By: Maria Panichelli and Jacqueline Ryan
Under the doctrine of sovereign immunity, the United States “is immune from suit save as it consents to be sued.”1Thus, a plaintiff’s ability to sue the government is limited to circumstances where Congress has specifically waived sovereign immunity. The Tucker Act is a federal statute that both waives sovereign immunity and grants subject-matter jurisdiction to the Court of Federal Claims (COFC) for matters relating to contracts with the United States and, more generally, for federal procurements. Specifically, the Tucker Act confers upon the COFC subject matter jurisdiction to hear lawsuits arising from express or implied contracts with the federal government. This includes both bid protests and claims covered by the Contract Disputes Act (CDA). While addressing the jurisdictional threshold of whether one can sue in the COFC may seem simple, confusion can easily arise.
For attorneys who regularly practice in the federal district courts, establishing subject matter jurisdiction is, with limited exceptions, thought of as a preliminary and perfunctory matter. Limited analysis is required. In contrast, for attorneys who practice in the COFC, jurisdiction can be a very different animal. Moreover, if one cannot establish that the COFC has jurisdiction, there may be no timely remedy available or, in some instances, no adequate remedy at all.
Before determining whether or not the COFC has jurisdiction, one first must determine whether the Tucker Act has, in fact, conferred subject matter jurisdiction upon the COFC, thereby enabling it to adjudicate the case. This can be difficult, and this difficulty most often arises in one of two areas.
The first area of confusion concerns whether a case is based on an “object[ion] 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” pursuant to 28 U.S.C. § 1491(b), or based on “a claim against the United States founded . . . upon any express or implied contract with the United States” pursuant to 28 U.S.C. § 1491(a). Stated more simply, is the case a true bid protest, or is it a claim made in connection with a contract that has already been awarded, that is, is it a CDA claim? The Tucker Act grants the COFC jurisdiction over both, but, as we will discuss, there are additional administrative requirements one must fulfill in connection with a CDA claim; until these requirements are met, the COFC has no jurisdiction.
The second area of confusion concerns the complicated interplay between the Tucker Act and the Administrative Procedures Act (APA). The APA is a separate and unrelated federal statute that also contains a waiver of sovereign immunity. Specifically, the APA permits the government to be sued for nonmonetary damages when a government agency acts unlawfully.2 While the APA includes a waiver of sovereign immunity in limited circumstances, there is not “an implied grant of subject-matter jurisdiction to review agency actions.”3 As such, the APA itself does not provide a court with subject matter jurisdiction. However, one can generally establish jurisdiction for an APA claim pursuant to federal question jurisdiction, 28 U.S.C. § 1331. While the APA and the Tucker Act are unrelated, the interplay between the two can add to the confusion surrounding COFC jurisdiction. This difficulty arises in determining whether a government action constituted an “alleged violation of statute or regulation in connection with a procurement or a proposed procurement”4 or if it was simply unlawful agency action unrelated to that procurement. In the former, the Tucker Act confers jurisdiction on the COFC. As to the latter, COFC jurisdiction is not conferred under the Tucker Act and one must then determine whether there is a basis for jurisdiction under the APA and 28 U.S.C. §1331. This type of analysis is employed, for example, when challenging actions taken by an agency in connection with a client’s eligibility to participate in the various Small Business Administration (SBA), Department of Veterans’ Affairs (VA), and other agency small business programs.
The purpose of this article is to provide a background on the Tucker Act, to examine the interplay between the Tucker Act and the APA, and to provide guidance on dealing with jurisdictional issues that are fundamental in practicing before the COFC.
Tucker Act: Bid Protest or CDA Claim?
The Tucker Act was enacted in 1887. It expanded the jurisdictional limits of the Court of Claims, the predecessor to the COFC, by waiving “the federal government’s sovereign immunity from suit and authoriz[ing] monetary claims ‘founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort.’”5 The current version of the statute is codified at 28 U.S.C. § 1491(a).
