107 replies to this topic

[Vern Edwards]

The Office of Management and Budget has directed federal agencies to ignore two GAO decisions about priorities among small business programs. OMB is taking the stance, for now, that there is parity among HUBZone, 8(a), and SDVOSB. GAO had ruled that the HUBZone program takes priority.

You can find the OMB memo here: http://www.whitehous...2009/m09-23.pdf.

This was the right thing for OMB to do. Now they need to tell agencies to ignore the GAO decision applying the rule of two to task and delivery order competitions.

[bob7947]

Here is the information I posted to the Wifcon Blog on Sunday morning.  It provides access to the decisions and memo for those interested.

Decisions & OMB memo.

[Desparado]

I see on the WIFCON site this morning that GAO is standing firm on its original position.  I guess everyone hates to admit when they've made a mistake.

[Don Acquisition]

Desparado,

What mistake do you think the GAO made?

[Vern Edwards]

GAO has read the statutes literally, and their interpretation based on their reading might be correct. The problem is that Congress gave SBA the authority to promulgate regulations and promulgated its regulations in accordance with the the Administrative Procedures Act. The question is whether CICA gives GAO authority to overrule a properly promulgated regulation. I don't think so. I think that only a federal judge can do that. OMB is doing the right thing by telling everyone to ignore GAO until OMB can sort things out. What if a CO complies with a statute that GAO thinks violates the Constitution? Can GAO overrule the statute? It has overstepped its authority.

[Don Acquisition]

Vern,

Part of the reconsideration states the following:

Quote

...while an agency?s interpretation of a statute it is responsible for implementing is entitled to substantial deference--and, if reasonable, should be upheld--an agency interpretation that is unreasonable is not entitled to deference. Id. (citing Blue Rock Structures, Inc., B‑293134, Feb. 6, 2004, 2004 CPD para. 63 at 8).

Are you saying that GAO should defer to an implementing agency's interpretation of a statute even if that interpretation is unreasonable?

[Iron Man]

Congress gave SBA authority to promulgate regulations.  However, no agency has the authority to promulgate regulations inconsistent with a statute it is trying to implement.  When statute and regulation conflict, the statute controls, not the regulation.  GAO has not overruled anything as it is not a judicial body and only offers nonbinding legal opinions (albeit opinions that carry a lot of weight).  GAO has issued an opinion that, in this case, the regulation does not accurately implement the language of the statute and, therefore, should not be followed.  In other words, GAO is recommending that the agency do what it already has the authority to do, ignore a conflicting regulation and follow the statute.  If the Agency disagrees with GAO?s decision, they can refuse to follow the opinion and notify Congress of its refusal.  If Congress really intends for their to be parity between the socio-economic programs, they shouldn?t have a problem with the agency?s decision and may even pass legislation clarifying that point.  People may disagree with GAO?s legal interpretation of the statute and regulation, but I don?t see how it?s an authority issue.

[Vern Edwards]

It is an authority issue. Nothing in the protest statute authorizes the GAO to sustain a protest because it does not agree with a regulation promulgated by an agency authorized by Congress to implement a statute. The SBA's regulation was promulgated in accordance with the Administrative Procedures Act. It reflects that agency's interpretation of a statute over which it has executive authority. The GAO had no authority under CICA to sustain the protest because it disagreed with SBA's interpretation of the statute. GAO should have denied the protest and then written to the Administrator of the SBA to offer its opinion about the validity of its regulation.

[ALAL]

Mr. Edwards--

I think you are technically correct that GAO does not have authority to "sustain a protest because it does not agree with a regulation promulgated by an agency authorized by Congress to implement a statute."

However, 31 USC 3554(b)(1) does give GAO authority to determine whether a solicitation or contract action "complies with STATUTE and regulation" (emphasis added).  In this case, GAO concluded that the protested action did not comply with statute, regardless of whether it complied with the SBA regulations.

That is something the GAO has authority to do.

