SEC. 326. BID PROTESTS BY FEDERAL EMPLOYEES IN AC- TIONS UNDER OFFICE
OF MANAGEMENT AND BUDGET CIRCULAR A-76.

(a) TREATMENT OF AGENCY TENDER OFFICIAL AS INTERESTED PARTY.-Section
3551(2) of title 31, United States Code, is amended-

(1) by inserting "(A)" after "(2)"; and

(2) by adding at the end the following new sub- paragraph:

"(B) The term includes the official responsible for submitting the
Federal agency tender in a pub- lic-private competition conducted
under Office of Management and Budget Circular A-76 regarding an
activity or function of a Federal agency per- formed by more than 65
full-time equivalent employ- ees of the Federal agency.".

(b) FILING OF PROTEST ON BEHALF OF FEDERAL EMPLOYEES.-Section 3552 of
such title is amended-

(1) by inserting "(a)" before "A protest"; and 

(2) by adding at the end the following new sub-
section: 

"(b)(1) In the case of an agency tender official who is an interested
party under section 3551(2)(B) of this title, the official may file a
protest in connection with the public-private competition for which
the official is an in- terested party. At the request of a majority of
the employ- ees of the Federal agency who are engaged in the perform-
ance of the activity or function subject to such public-pri- vate
competition, the official shall file a protest in connec- tion with
such public-private competition unless the offi- cial determines that
there is no reasonable basis for the protest.

"(2) The determination of an agency tender official under paragraph
(1) whether or not to file a protest is not subject to administrative
or judicial review. An agency tender official shall provide written
notification to Con- gress whenever the official makes a determination
under paragraph (1) that there is no reasonable basis for a pro-
test.".

(c) INTERVENTION IN PROTEST.-Section 3553 of such title is amended by
adding at the end the following new subsection:

"(g) If an interested party files a protest in connec- tion with a
public-private competition described in section 3551(2)(B) of this
title, a person representing a majority of the employees of the
Federal agency who are engaged in the performance of the activity or
function subject to the public-private competition may intervene in
protest.".

(d) APPLICABILITY.-The amendments made by this section shall apply to
protests filed under subchapter V of chapter 35 of title 31, United
States Code, that relate to studies initiated under Office of
Management and Budget Circular A-76 on or after the end of the 90-day
period beginning on the date of the enactment of this Act.

(e) RULE OF CONSTRUCTION.-The amendments made by this section shall
not be construed to authorize the use of a protest under subchapter V
of chapter 35 of title 31, United States Code, with regard to a
decision made by an agency tender official.

SEC. 327. LIMITATIONS ON CONVERSION OF WORK PER- FORMED BY DEPARTMENT
OF DEFENSE CI- VILIAN EMPLOYEES TO CONTRACTOR PER- FORMANCE.

(a) REQUIRED COST-SAVINGS THRESHOLD FOR CON- VERSION.-If a
public-private competition conducted under the Office of Management
and Budget Circular A- 76 dated May 29, 2003 (68 Fed. Reg. 32134),
regarding an activity or function performed by civilian employees of
the Department of Defense is required to include a formal comparison
of the cost of civilian employee performance of the activity or
function with the cost of contractor per- formance, the Secretary of
Defense shall maintain the con- tinued performance of the activity or
function by civilian employees unless the competitive sourcing
official deter- mines that, over all performance periods stated in the
so- licitation of offers for performance of the activity or func-
tion, the cost of performance of the activity or function by a
contractor would be less costly to the Department of Defense by an
amount that equals or exceeds the lesser of the following:

(1) $10,000,000.

(2) 10 percent of the most efficient organiza- tion's
personnel-related costs for performance of the activity or function by
civilian employees.

(b) PROHIBITION ON MODIFICATION OF FUNCTIONS TO PERMIT STREAMLINED
A-76 STUDY.-The Secretary of Defense shall ensure that no
organization, function, or activity of the Department of Defense is
consolidated, re- structured, reengineered, or otherwise modified in
any way for the purpose of exempting any public-private competi- tion
conducted under the Office of Management and Budget Circular A-76
dated May 29, 2003 (68 Fed. Reg. 32134), regarding a commercial or
industrial type func- tion of the Department of Defense from the
requirement to formally compare, in accordance with such Circular, the
cost of civilian employee performance of the function with the cost of
contractor performance. 

(c) EXCEPTION.-Subsection (a) does not apply in the case of a
public-private competition conducted as part of the best-value source
selection pilot program authorized by section 336 of the National
Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136; 10
U.S.C. 2461 note).

SEC. 328. COMPETITIVE SOURCING REPORTING REQUIRE- MENT.

Not later than February 1, 2005, the Inspector Gen- eral of the
Department of Defense shall submit to Con- gress a report addressing
whether the Department of Defense-

(1) employs a sufficient number of adequately trained civilian
employees-

(A) to conduct satisfactorily, taking into account equity, efficiency
and expeditiousness, all of the public-private competitions that are
scheduled to be undertaken by the Department of Defense during the
next fiscal year (includ- ing a sufficient number of employees to
formu- late satisfactorily the performance work state- ments and most
efficient organization plans for the purposes of such competitions);
and

(B) to administer any resulting contracts; and

(2) has implemented a comprehensive and reli- able system to track and
assess the cost and quality of the performance of functions of the
Department of Defense by service contractors.