January 19, 2021 Public Contract Law Journal

Federal Circuit Year-in-Review 2015 - The Federal Circuit Giveth, and the Federal Circuit Taketh

by Brian G. Walsh, Tara L. Ward, Gary S. Ward, Margaret E. Matavich, George E. Petel & Nina S. Rustgi

Brian G. Walsh (bwalsh@wileyrein.com): J.D., 2006, University of Pennsylvania Law School; B.A., 2002, Ursinus College. Mr. Walsh is an attorney in the Government Contracts practice at Wiley Rein LLP.

Tara L. Ward (tward@wileyrein.com): J.D., 2009, The George Washington University Law School; A.B., 2003, Princeton University. Ms. Ward is an attorney in the Government Contracts practice at Wiley Rein LLP.

Gary S. Ward (gsward@wileyrein.com): J.D., 2013, The George Washington University Law School; B.A., 2010, University of California, San Diego. Mr. Ward is an attorney in the Government Contracts practice at Wiley Rein LLP.

Margaret E. Matavich (mmatavich@wileyrein.com): J.D., 2014, The George Washington University Law School; B.A., 2011, Miami University. Ms. Matavich is an attorney in the Government Contracts practice at Wiley Rein LLP.

George E. Petel (gpetel@wileyrein.com): J.D. 2014, The George Washington University Law School; B.A., 2005, Swarthmore College. Mr. Petel is an attorney in the Government Contracts practice at Wiley Rein LLP.

Nina S. Rustgi (nrustgi@wileyrein.com): J.D., 2014, The George Washington University Law School; B.A., 2009, Yale University. Ms. Rustgi is an attorney in the Government Contracts practice at Wiley Rein LLP.

I. Introduction

In 2015, the U.S. Court of Appeals for the Federal Circuit invoked several principles more than once in deciding government contracts cases with dramatically different outcomes. In analyzing standing, considering exhaustion, interpreting contract terms, and navigating the applicability of government contract regulations to various government entities, the Federal Circuit issued at least one opinion favoring the contractor, and at least one favoring the government. The fact-specific nature of these decisions demonstrates that now, as ever, it is difficult to predict how the Federal Circuit will come out on a particular issue. Indeed, the court’s government contracts cases from 2015 demonstrate that the facts have become outcome determinative in even the more procedural of cases. Sorry, Homer, but if 2015 proves anything, it is that facts are not meaningless.1

The Federal Circuit’s decisions regarding protest standing provide the first example of how the court’s application of a particular principle resulted in different ends. In applying principles of timeliness and waiver, the court determined that one pre-award protester had standing and another did not. On the one hand, in CGI Federal Inc. v. United States,2 the Federal Circuit “giveth” when it determined that an offeror did have standing to pursue a pre-award protest at the Court of Federal Claims (COFC), even though the due date for submitting proposals — typically the deadline for filing a protest — had already passed.3 On the other hand, in Bannum, Inc. v. United States,4 the Federal Circuit “taketh” when it held that a putative contractor had waived its ability to protest solicitation provisions despite its having voiced concerns to the government.5 In particular, the court determined that mere expression of dissatisfaction regarding an amendment to a solicitation was not enough to avoid waiver;6 Bannum should have filed a formal protest to preserve its rights. In a slightly different context, in Tinton Falls Lodging Realty, LLC v. United States,7 the court appeared to expand bid protest standing to allow a large business to protest award in a small business competition — a decision that gave new legal remedies to large businesses while creating new threats to small business contractors to have their contracts taken away.8

The Federal Circuit also considered the extent to which contractors are required to exhaust administrative options before bringing suit, coming to different conclusions in each case. In Palladian Partners, Inc. v. United States,9 the court ruled that a contractor has to exhaust its administrative remedies before seeking judicial review of a North American Industry Classification System (NAICS) code protest, even where agency relief is precluded by regulation — taking away the original contract awardee’s ability to challenge the award to a new contractor under a different NAICS code.10 At the same time, in SUFI Network Services, Inc. v. United States,11 the Federal Circuit allowed a contractor to pursue a contract claim at the COFC without exhausting all of the procedural requirements set forth in the contract — giving the contractor a chance to recover funds it otherwise would not have.12

As in prior years, the Federal Circuit applied the plain meaning doctrine to interpret contract provisions, resulting in decisions favorable to both the government and contractors. These cases exemplify the fact-specific nature of the Federal Circuit’s jurisprudence. In EM Logging v. Department of Agriculture,13 the court applied plain meaning to determine whether a contractor’s allegedly “flagrant” disregard for contract terms justified termination.14 The Federal Circuit gave EM Logging the benefit of its determination that, even if EM Logging had violated the contract as alleged, the claimed violations did not rise to the level of “flagrant disregard” described in the termination clause.15 In Reliable Contracting Group, LLC v. Department of Veterans Affairs,16 the court applied the plain meaning doctrine to determine whether Reliable had met the contract’s requirement that Reliable provide “new” backup generators when it provided previously owned generators.17 According to the majority, to be “new,” the equipment must be both unused and in “fresh” condition, but need not be entirely free of cosmetic defects.18 Although the court found the factual record insufficient to resolve the case,19 the court’s construction of “new” to potentially allow four-year-old equipment to suffice was generous to say the least. Finally, in G4S Technology LLC v. United States,20 the Federal Circuit held that assurances from the government of a prime contractor’s financial viability were not enough to bestow thirdparty beneficiary status on a subcontractor, thereby taking away the subcontractor’s ability to collect payment for its services.21

The court also examined the extent to which different types of government entities are subject to the rules governing government contractors. In Colonial Press International, Inc. v. United States,22 the Federal Circuit affirmed that the Government Printing Office (GPO), a legislative agency, is not bound by the U.S. Small Business Administration (SBA) Certificate of Competency (COC) Program.23 The court “taketh” when it rejected a disappointed offeror’s argument that the GPO was required to refer its responsibility determination to the SBA rather than make its own determination.24 Instead, the court confirmed that the Small Business Act does not apply to legislative agencies such as the GPO, and the COC Program is no exception.25 In Bay County v. United States,26 the court “giveth” when it determined that because Bay County was an “independent regulatory body,” the county could revise the rates unilaterally in its utility contracts without negotiating those rates with the U.S. Department of the Air Force.27

Not every case the Federal Circuit decided in 2015 has a natural counterpoint, however. Indeed, the court issued two protest decisions that do not fit the theme but that will have significant consequences for contractors. In K-Con Building Systems Inc. v. United States,28 the court considered the extent to which the U.S. Department of Justice and the Contracting Officer (CO) have authority over separate contractor claims once litigation has begun.29 In Raytheon Co. v. United States,30 the Federal Circuit reinforced the difficult burden an original awardee faces in challenging an agency’s corrective action resulting from a U.S. Government Accountability Office (GAO) protest, even where the corrective action is based on outcome prediction rather than a final GAO decision.31

In the end, if 2015’s decisions prove anything, it is that, despite what Homer Simpson may believe, facts are meaningful.

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