The U.S. Court of Appeals for the Federal Circuit narrowly interprets the Federal Acquisition Streamlining Act’s bar on task order protests at the U.S. Court of Federal Claims, expanding the court’s bid protest jurisdiction.

TAKEAWAYS

• The Federal Circuit held that FASA’s jurisdictional bar of task order protests at COFC only relates to the award or proposed award of task orders and does not apply to alleged violations of statutes or regulations in connection with task orders.
• The appeals court reiterated that COFC’s bid protest jurisdiction is not limited to the award of a contract but extends to all stages of a procurement.
• It also held that to have standing in a protest, an interested party need not be an actual or prospective offeror where its bid protest does not challenge a solicitation or award of a contract.

On June 7, 2024, the U.S. Court of Appeals for the Federal Circuit issued its decision in Percipient.ai v. United States. The case was closely watched by the government contracting community because the Federal Circuit’s decision was poised to have significant impact on the bid protest jurisdiction of the U.S. Court of Federal Claims (COFC).

Percipient.ai (Percipient) filed a bid protest at COFC, arguing that the National Geospatial Agency (NGA) and its prime contractor, CACI, Inc. – Federal, violated procurement laws and regulations by refusing to meaningfully consider Percipient’s commercial offering to satisfy the agency’s needs for a computer vision (CV) system. Title 10, Section 3453 of the United States Code requires that agency heads give preference to commercial products and services “to the maximum extent practicable” in government acquisitions. CACI received an indefinite-delivery, indefinite-quantity (IDIQ) contract along with a task order under the IDIQ to provide, among other things, a CV system. Percipient alleged that its commercial platform, Mirage, is capable of meeting NGA’s needs for a CV system, but the agency and CACI failed to meaningfully consider Mirage to meet the task order’s requirements. COFC dismissed Percipient’s protest, holding that the Federal Acquisition Streamlining Act of 1994 (FASA), at 10 U.S.C § 3406(f)(1), bars COFC’s jurisdiction to hear task order protests.

Percipient appealed COFC’s decision. The Federal Circuit narrowly interpreted the text of FASA, which bars COFC’s jurisdiction over protests “in connection with the issuance or proposed issuance of a task or delivery order.” In reversing the dismissal, the Federal Circuit held that FASA’s jurisdictional bar did not apply to Percipient’s protest because Percipient was not challenging the award or proposed award of the task order to CACI, but NGA’s administration of the task order and CACI’s performance of it.

The Federal Circuit also held that Percipient’s protest was within the scope of COFC’s protest jurisdiction under the Tucker Act, at 28 U.S.C. § 1491(b)(1). The Tucker Act gives jurisdiction to COFC over three types of protests: (1) protests “objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract”; (2) protests objecting “to a proposed award or the award of a contract”; and (3) protests objecting to “any alleged violation of statute or regulation in connection with a procurement or proposed procurement.” The Federal Circuit held that Percipient’s protest fell within the third prong of the Tucket Act, because it objected to NGA’s and CACI’s alleged violation of a statute requiring preference for commercial products and services in the performance of CACI’s task order. In doing so, the Federal Circuit rejected the government’s argument that the term “procurement or proposed procurement” in the Tucker Act should be interpreted narrowly to apply only to decisions affecting the award of a contract. The Federal Circuit instead held that the plain meaning of the term includes all stages of procurements, beginning with the process of determining the need for property or services and ending with contract completion and closeout.

Finally, the Federal Circuit held that Percipient had standing to bring the protest even though it was admittedly not an actual or prospective offeror. Typically, to have standing in a bid protest, a party must be an “interested party” (i.e., it must be an actual or prospective offeror with a direct economic interest in the outcome of the protest). The Federal Circuit, however, held that a protester need not be an actual or prospective offeror to have standing to bringing a bid protest under the third prong of the Tucker Act, though it still needs to have a direct economic interest in the outcome of the protest. The Court found that Percipient had a direct economic interest in the outcome of the protest because it offers a commercial platform that NGA and CACI would have likely purchased absent the violation of 10 U.S.C. § 3453 alleged by Percipient.

While the practical effect of this landmark case remains to be seen, the Federal Circuit’s decision is important for three reasons: (1) it narrows the FASA bar to COFC’s task order protest jurisdiction; (2) it expands COFC’s protest jurisdiction under the Tucker Act; and (3) it makes it easier for some potential protesters to meet the test for standing as an interested party. Thus, the number and types of bid protests heard by COFC may increase.

How COFC resolves the merits of this protest on remand could further impact government contracting for businesses seeking to offer commercial items or services to the government through either a prime contract or a subcontract. If Percipient succeeds in forcing the government and CACI to meaningfully consider its Mirage system through a bid protest, other businesses with commercial offerings may follow suit.

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