This blog previously covered the Federal Circuit’s decision in Percipient.ai, Inc. v. United States, which addressed bid protest jurisdiction and standing at the Court of Federal Claims (“COFC”), and seemed to potentially open the door to a new category of protests. Now, in an en banc ruling, the Federal Circuit vacated that decision and reached a different conclusion on bid protest standing. The Federal Circuit left the jurisdictional questions unresolved, but even if future decisions construe COFC’s jurisdiction broadly, the Federal Circuit’s decision on standing will likely limit the universe of new protests that might otherwise result from such a broad construction of jurisdiction.
Background
Percipient.ai centers on an already-awarded task order concerning an artificial intelligence computer vision system. Percipient had not competed for the task order, but it wanted to perform as a subcontractor. However, the prime contractor chose to not subcontract with Percipient. Percipient then protested, alleging that the agency violated 10 U.S.C. § 3453, which obligated the agency to require the prime contractor to incorporate commercial products to the maximum extent practicable.
In June 2024, a panel of the Federal Circuit concluded that COFC had jurisdiction and that Percipient had standing to bring its protest. When assessing standing, the panel observed that, in a typical bid protest, only an “actual or prospective” bidder or offeror could constitute an “interested party.” However, the panel found that a different standard applied when “the challenged harm-causing action is not the solicitation, the award, or the proposed award of a contract,” but is instead the violation of a statute or regulation (i.e., the “third prong” of the Tucker Act, 28 U.S.C. § 1491(b)(1)). The panel further concluded that, “in the context of . . . alleged violations of 10 U.S.C. § 3453 without challenging the contract, an interested party includes an offeror of commercial or nondevelopmental services or items whose direct economic interest would be affected by the alleged violation of the statute.”
On November 22, 2024, the Federal Circuit announced that it would rehear the matter en banc to revisit the question of standing (while declining to revisit the other issues in the case).
Majority Decision in En Banc Proceeding
In a 7-4 decision, the Federal Circuit concluded that the Tucker Act’s definition of “interested party” is limited to “an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract, regardless of the type of challenge brought.”
The Federal Circuit’s analysis centered on the following points:
- The court has “long held” that the definition of “interested party” is limited to actual or prospective bidders or offerors, and there is “no reason to depart from this settled interpretation.”
- Because “a single term carries the same meaning throughout a single sentence,” the definition of “interested party” should not “change based on the ‘prong’ under which a party brings a challenge.”
- “Congress specifically chose to use” a term with “a well-known meaning in procurement law,” and there was “no indication in the statutory history . . . that Congress reversed course and decided to markedly expand the identities of the parties who could sue.”
The Federal Circuit thus concluded that Percipient lacked standing to bring its bid protest before COFC.
Dissenting Opinion
In an opinion by Judge Stoll, four judges dissented from the majority decision. According to the dissent, the definition of an “interested party” should include any “party with an interest in any alleged violation of a statute or regulation in connection with a procurement or a proposed procurement.” The dissent reasoned that this definition gave “real and consistent meaning” to all of the language in the Tucker Act, including the “third prong.”
Takeaways
The Federal Circuit’s en banc decision in Percipient.ai preserves the long-established test for bid protest standing at COFC, maintaining existing limits on the universe of potential protesters. However, it remains to be seen whether Percipient will file a petition for certiorari at the United States Supreme Court. It also remains to be seen whether the other conclusions reached in the prior Percipient.ai decision — including whether COFC has bid protest jurisdiction over what are sometimes referred to as matters of contract administration — will resurface in a future case. This area continues to merit close attention.