits.
A party must have standing to bring suit in federal court. A court may "refuse to determine the merits of a legal claim, on the ground that even though the claim may be correct the litigant advancing it is not properly situated to be entitled to its judicial determination." 13 C. WRIGHT, A. MILLER & E. COOPER, FEDERAL PRACTICE AND PROCEDURE Sec. 3531, at 338-39 (1984). Standing focuses on the party and not on the issues sought to be adjudicated. See Flast v. Cohen, 392 U.S. 83, 99, 88 S.Ct. 1942, 1952, 20 L.Ed.2d 947 (1968). The requirements of standing are generally separated into two categories: the constitutional requirements of Article III 8 and the prudential requirements crafted by the Judiciary. See generally, Center for Auto Safety v. National Hwy. Traffic Safety Admin., 793 F.2d 1322, 1328-38 (D.C.Cir.1986). Prudential standing requires that the "plaintiff's complaint fall within 'the zone of interests to be protected or regulated by the statute or constitutional guarantee in question.' " Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 474-75, 102 S.Ct. 752, 760, 70 L.Ed.2d 700 (1982) (quoting Association of Data Processing Service Orgs. v. Camp, 397 U.S. 150, 153, 90 S.Ct. 827, 830, 25 L.Ed.2d 184 (1970) (footnote omitted)).
In the instant case, appellants assert standing under section 702 of the APA. That section provides standing to "[a] person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute." 5 U.S.C. Sec. 702 (emphasis added). Section 702 and the prudential zone of interest test are intimately related--the former provides a statutory grant from Congress to an aggrieved party to contest agency action and the latter provides a judicial limitation necessary to ensure that the proper party is asserting the claim against the agency. As the Supreme Court has stated, the zone of interest test is "most usefully understood as a gloss on the meaning of [section] 702," particularly since the "principal cases in which the ... test has been applied are those involving claims under the APA." Clarke v. Securities Indus. Ass'n, 479 U.S. 388, 400 n. 16, 107 S.Ct. 750, 758 n. 16, 93 L.Ed.2d 757 (1987).
Thus, we are required to determine whether appellants' interests bring them within "that class of 'aggrieved' persons ... entitled to judicial review of ...
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