In 2001, the Administrative Dispute Resolution Act amended the Tucker Act to expand the COFC’s jurisdiction yet again.6 Specifically, it granted the COFC exclusive jurisdiction over bid protests.7 Bid protests are “legal challenges brought by bidders against the way the Government has conducted its procurements.”8 The Tucker Act, 28 U.S.C. § 1491(b), as amended by the Administrative Dispute Resolution Act, states as follows:
Both the United States Court of Federal Claims and the district courts of the United States shall have jurisdiction to render judgment on 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. Both the United States Court of Federal Claims and the district courts of the United States shall have jurisdiction to entertain such an action without regard to whether suit is instituted before or after the contract is awarded.9
Thus, in its current form, the Tucker Act confers two types of jurisdiction on the COFC. First, under 28 U.S.C. § 1491(a), the COFC has jurisdiction to render decisions on claims that emanate from contracts with the United States that have already been awarded. Litigation regarding such claims must follow the requirements of the Contract Disputes Act of 1978. Second, under 28 U.S.C. § 1491(b), the COFC has jurisdiction over bid protests.
As referenced above, there can be confusion about whether or not an action arises out of the procurement process (i.e., a bid protest) or out of a contract already in place (i.e., a CDA claim). As to the former, the COFC would have bid protest jurisdiction. In the latter case, however, the action would be more properly characterized as a CDA claim. The “Federal Circuit has made it crystal clear that the [CDA] is the ‘exclusive mechanism’ for the resolution of disputes arising . . . in contract management.”10 “When the [CDA] applies, it provides the exclusive mechanism for dispute resolution.”11 While the COFC does, in fact, have jurisdiction over CDA claims, jurisdiction only vests after a claim is filed by the contractor and a final decision is issued by the contracting officer.12 At that point, a contractor can appeal an adverse decision to the COFC. In other words, the COFC has jurisdiction over CDA claims against a governmental agency only after a claimant exhausts its administrative remedies against that agency. In order to avoid dismissal of the claim for lack of jurisdiction, the plaintiff must adhere to all of the procedural requirements of the CDA. Thus, if a matter is governed by the CDA, and a complaint is filed with the COFC prior to adhering to these requirements, the COFC has no jurisdiction to act.
Bid Protest Jurisdiction or CDA Claim?
As explained by the Honorable Charles F. Lettow in the 2005 COFC case OTI America, Inc. v. United States,13 the language of the Tucker Act confers COFC jurisdiction over three types of bid protests.14 Pre-award and post-award protests constitute the first two types.15 The third pertains to those premised upon an alleged violation of law in connection with a procurement or proposed pro-curement.16 While the first two categories are “are well-recognized and relatively standard proceedings,” the third is much “more amorphous and indefinite.”17
Let us quickly consider what constitutes pre-award and post-award protests. Pre-award protests generally arise in one of two circumstances: first, when there is an error in the solicitation itself (these errors can include, inter alia, inherently contradictory clauses, the omission of required information, or the inclusion of impermissible provisions), and second, when the pre-award protest is based upon the improper exclusion of the protestor from the competitive range in connection with a FAR Part 15 (Contracting by Negotiation) procurement.
Post-award protests, on the other hand, typically involve challenges to an agency action stemming from a source selection decision and award. The issues involved in post-award protests can vary, depending upon the type of procurement—Sealed Bidding pursuant to FAR Part 14 or Contracting by Negotiation pursuant to FAR Part 15. FAR Part 15 requires a procuring agency to determine what is the “best value” for the government, which requires an evaluation of factors other than price as part of the selection process. Protests brought in this context most often revolve around allegations that the procuring agency improperly rated, or weighed, evaluation factors such as past performance or technical capability. Alternatively, in a FAR Part 14 (Sealed Bidding) procurement, the lowest responsible and responsive bidder wins: price is the most important and, in effect, the only factor.18 Thus, FAR Part 14 post-award protests most often concern an alleged improper evaluation of price or a technical challenge grounded in what a bidder included, or failed to include, as part of its bid submission.
