Chapter 9

Federal Litigation Suing the Federal Government

Whoever came up with the expression “don’t make a federal case out of it” knew how hard it is to sue the federal government. Anybody who wants to sue the federal government has to satisfy a number of complex requirements. If you were suing someone in state court, the case would be much different and not nearly as complex. It’s much easier to have your case heard there.

The complexity of the process is apparently what the founding fathers wanted. When they wrote the Constitution, the founding fathers could have made litigation very simple. They could have let anybody sue everybody in any federal court, for any reason, to get whatever help the court thought would be fair.

But the founding fathers did not take the easy way out. They made federal courts into “courts of limited jurisdiction.” So, federal courts are available to those litigants who can “make a federal case out of it.”

Government vendors are no different than other litigants. If a vendor wants to sue the government in any procurement forum—through the U.S. Court of Federal Claims (COFC), Government Accountability Office (GAO), or a board of contract appeals (BCA)—it must meet these complex requirements. Whether it’s a disappointed bidder trying to file a protest or a government contractor trying to file a claim, a number of legal hoops must be jumped through before bringing a case to suit.

This chapter discusses the minimum requirements for any lawsuit against the federal government. It lays the groundwork for understanding the two typical procurement lawsuits—protests and claims—which are discussed in chapters 10 and 11. It also creates the foundation for chapter 12 (Costs of Litigation), which explains the availability of attorneys’ fees and costs available in protests and claims.

To make it easier to understand the complexity of lawsuits against the federal government, this chapter moves in a three-step process—from the general, to the specific, to the really specific. The first section (Any Lawsuit) discusses “the general”—what is involved in any lawsuit at any level of government—federal, state, or local. Examples of these types of lawsuits include an injured pedestrian versus a negligent driver, an irate neighbor vs. another irate neighbor. You might be surprised by how little the general public knows about a real lawsuit because much of what we think of as “legal” is actually Hollywood fiction. In describing “any lawsuit,” we discuss the four elements of any lawsuit—(1) what branch of government gets involved (typically, the judicial branch); (2) the jurisdiction of the court; (3) the applicable law (federal, state, or local); and (4) the help or relief the court can offer.

The second section (Any Lawsuit against the Federal Government) discusses “the specific”—what is involved in a typical lawsuit against the federal government. As you will see, a lawsuit against the federal government is much more complex than neighbors suing neighbors. Lawsuits against the federal government involve not only the four requirements described above but also two additional elements: (1) sovereign immunity and (2) standing. All of these elements—the four “any lawsuit” elements and the two additional ones—are discussed in that section.

The third section (The Two Typical Lawsuits involving the Government: Protests and Claims) discusses “the really specific” and focuses on the two typical procurement lawsuits against the government—protests and claims.

To simplify this complicated material, we’ll take two shortcuts. The first shortcut: the material in this chapter deals only with civil law. Any case that comes before a judge has to be either a criminal case or a civil case. Criminal cases are lawsuits brought by a government (local, state, or federal) to punish those who break the criminal laws. Civil lawsuits, on the other hand, are generally brought by taxpayers suing each other, although people sue the government on occasion.

The second shortcut: our focus will be on trial courts, not appellate courts. Hollywood has shown us plenty of trial judges in TV shows ranging from the twentieth-century’s Perry Mason to the unending Law & Order SVU series. These fictional judges sometimes have juries to help them do their work. Nasty lawyers ask insulting questions of sweating witnesses, and judges will usually make an oral decision regarding punishment right from the bench.

We see appellate judges on television much less frequently. One of the most notable examples was the litigation over the 2000 election involving the Florida Supreme Court. This litigation gave the average taxpayer an inside view of the rarely seen appellate process. Appellate judges don’t deal with juries, don’t listen to witnesses, and don’t act all by themselves. They join other judges on a panel of three to nine (or more) judges to hear lawyers argue points of law apparently botched by trial judges, and they usually issue written decisions, not immediate rulings from the bench.

Appellate judges do not necessarily give litigants any type of relief. These judges typically decide whether the trial court judges were right or wrong. If an appeals court decides the trial court was wrong, the appeals court can return the litigated case back to the trial court to fix any errors of law interpretation.

It’s important to realize that appellate courts do not try the case all over again. Appellate courts determine whether the trial court based its decision on facts—not guesswork—and whether the trial court applied the law in the correct way. Even if the trial court made a mistake, the error could be harmless to the trial court’s decision. Harmless error avoids the trial court’s having to re-try the case. The appellate court has a much narrower job to do: to determine if the trial court did its job without fatal error.

ANY LAWSUIT

In a typical lawsuit, any taxpayer who can find the courthouse asks a judge in the judicial branch to apply state or local law to give the plaintiff some kind of help, usually in the form of money. If one of the parties does not get the result it wanted, it can appeal the decision to an appellate court. Significantly, a defendant typically can’t beat the lawsuit by claiming that it is immune from lawsuits. As we will see later in this chapter, immunity from lawsuit—the government’s sovereign immunity—is one big issue that a lawsuit against the federal government must deal with.

A typical lawsuit has four essential elements: (1) the branch of government the “judge” works for—t he legislative branch, the judicial branch, or the executive branch; (2) the jurisdiction of the forum; (3) the applicable law (federal, state, or local); and (4) the type of relief or help a plaintiff can be awarded—for example, money or an injunction (a nonmonetary award).

Branch of Government: Judicial, Legislative, or Executive?

All countries need a government to make laws, to carry them out, and to enforce them. In a dictatorship, all three jobs can be done by one tyrant.

In our country, and indeed in most countries, the government is based on the separation of powers (that is, branches of government). Most governments divide up these three responsibilities and entrust them to separate and independent branches of the government instead of entrusting all three responsibilities to one entity. In the United States, the legislative branch makes the laws, the executive branch carries out the laws, and the judicial branch interprets and applies the laws.

Most judges are in the judicial branch. However, the executive branch can have “judges,” too. For example, some communities have a department of motor vehicles “judge” to whom you can argue your case regarding a traffic ticket. And legislators can also be judges: some communities let their local city or town councils to make zoning changes that can pit a landowner against the neighbors, leaving the local legislature to decide who wins. So, it’s possible for all three branches to get involved in lawsuits.

Generally, the typical lawsuit involves a judge working for the judicial branch of government.

The Jurisdiction of a Forum

Jurisdiction has two aspects: subject matter jurisdiction and jurisdiction over the person being sued. We focus on the first one. The subject matter of some state and local courts, for example, is limited by the maximum dollar amount for which a plaintiff can sue. A Small Claims Court might be able to hear only cases under $5,000, for example.

The Law a Judge Applies

Because our country is made up of local, state, and federal governments, all three levels of government may make laws for a judge to apply. Typically, a local judge applies local laws passed by a local legislature, such as a city council. A local judge could apply state law but cannot apply federal law. A state court judge typically applies state law, and a federal judge typically applies federal law.