[Vern Edwards]

The protest in International Program Group was based upon a violation of FAR 19.1305, which says that HUBZone set-asides "shall" be made if there are two or more capable and willing HUBZone small businesses. But FAR says "may" with respect to SDVOSB set-asides and sole source awards. Under FAR, the HUBZone program takes priority. It does not appear that the protester was challenging the SBA parity policy.

Here is what GAO said:

Quote

With regard to the HUBZone program, the pertinent statutory provision states that, ?[n]otwithstanding any other provision of law,?

a contract opportunity shall be awarded pursuant to this section on the basis of competition restricted to HUBZone small business concerns if the contracting officer has a reasonable expectation that not less than 2 qualified HUBZone small business concerns will submit offers and that the award can be made at a fair market price.

15 U.S.C. ? 657a(b)(2)(B) (2006) (emphasis added). This provision is implemented in Federal Acquisition Regulation (FAR) Part 19--Small Business Programs. Mirroring the statutory language, the applicable FAR provision states that a contracting officer ?shall set aside acquisitions exceeding the simplified acquisition threshold for competition restricted to HUBZone small business concerns,? FAR ? 19.305(a) (emphasis added), when the contracting officer has a reasonable expectation that offers will be received from two or more HUBZone small business concerns and award will be made at a fair market price. FAR ? 19.1305(b). The FAR also provides that a contracting officer may, under certain circumstances, award contracts to HUBZone small business concerns on a sole-source basis, FAR ? 19.306(a), but that the contracting officer ?shall consider HUBZone set-asides before considering HUBZone sole source awards.? FAR ? 19.1305(a).

Why did GAO resort to an analysis of the statute? Why did it contact the SBA and get into the parity issue? It does not appear that the agency relied upon the SBA's regs and the parity policy. Did the agency raise the issue in its defense against the protest? GAO does not say that they did. Thus, GAO could have sustained the protest based on a violation of FAR 19.1305, without any mention of the HUBZone statute and SBA's parity stance. Was GAO looking for an excuse to challenge the SBA parity policy?

[Vern Edwards]

ALAL:

I think that when deciding whether an agency conducted its procurement in accordance with statute and regulation, GAO must consider the agency's compliance with statute in light of the implementing regulations. COs do not refer to the United States Code when planning a procurement, they refer to the FAR and other implementing regulations. The GAO should not use its protest authority to challenge implementing regulations.

The Administrative Procedures Act establishes the rules for promulgating regulations. One of those rules is Congressional review. According to 5 USC 801, which says, in part:

Quote

(a)(1)(A) Before a rule can take effect, the Federal agency
promulgating such rule shall submit to each House of the Congress and to
the Comptroller General a report containing--
        (i) a copy of the rule;
        (ii) a concise general statement relating to the rule, including
    whether it is a major rule; and
        (iii) the proposed effective date of the rule.

    (B) On the date of the submission of the report under subparagraph
(A), the Federal agency promulgating the rule shall submit to the Comptroller General and make
available to each House of Congress--
        (i) a complete copy of the cost-benefit analysis of the rule, if
    any;
        (ii) the agency's actions relevant to sections 603, 604, 605,
    607, and 609;
        (iii) the agency's actions relevant to sections 202, 203, 204,
    and 205 of the Unfunded Mandates Reform Act of 1995; and
        (iv) any other relevant information or requirements under any
    other Act and any relevant Executive orders.

    ? Upon receipt of a report submitted under subparagraph (A), each
House shall provide copies of the report to the chairman and ranking
member of each standing committee with jurisdiction under the rules of
the House of Representatives or the Senate to report a bill to amend the
provision of law under which the rule is issued.
    (2)(A) The Comptroller General shall provide a report on each major
rule to the committees of jurisdiction in each House of the Congress by
the end of 15 calendar days after the submission or publication date as
provided in section 802(b)(2). The report of the Comptroller General
shall include an assessment of the agency's compliance with procedural
steps required by paragraph (1)(B).
    (B) Federal agencies shall cooperate with the Comptroller General by
providing information relevant to the Comptroller General's report under
subparagraph (A).