The third type of bid protest over which the COFC has jurisdiction under the Tucker Act is not as straightforward. Generally, this prong of section 1491(b) has been given a broad interpretation. As set forth above, it covers alleged violations of law in connection with a procurement, or proposed procurement. “Congress has defined the term ‘procurement’ to include ‘all stages of the process of acquiring property or services, beginning with the process for determining a need for property or services and ending with contract completion and close-out.’”19 Indeed, where “an agency’s actions under a statute so clearly affect the award and performance of a contract,” a court should have “little difficulty concluding that that statute has a ‘connection with a procurement.’”2° As long as a “statute has a connection to a procurement proposal, an alleged violation suffices to supply jurisdiction.”21 To this end, the third prong has been described as “very sweeping in scope.”22 In fact, when Congress amended the Tucker Act through the Administrative Dispute Resolution Act, “its goal was to grant [the Court of Federal Claims] jurisdiction ‘over the full range of procurement protest cases.’”23 Therefore, “[i]n this context, the meaning of ‘procurement’ . . . tracks the broad definition of the term in 41 U.S.C. § 4°3(2).”24 This means “a procurement ‘includes all stages of the process of acquiring property or services, beginning with the process for determining a need for property or services and ending with the contract completion and closeout.’”25 The term “in connection with a proposed procurement,” by definition, “involves a connection with any stage of the federal contracting acquisition process.”26 Thus, based upon the wide jurisdictional net that has been seemingly cast under the third prong of the Tucker Act, a protesting party should have little trouble advancing its dispute at the COFC. However, in practice, the net is not always so wide.
Case Review: Snared by the Tucker Act and Those That Got Away
We shall start our analysis with cases found to be within the purview of this third prong under the Tucker Act. This type of protest is often, although certainly not exclusively, invoked in “override” cases,27 “where a bid protest is filed with [sic] GAO triggering an automatic stay of the procurement action under the Competition in Contracting Act. That Act allows the procuring agency to override the automatic stay if certain findings regarding exigent circumstances are made in writing by the head of the procuring activity.”28 If the agency decides that exigent circumstances exist and does, in fact, attempt to circumvent CICA’s automatic stay, the protesting party can run to the COFC and attempt to enforce the stay. This type of protest has also been used to establish jurisdiction “when an agency endeavored to expand the scope of a contract to make a new procurement without competitive bidding.”29
Jurisdiction has also been found under the third prong in cases of “down select” contracts.3° These are cases in which “the agency has entered into identical multi-award contracts that essentially involve a competition in stages to develop a new product, and ultimately procure that product, and the protest concerns objections to the agency’s actions in eliminating one of the competitors at an intermediate stage.”31
In contrast, matters of contract administration over which the COFC does not have jurisdiction include the government’s decision to terminate or resolicit a contract.32 For example, in Data Monitor Systems, the COFC found that Tucker Act jurisdiction was not invoked by the Air Force’s decision to resolicit a contract because the plaintiff could not point to any specific statute or regulation that was violated by the Air Force’s action. The court’s position was as follows:
[P]laintiff contends that the entire statutory scheme that governs procurements and permits agencies to reopen discussions is violated if the agency exercises its powers arbitrarily. Such a sweeping grant of jurisdiction, however, is not what section 1491(b)(1) intends. Rather, the violation claimed must be rooted in a specific statute or regulation and plaintiff alleges no such violation here.33
Similarly, the COFC, many times over, has held that the government’s failure to exercise an option is governed by the CDA and is not an action arising from the Tucker Act.34 For example, in Government Technical Services, the plaintiff argued that it was “entitled to choose between the CDA and the [Tucker Act] as a jurisdictional basis for an action based on the government’s failure to exercise an option on an existing contract.”35 However, in keeping with precedent, the court held that Tucker Act jurisdiction was not available and went on to point out that the plaintiff “was not a ‘prospective bidder’ because the decision to exercise the option or not was made by the government concerning an existing contract without a competitive process.”36
Tucker Act or APA?