There are exceptions, which will be discussed later. In some cases, Congress has told federal judges that they may be guided by the applicable state law. One example is the Federal Tort Claims Act (FTCA), which involves a federal judge deciding whether a federal employee is immune from lawsuit. Another exception is when there is no federal law on an issue before a federal judge. In that case, the federal judge is like a kid in a candy store, picking the law to follow based on the “best in modern decision and discussion.”¹

Types of Relief

Relief means the type of help a judge may give. Most plaintiffs want money from the defendant. But sometimes they want something different. A plaintiff might want to stop someone from doing something and therefore seeks an injunction. Or a plaintiff might want a judge to decide conflicting rights of the parties—for example, whose interpretation of a contract is the correct interpretation of the contract. In this case, a plaintiff would ask for a declaratory judgment—a judgment declaring the rights of the parties to the contract.

On rare occasions, one of the contracting parties might want a judge to force the reluctant other party to go through with a contract. For example, a home buyer might have a sales contract with the home seller that obligates the seller to sell the house to the buyer at some point. As an example, if the housing market has become hot and prices in the market have increased greatly, a home seller might not want to carry out the contract with the home buyer because the home seller might want to take advantage of the hot market to get more money from a different buyer. In this case, the home buyer would go to court to ask the judge to order the specific performance of the contract between the buyer and the seller.

Four kinds of relief are generally available in a typical lawsuit: money damages, injunctions, declaratory judgments, and the specific performance of a contract.

ANY LAWSUIT AGAINST THE FEDERAL GOVERNMENT

The federal government gets sued for all sorts of things, which is evident from a daily review of news media. Some of these lawsuits argue that something the government did was unconstitutional; that something an agency did was illegal; or that something went wrong with a federal contract (this will be discussed later in chapters 10 and 11).

Like the lawsuit described above, a typical lawsuit against the federal government involves a judge in the judicial branch being asked for one or more of the four kinds of relief mentioned above. But there are several additional issues found in federal lawsuits that make them different from a typical lawsuit.

The first difference is that the judge takes a harder look at the plaintiff. A federal judge has to ask, “Does the plaintiff have the right to bring this lawsuit? Does the plaintiff have standing?” The second difference looks at the court where the case is being heard. Now the federal judge asks, “Has the government waived sovereign immunity to be sued in this court?” Let’s review the four elements of a typical lawsuit against the government.

Branch of Government—Typical Federal Litigation

Most cases against the federal government are argued in Federal District Court, and so the judicial branch of government is typically the forum for litigation against the federal government.

As we all know, the other two branches—the legislative and the executive—also get involved in resolving controversies against the federal government. The legislative and the executive branches get involved in resolving such controversies as those which arise when an agency issues licenses—for example, the Federal Communications Commission, who issues television station licenses. Congress gets involved when, for instance, it passes legislation benefiting one or more persons or companies. In addition, GAO, an arm of Congress, is a major player in procurement litigation as it is one of the forums that litigates protests.

Procurement lawsuits can involve all three branches of the federal government. For example, protests can be resolved by GAO in the legislative branch, by the U.S. Court of Federal Claims (COFC) in the judicial branch, by the agency awarding the contract in the executive branch, or by more than one of the branches.

Jurisdiction of a Forum—Typical Federal Litigation

The subject matter jurisdiction of the federal court is typically a lawsuit between residents of different states (diversity jurisdiction) or questions involving the Constitution, federal laws, and federal regulations (federal question jurisdiction). In discussing the typical lawsuit against the federal government, we will discuss federal question jurisdiction.

The Law a Judge Applies—Typical Federal Litigation

The federal judge typically applies federal law and not state law. There are, however, several exceptions to this rule that allow a federal judge to apply state law.

On occasion, Congress has told federal judges to apply state law. When Congress passed the Federal Tort Claims Act (FTCA), which is discussed in chapter 3, it told federal judges to use state law in deciding, for example, whether or not a federal employee is protected under the FTCA because the employee is acting within the scope of employment.

Another exception is when there is no federal law on a topic. In this no-man’s-land, the federal judge can look to state law or general common law for an answer.

Since federal law does not answer the issue, we look to general property and contract law principles as they are embodied in state law pronouncements.²

Types of Relief—Typical Federal Litigation

Generally, federal judges can give litigants any one or more of the four forms of relief typically available in any lawsuit: money, injunctions, declaratory judgments, and specific performance.

These four remedies are not always available in procurement cases, as will be discussed later. A contractor filing a claim can get money and not an injunction for a government breach of contract; and in a protest, the court may issue an injunction and make a declaratory judgment under some circumstances but may not order specific performance of a contract, like a judge faced with the home buyer-home seller con-troversy.³

Standing of the Plaintiff-Typical Federal Litigation

The issue of standing begins our departure from the more straightforward state court rules to the more complex federal court rules.

In a typical federal lawsuit, a taxpayer cannot necessarily sue someone in a federal courthouse. Only a plaintiff with standing can bring a lawsuit, and there is no assurance that the plaintiff has standing simply because the plaintiff pays taxes.

This is one significant difference between the typical federal lawsuit and lawsuits at the state and local levels, where standing is not an issue. More importantly, standing is an issue in protests and claims, which are discussed later in the chapter.

Standing is frustrating. As one commentator put it,

Standing has been labeled one of the most amorphous concepts in the domain of public law, and has been referred to as “a complicated specialty of federal jurisdiction,” and criticized as being both “needlessly complex and needlessly artificial.”⁴

Some examples of plaintiffs lacking standing in a federal courthouse include taxpayers objecting to Congress’s spending money on a war or Congressional members arguing that one of their laws is not being carried out properly. And while these examples might seem surprising, their outcomes are realistic. An unelected judge does not want to get too involved in issues better left to the elected officials in the executive branch or legislative branch.

Sovereign Immunity-Typical Federal Litigation

Historically, as in many centuries ago, a sovereign such as a king could not be sued unless the sovereign had consented to be sued. This is the concept of sovereign immunity.

Because the federal government is a sovereign, it enjoys sovereign immunity. It cannot be sued unless Congress has waived the government’s sovereign immunity. This waiver comes in the form of a “consent statute”—a law passed by Congress and signed by the president waiving the government’s sovereign immunity and consenting to the government’s being sued.

Sovereign immunity is not an issue in a lawsuit in a federal court between residents of different states. But it certainly is an issue if the lawsuit is against the federal government. Whether or not a judge has jurisdiction to hear that kind of a case depends on whether the government has waived its sovereign immunity.

Jurisdiction and sovereign immunity are closely related. Jurisdiction describes the kinds of cases a judge can hear—whether it’s a lawsuit against a next-door neighbor or a government. Sovereign immunity is related to jurisdiction, because a court has jurisdiction over a case in which the federal government is a defendant only if Congress has waived the federal government’s sovereign immunity. If you want to sue your neighbor, all you have to prove is that the court has jurisdiction; your neighbor doesn’t have immunity from suit. But if you are suing the federal government, you have to prove both that the court has jurisdiction and that the government has waived its sovereign immunity. If so, the court has jurisdiction. While the jurisdiction of a court describes the types of cases it can hear involving a neighbor or the government, sovereign immunity whittles away the kinds of cases over which a court has jurisdiction when the federal government is the defendant.

THE TWO TYPICAL LAWSUITS INVOLVING GOVERNMENT CONTRACTS

With this background on lawsuits in general and lawsuits specifically against the federal government in mind, we now move to the two typical procurement lawsuits the government faces—protests and claims.