If we assume that SBA followed that procedure when it promulgated its regulations and Congress did not stop it, then why is GAO getting into it with the SBA over the parity policy, especially since it could have sustained the protests based on FAR alone.

[Iron Man]

GAO should certainly consider whether a CO followed a regulation.  And it may be true that few CO?s consult the US Code during an acquisition.  However, if a regulation is contrary to the statute, ignorance of the statute and following the regulation does not make the action legal.  The fact that a regulation was promulgated in accordance with the APA does not render it infallible.  The statute always controls and is not waived simply because a conflict is not immediately discovered and remedied during the regulatory approval process.

When there are conflicting regulations, as in this case, the proper legal approach is to consult the underlying statute(s) to determine whether the action was appropriate.  If GAO had sustained the protest strictly based on a violation of FAR 19.1305, without any mention of the underlying and statute and SBA's parity stance, folks would be skewering GAO for ?ignoring? SBA?s regulations that would support a different outcome.  I?m guessing GAO contacted SBA because it was aware that there are conflicting regulations, knew this decision would have larger implications, and wanted to let the reader know that such issues had been considered.  I submit it would have been irresponsible to render an opinion that implicitly rejects an SBA regulation without first offering SBA a chance to comment.

But ultimately, none of this goes to the issue of authority.  GAO believes an agency conducted a procurement contrary to statute (15 U.S.C. ? 657) and regulation (FAR 19.1305) and said so in an opinion.  As part of its analysis it noted there are conflicting regulations and stated it believes FAR 19.1305 more accurately reflects the intent of the statute.  That is fully within its authority.  GAO?s opinion does nothing, legally, to SBA?s regulation, and, if other agencies believe SBA is correct, they may continue to follow SBA?s reg, as OMB has advised.

[Don Acquisition]

Another interesting thing about the OMB memo is that it assumes that agencies have been following, and will now continue to follow, SBA's regulations regarding parity between the HUBZone and SDVOSB programs:

Quote

Pending the completion of the legal review of the GAO?s decisions by the Executive Branch, the SBA?s ?parity? regulations should not be disregarded by contracting officers, and Federal agencies should not, as a result of the GAO?s decisions, be compelled to prioritize HUBZone small businesses over 8(a) BD or SDVOSBs. Instead, until the legal review is completed, Federal agencies should continue to give active consideration to each small business program pursuant to their pre-existing contracting practices and ?parity? policies.

There is no acknowledgement that the FAR gives priority to HUBZone set-asides over SDVOSB set-asides and sole source actions.  This raises the question: If a contracting officer intended to ignore the HUBZone priority in the FAR, wouldn't they be required to obtain approval of a FAR deviation?

[Vern Edwards]

Iron Man:

You wrote:

Quote

However, if a regulation is contrary to the statute, ignorance of the statute and following the regulation does not make the action legal. The fact that a regulation was promulgated in accordance with the APA does not render it infallible. The statute always controls and is not waived simply because a conflict is not immediately discovered and remedied during the regulatory approval process.

I agree wholeheartedly, but I do not think that GAO has the authority under CICA to make that determination. That is a matter for judicial review under the APA. If a regulation implementing a statute is promulgated in accordance with established procedure and has been finalized, and if a CO complies with the regulation, then I believe that GAO must deny the protest. GAO should then notify the promulgating agency and the cognizant Congressional committee chair of its opinion.

The CO must comply with FAR. If there is a conflict between FAR and SBA regulations, that matter should be resolved at a level above the CO. In this case, I do not think that there is necessarily a conflict between FAR and the SBA regulations. The SBA regulations establish parity among the programs and leave choice to contracting agencies. If, in light of parity, agencies can decide which program to use, then I see no reason why the Secretary of Defense, the Administrator of NASA, and the Administrator of GSA cannot instruct their their contracting officers to give priority to HUBZone set-asides.

GAO picked a fight with the SBA about a regulation that had no bearing on the protest. The contracting officer failed to follow the FAR, and the protest should have been decided on that basis and that basis alone. There was no need for a statutory analysis.

GAO has engaged in entirely too much rulemaking, and I'm glad to see that OMB has stepped in.

