GAO ruling could cripple A-76 competitions, military services say

Hundreds of military installations could be forced to restart their public-private job competitions unless a controversial General Accounting Office ruling is overturned, according to officials at the Navy, Army, and Defense Logistics Agency.

The services allege that the vast majority of ongoing job competitions in the Navy and Army could be scuttled as a result of new conflict-of-interest guidelines contained in a Dec. 5 GAO bid protest decision. In that ruling, GAO urged the Navy to hold a new job competition at the Naval Air Station in Lemoore, Calif., after finding that a Navy employee and private sector consultant set performance targets for the competition and then helped develop the in-house proposal to meet those targets. That created a conflict of interest that tainted the competition.

GAO is reconsidering its ruling after an appeal by the Navy, which charged the decision is a departure from GAO precedent and creates a new requirement that jeopardizes the majority of the Navy's ongoing job competitions. The Army and the Defense Logistics Agency joined the Navy in its protest, contending the GAO decision fails to clarify how agencies can avoid falling prey to conflict-of-interest charges.

"This action places agencies in a virtually impossible situation," said Army Deputy General Counsel Levator Norsworthy in a Feb. 14 letter to the Navy. "They are faced with expending time and money to rewrite the performance work statement and [in-house bid] with no real standards to judge the acceptability of any subsequent document."

GAO's ruling could disrupt the vast majority of Army job competitions, he added. "Over 83 percent of Army A-76 actions currently in progress would have to be essentially started over under the GAO's new standards."

At issue is the question of how agencies divide up the work involved in public-private job competitions. First, agencies must develop a performance work statement setting out specific requirements that both the private firm and government team involved in the competition must meet. Then, agency teams develop the government or in-house proposal to fulfill these requirements. In the Lemoore competition, a Navy employee helped craft both the performance work statement and the in-house proposal--a routine practice, according to the Navy.

"It has been a common practice in the Navy for employees to serve on both the PWS and [in-house] teams, given the limited pool of available personnel 'with the requisite knowledge or skills,' and we believe this is common practice at other agencies," the Navy said in its Dec. 17 appeal to GAO.

But in its Dec. 5 ruling, GAO held that using the same personnel to work on both teams creates a conflict of interest under the Federal Acquisition Regulation, since an employee could potentially skew the performance requirements to favor the in-house team.

William Roberts, an attorney for the protester in the Lemoore competition, a joint venture of the CH2M Hill and J.A. Jones companies, said the GAO decision merely holds job competitions to the same conflict-of-interest standards as other federal procurements.

"If you have a group that's doing one function, isolate them and put up a wall so they aren't talking to other people in an organization," he said. "Those things have been done for some time by other agencies. It took GAO to point that out to the Navy."

GAO also criticized the Navy for allowing a private sector consultant to work on both the performance work statement and the in-house team, a judgment that is affecting job competitions outside the military. As civilian agencies enlist private consultants to help them comply with President Bush's competitive sourcing initiative, some are awarding contracts to multiple consultants to avoid the appearance of conflicts of interests.

"It's impacted my industry severely from the standpoint that the clients are very concerned about the appearance issue," said Dale Warden, president of Warden Associates Inc., a Springfield, Va.-based A-76 consulting firm.

At the Interior Department, which is still negotiating with consultants to assist its A-76 program, officials are requiring prospective consultants to build a "firewall" between employees working on the PWS and those assisting the in-house team.

"It has introduced an appropriate kind of caution as to how the performance work statement, management plan, and source selection process are structured and undertaken,"said Michael Del-Colle, director of Interior's competitive sourcing office. "Common sense says maybe the same person can't play on these things."

OMB Director Mitch Daniels shared his thoughts on the job competition ritual in a speech to the U.S. Chamber of Commerce on Wednesday.

"It's a hideously complicated and obstructive process that makes these things sometimes more trouble than they're worth," he said. "We need to rewrite it or modify it substantially."