One of the problems with distinguishing between these two radically different types of lawsuits is the terminology. In our everyday language, we use different words to describe a controversy: people protesting what’s happening, people claiming they are not being treated fairly, or people disputing somebody else’s conclusion. Note that the terms used to describe a controversy—protests, claims, and disputes—are used here interchangeably.

In the procurement field, these terms are considered terms of art. This means that they have a special, unique meaning in procurement that is different from their meaning in everyday language. So the first thing to keep in mind in discussing procurement litigation is the sharp distinction between the two battles—protests and claims.

A protest is a lawsuit by a loser trying to get the contract.

A claim is a lawsuit by a contractor trying to get more money under the contract. A claim may also be filed by a contractor asking the government to interpret words used in a contract or provide some other type of help.

Another difference is the speed with which a protest or claim is resolved. Protest litigation is always on a fast track with short, tight, and strict deadlines. Claims have deadlines too but claim litigation can drag on for years while a protest usually gets resolved within months.

This difference springs for the nature of a protest: it is a lawsuit holding up the government buying something it needs. Delay in letting the government get what it needs cannot be tolerated.

This section discusses protests and claims in terms of the who (standing), where (jurisdiction), and why (relief). The when, what, and how of protests and claims are discussed in chapters 10 (Protests) and 11 (Claims).

Protests

A losing vendor can file a protest in any or all of three forms: the agency awarding a contract, GAO, or the U.S. Court of Federal Claims. Although all three forms have a specific process for dealing with claims, only two—GAO and the court—have reported decisions. For that reason, this section discusses only protests to these two forums.

The Court of Federal Claims (COFC)

Some laws Congress passes are so complex that Congress has set up special courts to handle them. For example, the U.S. Bankruptcy Court handles our country’s complex bankruptcy laws, and the U.S. Tax Court deals with the equally complex Internal Revenue Code.

We won’t debate where the Federal Acquisition Regulation (FAR) falls in terms of complexity when compared to bankruptcy laws and tax laws. But by any standard, procurement is legally complex. Congress recognized this when it set up the U.S. Court of Federal Claims (COFC) and its predecessors (the U.S. Court of Claims and the U.S. Claims Court) to deal with procurement litigation, which includes both protests and claims.

Until 1982, the Court of Claims had a trial part and an appellate part. In 1982, the trial part became the U.S. Claims Court and the appellate part was incorporated into the U.S. Court of Appeals for the Federal Circuit. In 1992 the Claims Court was renamed the Court of Federal Claims.⁵

Federal courts are typically classified as Article I or Article III courts, after the particular section of the U.S. Constitution that set the court up. Article III courts, like a local federal district court, have judges with lifetime appointments. Article I courts are set up by Congress, and their judges do not have lifetime appointments. The COFC is an Article I court. Its judges are appointed by the president and confirmed by the Senate for fifteen-year terms.

The COFC’s Branch of Government. The court is in the judicial branch of government.

The COFC’s Protest Jurisdiction. As of September 30, 2016, slightly more than half the court’s 1,501 pending cases involved protests and claims. About one-third of the court’s caseload involves government contracts—protests and claims. The other matters the court handles include tax refund suits (about 10 percent of the court’s caseload), Fifth Amendment takings (about 15 percent), civilian and military pay questions, and intellectual property issues.⁶

Protest can be started before the contract is awarded or after award is made. Pre-award protests are brought by vendors disqualified from the competition while the competition is still going on and before the winner has been selected.

Pre-award protests would be filed by potential offerors who are confused by the solicitation and want the agency to clarify something before the offeror submits its offer. A pre-award protest could also be filed by an offeror who submitted an offer but was told by the agency that its offer is not in the competitive range.

Post-award protests are filed by offerors after they are notified that they lost and that the agency has awarded the work to another vendor.

Prior to 1996 the COFC handled only pre-award protests. So once the agency awarded the contract, the COFC could not handle the protest.

But in 1996 Congress expanded the court’s jurisdiction to include post-award protests. The court now has protest jurisdiction over

an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.⁷

The COFC has jurisdiction over protests of some task orders or delivery orders—for convenience, let’s just use the phrase “task orders.”

Jurisdiction of the court and GAO over task orders can get a little confusing. Task orders can be issued not only under the authority of FAR Part 8.4, which authorizes contracts and task orders under the GSA Federal Supply Schedule (FSS), but also under FAR Part 16, which also allows task order contracts like the governmentwide acquisition contract (GWAC) awarded by GSA for information technology (IT) services. It is very important to be sure of the precise authority under which the task order to be protested was issued.

Task orders under the FSS are not the problem. The COFC as well as GAO (we will discuss this later) have jurisdiction over FSS task order protests.

The confusion over task order jurisdiction involves task orders under FAR Part 16. The COFC does not have protest jurisdiction over task orders or delivery orders under FAR Part 16. Congress did not want task orders to be protested, and this restriction follows that general rule. This limitation was imposed as part of the Federal Acquisition Streamlining Act of 1994 (FASA). One way Congress streamlined the acquisition process was to encourage agencies to use task order contracts awarded under full and open competition. Because there had been competition for these task order contracts, and the award of these contracts could be protested, Congress wanted to limit protests for the task orders issued under those contracts.

This limitation started out being truly limited: generally, a task order could be protested to the COFC only on the limited basis that it increased the scope, time period, or maximum value of the underlying task order contract. Then Congress added exceptions that allowed more FAR Part 16 task order protests. As we will discuss later, GAO (but not the COFC) was given the additional jurisdiction over task order protests in excess of $10 million (civilian agencies) and $25 million for DOD agencies.

After reaching the conclusion that the COFC has only limited Part 16 task order jurisdiction, the Court of Appeals for the Federal Circuit (CAFC) concluded, as described below, that two laws, both containing the vague phrase “in connection with” a procurement, did not open the COFC’s door to FAR Part 16 task order protests.

The Law Applied by the COFC in Protests. The court, like any other federal court, applies federal law and, as needed, state law.

The COFC’s Protest Relief. It would be nice if every federal court could give all four forms of relief. But they cannot, and the COFC cannot.

It would also be nice if at least the COFC had consistent forms of relief for the two types of cases (protests and claims) it handles. But that is not the case. In fact, it’s backward. In a protest, the primary relief is an injunction against performance of the protested contract and a declaratory judgment that the government messed up the solicitation process. If that relief is given, money (in the form of bid preparation and proposal costs) is available.⁹

What the COFC cannot provide a protester is what the protester wants most: the contract. A court cannot tell an agency to whom to award a contract.

In terms of relief, a home buyer has greater rights than a government contractor. When people buy a home, they typically sign a sales contract with the house’s seller. The contract requires the seller to complete the deal sometime in the future. But what happens if the property values increase after the contract has been signed, and the seller wants more money for the house (either by raising the price to the contracted home buyer or by selling the house to someone with a better offer)? If the seller refuses to carry out the sales contract, the home buyer has a good courtroom remedy available: a judge could order the home seller to go through with the sales contract. Specifically, the judge would order “specific performance of the contract.” The seller would then be forced to perform the contract and sell the house to the buyer.

Returning to the government contractor: can a vendor ask the COFC to order specific performance of a government contract, that is, to order the government to award the protester the contract? The answer is no.

