On June 9, 2008, the Government Accountability Office (“GAO”) Bid Protest Regulations were amended to modify the definition of “interested party,” and to make certain administrative changes related to filing dates and the confidentiality of parties’ proprietary information. These amendments, which can be found in their entirety at http://edocket.access.gpo.gov/2008/pdf/E8-12790.pdf, were made pursuant to the changes set forth in section 326 of the National Defense Authorization Act for Fiscal Year 2008. See Pub. L. No. 110-181 § 326, 122 Stat. 3, 62-63 (2008). The following is a brief summary of the amended sections and possible implications of those amendments.

Who is an ‘Interested Party’ Anyway?

GAO amended the definition of an “interested party” in 4 C.F.R. § 21.0(a)(2) for: (1) publicprivate competitions under Office of Management and Budget (“OMB”) Circular A-76, and (2) decisions to “convert a function performed by Federal employees to private sector performance without a competition under OMB Circular A-76.” An “interested party” now includes: “(A) [t]he official responsible for submitting the Federal agency tender, and (B) [a]ny one individual, designated as an agent by a majority of the employees performing that activity or function who represents the affected employees.” 73 F.R. 32,427, 32,429 (June 9, 2008); see also 4 C.F.R. § 21.0(b)(2). Although the term “individual,” rather than the term “person,” is used for these amendments, GAO stated that the terms are substantively the same and no difference in meaning is intended. 73 F.R. at 32,427-28.

Implications of this New ‘Interested Party’ Definition

GAO, in responding to comments received following the notice and comment period, addressed several concerns regarding this new definition of an “interested party.” Once concern was that this definition “could allow affected employees to protest the selection of a ‘most efficient organization’” under OMB Circular A-76. Although GAO could have advised future parties on this issue, the agency stated that it would consider this issue if presented in the future. Other concerns addressed by GAO were: (1) the designation of “an employee representative,” (2) standing for government employees, and (3) concerns with the authority to protest without regard to the number of employees involved.

First, GAO stated that it would not provide any further guidance for the designation of an employee representative, but would decide the issue on a caseby- case basis. 73 F.R. at 32,428.

Second, regarding the issue of standing, GAO cited to a recent decision in which the agency discussed the issue of whether a federal employee had standing to bring a protest as guidance regarding the standard that will apply under the new definition of “interested party.” See Mark Whetstone, B-311284, 2008 CPD ¶ __, 2008 U.S. Comp. Gen. LEXIS 122 (May 9, 2008) (dismissing protest brought by federal employee, holding “federal employees’ jobs must be at stake in order for their designated agent to qualify as an interested party”). The agency explained, “Because GAO has addressed this issue in a decision, GAO does not believe that a change to the proposed rule is needed.” 73 F.R. at 32,428.

Third, GAO addressed the issue of whether a protest is authorized without regard to the number of employees affected, by citing a recent decision in which GAO held that “there is no requirement under OMB Circular A-76 for an agency to use the procurement process to conduct a ‘streamlined competition,’ when a commercial activity is performed by 65 or fewer full-time employees.” 73 F.R. at 32,428 (citing Lisa Hartman, B-311247, 2008 CPD ¶ __, 2008 Comp. Gen. LEXIS 79 (May 6, 2008)).

Another concern was the issue of whether an affected employee should be able to gain access to information covered by a protective order. In 2005, GAO “thought it was premature” to address this concern and has not addressed the issue in any protest decision since that time. 73 F.R. at 32,428 (citing 70 F.R. 19,679, 19,680 (April 14, 2005)). GAO stated that it intends to develop these procedures “[a]s the practice develops, and experience is gained by all sides.” Id.

Administrative Changes, Current Practice Standards, and Clarifications

One of the administrative changes made by GAO was the replacement of the term “contracting agency” with the less-specific term “agency.” Now, 4 C.F.R. § 21.0(d), which previously defined the term “contracting agency,” has been replaced by the definition of a term that previously appeared in § 21.0(e). As a result, each section of GAO’s bid protest regulations that used the term “contracting agency” has been amended to reflect this administrative change.

GAO also amended 4 C.F.R. § 21.3(j) to reflect current practice standards regarding how parties must seek approval to submit additional statements. Rejecting a comment received during the notice and comment period, GAO stated that it would not automatically reject submissions of additional information made without prior approval, but would make those determinations on a case-by-case basis. Nevertheless, the rule regarding additional statements remains unchanged: a party must obtain permission from GAO before it may submit additional statements.

GAO clarified that it “has no role in administering the statutory requirements to withhold contract award[s] or suspend contract performance.” 73 F.R. at 32,429. GAO further clarified that this is true for all protests subject to GAO jurisdiction, including public-private competitions.

TSA, the New GAO Jurisdiction

As of June 23, 2008, any procurement conducted by the Transportation Security Administration (“TSA”) will be subject to the Federal Acquisition Regulation, and GAO will have jurisdiction to resolve bid protests involving TSA procurements. Previously, parties bringing protests involving TSA procurements were limited to either agency-level protests before the Department of Homeland Security or protests before the Court of Federal Claims. Although not a formal amendment to its bid protest regulations, GAO noted in the Final Rule that its bid protest jurisdiction applies to “TSA procurements covered by TSA solicitations issued on or after June 23.”

Conclusion

In sum, GAO’s bid protest regulations and statutory jurisdiction has been extended to encourage federal employees to bring protests in cases that involve the privatization of work that was previously performed by federal agencies. Thus, it is important that contractors understand the increased risk that their awards will be challenged under such privatization procurements, and factor this risk into their business decisions accordingly. Reed Smith’s attorneys have a great deal of experience in litigating GAO bid protests and are available to advise contractors regarding strategies for the protection of their awards.