As set forth above, one of the most confusing questions in analyzing COFC jurisdiction is determining whether agency action constituted an “alleged violation of statute or regulation in connection with a procurement or a proposed procurement” or if it was simply an unlawful agency action, unrelated to a particular procurement. In the former case, the Tucker Act confers jurisdiction on the COFC. In the latter case, there is no such jurisdiction, though there might be district court jurisdiction under the APA. The confusion surrounding this analysis has been exacerbated by the government’s tendency to argue lack of jurisdiction regardless of where the matter is initiated. This issue is illustrated by two cases, one brought before the Court of Federal Claims and the other before the U.S. District Court for the District of Columbia.
In Miles Construction, LLC v. United States, 37 Miles Construction LLC (Miles), a service-disabled veteran, owned small business (SDVOSB), was the awardee for a SDVOSB set-aside contract. An unsuccessful bidder filed a size status and eligibility protest against Miles, claiming that Miles was nothing more than a “pass-through” for a non-SDVOSB firm. The protest advanced multiple allegations as to whether the service-disabled veteran owner (SDVO) was able to exhibit “unconditional control” of his company pursuant to 38 C.F.R. § 74.4.38 Ultimately, the VA’s Office of Small and Disadvantaged Business Utilization (OSDBU) discredited the allegation. However, after reaching this conclusion, OSDBU took it upon itself to perform an independent review of the SDVO’s “unconditional ownership” pursuant to 38 C.F.R. § 74.3.39 After reviewing Miles’ operating agreement—which had been previously vetted and approved by the VA during the program application process—OSDBU ultimately concluded that the SDVO did not possess “unconditional ownership” of Miles. As a result, OSDBU reasoned that Miles was not a legitimate SDVOSB. The protest was therefore sustained, but on grounds never raised by the protesting party. Based upon this ruling, Miles’ status as an SDVOSB was immediately cancelled and it was deemed ineligible for the award of the contract at issue.
Miles protested the VA’s decision in the COFC, relying upon the third prong of the Tucker Act as the jurisdictional foundation. Miles proffered that its protest was “in connection with a procurement” because the VA inconsistently applied a statute relating to SDVOSB/ VOSB Small Business Status Protests40 and a statute governing the VA’s Veteran’s Small Business Regulations41 in evaluating Miles’ eligibility to participate in the procurement process. The agency action of cancelling Miles’ status as an SDVOSB and removing it from the VetBiz database occurred as part of a protest stemming from a specific procurement. As such, because the cancellation of Miles’ SDVOSB status occurred as a result of a protest, Miles took the logical position that the VA’s misconduct was an “alleged violation of statute or regulation in connection with a procurement or a proposed procurement.” Subject matter jurisdiction was thus conferred upon the COFC pursuant to the third prong of 28 U.S.C. § 1491(b)(1).
However, as often happens in bid protests under the third prong of the Tucker Act, the government responded to Miles’ complaint, in part, by asserting that the COFC did not have jurisdiction to hear the protest. The government initially argued that the case should be dismissed and refiled in federal district court. Ultimately, however, it was determined that jurisdiction was proper under the third prong of the Tucker Act and the case moved forward on the merits.
In contrast, Herrera Corp. v. U.S. Department of Veterans Affairs42 involved an SDVOSB entity that responded to two solicitations for SDVOSB set-aside proposals. Herrera was the apparent lowest responsive and responsible bidder in connection with both. However, prior to Herrera’s response to the solicitations, the VA had improperly identified Herrera in the VetBiz database where the agency would look to determine eligibility, such that Herrera did not appear to be eligible for award. The VA then improperly excluded Herrera from the database altogether for two months, for reasons wholly unrelated to a specific procurement. Because of this improper listing, the contracting officer determined that Herrera was ineligible to receive the awards of either of the set-aside contracts referenced above.
In response, Herrera filed suit against the VA in the U.S. District Court for the District of Columbia. It made a claim under the APA, alleging that the VA engaged in unlawful action in connection with Herrera’s status. Not surprisingly, the government responded by alleging that the district court did not have jurisdiction and asked for dismissal. The government argued that the Court of Federal Claims has exclusive jurisdiction over all claims involving an entity’s inability to secure a contract, in this case an SDVOSB contract, even if that inability is due to a contracting officer’s reliance on an underlying eligibility determination that had nothing to do with the procurement itself.