A more limited form of protest relief that the COFC can provide is forcing the government to pay bid preparation and proposal costs. This relief is given not under the theory of a protest but under the theory of a breach of an implied contract between the government and prospective bidders to treat bidders’ proposals fairly and honestly.¹¹

The COFC’s Protest Standing. Having described standing as a confusing concept, now is the time to add that, for protests, standing is made easier to work with because GAO and the COFC apply the same test for determining whether a protester has standing to bring a protest. Both require a protester to prove as a preliminary matter that if the government had not made an error (prejudice), the vendor would have had a good chance to win the contract being protested (interested party). These dual requirements flow from the uniqueness of a protest: because the protest delays the government from getting something it needs, protesters must show that they have a valid chance to win the work and that a significant mistake by the government is denying them that chance.

In protests, standing depends on two issues: “prejudice” and an “interested party.”

Prejudice. Curiously, the test for standing starts out with the question “So what?” If a protester argues that the agency did not evaluate its proposal correctly, broke the law, bribed the contracting officer, or made some other mistake, the first issue the COFC must deal with is standing, which in turn requires that the COFC look at “prejudice”—harm—a “So what?” question.

In order to establish standing, 1TAC must show that it is an “actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract,” i.e., that 1TAC was an interested party, prejudiced by the award to RS1S. The Court of Federal Claims did not decide the question of prejudice because it determined that there was no error in the procurement process, stating that “[i]f the court finds error, the court then examines whether the error was prejudicial to plaintiff.” This approach was erroneous. In fact, because the question of prejudice goes directly to the question of standing, the prejudice issue must be reached before addressing the merits. As we said in Myers, “prejudice (or injury) is a necessary element of standing.”¹²

Prejudice here means “harm.” It’s important to point out that prejudice in protest/standing issues does not mean prejudice in the sense of equal employment opportunity (EEO) prejudice. Prejudice simply means the government did something wrong during the solicitation process that hurt a vendor who had a real good chance of winning a contract.

To establish prejudice, 1TAC must show that there was a “substantial chance” it would have received the contract award but for the alleged error in the procurement process. In other words, the protestor’s chance of securing the award must not have been insubstantial.¹³

The CAFC went on to show how ITAC qualified as an interested party, having been prejudiced by the government’s actions:

ITAC argues that the award to RS1S should be set aside on a variety of grounds. If ITAC were successful, the award would be set aside, and ITAC might secure it. ITAC also argues that the Air Force improperly failed to conduct “discussions” with ITAC and that, if it had, ITAC would have been able to cure deficiencies in its bid. There is no question here that ITAC was a qualified bidder and that its proposal would have been improved and its chances of securing the contract increased if the problem with its cost estimate had been cured. The Air Force’s decision letter stated that “all offerors provided proposals which met minimum contract requirements” and “all proposals were fundamentally sound.” Under these circumstances, ITAC has established prejudice (and therefore standing), because it had greater than an insubstantial chance of securing the contract if successful on the merits of the bid protest.¹⁴

It’s important to add that prejudice can become an issue at two points in the process:

To prevail in a bid protest, the protestor must show that the procuring agency acted without a rational basis or contrary to law and that the error prejudiced the offeror’s posture in the procurement process. Prejudice thus frequently is addressed at two separate stages of a bid protest, first in analyzing whether the protestor has standing to pursue its claims and then near the end of the analytical process in determining whether the protestor is entitled to relief. The second analytical step has also been described as follows: “for [plaintiff] to prevail it must establish not only some significant error in the procurement process, but also that there was a substantial chance it would have received the contract award but for that error.”¹⁵

Interested Party. In addition to proving prejudice, a protester must also prove it is an “interested party” to have standing to raise the protest. Only an interested party has standing.

One big problem in defining the term interested party is that Congress has not defined it for the federal courts. The law giving the Court of Federal Claims more protest authority—the 1996 Administrative Dispute Resolution Act—gave the court the authority to hear the cases of “interested parties,” but the act itself did not define the term.

Judges had to come up with their own definition. This definition uses the one Congress told GAO to use in the Competition in Contracting Act:

Standing is limited to actual or prospective bidders or offerors whose direct economic interest would be affected by the award of the contract or by failure to award the contract.¹⁶

To be an interested party, the protester must have been an actual or potential bidder.

In addition to showing prejudice, protest standing—being an interested party—requires a potential protester to show a “direct economic interest affected by the award of the contract.”¹⁸

An actual bidder often has a direct economic interest usually because it stands to gain if it wins the contract. But it ultimately depends on the specific facts. In two COFC protests, one by an offeror who was third in line for award and another by an offeror who was fourth in line for award, one judge concluded that the third in line offeror had not proven it was an interested party and another judge concluded that a fourth in line offeror had proven it was an interested party.

Because it’s usually obvious whether or not an offeror has submitted an offer, the more difficult issue in pre-award standing is “who qualifies as a prospective bidder?” In protests, if you don’t put in a bid, it’s hard to win a protest—but there are exceptions. For example, if an offeror in a competitive solicitation is expecting to submit an offer, it qualifies as a prospective bidder.

In a sole-source competition, a prospective bidder protesting to open up the solicitation to full and open competition “must submit a statement of capability during the prescribed period” to establish that it is a prospective bidder.²¹

In some situations, it is possible to be a prospective bidder even if a protester has not submitted a proposal to the agency. Protesting the terms of the solicitation is one way to show that a vendor is a prospective bidder.

A prospective bidder can prove a “direct economic interest” so long as it shows it suffered “a non-trivial competitive injury which can be redressed by judicial relief.”

In addition to nonbidders failing the standing test, winning vendors can fail the interested party test. Curiously, the fact that a vendor wins a contract does not mean the vendor is necessarily an interested party who is entitled to participate in a protest by another vendor against the contract award. Winners do not have an unconditional right to defend the agency’s selection by participating in the protest.²³

Other COFC judges, however, have allowed the winner to intervene by permission of the court.²⁵

Another vendor that lacks standing is a vendor that “withdrew its proposal, or a case in which a disappointed bidder could not receive the award even if successful in its challenge to the winning bidder’s proposal.”²⁶

The COFC’s Sovereign Immunity. Congress has consented to the government’s being sued in the COFC for protests.

Congressional consent to suit in the Court of Federal Claims, which thereby waives sovereign immunity, must be explicit and strictly construed. Consent to suit in this Court is granted by 28 U.S.C. §1491(b)(1).²⁷

The Government Accountability Office (GAO)

GAO is a favorite forum for protesters. It’s easy—a protest can even be filed electronically. GAO is accessible—a protest can be filed at GAO 24/7. And it’s cheap—you don’t need a lawyer.

But a lawyer can be very useful to a protester in a GAO protest. If a protester has a lawyer, that lawyer can gain access to much more agency information due to a device known as a protective order. Information will be disclosed to the lawyer but is protected from being disclosed by the lawyer to the client.

The GAO’s Branch of Government. GAO is a branch of Congress, the legislative branch. In addition to its protest work, GAO is a think tank for Congress. When members of Congress want a study of a particular issue done, they ask GAO to do it.