[formerfed]

Just to add more fuel to the flame, GAO denied SBA's request for reconsideration:

http://www.gao.gov/d...pro/4010572.pdf

[Iron Man]

Vern Edwards, on Jul 16 2009, 02:36 PM, said:

I agree wholeheartedly, but I do not think that GAO has the authority under CICA to make that determination. That is a matter for judicial review under the APA.

I guess this is where we disagree.  I believe every agency has an obligation to ensure that it follows statutes first and regulations second.  It need not wait for a judge to strike down a regulation that is contrary to a statute before it refuses to follow the reg.  Therefore, DOD had the authority to ignore SBA and follow the FAR and the statute.  GAO opined that this is what the agency should have done and, in failing to do so, conducted a flawed procurement.

Vern Edwards, on Jul 16 2009, 02:36 PM, said:

The CO must comply with FAR. If there is a conflict between FAR and SBA regulations, that matter should be resolved at a level above the CO.

If the statute were silent on the matter or were ambiguous and either regulation were a reasonable interpretation, then I would agree with you, the matter would be susceptible to being resolved internally at a higher level within the Executive Branch.  However, if one regulation complies with the statute and one regulation is in conflict with the statute, there is nothing to be resolved.  The regulation that is in conflict with the statute is not valid.

Vern Edwards, on Jul 16 2009, 02:36 PM, said:

In this case, I do not think that there is necessarily a conflict between FAR and the SBA regulations. The SBA regulations establish parity among the programs and leave choice to contracting agencies. If, in light of parity, agencies can decide which program to use, then I see no reason why the Secretary of Defense, the Administrator of NASA, and the Administrator of GSA cannot instruct their their contracting officers to give priority to HUBZone set-asides.

You are assuming the SBA regulations are valid.  If the statute says that HUBZones shall be given priority over other concerns, what authority does the SBA have to say HUBZones are merely of equal status?

Vern Edwards, on Jul 16 2009, 02:36 PM, said:

If a regulation implementing a statute is promulgated in accordance with established procedure and has been finalized, and if a CO complies with the regulation, then I believe that GAO must deny the protest. GAO should then notify the promulgating agency and the cognizant Congressional committee chair of its opinion.

This seems to suggest that because the CO followed properly promulgated SBA regs, GAO should have denied the protest.

Vern Edwards, on Jul 16 2009, 02:36 PM, said:

The contracting officer failed to follow the FAR, and the protest should have been decided on that basis and that basis alone. There was no need for a statutory analysis.

Whereas this statement seems to suggest that GAO should have upheld the protest based on the CO's failure to follow the FAR.

If you only look at individual parts of the issue you can come to such different conclusions.  That is why GAO addressed both regulations and the statute in its decision.

[Vern Edwards]

Quote

I guess this is where we disagree. I believe every agency has an obligation to ensure that it follows statutes first and regulations second. It need not wait for a judge to strike down a regulation that is contrary to a statute before it refuses to follow the reg. Therefore, DOD had the authority to ignore SBA and follow the FAR and the statute.

That would lead to regulatory anarchy and would be contrary to the interest of sound and efficient governance. That's why we have a rulemaking process.

Quote

However, if one regulation complies with the statute and one regulation is in conflict with the statute, there is nothing to be resolved. The regulation that is in conflict with the statute is not valid.

Yes, but who gets to decide which complies and which conflicts? It's not always or even often clear that there is a conflict. We have a rulemaking process and judicial review, mandated by Congress, to resolve those matters. GAO has no role in the rulemaking process other than the one I quoted from statute in my earlier post. And I do not think that FAR 19.1305 necessarily conflicts with the SBA's regulations. I explained why I think that in an earlier post.

Quote

You are assuming the SBA regulations are valid. If the statute says that HUBZones shall be given priority over other concerns, what authority does the SBA have to say HUBZones are merely of equal status?

I assume no such thing. I know only that SBA has promulgated its rules in compliance with the APA. I may have an opinion about SBA's rule, but I have not said what my opinion is and my opinion does not matter. If anyone thinks that SBA's rule is contrary to statute they can challenge it in court as provided in the APA.

