Welcome to Jenner & Block’s Government Contracts Legal Round‑Up, a biweekly update on important government contracts developments. This update offers brief summaries of key developments for government contracts legal, compliance, contracting, and business executives. Please contact any of the professionals at the bottom of the update for further information on any of these topics.
Federal Circuit Court Cases
M.R. Pittman Group, LLC v. United States, Fed. Cir. 2021-2325 (May 22, 2023)
- The Federal Circuit confirmed that the Blue & Gold bid protest timeliness rule is not jurisdictional.
- Although several Court of Federal Claims (COFC) decisions have previously recognized that Blue & Gold does not carry jurisdictional weight, the COFC dismissed the underlying protest for lack of jurisdiction as untimely.
- On appeal, the Federal Circuit confirmed that Blue & Gold is not jurisdictional, but also affirmed that the protest was untimely and therefore properly denied on the merits.
While the bottom-line outcome looks the same in this case, it is important to have clarity from the Federal Circuit as to whether rules like Blue & Gold are jurisdictional. Jurisdictional rules are very special; they cannot be tolled or waived, and courts must go out of their way to independently confirm jurisdiction. If Blue & Gold were jurisdictional, for example, the COFC and Federal Circuit would be required to dismiss a protest sua sponte under Blue & Gold even if no party argued the issue. To be sure, Blue & Gold is still special and demands careful attention. As the Federal Circuit confirmed in this case, Blue & Gold can still be the deciding factor for the merits of a protest. And, even if Blue & Gold is not dispositive, timely prosecution of a protest may also impact the COFC’s assessment of injunctive relief.
Percipient.ai, Inc. v. United States, No. 23-28C (Fed. Cl. May 24, 2023)
- In the latest development in Percipient.ai’s protest of the National Geospatial Intelligence Agency’s alleged violation of FASA’s requirement for agencies to procure commercial or non-developmental solutions to the maximum extent practicable, Percipient.ai recently filed its notice of appeal to the Federal Circuit challenging the Court of Federal Claims’s decision to dismiss its protest for lack of subject matter jurisdiction.
- In March 2023, the court had initially ruled in favor of Percipient.ai in an opinion that asserted that the court had jurisdiction over the protest. Following the defendant and defendant-intervenor’s motion for reconsideration, the court revisited this jurisdictional question and reversed course. Upon further review, the court granted the defendant and defendant-intervenor’s motion to dismiss, concluding that the FASA task order bar applied to divest the court of jurisdiction as Percipient.ai’s protest was directly and causally related to the agency’s issuance of a task order. In so doing, the court rejected Percipient.ai’s argument that the task order bar did not prevent jurisdiction where its protest challenged that the agency had violated the statute after its issuance of the task order.
Percipient.ai’s notice of appeal provides the Federal Circuit with an opportunity to answer important questions on the scope of the FASA task order bar that has been percolating in several recent decisions in the Court of Federal Claims. Contractors should be mindful of how the Federal Circuit may resolve the key jurisdictional issues posed by FASA, especially given the prevalence of task orders as a favored contracting vehicle and its implications on the availability of different protest forums.
Consorzio Stabile GMG S.c.ar.l., ASBCA No 62753 (May 1, 2023)
- The ASBCA issued a decision converting a termination for default by the Navy to a termination for convenience.
- The default termination stemmed from a task order for the design and construction of a vestibule in a building in Bahrain.
- In terminating for default, the Navy cited the contractor’s failure to perform the required work within the time specified in the contract.
- On appeal, the Navy changed its rationale and tried to justify its termination with the contractor’s failure to make progress on the project.
- The contractor took issue with the change in rationale, but the ASBCA did not. The board determined it was permissible for the Navy to change its rationale as long as the Navy could show that at the time of termination, the contractor had failed to make progress.
- On substance, however, the board agreed with the contractor. The ASBCA held that the Navy could not terminate for default based on the failure to make progress because the Navy had waived the contract completion date and had failed to establish a new one.
- The completion date was important because to justify a default termination for failure to make progress, an agency must show there was no reasonable likelihood the contractor could perform the entire project within the time left on the contract.
- In holding that the Navy waived the completion date, the ASBCA looked at the Navy’s: failure to communicate that time was of the essence; failure to issue a stop work order; issuance of modifications for work that would require months beyond the completion date; and failure to reserve rights or assess liquidated damages.
The decision is a good reminder of what the government must show to substantiate the drastic step of terminating for default.