More opportunities for government contractors, thanks to court decision
A recent U.S. Court of Federal Claims verdict could limit procurement options for federal agencies. At the same time, the decision could yield expanded opportunities for contractors to bid on federal government procurement projects.
“The May 2 decision by the U.S. Court of Federal Claims broke new ground in two areas,” said Thomas Coulter, who heads the Government Contracts practice area team for the Richmond, Va.-based LeClairRyan law firm. He represented two software vendors that claimed they were improperly denied the right to compete for a sizable project under federal procurement laws.
“This is the first time that the right of contractors to challenge the federal government’s pre-procurement decisions has been recognized in a situation where the government didn’t issue a procurement vehicle,” Coulter said. “Equally important, it places a check on the government’s ability to use a private party for procurement decisions in an attempt to eliminate the protection of procurement laws and protest rights.”
The controversy began when the plaintiffs in the suit, computer software firms Fairfax, Va.-based STR LLC and Reston, Va.-
based Distributed Solutions Inc., submitted bids in 2005 in
in connection with a Joint Acquisition and Assistance Management System (JAAMS) program that was being
developed by the U.S. Agency for International Development and the U.S. Department of State. Designed to coordinate dispersed acquisition and assistance functions in more than 250 missions and posts around the world, the 2005 business opportunity was said to be worth about $10 million, according to court filings.
Traditionally, the federal agencies would assess contractor proposals and make a so-called direct decision about awarding the procurement contract to one or more firms, said Coulter.
“But in a stunning reversal of policy, the agencies decided to forego the direct procurement process and instead handed off the management of the procurement process to SRA International, a technology and consulting company in Fairfax that also provided software contracting services for federal agencies,” Coulter said. “SRA recommended itself as the sole provider for the JAAMS software, and when the plaintiffs protested, the federal agencies claimed that the firms had no bid protest rights since a third-party, non-governmental agency had handled the procurement process. The court agreed with the core of our argument, which was that the federal agencies were remiss in changing from a direct, federal procurement to one conducted by a private party, without providing any reason for doing so.”
The underlying project was completed long before the courts resolved the issue, but the plaintiffs were awarded the right to recover their proposal preparation costs, according to Coulter.
“Since the Federal Circuit’s ruling in this case establishing jurisdiction for pre-procurement challenges, more than 20 other contractors have filed similar pre-procurement decision appeals,” Coulter said. “My clients were concerned that the government’s use of a third party for procurement would become a common practice, and that they and other contractors would miss out on more opportunities issued under the protection of the federal procurement laws and regulations. We are all pleased that this important issue has been resolved in a way that protects contractor procurement rights.”
Impact on state government procurements
The May 2 decision will probably not influence state procurement actions, Coulter said. He told Govpro: “The federal decision is dependent upon the particular jurisdictional grant in the Tucker Act, which gives the Court of Federal Claims the right to review pre-procurement decisions in connection with a procurement or proposed procurement. Unless a state offered those same bid protest rights, the decision would have no impact on that state’s bid protest rights. I suspect most states have a more narrow grant than the federal system.”