The GAO’s Jurisdiction. GAO has authority to deal with protests involving “the procurement of goods and services” by the government.²⁸ Although this might seem straightforward, GAO protest jurisdiction involves a number of recurring issues.

Concession Contracts. Some types of government contracts do not involve the procurement of goods and services. Concession contracts are good examples. These are contracts through which the government offers business opportunities to vendors. One example is a contract for someone to provide a service, such as running a National Park Service campsite. As the government is awarding a concession contract, GAO does not believe that the government is procuring goods and services. To GAO, the government is selling a business opportunity when it awards a concession contract. As such GAO will generally not hear protests of concession contracts. But, if the concession contract includes more than a minimal amount of services, GAO will hear a protest of the concession contract award.

IDIQ Task Orders. Task orders also present a GAO jurisdiction issue.

As mentioned earlier, the protest jurisdiction of the court and GAO over task orders gets a little confusing. Task orders can be issued not only under the authority of FAR Part 8.4, which authorizes contracts and task orders under the GSA Federal Supply Schedule (FSS), but also under FAR Part 16, which also allows task order contracts like the government-wide acquisition contract (GWAC) awarded by GSA for IT services. So it’s imperative to verify the precise authority under which the task order to be protested was issued.

Task orders under the FSS are not the problem. GAO and the COFC have jurisdiction over FSS task order protests as well as task orders— actually over the underlying task order contract, where the protester can show that the order increases the scope, period, or maximum value of the contract under which the order is issued.³⁰

The confusion over task order jurisdiction involves task orders under FAR Part 16. Although the COFC does not have protest jurisdiction over task orders or delivery orders under FAR Part 16, GAO does, but only regarding “high-dollar value” protests—and that meant fhose involving more than $10 million until 2017. That year, the threshold for DOD task order protests to GAO increased to over $25 million. This specifically refers to GAO’s ability to hear protests of task orders that are issued under multiple-award contracts established within the Department of Defense (or protests of the solicitations for those task orders) or to hear protests where the protester asserts that the task order increases the scope, period, or maximum value of the contract under which the order is issued.³¹

On occasion, the issue is to “what does the “$10 million”—now “$25 million”—refer?

In one GAO decision, GAO concluded that the $10 million refers to the value of the awarded task order and not the value of the protester’s bid.

In other decisions, GAO concluded that, (1) if the government had not yet established a competitive range, the $10 million figure could be based on the independent government estimate (IGE);³³ and (2) although the protester’s proposed task order cost is less than $10 million, the value of all the remaining offers exceeds $10 million and GAO therefore had juris-diction.³⁴

IDIQ Contracts. Years ago, Congress encouraged agencies to use IDIQ contracts to speed the procurement process. At the time, one concern was that the easy use of these contracts would be reduced by protests of the task orders issued under them. One solution was a law that limited the protests of task orders. But GAO could handle protests of task orders issued under IDIQ contracts on the grounds that the task order increases the scope, period, or maximum value of the IDIQ contract. Someone protesting a task order was really protesting the underlying IDIQ contract. If so, GAO will hear the protest of the underlying contract.

GAO will also consider protests of a task order when an agency tries to get around the law and regulations by, for example, using a nonappropriated fund instrumentality or a cooperative agreement or grant instead of a contract.³⁶

Subcontracts. Another area of problematic GAO protest jurisdiction involves protests of subcontract awards, which are rare and happen only in two limited cases. GAO refers to these exceptions as subcontracts “for” the government and subcontracts “by” the government.

A Subcontract “for” the Government. A prime contractor can act as the government’s purchasing agent by going out and buying something for the government. This is a contract awarded by a prime contractor but “for” the government. For the contract to qualify as a subcontract “for” the government, the losing vendor would have to prove that (1) the prime contractor was acting as a purchasing agent for the government; (2) the agency relationship between the government and the prime contractor was established by clear contractual consent; and (3) the contract stated that the government would be directly liable to the vendor for the purchase price.³⁷ GAO “will consider a protest of that buy only if asked by the agency.”³⁸

A Subcontract “by” the Government. In this subcontract, the prime contractor plays only a minor role in awarding the contract. It is the government that does all the hard work. GAO says a subcontract procurement is “by” the government

where the agency handled substantially all the substantive aspects of the procurement and, in effect, “took over” the procurement, leaving to the prime contractor only the procedural aspects of the procurement, i.e., issuing the subcontract solicitation and receiving proposals. In such cases, the prime contractor’s role in the procurement was essentially ministerial, such that it was merely acting as a conduit for the government. On the other hand, we have found subcontractor procurements were not “by” the government where the prime contractor handled other meaningful aspects of the procurement, such as preparing the subcontract solicitation and evaluation criteria, evaluating the offers, negotiating with the offerors, and selecting an awardee.³⁹

Protests of Contract Administration Activities. As the above examples show, typically the government procures goods and services through the solicitation process. But sometimes the government also procures goods and services during a contract administration phase, such as when it modifies a contract to procure more (or fewer) goods and services. Although GAO’s protest jurisdiction typically involves the solicitation process, GAO on occasion gets involved in the contract administration process.

When GAO does get involved in the contract administration process, it is typically because of change orders the government wants to issue. When the government realizes it has to change contract work, it can modify the existing contract to give the incumbent contractor the work or it can solicit the changed need from vendors using full and open competition. GAO can handle protests of whether changes to a contract should have been competed under full and open competition rather than awarded sole source to the incumbent contractor.

What GAO is looking for is whether the change is within the scope of the contract and within one of the designated areas of the contract covered by the Changes clause; for example, the method of shipment or packing.

On occasion, GAO gets in involved in parts of the contract administration process other than changes. For example, GAO can review the use of a termination for convenience as a protest remedy. Normally, whether an agency properly used a termination for convenience is a matter for the claims process. On rare occasions, however, the government uses the Termination for Convenience clause in the protest process to right some wrong done during the solicitation process. In that event, GAO reviews the agency’s use of the termination for convenience remedy.

Government Employees and A-76. One of the longest running—but losing—battles government employees have endured is the fight to get government employees more actively involved in challenging agency decisions in the A-76 process that take away the jobs of these employees. Over the years Congress has relaxed some of the rules, but generally it has limited how much input these government employees have in the A-76 process.

For years GAO held that the Competition in Contracting Act (CICA) did not allow representatives of in-house government competitors to pursue a protest before GAO. This remained GAO’s position even after the 2003 changes to A-76. But Congress did expand the definition of an interested party that could file a bid protest in A-76 issues to provide that “the term ‘interested party’ includes the official responsible for submitting the Federal agency tender in a public-private competition conducted under Office of Management and Budget Circular A-76.”⁴² But that was as far as Congress was willing to let GAO go.

The Law GAO Applies. The law GAO uses in deciding protests usually is precedent from its previous cases and federal law. It looks to state law only as a last resort.

Where controlling federal law exists, state law may only be considered where the result would not conflict with federal laws or policies, or otherwise interfere with the exercise of federal powers.⁴³

Whether federal procurement laws may preempt local and state laws is an issue with difficult constitutional questions. To what extent can the federal government make states do or not do something? Although this issue rarely affects procurement, in one interesting example involving utilities at a military base, GAO concluded that the federal government could preempt state law because Congress said it could.