Quote

This seems to suggest that because the CO followed properly promulgated SBA regs, GAO should have denied the protest.

That's not my suggestion. I think that the CO violated FAR 19.1305 and that the GAO should have sustained the protest for that reason and that reason only, without saying anything about SBA's rule. In fact, it does not appear that the CO took SBA's rule into consideration in making the decision to award to a SDVOSB. The decision does not say that the agency invoked the parity rule in its defense.

Too often, the GAO has exceeded its authority when deciding protests. The Executive Branch should have resisted the GAO's rulemaking intrusions decades ago. Words cannot express how happy I am with OMB's course of action.

[Iron Man]

Vern Edwards, on Jul 16 2009, 04:38 PM, said:

That would lead to regulatory anarchy and would be contrary to the interest of sound and efficient governance. That's why we have a rulemaking process. ... It's not always or even often clear that there is a conflict. We have a rulemaking process and judicial review, mandated by Congress, to resolve those matters.

No, it does not lead to regulatory anarchy.  Here?s how it works.  For the purpose of this discussion, we can divide regulations into four categories.  Group 1 are regulations that clearly implement and comply with the language of a statute.  Group 2 are regulations that implement statutes that are unclear, and the regulation is a reasonable interpretation.  Group 3 are regulations that implement a statute that is unclear, and the regulation is a clearly unreasonable interpretation.  Group 4 are regulations that clearly conflict with the language of the statute.  

The vast majority of regulations fall within groups 1 and 2, i.e., they either clearly comply with the language of the statute, or there is an ambiguity but the agency?s interpretation is reasonable.  For Group 1 regulations, the matter is simple, follow the regulation.  For Group 2 regulations, you can rely on Supreme Court precedent such as Chevron, which says that if there is ambiguity, the interpretation of agency charged with issuing and implementing the regulation should be given wide deference and therefore followed.  If you can?t tell whether there is a conflict, i.e., you can see both sides of the argument, then the agency?s interpretation is not unreasonable and falls within Group 2.

What we are left with are a very small fraction of regulations that fall into Groups 3 and 4, i.e., regulations that are clearly unreasonable or that clearly conflict with statute.  Furthermore, some of these regulations only affect the general public and the agency that issue the regulation.  In such a case, the agency that implemented the conflicting regulation is not going to ?challenge? its own regulation (it would just change the reg if it wanted) and other agencies are not going to challeng it because the reg doesn?t affect them.  In this situation, the APA allows a member of the public with standing to challenge the regulation and have a judicial body overturn the regulation.  (Of course, the public can challenge regs in Group 1 and 2 also, but they will be unsuccessful.)  

Now we are left with an even smaller subset of regulations that are clearly unreasonable or clearly conflict with the statute and also affect other agencies.  In this case, the public could certainly challenge a regulation under the APA, but another agency cannot.  DOD is not going to sue the SBA under the APA.  What recourse is left for this minute fraction of regulations?  Certainly, it is politically wise to try to work it out within the Executive Branch.  However, in the meantime, each agency is still obligated to follow the language of the statute, not the regulation.

Sorry for the longwinded explanation, but as you can see we are only dealing with a very small subset of regulations and asking an agency to give priority to statutes over regulations will not cause ?regulatory anarchy?  because a genuine patent conflict is so rare.

Vern Edwards, on Jul 16 2009, 04:38 PM, said:

And I do not think that FAR 19.1305 necessarily conflicts with the SBA's regulations. I explained why I think that in an earlier post.

This issue is not just whether SBA regulations conflict with the FAR, but whether they conflict with that underlying statute.  Your interpretation only works if you apply SBA regulations first and then the FAR, i.e., SBA regs establish parity first and then the FAR can further restrict to HUBZones.  However, it is the statute that takes precedence and must be applied first, establishing priority for HUBZones.  Once HUBZone priority is established by the statute, SBA regulations have no where to fit in this scheme.  By trying to establish parity after the statute has given HUBZone's priority, the regs conflict with the statute.  If the the statute did not say "shall" I would agree with you that agencies could further refine the priorities.  But the statute makes HUBZone priority mandatory, and SBA's regs, no matter how promulgated, cannot preempt the statute.

