This procurement protest has brought all the wigs into the courtroom
"This is only the fifth en banque review by the Federal Circuit Court of Appeals on a government contracts issue since 2000," said Dan Ramish.
A seemingly ordinary award protest has blown up. For only the fifth time in the last 25 years, all of the judges of the Court of Appeals for the Federal Circuit will hear the case. That’s known as an en banc hearing. To explain how a subcontracting dispute got to this level, Haynes Boone procurement attorney Dan Ramish joined the Federal Drive with Tom Temin.
Interview transcript:
Tom Temin: And this is, I guess if you’re a lawyer, the case that keeps on giving, isn’t it?
Dan Ramish: It absolutely is, Tom. This one’s been going on for quite some time now and will get a full court review at the Federal Circuit, which, as you mentioned, this is the only the fifth en banc review by the Federal Circuit Court of Appeals on a government contracts issue since 2000. And the last one was in 2012.
Tom Temin: Right.
Dan Ramish: So this is a big deal.
Tom Temin: They must see then the judges that there’s an important point of law here that needs to be decided. And is it the case, the merits itself, or is it a jurisdictional hearing that they’re going to be having?
Dan Ramish: So it’s a matter of statutory standing. The full court is going to decide who constitutes an interested party to bring a bid protest at the Court of Federal Claims.
Tom Temin: Right. Because the plaintiff in this case is a would-be subcontractor to a prime for the National Geospatial-Intelligence Agency. And so since they weren’t selected as a sub in the first place, the question is do they have standing to bring a protest? Is that the essential case?
Dan Ramish: That’s exactly right, Tim. So Percipient.ai is a commercial provider of computer vision software, and they acknowledged that they couldn’t have bid on the original NGIA procurement. But they wanted to provide the computer vision software as a subcontractor to CACI. And they pitched their software to the agency and to the prime contractor, and they felt like they didn’t get a fair hearing for their software. And so there’s a statutory preference for commercial products and commercial services. And Percipient brought a protest at the Court of Federal Claims saying, ‘Hey, the agency didn’t follow the statutory preference.’
Tom Temin: Right. CACI, instead of selecting Percipient as a sub, went ahead and developed its own vision software, which would not be commercial because it would be custom developed for NGA. And that’s kind of the crux. Percipient thought it should have gotten that deal with CACI.
Dan Ramish: That’s right. And so the Court of Federal Claims in initially reviewing the protest actually kicked it out for a different reason. They said, ‘Well, this runs afoul of the task order protest bar under FASA, which says that only protests over 25 million for DoD or 10 million for civilian agencies can be heard.’ And that GAO has jurisdiction, not the Court of Federal Claims over those higher dollar task order protests. Court of Federal Claims judge said this is really a task order protest and found that it didn’t have jurisdiction for that reason, which teed up an appeal to the Federal Circuit.
Tom Temin: In other words, it wasn’t a full and open competition from a greenfield procurement, but a task order under an existing IDIQ that the NGA had?
Dan Ramish: That’s right. So the award to CACI was an IDIQ contract and the quarterfinal claim said, ‘Well, this is in connection with the award of a task order.’
Tom Temin: And by the way, do we know whether there was anyone besides Percipient that could have had that vision software that CACI ultimately chose to develop for itself?
Dan Ramish: There wasn’t anyone else that was involved in the protest besides CACI and Percipient.
Tom Temin: OK, so the NGA then just said, Aere’s the task order to CACI and then decided not to look further about the software component because CACI would be the deliverer of whatever final capabilities NGA wanted.
Dan Ramish: Yes, that’s right.
Tom Temin: How long is this all been going on?
Dan Ramish: I don’t have the date in front of me of the original protest, the Court of Federal Claims. But the earlier panel decision was in mid-2024. So the court of claims protest was earlier than that, the number of months maybe into last year.
Tom Temin: Sure. We’re speaking with Dan Ramish. He is a procurement attorney with Haynes Boone. And what’s really at stake here? So the en banc is a whole bunch of judges. In other words, it’s almost like a jury of judges that’s going to hear this.
Dan Ramish: Yes. So the full court, it’ll be at least the 12 active judges and then potentially Judge Clevenger, who was a senior judge who was on the original panel, will hear the case. And what they’re deciding is what it takes to be an interested party to protest at the Court of Federal Claims. So under the Competition and Contracting Act, which governs GAO bid protests, there’s a definition for interested party and the ADRA, which governs Court of Federal Claims bid protest jurisdiction that created the jurisdiction.