Relief Available at GAO. The relief that GAO can give a protester is, curiously, labeled as only a “recommendation” to the agency. Routinely, virtually all GAO recommendations are followed by the agencies. These recommendations include a range of alternatives, such as putting a successful protester back in the competitive range, reevaluating proposals, reconsidering award decisions, and awarding protest costs (including attorneys’ fees).

Standing. The test for standing to raise a protest before GAO is similar to the test used by the COFC in that the GAO test uses the same phrases: interested party and prejudice.

An Interested Party. GAO defines an interested party as “an actual or prospective supplier whose direct economic interest would be affected by the award of a contract or the failure to award a contract.”⁴⁵

A more workable definition is that a “protester is not an interested party where it would not be in line for contract award if its protest were sustained.”⁴⁶

In a sealed bid, the second-low bid would be an interested party to protest a contract awarded to the low bidder. But if the third-low bidder wanted to be an interested party, it would have to protest the agency’s treatment of not only the winner but also the second-low bidder so that the protester (the third-low bidder) could be in line for award and therefore an interested party. To be an interested party in these price-oriented awards, a protester must challenge not only the winner’s award but also the evaluation the agency did on any vendors between the protester and the winner. In other words, an interested party must clear the deck of all vendors, including the winner and everybody else in between.⁴⁷

An interested party must also have submitted a technically acceptable offer. Otherwise, it would not be in line for award. For example, a vendor quoting a nonconforming product would not be in line for award so it cannot be an interested party.⁴⁸

But as always, GAO has found exceptions:

[W]e have found a firm to be an interested party even though its product sample had been properly rejected as failing to comply with various required salient characteristics of the solicited product, where its protest alleges that the product samples of the awardee did not comply with the salient characteristics and where the awardee was the only other offeror eligible for award. . . . In addition, we will consider a protest where an offeror protests that it was denied equal treatment because the agency rejected its nonconforming offer while accepting a competitor’s similarly nonconforming offer. . . . In other words, we view a protester as an interested party where the basis for protest is that the protester and the awardee were treated disparately, even where we agree that the protester’s offer was unacceptable.⁴⁹

In a best value trade-off solicitation—one based on price and other (nonprice) factors—it is easier to be an interested party. All the protester generally has to argue is that, if the agency had properly done its evaluation job, the protester would have been the best value and it would have won the contract, and so it is an interested party.

But this argument does not always work.

[S]ince as a result of the agency’s evaluation, which we find reasonable, McDonald’s technical proposal was ranked seventh, and since in addition to Greenhut’s, several other higher-rated, reasonably priced proposals remained eligible for award, McDonald is not an interested party to challenge the agency’s tradeoff decision because, even if its protest were sustained, those intervening offerors, not McDonald, would be in line for award.⁵⁰

Prejudice. In the National Basketball Association it’s called “No harm, no foul.” In procurement, it’s called “prejudice.”

Making a mistake in the solicitation process does not mean the government loses a protest. Before the government can lose, a vendor has to prove an extra fact: that the government mistake probably was fatal to the vendor’s chances of winning the contract. Unless a vendor can prove that the government’s mistake probably cost the vendor the contract, the vendor cannot win a protest at GAO.

GAO says that

[p]rejudice is an essential element of any viable protest and even where the record establishes a procurement deficiency, we will sustain a protest on this basis only where it results in competitive prejudice to the protester.⁵¹

To prove competitive prejudice,

a protester must demonstrate that, but for the agency’s actions, it would have a substantial chance of receiving award.⁵²

Sovereign Immunity. Sovereign immunity is not an issue for protests before GAO. The government has consented to be sued on protests before GAO. The Competition in Contracting Act gave GAO protest authority.

Claims

The Court of Federal Claims (COFC)

The COFC’s Branch of Government. As mentioned above, the court is in the judicial branch of government. The following text is stated earlier in the chapter but is repeated here for those readers who are skipping through the book.

Some laws Congress passes are so complex that Congress has set up special courts to handle them. For example, the U.S. Bankruptcy Court handles our country’s complex bankruptcy laws, and the U.S. Tax Court deals with the equally complex Internal Revenue Code.

We won’t debate where FAR falls in terms of complexity when compared to bankruptcy laws and tax laws. But by any standard, procurement is legally complex. Congress recognized this when it set up the COFC to deal with procurement litigation, which includes both protests and claims.

Until 1982, the Court of Claims had a trial part and an appellate part. In 1982, the trial part became the U.S. Claims Court and the appellate part was incorporated into the CAFC. In 1992 the Claims Court was renamed the Court of Federal Claims.⁵⁴

Federal courts are typically classified as Article I or Article III courts, after the particular section of the U.S. Constitution that set the court up. Article III courts have judges with lifetime appointments. Article I courts are set up by Congress, and their judges do not have lifetime appointments. The COFC is an Article I court. Its judges are appointed by the president and confirmed by the Senate for fifteen-year terms.

The COFC’s Claims Jurisdiction.

General Rule. The jurisdiction/sovereign immunity of this court is based on the Tucker Act, which gives the court jurisdiction over “any claim against the United States founded upon any express or implied contract with the United States.”⁵⁵

Generally, the court has jurisdiction over claims involving a government contract.

But the fact that the Tucker Act gave the court jurisdiction does not mean that all government contracts can be litigated at the COFC. In a distinction that perhaps only lawyers can see, the jurisdiction of the court is separate from a litigant’s right to sue in that court. As the CAFC describes it,

The Tucker Act itself does not create a substantive cause of action; in order to come within the jurisdictional reach and the waiver of [sovereign immunity in] the Tucker Act, a plaintiff must identify a separate source of substantive law that creates the right to money damages.⁵⁶

Since the Contract Disputes Act (CDA) gives the parties to a procurement contract the right to appeal a contracting officer’s final decision to the COFC or a BCA, the CDA gives this “separate source of substantive law.”

Implied Contracts. The COFC has jurisdiction over contracts that are “express or implied,” according to the Tucker Act. But implied does not mean “all implied contracts.” An implied contract can be either an implied-in-fact contract or an implied-in-law contract. The COFC has jurisdiction over only an implied-in-fact contract, not an implied-in-law contract.

Under the Tucker Act this court’s contract-based jurisdiction extends only to contracts either express or implied in fact, and not to claims on contracts implied in law.⁵⁷

An implied-in-fact contract is one that has all the elements of a contract without the paperwork. We discussed implied-in-fact contracts in chapter 6.

An implied-in-law contract is not a contract at all. It is what we call a “tegal fiction.” It’s considered a fiction because a judge creates an implied-in-law contract so that the end result is a fair one. Because a judge does not have a warrant, he cannot enter into express contracts or implied-in-fact contracts for the federal government. But judges can certainly construe what has taken place to be something that sort of looks like a contract. These situations typically involve cases where the government has received a benefit from a contractor but there is no “legal” way to pay the contractor.

Again, the COFC has no jurisdiction over implied-in-law contracts.

Law Applied by COFC in Claims. The court applies federal law as it has been interpreted by the U.S. Supreme Court and the CAFC. The court may look to precedents set by BCAs, but those decisions are not binding on the court.⁵⁸ In addition, one judge on the court is not bound by the decisions of any other judge on that court. The judges certainly consider the conclusions reached by their colleagues on the court, but they are not bound by those decisions.

