August 11, 2021

Contractors Pay Heed: The Federal Circuit Clarifies Two Important Issues For Bid Protestors

By: Andrew Balland, Associate, Watt, Tieder, Hoffar & Fitzgerald, LLP.

The United States Court of Appeals for the Federal Circuit (Federal Circuit) recently decided two cases that are relevant to many disappointed offerors considering a bid protest. One decision rendered in March 2021 confirmed the authority of the United States Court of Federal Claims (COFC) to hear a protest based on an agency’s breach of an implied-in-fact contract. A second decision issued in February 2021 reversed a COFC decision from last year regarding the timeliness requirements to obtain a CICA stay and their interplay with Department of Defense (DoD) enhanced debriefing regulations.

Federal Circuit Confirms The Court Of Federal Claims’ Jurisdiction Over Procurement-Related Implied Contract Claims

When a contractor’s bid protest is denied by the Government Accountability Office (GAO), the unsuccessful protestor may challenge the GAO’s decision as arbitrary and capricious in an action before the COFC. While 28 U.S.C. § 1491(b)(1) authorizes the COFC to hear such procurement-related challenges, § 1491(a) also permits the court to adjudicate claims against the United States based on any express or implied contracts.

The authority defining the contexts in which – as well as the code sections under which – a protestor may raise an implied contract claim is an evolving body of law. On October 19, 1996, Congress passed the Administrative Dispute Resolution Act (ADRA) and enacted § 1491(b)(1) to unify bid protest law under one court: the COFC. See H.R. Rep. No. 104–841, at 10. Since the ADRA’s passage, however, it has been unclear whether the COFC is still authorized to hear implied contract claims in the procurement context.

The procurement-related implied-in-fact contract claim emanates from a 1956 Court of Claims opinion which held that disappointed offerors were entitled to sue the United States to recover bid preparation costs under an implied contract theory that the government would “give fair and impartial consideration to [the disappointed offeror’s] bid.”  See Heyer Prods. Co. v. United States, 140 F. Supp. 409, 413 (Ct. Cl. 1956). Although the court in Heyer Products did not cite its jurisdictional authority to hear such claims, § 1491 authorized implied contract claims against the United States under the same operative language found in the current language of § 1491(a).

COFC judges have been uncertain about whether the procurement-related implied contract claim survived the enactment of § 1491(b)(1), which makes no reference to implied contracts and is now the sole provision authorizing the COFC to hear procurement challenges. In 2010, the Federal Circuit held that contractors retained the right to pursue an implied-in-fact contract claim against the government outside the procurement process under § 1491(a). See Res. Conservation Grp., LLC v. United States, 597 F.3d 1238, 1245 (Fed. Cir. 2010). Because the Resource Conservation Group decision only involved the lease of government property, the Federal Circuit did not articulate whether the COFC had jurisdiction over implied contract claims related to the procurement process under § 1491(b)(1). 

The absence of authority in this area led to inconsistent rulings by the COFC. Specifically, some judges have held that jurisdiction over procurement-related implied contract claims no longer exists. See Linc Gov’t Servs., LLC v. United States, 96 Fed. Cl. 672, 693 (2010); Metro. Van & Storage Co. v. United States, 92 Fed. Cl. 232, 249 n.7 (2010). At least one judge, however, has held that such jurisdiction exists under § 1491(a), while others have found that such jurisdiction exists instead under § 1491(b)(1). See L-3 Commc’ns Integrated Sys., L.P. v. United States, 94 Fed. Cl. 394, 398 (2010); see also J.C.N. Constr., Inc. v. United States, 107 Fed. Cl. 503 (2012); Castle-Rose, Inc. v. United States, 99 Fed. Cl. 517, 531 (2011).

In March 2021, the Federal Circuit finally resolved the split in Safeguard Base Operations, LLC v. United States, 989 F.3d 1326, 1342-43 (Fed. Cir. 2021). The court in Safeguard found the COFC could hear a protestor’s breach of an implied-in-fact contract claim under § 1491(b)(1), and this section alone, where the protestor alleged the Department of Homeland Security failed to honestly and fairly consider its proposal in the procurement process. Safeguard provided much needed clarity for protestors and confirmed the viability of the procurement-related breach of an implied contract claim.

Within a week of the opinion, the COFC acknowledged its jurisdiction over these § 1491(b)(1) claims. In Colonna’s Shipyard v. United States, the COFC permitted a claim to proceed where the protestor alleged the Navy breached its implied contract of fair dealing by acting in bad faith when reviewing the contractor’s proposal. 152 Fed. Cl. 631, 640, 646-47 (2021). Although the court in Colonna’s Shipyard ultimately found the protestor’s argument unavailing, the success of future § 1491(b)(1) implied contract claims will be worth monitoring. For now, contractors at least have an additional tool in their belts to deploy at the COFC, and they can rest assured this claim’s viability no longer depends on the judge assigned to the case.