Vern Edwards, on Jul 16 2009, 04:38 PM, said:

If anyone thinks that SBA's rule is contrary to statute they can challenge it in court as provided in the APA.

That is not true.  In order to challenge the SBA?s rule in court, you must have standing, i.e., you must be directly affected by the rule.  Furthermore, as noted above, an agency (or agency employee acting in his or her official capacity) that does not agree with the rule cannot challenge another agency under the APA.

Vern Edwards, on Jul 16 2009, 04:38 PM, said:

I think that the CO violated FAR 19.1305 and that the GAO should have sustained the protest for that reason and that reason only, without saying anything about SBA's rule. In fact, it does not appear that the CO took SBA's rule into consideration in making the decision to award to a SDVOSB. The decision does not say that the agency invoked the parity rule in its defense.

The agency may or may not have invoked the parity rule in its defense.  I don?t know.  But the SBA clearly raised the issue in its submissions and as part of the protest process.  If SBA thought this was a strictly FAR 19.1305 issue, it could have said so and declined comment on the case.  Once raised, however, it was appropriate for GAO to addresses it.  

Even if it wasn?t raised by SBA, I know of no rule that restricts GAO opinions only to the issues raised by the parties to the protest.  In fact, 31 USC 3554(b)(1) states,

?With respect to a solicitation for a contract, or a proposed
award or the award of a contract, protested under this subchapter, the
Comptroller General may determine whether the solicitation, proposed
award, or award complies with statute and regulation. If the Comptroller
General determines that the solicitation, proposed award, or award does
not comply with a statute or regulation, the Comptroller General shall
recommend that the Federal agency [recomplete, terminate the contract, etc.]?

It does not say the Comptroller General should determine who has raised the better argument.  Nor does it say the Comptroller General may only consider arguments raised by the parties.  If there is a relevant statute or regulation, GAO should consider it and render an opinion.

Finally, despite protestations to the contrary, GAO has not engaged in rulemaking.  No new rules or regulations have been made, and no rules or regulations have been repealed.  GAO?s opinion that the language of the statute takes precedence over the language of any conflicting regulations is established law and nothing new. GAO?s decision may have practical consequences with regard to how agencies conduct procurements, but then again that can be said about almost every GAO opinion.  

Vern Edwards, on Jul 16 2009, 04:38 PM, said:

Words cannot express how happy I am with OMB's course of action.

For purely selfish reasons, I?m happy with OMB?s course of action too.  I have no direct stake in the matter and think it makes for great drama.  I'm interested in how it will play out.

[Vern Edwards]

Iron Man:

Quote

Sorry for the longwinded explanation... .

No problem, but just to be clear, what you gave me was an explanation of your analysis and opinion. I welcome it, but I don't want other readers to take your explanation as an explanation of how the world really works.

Quote

For the purpose of this discussion, we can divide regulations into four categories. Group 1 are regulations that clearly implement and comply with the language of a statute. Group 2 are regulations that implement statutes that are unclear, and the regulation is a reasonable interpretation. Group 3 are regulations that implement a statute that is unclear, and the regulation is a clearly unreasonable interpretation. Group 4 are regulations that clearly conflict with the language of the statute.

The vast majority of regulations fall within groups 1 and 2... .

Well, that's a nice taxonomy. The problem is that what is clear implementation and compliance to you or me may not be so to someone else, in which case someone must decide. My point is that CICA does not authorize GAO to resolve such issues and to overrule an agency that has the authority to promulgate the regulation at issue. I want to make that clear: My issue is GAO's authority under CICA. I am not saying that I agree with SBA's interpretation of statute or its parity policy.

Quote

This issue is not just whether SBA regulations conflict with the FAR, but whether they conflict with that underlying statute.