Contrary to the government’s claims, the Herrera case was properly before the district court. Herrera’s challenge was not made “in connection with a procurement” because the VA action that Herrera was objecting to was the improper exclusion of the company from the VA Vet-Biz database. That action occurred prior to, and independent from, the two solicitations at issue. While it is true that the ultimate result was that Herrera was found ineligible for these two set-aside contracts, the agency action that resulted in the ineligibility determination occurred outside the scope of the procurement process. For this reason, Herrera properly initiated its action in district court under the APA. Unfortunately, Herrera never advanced far enough for a judicial decision as to jurisdiction.43 Despite this, we believe that Herrera was properly filed in the district court as the improper agency action did not occur “in connection with a procurement” so as to trigger Tucker Act jurisdiction in the COFC.
A Jurisdiction Bridge to Nowhere
As demonstrated here, there can be confusion regarding whether claims should be brought in the COFC or in the district court under federal question jurisdiction arising from a violation of the APA. As set forth above, the APA contains “a broad waiver of sovereign immunity for actions seeking relief other than money damages against federal agencies, officers, or employees.”44 Specifically, the APA allows for judicial review of allegations of unlawful agency ac-tion.45However, the “APA excludes from its waiver of sovereign immunity (1) claims for money damages, (2) claims for which an adequate remedy is available elsewhere, and (3) claims seeking relief expressly or impliedly forbidden by another statute.”46 While it may appear at first glance as though the jurisdiction of the district court under the APA may overlap with the jurisdiction of the COFC, when Congress amended the APA, “it made it clear that it did not intend that amendment to have any effect on the exclusive jurisdiction of the Court of Claims over suits for money damages falling within the jurisdiction of that court.”47 Indeed, “[b]ecause the APA expressly excludes judicial review in District Court when an ‘adequate remedy’ lies in another court, the Federal Circuit has repeatedly confirmed that the [COFC] retains its traditional and exclusive jurisdiction to hear claims against the federal government that are adequately remedied by a money judgment.”48
Congress intended to maintain a clear distinction between the types of cases brought in federal district court under the APA and cases brought in the COFC under the Tucker Act. However, that intention is often frustrated. When it is, the result can be the legal equivalent to Alaska’s Bridge to Nowhere, as a litigant is tossed from one jurisdiction to another. It is not uncommon to file a bid protest in the COFC under Tucker Act jurisdiction only to have the government urge the court to dismiss for lack of jurisdiction, arguing that the matter belongs in district court, and for the same argument to arise or the same facts when the matter is initiated in district court. Although raised in a slightly different context, Judge Plager’s criticism in a 2012 case before the U.S. Court of Appeals for the Federal Circuit applies here:
Regrettably, this is not the first case in which the Government urged a district court to dismiss a case on the ground that jurisdiction belonged in the Court of Federal Claims and then, after suit was brought in the Court of Federal Claims, again urged dismissal on the ground that the Court of Federal Claims lacked jurisdiction. We hope our decision today will reduce the prevalence of these “jurisdictional ping-pong” games. The Government would be well advised to avoid taking positions in future litigations that open it up to the criticism that it has used its overwhelming resources to whipsaw a citizen into submission. At a minimum, the Government should consider an authoritative position on jurisdiction in cases such as this binding on the Government, just as appellate courts are encouraged by the Supreme Court to avoid wasteful jurisdictional litigation by accepting the jurisdictional determination of the first circuit that decides the jurisdictional issue.49
Professor Gregory C. Sisk has written extensively about this “jurisdictional ping-pong” in the context of claims by Native Americans and American Indian tribes against the government.50 While different from bid protests, the same interplay between the COFC and district court often arises in this specialized claim context. Professor Sisk suggests that,
[i]n recent years, the jurisdictional tug-of-war between the Court of Federal Claims (under the Tucker Act) and the District Court (under the APA) has been most sharply featured in the adjudication of a series of breach of trust claims presented by individual Native Americans and American Indian tribes against the federal government. While the governing principles and jurisdictional lines drawn in statutory waivers of sovereign immunity and accompanying jurisdictional enactments generally apply across the wide diversity of disputes involving the federal government, the problem of forum shopping has emerged most prominently in Indian breach of trust litigation since the late 1990s.51