Federal Circuit Clarifies The Interplay Between DoD Enhanced Debriefing Regulations And CICA Stay Timeliness Requirements

The Federal Circuit has also clarified a complex interplay between DoD enhanced debriefing regulations and the filing requirements to obtain an automatic stay under the Competition in Contracting Act (CICA).

Protestors often choose to file at the GAO to trigger the CICA stay, which automatically suspends any contract award or performance upon the filing of a GAO protest. 31 U.S.C. § 3553(c)(1). The stay is only available when a contractor files its protest within five (5) days of receiving a written debriefing from the agency or within ten (10) days of the contract’s award, whichever is later. 31 U.S.C. § 3553(d)(4)(A).

Disappointed offerors can also take advantage of DoD-specific procedures before protesting the award of a DoD contract. Since the issuance of FAR Class Deviation No. 2018-O0011, DoD protestors have been entitled to unique “enhanced debriefings,” including the right to submit written questions within two (2) business days after receiving their written debriefings and to receive written answers to those questions. The regulations provide that a DoD agency (1) “shall not consider the post-award debriefing to be concluded until the agency delivers its written responses to the unsuccessful offeror,” and (2) must “comply with the requirements of FAR § 33.104(c) [which mirrors CICA] regarding the suspension of contract performance.” Id.

In 2020, the COFC was asked to determine whether the enhanced debriefing regulations affect when the clock begins running for the CICA stay timeliness requirements. See NIKA Technologies, Inc. v. United States, 147 Fed. Cl. 690, 692-96 (2020). In NIKA Technologies, the Army Corps of Engineers issued a written debriefing to the plaintiff-contractor on March 4, 2020, noting the contractor had two days to submit questions under the DoD enhanced debriefing provisions before the agency would close the matter. The contractor indicated it would prepare questions but ultimately never submitted any before filing its protest at the GAO on March 10, 2020.

At the GAO, the government opposed the request for a CICA stay, arguing the five-day clock began running as of March 4. The contractor then filed a separate action at the COFC to have the court render judgment on the administrative record and institute the stay. The plaintiff argued that because its ability to submit the enhanced debriefing questions did not end until March 6, its protest was timely under § 3553(d)(4)(A). By contrast, the government argued the written debriefing was issued on March 4 and therefore the contractor’s protest was late under the plain language of the statute.

The COFC ultimately sided with the contractor, specifically pointing to case law demonstrating the debriefing date referenced in § 3553(d)(4)(A) had been construed to contemplate a multi-day debriefing process. This decision was a brief victory for protestors who face stringent filing requirements at the GAO, but it was not long lived. In February 2021, the Federal Circuit reversed the COFC in this matter, holding “that the plain meaning of the statute is that the deadline in 31 U.S.C. § 3553(d)(4)(A) is five days after receipt of debriefing.” 987 F.3d 1025, 1029 (Fed. Cir. 2021). The Federal Circuit rejected the COFC’s determination that the statute contemplates a broader debriefing period as opposed to the specific day on which the protestor receives its debriefing.

DoD contractors can take away two key points from NIKA Technologies. First, the Federal Circuit was clear that “the two-day period for questions [under the DoD enhanced debriefing regulations] occurs within the five-day window for filing a protest.” 987 F.3d at 1029. Second, the Federal Circuit acknowledged that § 3553(d)(4)(B) specifically states the five-day filing deadline does not begin running until the government issues any responses to additional questions submitted under the enhanced debriefing regulations. See id. at 1029, n.1. Thus, while the contractor in NIKA Technologies filed its protest late because it never submitted any additional questions that would alter the debriefing end date, DoD contractors who timely submit such questions can wait to receive their responses before the clock on the CICA stay starts running.

Conclusion

Contractors should be aware of the Safeguard opinion because it confirms the COFC’s authority to hear a protest based upon an agency’s breach of an implied-in-fact contract in the procurement context. Additionally, to avoid future timeliness issues, contractors should review the NIKA Technologies opinion discussing the interplay of CICA stay filing requirements and DoD enhanced debriefing regulations. Contractors are encouraged to read these decisions in their entirety and discuss their relevancy to any pending matters with counsel.

Watt Tieder is one of the largest construction boutique law firms in the United States, with a diverse and experienced team of attorneys representing many of the world’s leading corporations, developers and contractors on both domestic and international projects. We represent more than half of the Top 30 Engineering News Record contractors and most of the nation’s top sureties. With offices in six cities in the United States, the firm is a dynamic, mid-size boutique that provides knowledgeable and practical legal representation to the construction, surety, government contracts and bankruptcy industries world-wide. 

The  views expressed in this article are not necessarily those of ConsensusDocs. Readers should not take or refrain from taking any action based on any information without first seeking legal advice