That may be your issue, but it was not an issue raised by the protester in the International Program Group decision and it is not my issue. Nothing in the decision indicates that either the protester or the agency raised the issue of the SBA's parity rule. GAO went to SBA to seek its opinion on the case. Why, I do not know, because the protester accused the agency of violating FAR 19.1305. The fact that the SBA thought that there is parity among the programs should had no bearing and should have made no difference to the outcome of the decision. If I remember correctly, the FAR councils had announced that there were going to change FAR to bring it in line with the GAO's parity policy, but had not yet done so. GAO could have used the public comment period to raise the issue. Instead, it chose to consult SBA needlessly and insert a footnote in its decision that was irrelevant to the case as best we can tell from the text of the decision.

Nor is it my issue. It's true that i mentioned that I do not think that FAR necessarily conflicts with SBA regulations, but I do not think that was an issue in the case and I don't consider it an issue here. SBA's policy may or may not conflict with statute. (I have not said what I think in that regard.) My issue is whether GAO has the authority to decide that issue under its protest jurisdiction, and I say that they do not. Under its protest jurisdiction GAO has the authority to decide whether a procuring agency complied with statute and regulation. I say that in doing so, GAO must rely on the statutory interpretations of executive agencies that have the authority to make such rules. (The Court of Federal Claims, on the other hand, does not.)

Quote

QUOTE (Vern Edwards @ Jul 16 2009, 04:38 PM) If anyone thinks that SBA's rule is contrary to statute they can challenge it in court as provided in the APA.
That is not true. In order to challenge the SBA?s rule in court, you must have standing, i.e., you must be directly affected by the rule. Furthermore, as noted above, an agency (or agency employee acting in his or her official capacity) that does not agree with the rule cannot challenge another agency under the APA.

Read my statement again. I wrote "as provided in the APA." I typically don't make the kinds of dumb errors that you attribute to me.

Quote

The agency may or may not have invoked the parity rule in its defense. I don?t know. But the SBA clearly raised the issue in its submissions and as part of the protest process.

And why was SBA allowed to raise any issue? It does not appear from the decision that the protester challenged SBA's policy. The protester challenged the agency's failure to comply with FAR. GAO decided to go to SBA. I will wager that it already knew about SBA's parity rule and knew what SBA was going to say, and decided to seek SBA's opinion so it could inject its little footnote. GAO should decide protests based on issues raised by protesters and the agencies that conduct protested procurements.

Quote

Even if it wasn?t raised by SBA, I know of no rule that restricts GAO opinions only to the issues raised by the parties to the protest.

The protest statute says:

Quote

Under procedures prescribed under section 3555 of this title,
the Comptroller General shall decide a protest submitted to the
Comptroller General by an interested party.

The statute does not say that GAO can raise an issue sua sponte. It says that GAO shall decide "a protest submitted to" the CG. I say that means that it must decide the protest based on issue raised by the protester.

The issue is not whether GAO should consider a relevant statute. The issue is how GAO may interpret the statute under its protest authority. I say that if an executive agency charged by Congress with statutory implementation has interpreted the statute in duly promulgated regulations, then GAO must accept the agency's interpretation when deciding the protest, whether it agrees with the agency's interpretation or not. If it disagrees, it can raise the issue with the agency head, OMB, and with the appropriate congressional committees.

[Vern Edwards]

Iron Man:

I want add this. You wrote:

Quote

Finally, despite protestations to the contrary, GAO has not engaged in rulemaking. No new rules or regulations have been made, and no rules or regulations have been repealed.

Oh, please! GAO has engaged in de facto rulemaking for decades. Even the Court of Federal Claims thinks so. See, e.g., Judge Lettow's comment in Geo-Seis Helicopters, Inc. v. U.S., 77 Fed. Cl. 633 (Fed. Cl. 2007):

Quote

There is simply no basis in the FAR for the view that the Contracting Officer had discretion to render the ?late is late? rule a nullity. Although GAO decisions support the government's position as to the nunc pro tunc effect of post-hoc amendments, see supra at 642, those GAO precedents reflect ?one of those Comptroller-General-created rules that is not reflected in the FAR,? as conceded by Professor Nash, a harsh critic of the ?late is late? rule. Ralph C. Nash & John Cibinic, Late Final Proposal Revisions: The Final Straw!, Nash & Cibinic Report, Vol. 18, No. 4, ? 16 (1997).  Those GAO decisions are not persuasive and they will not be adopted.

