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Washington, D.C.—The National Treasury Employees Union (NTEU) successfully challenged a decision by the Department of Energy (DOE) to contract work to a private company—the first win of its kind under revised federal contracting rules and an important victory in ensuring that federal employees are treated fairly.

NTEU President Colleen M. Kelley, who is leading the fight against the administration’s drive to contract out the jobs of thousands of federal workers, filed a “bid protest” with DOE to challenge its decision to award a headquarters logistics contract to a private sector company even though the federal employees’ bid for the work was lower. The agency tender official (ATO)—who developed the federal employees’ bid—also protested the decision.

Federal employees’ right to protest contracting out decisions within the agency was created by the 2003 revisions to Office of Management and Budget Circular A-76.

Kelley, who was designated by the affected employees as their legal agent, argued that the contractor’s higher-cost bid did not offer the “best value” to DOE and that the decision to award the contract was based on a previously undisclosed factor. A senior DOE procurement official sustained both of these aspects of the bid protests.

Specifically, he agreed with Kelley that there was no proof that the contractor’s higher-cost proposal provided any additional benefit to justify paying the additional cost. He also agreed that it was unfair to base the contract award on the average hourly rate of the workers, because the solicitation did not identify that as a relevant factor.

Kelley said the contractor’s bid, which was $2.6 million higher than the employees’ proposal, “clearly was not the ‘best value’ for DOE or taxpayers.” In addition, she said, it is “fundamentally unfair to base the performance decision on factors not disclosed in advance.”

The contract, which has been suspended in light of the protests, was for facility and building maintenance and management, transportation management, motor vehicle maintenance and logistics operations in Washington and suburban Maryland—all work currently being performed by DOE employees. They will continue to perform those functions while DOE considers an appropriate remedy for the faulty contract award. Kelley said that NTEU would aggressively seek to retain the work in the hands of DOE employees.

Even with this successful internal agency bid protest, however, Kelley pointed to a continuing and key unfairness in federal contracting rules in that they provide an avenue of review outside the agency to contractors only—an avenue the contractor in this matter may choose to pursue.

“This highlights a fundamental flaw in the bid protest process,” she said, “because private sector bidders are able to seek review from the Government Accountability Office (GAO) or the U.S. Court of Federal Claims. This one-sided process is a disservice to taxpayers, who are deprived of outside consideration of legitimate concerns raised by employees.” She said NTEU “will continue to urge Congress to correct this imbalance.”

NTEU is the largest independent federal union, representing some 150,000 employees in 30 agencies and departments.