Public Contract Law Journal

Jurisdiction over Federal Procurement Disputes: The Puzzle of Other Transaction Agreements

by Nikole R. Snyder

Nikole R. Snyder is a GMU School of Law, JD, 2019.

I. Introduction

Assume you are the CEO of a small biotech company. In the routine course of business, your company enters into contracts with other companies. However, you are reluctant to contract with the federal government due to what you perceive are burdensome laws and regulations governing federal procurement. But what if you could have a contract with the federal government that was not subject to most of these laws and regulations? Congress created authority for certain federal entities to use Other Transaction (OT) agreements for this purpose. OTs resemble commercial contracts, permitting the federal government and the contractor to define their relationship through flexible negotiation, without the usual constraints imposed by traditional procurement contracts.1 However, because OTs are exempt from most federal procurement laws and regulations, there is no guidance for what happens if a dispute arises under the OT agreement.

To resolve a contract dispute with another company, the plaintiff would simply choose the proper judicial venue and file a civil lawsuit. The federal government, however, cannot be sued in the same manner as a company. The doctrine of sovereign immunity shields the government from suit unless Congress has expressly abrogated that immunity.2 For example, the Contract Disputes Act (CDA), provides a waiver of sovereign immunity that enables contractors to sue the government for procurement contract disputes.3  However, the CDA (along with many other statutes) does not apply to OTs.4 Additionally, under the current OT statute, there is no evident means for judicial redress of OT disputes.Therefore, it appears that due to the lack of express congressional abrogation of sovereign immunity, the federal government cannot be sued for OT disputes. This is in sharp contrast to traditional procurement contracts where several statutes operate as waivers of immunity.6

By design, OTs are excused from nearly all statutory and regulatory provisions that apply to traditional federal contracting. This increases flexibility and makes working with the federal government more attractive to non- traditional contractors.7 An unintended consequence of this flexibility, how- ever, may be that OTs create an agreement under which the OT contractor cannot sue the federal government.8

To explore this issue, this article analyzes sovereign immunity in view of 10 U.S.C. § 2371b, commonly referred to as the OT statute.Additionally, this article outlines the types of dispute resolution mechanisms that may be available to parties who enter into OTs with the federal government, and recommends how to improve those mechanisms.

Part II describes the OT statute background, specifically focusing on its legislative history, legislative expansion over time, and applicable statutory exemptions. This part also introduces the concept of sovereign immunity, and will discuss other categories of federal procurements that have congressional waivers of immunity that authorize lawsuits against the federal government. Part III will bifurcate the discussion between pre-award and post-award disputes, which represent two major areas of litigation in federal procurement disputes. This part will analyze the specific statutory exemptions, prescribed judicial forums, and applicability of the Tucker Act10 and other federal jurisdictional statutes, concluding that, by inference, the federal government is not immune from suit arising from OTs.  Finally, Part IV outlines several ways that Congress could clarify the limits of the federal government’s immunity from lawsuits under OTs without compromising the inherent flexibility of these types of agreements.

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