In the cited article, Nash wrote:

Quote

The Contracting Officer could have solved the problem with a minimum of effort by extending the time for proposal submission. See Ivey Mechanical Co., Comp. Gen. Dec. B-272764, 96-2 CPD ? 83, permitting such an extension after the time had passed and Micromass, Inc., Comp. Gen. Dec. B-278869, 98-1 CPD ? 93, permitting an extension before the time had arrived. But we doubt if most COs know that an extension is possible, and the rule is one of those Comptroller General-created rules that is not reflected in the FAR.

The entire history of discussions in source selection is a history of GAO rulemaking. I would go as far as to say that most of the "rules" for the conduct of source selection under FAR Part 15 are GAO-made rules. See Nash, The Rules of the Competitive Negotiation Game: Who Makes Them?, 14 N&CR ? 48 (Sept. 2000). Consider, for example, the cost-realism rule, which did not exist in FAR until fairly recently. Here is Nash:

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In Postscript: Negotiation in a Competitive Situation, 13 N&CR ? 19, we reported our amazement at the way the Comptroller General had interpreted the new mandatory discussion rule in Federal Acquisition Regulation 15.306(d). It seemed to us that he had ignored the explicit language of the FAR, as well as the stated intent of its drafters, in concluding that the new FAR language was the same as the old language. We also found it remarkable that he seemed to ignore past Comptroller General decisions in deciding the MCR Federal, Inc., Comp. Gen. Dec. B-280969, 99-1 CPD ? 8 (1998), case. Our conclusion was that the Comptroller General appears to make up the rules of the competitive negotiation game on an ad hoc basis.

In retrospect, we shouldn't have been so surprised because this has been going on for quite awhile. We recently found a decision that lays out as clearly as possible the Comptroller General's rule that a cost realism analysis is mandatory when awarding a cost-reimbursement contract. This rule has now been inserted in FAR 15.404-1(d) as follows:

(2) Cost realism analyses shall be performed on cost-reimbursement contracts to determine the probable cost of performance for each offeror.
(i) The probable cost may differ from the proposed cost and should reflect the Government's best estimate of the cost of any contract that is most likely to result from the offeror's proposal. The probable cost shall be used for purposes of evaluation to determine the best value.
(ii) The probable cost is determined by adjusting each offeror's proposed cost, and fee when appropriate, to reflect any additions or reductions in cost elements to realistic levels based on the results of the cost realism analysis.

Before the FAR Part 15 rewrite in 1997, however, this mandatory rule was not in the FAR. Nonetheless, the Comptroller General imposed it on agencies. This was addressed explicitly in KPMG Peat Marwick, LLP, Comp. Gen. Dec. B-259479.2, 95-2 CPD ? 13, where the Comptroller General stated the rule as follows:

The agency must perform a cost realism analysis, however, whenever a cost reimbursement-type contract is contemplated. The basis for the cost realism analysis rule is that an offeror's estimated costs may not provide valid indications of the final and actual allowable costs that the government is required to pay. FAR ? 15.605(d); Tecom, Inc., B-257947, Nov. 29, 1994, 94-2 CPD ? 212. Consequently, a cost realism analysis must be performed to determine the extent to which an offeror's proposed costs represent what the contract should cost, assuming reasonable economy and efficiency. CACI, Inc.--Fed., 64 Comp. Gen. 71 (1984), 84-2 CPD ? 542. This requirement exists regardless of whether or not an agency is otherwise required to request cost and pricing data.

Please don't tell me that the GAO hasn't engaged in rulemaking through its protest decisions. There are too many examples to write about. Just study the history of its decisions about discussions in source selection. Start with what originating statute, PL 87-653, said about discussions, then follow the decisions. It's incredible!