OMB tweaks A-76 to clarify rights for FAIR Act challenges

The Office of Management and Budget is tweaking Circular A-76, the government's manual for letting companies bid on federal jobs, to clarify the rights of groups to challenge whether jobs are "commercial in nature," and therefore eligible for outsourcing.

In a Federal Register notice to be published Friday, OMB will clarify that groups can challenge any agency decision to designate federal work as "commercial" or "inherently governmental," under the 1998 Federal Activities Inventory Reform (FAIR) Act. The FAIR Act requires agencies to complete annual inventories of jobs that could be performed by the private sector. Government workers, unions, contractors and other interested parties can challenge job classifications, and can file appeals if they lose their initial challenges.

OMB's notice, a copy of which was obtained by Government Executive, revises wording in Circular A-76 that implied groups could only challenge the designation of work that had been changed from the previous year. Federal unions have argued this wording narrowed their FAIR Act challenge rights in separate lawsuits that allege the revised A-76 is illegal.

But in the notice, OMB said it did not intend to limit FAIR Act challenges in the revised A-76, which was issued May 29. "Notwithstanding the wording . . . OMB did not intend to impose such a limitation. Instead, OMB intended to continue to provide that interested parties may submit challenges to an activity's classification as commercial or as inherently governmental," stated the notice.

OMB's move won praise from Colleen Kelley, president of the National Treasury Employees Union, which filed the first lawsuit against the revised A-76. "This is very, very good news and I think it's a confirmation of what NTEU maintained in the lawsuit," she said.

"It's definitely a step in the right direction," added Martin Cohen, counsel with the American Federation of Government Employees, which also has challenged A-76 in court.

By issuing its notice now, OMB will allow groups to challenge the full spectrum of activities on agency FAIR Act lists for fiscal 2003, which have not yet been released by the budget office. "The good news is [OMB] will make the technical correction before anyone is harmed by being denied the right to challenge," said Kelley.

Despite OMB's move, both NTEU and AFGE will continue their lawsuits, which also allege the revised A-76 illegally narrows the definition of "inherently governmental" work, exposing more federal workers to possible outsourcing.

"If they want to make technical corrections to address those issues too, that would be very good news and would resolve all these issues, but absent them doing that, our lawsuit will stay in place," said Kelley.

Federal procurement chief Angela Styles has said OMB actually tried to expand FAIR Act challenge rights in the revised circular, by allowing groups to challenge designations using "reason code A," where activities are classified as "commercial" but exempted from possible competition.

"There's no intent to only allow people to challenge something that's reclassified after one year," she told reporters on June 24. "The wording, I admit, is a little bit awkward, but the process itself is really meant to open it up to allow people to challenge any one that they want to any year, and to challenge inherently governmental, commercial or even 'reason code A' designations," Styles said.

OMB told agencies about the change to A-76 in an August 12 memorandum from OMB Director Joshua Bolten.