COFC Relief in Claims. The first place to look for the kind of relief a contractor can receive in the claims process is the contract and its clauses. Many clauses describe what remedies a contractor can get if the government doesn’t comply with the clause. For example, many clauses call for an equitable adjustment, which means more money to a contractor. As such, contractors filing claims with the COFC can obviously get money as one form of relief. This is one reason it’s called the U.S. Court of Federal Claims.

Sometimes money is no help at all. When the government and a contractor are arguing over whether or not the contract’s requirement that the contractor “stock the restroom” means to provide one-ply or two-ply paper hand towels, money is not the issue. The issue is, what does the contract require? In cases like these, the usual type of help a court gives—monetary damages—is inadequate, making nonmonetary relief a requirement.

Outside the government contracting world, a court can typically give three different kinds of nonmonetary help: injunctions, declaratory judgments, and specific pertormance of a contract. An injunction stops things. A declaratory judgment declares the rights of the parties. And specific performance of the contract requires a reluctant contracting party to perform the contract for which the parties had previously contracted.

Life would have been easy if Congress had allowed the government contracting world to have those three nonmonetary remedies as well, but that’s not the case. Congress has given the COFC this nonmone-tary relief jurisdiction:

The Court of Federal Claims shall have jurisdiction to render judgment upon any claim by or against, or dispute with, a contractor arising under section 10(a)(1) of the [CDA], including a dispute concerning termination of a contract, rights in tangible or intangible property, compliance with cost accounting standards, and other nonmonetary disputes on which a decision of the contracting officer has been issued under [section 605 of the CDA].⁵⁹

Under the CDA, only one of these three nonmonetary remedies is available. The CDA lets government contractors force the contracting officer to interpret contract terms—in a sense, making declaratory judgments available.

But the CDA does not allow the government and a contractor to get injunctions against each other, although the government can stop a contract by terminating it. Nor does it let the parties demand specific performance of the contract, although the government can issue a cure notice demanding that the contract be performed, with the threat of a default hanging over the contractor’s head if it is not.

Declaratory Judgments. The COFC has jurisdiction over contract interpretation issues:

The Tucker Act grants the Court of Federal Claims jurisdiction to grant nonmonetary relief in connection with contractor claims, including claims requesting an interpretation of contract terms.⁶⁰

But when judges get involved in interpreting a contract, they start to get involved in administering a contract. And judges don’t want to administer contracts. As part of the judicial branch of government, they want to decide cases and leave the contract administration to contracting officers. However, since the CDA gives a contractor the right to file a claim (while the contract is still ongoing) over issues involving the interpretation of contract terms, judges can’t avoid getting involved in the contract administration process.

But how deep into contract administration issues should judges go? One answer—the easy answer—is not at all. If the contractor wants to challenge what the contracting officer wants him to do, the contractor should just do whatever the contracting officer demands and ask for an equitable adjustment in order to get paid for the contested work when the contract is over.

In some cases this easy answer does not make sense. For example, if a janitorial contract requires the contractor to “stock the restroom” but does not describe the quality (one ply versus two ply) of paper hand towels, a judge would decide whether the ambiguous phrase “stock the rest-room” means one-ply or two-ply paper hand towels. In a janitorial contract, that’s a fundamental question to the contract.

The easy answer also does not make sense when a case has a special need for early resolution of a legal issue, such as when the government exercises an option that the contractor says is an illegal exercise of the option. Here the issue is not “what does the contractor have to do under the contract” but rather “does the contractor even have to perform the option.” That kind of issue should be resolved early and not after the contract is over.

The CAFC has resolved the issue of its role in the administration process by giving judges the discretion to decide some administration issues but not others.

Here’s the test: The COFC should consider

the appropriateness of declaratory relief, including whether the claim involve[d] a live dispute between the parties, whether a declaration will resolve that dispute, and whether the legal remedies available to the parties would be adequate to protect the parties’ interests.⁶¹

The appeals court gave a good example of routine matters of contract performance that judges should stay out of:

While a contractor may want to know ahead of time how a contract issue will be resolved—such as whether the contractor will be entitled to additional compensation under the changes clause for a particular item of work directed by the contracting officer—such cases do not ordinarily put into question whether the contractor is obligated to perform at all. . . . It would normally be appropriate in such cases for the court . . . to decline to issue a declaratory judgment and to await a later equitable adjustment claim by the contractor.⁶²

But judges can hear contract administration issues that involve a fundamental question of contract interpretation or contract performance.

This debate over a judge’s role in contract administration usually comes up in the context, legally, of whether or not a judge can issue a “declaratory judgment” resolving the rights of the parties.

CW Government Travel Inc. (Carlson) had an Army contract that made Carlson the “exclusive” provider of certain kinds of travel services for the Army. So when the Army issued a solicitation that seemed to involve the same kinds of services, Carlson asked the contracting officer to confirm that its work under the existing contract would be transferred to the new contract. The contractor did not ask for money damages. After Carlson did not get the answer it wanted from the contracting officer, it went to the COFC. The COFC did not think it was getting involved in day-to-day routine contract administration. The case met at least the first element of the three-part “court-intervention” test: a “live dispute” over whether the government would repudiate its contract. The court refused to dismiss the case.⁶³

Quantum meruit: Unjust Enrichment. Quantum meruit is Latin for “how much money should be paid, regardless of the laws of contracts.” When the COFC sees unjust enrichment, it can make sure justice is done by finding an implied-in-fact contract.

An implied-in-fact contract could be used when the express contract is unenforceable. For example, if an initially valid contract is improperly assigned and becomes invalid, the COFC can find the existence of an implied-in-fact contract to make sure the contractor gets paid.

Assuming arguendo that the [contract was illegally transferred], the voiding of th[e] contract did not automatically nullify the further dealings between plaintiff and defendant. . . . In this case, plaintiff and defendant, with the approval of the CO [contracting officer], fully carried out the contractual obligations embodied in the contract. . . . In similar circumstances, courts have found that an implied-in-fact contract for a quantum meruit arose.⁶⁴

The COFC’s Standing in Claims. Standing in claims is easier. Some clear examples: A contractor has standing to bring a claim. On the other hand, a subcontractor cannot bring a claim unless the claim is sponsored by the prime.

The COFC’s Sovereign Immunity for Claims. Generally, the government has waived sovereign immunity in claims as a result of the CDA. The real issues over sovereign immunity in claims are those addressed above in the jurisdictional section.

Constitutional “Taking” Issues. The COFC can hear a contract case that a BCA cannot hear. A board cannot hear an issue involving the taking of a person’s land, but the COFC can.

When the government leases out its land, the lease involves both contract rights and property rights. Breaching the lease could be considered not only a breach of contract rights but also a breach of property rights. Although BCAs can hear cases involving breach of contract, they cannot hear a “breach of property rights” argument. An example of such an argument is seen in a tenant on government land who claims that the government has so restricted the tenant’s use of the land that the government has taken the tenant’s property rights under the Fifth Amendment to the U.S. Constitution.

The Boards of Contract Appeals

The BCAs Branch of Government. The BCAs are part of the executive branch.