He observed that, in the past ten years, the U.S. Court of Appeals for the Federal Circuit has had to issue a number of opinions clarifying the jurisdictional boundaries between the COFC and the district courts because plaintiffs had either “cleverly or mistakenly” characterized financial disputes as cases seeking injunctive or declaratory relief under the APA, which could be filed in the district court.52 According to Professor Sisk, the clear line delineating the jurisdictional boundary of the COFC was blurred when the U.S. District Court for the District of Columbia “asserted authority under the APA to adjudicate the management and evaluate the records of government-established financial accounts, which were used to distribute to individuals the profits derived from Native American resources held in trust by the United States.”53
As a result of this ruling, tribes began to recharacterize breach of trust disputes, which would have previously been filed as suits seeking money judgments in the COFC, as “equitable requests for an accounting of trust assets that purportedly could be filed in the District Court.”54 Professor Sisk notes that in some cases, tribal plaintiffs filed suits in both district court, seeking an accounting and restitution, and the COFC, seeking a monetary judgment.55 This forum shopping chaos was somewhat ameliorated by several court cases clarifying the jurisdictional boundaries between the COFC and the district court under the APA, and Professor Sisk concludes that “in light of these judicial developments, attempted detours from the [COFC] in cases arising from monetary damages with the federal government—in Indian breach of trust cases or otherwise— should be coming to an end.”56
While Professor Sisk analyzed the “tug of war” between the district court and the COFC in the context of tribal claims against the federal government, the underlying theme remains the same: there is deep jurisdiction confusion regarding whether to characterize lawsuits against the government under the Tucker Act or the APA. By issuing clarifying jurisdictional opinions in tribal claims, the judiciary provided guidance on where to file suit and helped to restructure the pathway to justice. This same judicial guidance is necessary in the context of bid protests, where, too often, the government urges dismissal for lack of jurisdiction in contexts where it is not warranted, or where it will lead to nothing more than delayed justice.
The best approach to preventing this “jurisdictional ping-pong” in the context of bid protests would be for the COFC to consistently adopt a broad interpretation of the Tucker Act. It must assert jurisdiction over unlawful agency actions when they occur in connection with a procurement. The key to determining where Tucker Act bid protest jurisdiction is proper is to isolate when, temporally, the unlawful agency action occurred and whether the unlawful agency action is related to a particular procurement. As seen in Herrera, the unlawful agency action occurred prior to the firm’s participation in the procurement, whereas in Miles, the unlawful agency action occurred as a result of a protest stemming from a particular procurement. While this analysis is not always simple to apply, it can be a helpful starting place to determine COFC jurisdiction.
Determining whether the COFC has jurisdiction requires an analysis of several complex legal issues. The jurisdictional analysis begins with a determination of whether the Tucker Act has conferred jurisdiction upon the COFC. While this may seem simple, confusion can arise in two areas for even the most experienced federal contracting attorneys. The first area that can elicit confusion is whether the case at hand is a true bid protest or a CDA claim. As explained above, while the Tucker Act grants the COFC jurisdiction over both types of actions, CDA claims require a party to complete additional administrative requirements. The second area of confusion arises because of the interplay between the Tucker Act and the APA. It can be difficult to determine whether a government action constitutes an “alleged violation of statute or regulation in connection with a procurement or proposed procurement,” thus invoking the third prong of the Tucker Act, or whether the government action was simply unlawful with no relation to a particular procurement, which can trigger the APA. This article aimed to clarify this jurisdictional confusion and provide guidance on how to tackle this difficult area of the law. By thoroughly analyzing jurisdiction issues prior to commencing suit, attorneys can cut back on costs and time-consuming motions practice debating the merits of subject matter jurisdiction in the COFC.
Published in The Procurement Lawyer, Volume 51, Number 3, Spring 2016. © 2016 by the American Bar Association. Reproduced with permission. All rights reserved.