Tom Temin: ADRA stands for?
Dan Ramish: The Administrative Dispute Resolution Act.
Tom Temin: OK. Got it.
Dan Ramish: That used the term interested party but didn’t define it. And so there was a previous court decision, the American Federation of Government Employees that adopted the definition from the Competition Contracting Act. But the original panel decision for Percipient, which was a split decision I should mention the majority, two judges voted in favor of the decision. The majority said that using that Competition and Contracting Act or CICA definition wasn’t appropriate in these circumstances.
Tom Temin: OK. So Percipient did have discussions with CAC, correct? I mean, there’s a record of discussions and negotiations as to whether they would become the subcontractor. They weren’t just watching this happen and didn’t try to get in on it.
Dan Ramish: Yes. At this stage, Percipient has alleged that they approached both the agency and CACI about the use of the software.
Tom Temin: Well, that’s easier to prove that they did or didn’t. There’s meetings and notes and so forth.
Dan Ramish: Yes. That’s right. So that will come later if the full court determines that Percipient is an interested party.
Tom Temin: The fact of them having had those meetings to try to get in on it, wouldn’t that help make them an interested party?
Dan Ramish: Well, so the test that the panel majority proposed was that where a party is an offer of commercial product or commercial service that has a substantial chance of being acquired to meet the needs of the agency. They should be an interested party. But there’s an additional wrinkle to this, which is that there are different types of protests that can be brought at the Court of Federal Claims. So the reason the panel decision found that a new test was appropriate was because it was a type of protest that can’t be brought at GAO. And so they said, ‘Well, it’s not appropriate to use the GAO definition.’ So the Court of Federal Claims could hear protests that challenge a solicitation by a federal agency, a proposed award or award of a contract. And then there’s this other category of alleged violations of statute or regulation in connection with the procurement or proposed procurement. And the panel said this last category or sometimes call it the last prong or third prong protests at the Court of Federal Claims are protests that couldn’t be brought at GAO. So it’s not really appropriate. And it wasn’t the intention of protest that only allege that type of violation and not a solicitation or contract violation to be governed by this interested party standard.
Tom Temin: So this en banc hearing could result in some precedential rulings then?
Dan Ramish: Yes. So the en banc court is not bound by prior precedent. In fact, they can overturn prior precedent. And so they will establish what the rule is for who is an interested party and can bring a bid protest to the court.
Tom Temin: And suppose Percipient loses and they’re determined not to be an interested party. Do they have any further appeal at that point?
Dan Ramish: In theory, they could appeal to the Supreme Court, but it’s extremely rare for the Supreme Court to grant surgery for government contracts issues. So in almost all cases, the federal circuit is the end of the road for government contract litigators.
Tom Temin: Sure. And if the en banc decides that they do have standing, then who decides? I guess redecides the issue of whether the NGA was correct in not having them as a commercial product.
Dan Ramish: So the way this would work, the panel considered other issues relating to whether the court could hear the case as well. Most significantly, whether the FASA task order protest bar prevented the protest and the panel had decided that the FASA bar did not apply and that the court otherwise had jurisdiction to hear the case. So first, if the en banc court decides for Percipient that they have standing, it would actually go back to the panel most likely to decide the other issues. The panel would be likely to hold as they did before that the trial court had the jurisdiction to hear the case and decided the other issues in Percipient’s favor. At that point, it would go all the way back to the trial court to hear the merits.
Tom Temin: Percipient have any chance of getting a contract to provide vision software to CACI and therefore to NGA. Is that still a possibility if they were found to have standing?
Dan Ramish: If they have standing, and if the court has jurisdiction, then they could ultimately receive an award. It’ll be interesting to see where the full court comes out on this. And I think there was a lot of criticism of the prior panel decision. And so I think many commentators are expecting that the full court will go in a different direction or it’s anybody’s guess.
Tom Temin: And does it have to be unanimous or it can just be a majority of the judges?
Dan Ramish: So the majority decides.
Tom Temin: Well, we’re going to keep an eye on it. We know you will. Interesting case.
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Tom Temin
Tom Temin is host of the Federal Drive and has been providing insight on federal technology and management issues for more than 30 years.
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