The BCAs Jurisdiction: Claims Only. The CDA gave the boards jurisdiction over “any express or implied contract for (i) the procurement of property, other than real property in being; (ii) the procurement of services; (iii) the procurement of construction, alteration, repair or maintenance of real property; or, (iv) the disposal of personal property.”⁶⁶

The boards typically have jurisdiction over claims filed by contractors under the CDA. In addition, boards have jurisdiction under their own charters.

Disputes beyond a BCAs Jurisdiction.

Certain Types of Implied and Express Contracts. A BCA does not have jurisdiction over all contract controversies. Some contract-related disputes are beyond its reach.

Several kinds of implied contracts are not within the board’s jurisdiction: implied contracts to treat a bidder honestly and fairly and implied contracts to keep a second-tier subcontractor’s drawings confidential. Neither of these are contracts for the procurement of goods or services. Breaches of an unsolicited proposal and a confidentiality agreement for nondisclosure of trade secrets submitted in that proposal could be within the BCA’s jurisdiction if the unsolicited proposal or confidentiality agreements are later incorporated into a contract subject to the CDA.⁶⁸

Torts. BCAs are designed to handle contract issues. It is possible, however, that issues involving torts, such as intentional or negligent wrongdoing, can result from contract performance. The line has been drawn: BCAs cannot deal with torts that are independent of the contract for which no violation of a contract duty can be shown.

But torts that are tied to a contract can come before the BCAs.

The Law Applied by BCA in Claims. Each board applies federal law in the form of other precedents of that board and the law established by its boss, the Court of Appeals for the Federal Circuit. The boards are not bound by the precedents of other boards. Nor are they bound by the precedents of the U.S. Court of Federal Claims. But boards do look to other boards and to the COFC for guidance.

Relief Available to BCA in Claims. Although money may be the root of all evil, it is not always the goal of all lawsuits. On occasion, plaintiffs ask judges for something other than money.

Outside the government contracting world, a court can give a plaintiff three different kinds of nonmonetary help: an injunction, a declaratory judgment, and specific performance of a contract.

An injunction stops things.

Declaratory judgments declare the rights of the parties, such as whose interpretation of a contract is correct.

And specific performance of the contract requires a reluctant contracting party to perform the contract for which the parties had previously contracted. For example, if a home seller has a contract with a home buyer and the home buyer no longer wants to go through with the contract, the home seller could ask the court to order the buyer to specifically perform the sales contract that both the buyer and seller have signed.

To sum up, plaintiffs have four remedies: money and the three non-monetary forms of relief—injunctions, declaratory judgments, and specific performance of a contract.

That’s the situation outside the world of government contracts. Life would be easy if Congress had allowed the government contracting world to have monetary relief as well as the three nonmonetary remedies. But that’s not the case.

Of these four remedies, which remedies has Congress given government contractors? In the CDA, Congress gives government contractors only two remedies: the right to get money and the right to get declaratory judgments. The CDA does not allow the government and a contractor to get injunctions against each other, although the government can stop a contract by terminating it. Nor does it let the parties demand specific performance of the contract, although the government can issue a cure notice demanding that the contract be performed, with the threat of a default hanging over the contractor’s head if it is not.

The BCAs Standing Requirement for Contractors in Claims. This is a topic subcontractors must understand.

Standing is generally not an issue in claims before the boards. As long as the claim is in the contractor’s name, and the contractor is still an operating company, the company has standing to bring the claim.

One recurring standing problem is a claim involving subcontractors. Subcontractors are the orphans of government contracting. Legally, a subcontractor has no contract with the government. And because a subcontractor has no contract, it has no privity of contract—that is, no party to the contract—with the government. And because it has no privity of contract, it has no standing. So generally a subcontractor cannot sue the government to get paid.

This legal rule can be unfair. A subcontractor who sells something to the government through a prime contractor can be left out in the cold if the prime contractor does not pay the subcontractor. If a prime contractor, for example, is paid by the government but then goes bankrupt before paying the subcontractor, the subcontractor does not get paid. The subcontractor ends up giving, but getting nothing in return.

As always, there are exceptions. In the past, judges have developed a number of exceptions that let a subcontractor sue the government and get paid. One is pretty common and the others are rare.

A Prime Contractor Sponsoring a Subcontractor’s Claim. A subcontractor’s no-standing problem can be commonly fixed by having the prime sponsor the subcontractor’s claim. In that situation, the prime contractor technically, but not practically, is filing the claim, and the standing requirement has been satisfied.

The Subcontractor as Government Purchasing Agent. One rare way a subcontractor can obtain standing is for the subcontractor to prove it is the government’s purchasing agent. To win on this theory, a subcontractor has to prove three things: “(1) the prime contractor was acting as a purchasing agent for the government; (2) the agency relationship between the government and the prime was established by clear contractual consent; and (3) the contract stated that the government would be directly liable to the vendors for the purchase price.”⁷²

Direct Appeal. Another rare example of a subcontractor’s being able to sue is a direct appeal, whereby both the prime contract and the subcontract allow a subcontractor to file a claim directly with the government. One way this rarity happens is when the prime contractor assigns the subcontract to the government, letting the prime off the hook and putting the subcontractor on the hook.

Third-Party Beneficiary. A third rare example of a subcontractor’s being able to sue the government is as a third-party beneficiary. If a contract between two parties is really for the benefit of someone else—a third-party beneficiary—the third-party should be allowed to sue under the contract. The classic example is where the government agreed to write one check payable to a broke prime contractor and a skittish solvent subcontractor. The government agreed to make a check payable to both the prime and the subcontractor but did not follow the agreement, paying only the prime instead. The CAFC concluded that the subcontractor could sue the government.⁷⁴

One subcontractor tried to use all three of these rare arguments and, as expected, lost on all of them.

The BCAs Sovereign Immunity. Sovereign immunity issues that the BCAs face were discussed earlier in “Sovereign Immunity-Typical Federal Litigation.” Because the CDA gives a contractor the right to sue the government, the CDA is a waiver of sovereign immunity.

COFC-District Court Overlap

Like schoolchildren, lawyers have to find the right cubby in which to put things. In giving the various federal courts their jurisdiction, Congress has defined all the “cubbies” lawyers have to deal with. For example, as we saw above, Congress passed the CDA, which gives the COFC jurisdiction over contract claims. So, contract claims against federal agencies go into the COFC cubby. On the other hand, Congress gave local federal district courts jurisdiction over general agency actions, such as an agency’s not issuing an environmental impact statement. It also gave these local federal courts jurisdiction over taxpayer arguments that an agency acted arbitrarily and capriciously. The end result is, theoretically, that everything is nicely and neatly divided into one cubby or another. Either one court has jurisdiction or the other one does.

But, on occasion, separating a COFC contract issue from a local federal court noncontract issue is difficult. A claim can involve how a federal regulation gets interpreted. Is the claim a contract issue for the COFC, or is the claim a federal law or regulation issue for a federal district court?

Contractor Not Challenging Federal Regulation.

Thus, the case was a claim that belonged before the COFC and not the local federal court.

Contractor Challenging Federal Regulation.

The case was not a claim for the COFC but a regulation interpretation issue for the local federal court.