Quick Take on Two Protests: Jurisdictional Quagmire for Protesting OTA Awards
A tale of two bid protests challenging awards of other transaction agreements ("OTA"), both of which were dismissed for lack of subject matter jurisdiction. On the one hand, the Court of Federal Claims determined that an Air Force OTA award was neither a "procurement contract" nor "in connection with" a procurement, and therefore it did not have Tucker Act jurisdiction to hear the case. [1]
On the other hand, a U.S. District Court determined that: 1) an Army OTA was a contract and therefore the Tucker Act precludes a waiver of sovereign immunity, and 2) the OTA was connected to an eventual procurement and thus it did not have jurisdiction to hear the case because the ADRA's sunset provision placed exclusive bid protest jurisdiction under the Tucker Act with the Court of Federal Claims. [2]
This Quick Take provides a brief overview of what happened in each case.
SpaceX – U.S. Court of Federal Claims
On August 26, 2019, in Space Exploration Technologies Corp. v. United States, the U.S. Court of Federal Claims ("COFC") held that it did not have subject matter jurisdiction to hear a bid protest challenging the Air Force's award of launch services agreements ("LSA") pursuant to its OTA authority. See 10 U.S.C. §§ 2371(a); 2371b(a)(1). The LSA competition was part of the Air Force's multi-phase procurement for launch services.
In SpaceX, COFC determined that the LSA awards were not "procurement contracts" because OTAs are statutorily defined as transactions that are "other than contracts" and were thus not subject to the Federal laws and regulations applicable to procurement contracts. [3] As a result, COFC concluded that it did not have jurisdiction to hear the protest under Federal Circuit precedent, which makes clear that Tucker Act jurisdiction is “is exclusively concerned with procurement solicitations and contracts.” [4] COFC also found that the LSA award competition was not "in connection with a procurement or proposed procurement" (i.e., the second phase of the Air Force's procurement for launch services) within the meaning of Tucker Act jurisdiction.
Because COFC determined it didn't have subject matter jurisdiction over SpaceX's protest, it transferred the case, at SpaceX's request, to the U.S. District Court for the Central District of California. In so doing, SpaceX will likely invoke jurisdiction under the Scanwell line of cases. See Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859 (D.C. Cir. 1970).
MD Helicopters – U.S. District Court for the District of Arizona
On Friday, January 24, 2020, in MD Helicopters Inc., v. United States, the U.S. District Court for the District of Arizona held that it did not have subject matter jurisdiction to hear a challenge to the Army's award of a Future Attack Reconnaissance Aircraft Competitive Prototype (“FARA CP”) OTA pursuant to the same OTA authority. See 10 U.S.C. §§ 2371(a); 2371b(a)(1). [5]
In MD Helicopters, the Court first determined that the Tucker Act precludes a waiver of sovereign immunity in MD Helicopters' suit because its claim was based in contract (i.e., the Court of Federal Claims has exclusive jurisdiction). In that respect, the Court determined the OTA was a contract because it governed "virtually every aspect" of the relationship between parties, and it included price, performance obligations and intellectual property rights, among other provisions (i.e., all the features of a contract were present). The Court found unpersuasive DoD OTA Guidance and Congressional Research Service documents to show that the “contracts” in DoD's OTA statute means “procurement contracts” (i.e., that the OTA was really not a contract). [6] In the Court's view, these documents demonstrated that OTAs were merely considered "other than contracts" to indicate that they are not subject to Federal procurement laws and regulations. Ultimately, the Court found that because MD Helicpters' "source of rights stems from a potential contract with the government, the APA does not waive sovereign immunity with respect to its claim for injunctive relief in this Court." [7]
Next, the Court determined that it did not have bid protest jurisdiction under the Tucker Act because the Administrative Dispute Resolution Act (the "ADRA") eliminated U.S district courts’ jurisdiction under the Tucker Act to hear bid protests that they formerly could hear under the Scanwell line of cases. [8] In determining that the Court lacked bid protest jurisdiction, the Court focused on the statute's "in connection with" language and distinguished the case from SpaceX. In that regard, the Court determined that the cases were different because MD Helicopters' "present objection relates far more directly to an eventual procurement than the solicitation at issue in [SpaceX]." The Court reasoned that the two cases were different because the FARA CP OTA involved one solicitation and because any offeror not selected in any phase of the FARA CP program would be excluded from the Army's eventual procurement of attack helicopters. Notably, because the Court determined that the OTA was connected to a procurement, it did not need to consider whether the OTA was itself a "procurement." As a result, the Court noted that there was "no disharmony between the ADRA and the other laws that the Army identifies."
What This Means
The DoD's use of OTAs is on the rise. Given that OTA awards can be a lucrative way to enter the government contracting marketplace without Federal past performance, the ability to challenge OTA awards is something that interests many traditional and non-traditional government contractors alike.
To that end, it will be interesting to see how this unfolds at both COFC and other U.S. District Courts. Notably, because COFC judges are not bound by each other's decisions, it is possible that another COFC judge could rule it has jurisdiction under the Tucker Act to hear a bid protest challenging the award of an OTA (such a decision would likely end up on appeal to the Federal Circuit). [9]
Lastly, SpaceX is still litigating its protest in the Central District of California, where sealed motions have been filed. So, it will also be interesting to see how that California District Court rules, as well as any other OTA protests that may be filed in other U.S. District Courts (including any appeals). Ultimately, given this jurisdictional quagmire surrounding post-award OTA protests, contractors may need Congress to step in and clarify this issue.
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[1] The Tucker Act grants the U.S. Court of Federal Claims exclusive jurisdiction over bid protests brought 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.” 28 U.S.C. § 1491(b)(1).
[2] In 1996, Congress passed the Administrative Dispute Resolution Act ("ADRA") which contained a sunset provision that terminated the district courts’ jurisdiction over Tucker Act cases on January 1, 2001. See ADRA, Pub. L. No. 104-320, § 12(d), 110 Stat. 3870, 3874.
[3] 10 U.S.C. § 2371(a); see MorphoTrust USA, LLC, B-412711, May 16, 2016, 2016 CPD ¶ 133; see also Congressional Research Service, “Department of Defense Use of Other Transaction Authority: Background, Analysis, and Issues for Congress” at p. 7-8, Feb. 22, 2019, available at https://crsreports.congress.gov/product/pdf/R/R45521.
[4] See Res. Conservation Grp., LLC v. United States, 597 F.3d 1238, 1245 (Fed. Cir. 2010); see also United States v. Testan, 424 U.S. 392, 399 (1976) (“[T]he United States, as sovereign, ‘is immune from suit save as it consents to be sued . . . and the terms of its consent to be sued in any court define that court’s jurisdiction to entertain the suit.’”) (citation omitted).
Interestingly, COFC noted (footnote 4) that it did not reach the issue of whether OTAs generally fall beyond COFC's jurisdiction under the Tucker Act (i.e., COFC only concluded that the LSAs at issue here were not procurement contracts).
[5] The MD Helicopters opinion was filed under seal. Following a joint stipulation, the Court subsequently unsealed the opinion on January 30, 2020.
[6] See supra note 3; see also Department of Defense, "Other Transactions Guide," available at https://www.acq.osd.mil/dpap/cpic/cp/docs/OT_Guide_(Nov_2018)_Final.pdf.
[7] Interestingly, under the Ninth Circuit, "potential contracts" fall within the scope of Tucker Act jurisdiction.
[8] See supra note 2.
[9] The SpaceX opinion notes that both SpaceX and the Government agreed that the LSAs were not "procurement contracts" and the LSA solicitation was not a "procurement."
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