Federal Circuit Panel Issues Landmark Decision Addressing Tucker Act Standing and COFC Jurisdiction in Task Order Protests
The Federal Circuit’s recent decision in Percipient.AI, Inc. v. United States represents a major development in its case law regarding bid protest standing and task order protest jurisdiction. In the decision—which has rightly received significant attention this month—a three-judge panel of the U.S. Court of Appeals for the Federal Circuit held that Percipient, which sells a commercial AI-enabled intelligence analysis platform called “Mirage,” was permitted to bring a bid protest against the government alleging violations of a procurement statute even though Percipient did “not challenge a contract, proposed contract, or solicitation for a contract between the government and its contractor or the issuance of a task order under such a contract.”
Percipient’s bid protest was related to CACI, Inc.-Federal’s Indefinite Delivery/Indefinite Quantity (IDIQ) contract and ensuing task order for integrating the National Geospatial-Intelligence Agency (NGA)’s “processes for obtaining and storing visual intelligence data . . . with computer vision (CV), a form of artificial intelligence.” According to Percipient, it did not bid on the IDIQ contract or the task order, challenge the underlying solicitation, or challenge the awards to CACI, but it hoped and expected that CACI would use Mirage as a component of the overall solution provided to NGA. Percipient further alleged that after NGA awarded the IDIQ contract and task order to CACI, Percipient pitched CACI and NGA on Mirage, but CACI decided to build its own software and NGA declined to evaluate Mirage as a possible (and ostensibly less expensive) alternative to CACI’s to-be-built system.
Percipient then filed a bid protest against NGA under the Tucker Act, which establishes the Court of Federal Claims (COFC)’s jurisdiction to hear bid protests. Percipient claimed that NGA’s actions violated 10 U.S.C. § 3453, which sets out a government preference for commercial products and commercial services, by failing to conduct the necessary market research “to determine if commercial or nondevelopmental items are available that can meet” its needs and by instead allowing CACI to build a software program from scratch to provide the services sought by NGA.
COFC dismissed Percipient’s bid protest, concluding that it lacked subject matter jurisdiction because of the Federal Acquisition Streamlining Act (FASA)’s task order protest bar, which prohibits COFC from hearing bid protests brought “in connection with the issuance or proposed issuance of a task or delivery order.” 10 U.S.C. § 3406(f). Percipient appealed COFC’s dismissal to the Federal Circuit.
In the Percipient decision, issued on June 7, 2024, a Federal Circuit panel reversed COFC, effectively allowing Percipient’s bid protest to proceed. The Federal Circuit’s decision included three significant holdings. First, the Federal Circuit explained that the FASA prohibition on task order protests at COFC did not apply to Percipient because Percipient did “not challenge the issuance or proposed issuance of a task order” or allege that the task order was “deficient or forced the alleged statutory violations to occur”; rather, Percipient’s bid protest “largely challenge[d] the failure of NGA and its contractor to properly review its Mirage product and thereby conduct the necessary research required by statute before developing the CV system.”
Second, and relatedly, the Federal Circuit panel concluded that Percipient’s protest fell within the third prong of the Tucker Act, which provides for COFC jurisdiction when a protester alleges “any . . . violation of statute or regulation in connection with a procurement or a proposed procurement.” 28 U.S.C. § 1491(b)(1). The Federal Circuit has previously stated that “in connection with a procurement or proposed procurement” involves “a connection with any stage of the federal contracting acquisition process, including ‘the process for determining a need for property or services.’” Distributed Sols., Inc. v. U.S., 539 F.3d 1340, 1346 (Fed. Cir. 2008). This panel relied on that broad interpretation of the Tucker Act in finding that Percipient brought its protest “in connection with the procurement,” since the protest alleged that NGA violated the commercial items and services statute as it pertained to services related to the broader CV system procurement.
Third, the Federal Circuit panel held that in the context of a bid protest involving alleged violations of 10 U.S.C. § 3453, “an offeror of commercial or nondevelopmental items whose direct economic interest would be affected by the alleged violation of the statute,” like Percipient, was an “interested party” with standing to bring the protest action. The Federal Circuit explained that the meaning of “interested party” with respect to a bid protest brought only under the third prong of the Tucker Act (“alleged violation of statute or regulation in connection with a procurement or a proposed procurement”) was an issue of first impression. Given this novelty, it declined to be bound by earlier decisions establishing that “interested party” means “disappointed offeror.”
It will be important to closely track the impact of this decision, which represents a significant development in the law of bid protests. Most immediately, it should be noted that the decision included a lengthy dissent from Judge Clevenger, who thought that FASA prohibited Percipient’s protest before COFC and that, in any event, Percipient did not have standing. The United States or CACI may very well seek a rehearing en banc at the Federal Circuit and/or seek review before the U.S. Supreme Court.
If Percipient remains good law, it will be interesting to see whether the Federal Circuit will expand its underlying principle to reach alleged violations of other procurement statutes where the protester isn’t directly challenging a particular solicitation, contract, or task order.
Additionally, some commentators have remarked that the Government Accountability Office (GAO) may choose to follow the Federal Circuit’s lead and allow subcontractors, or other entities that aren’t offerors or bidders on a particular solicitation, to establish interested party status and pursue a bid protest. We think this is unlikely, since the Competition in Contracting Act (CICA), the statute that establishes GAO’s bid protest jurisdiction, explicitly defines “interested party” as “an actual or prospective bidder,” and also specifically limits GAO to hearing written objections to solicitations, awards or proposed awards of contracts, cancellation of solicitations, termination or cancellation of an award, and “conversion of a function that is being performed by Federal employees to private sector performance.” See 31 U.S.C. § 3551. Thus, the scope of GAO’s jurisdiction as established by CICA is narrower than the COFC’s bid protest jurisdiction under the third prong of the Tucker Act which reaches “any . . . violation of statute or regulation in connection with a procurement or a proposed procurement.” The type of bid protest brought by Percipient does not seem to fall within one of the CICA categories.